jkdoll2

Relevant Background Information ---------------------- One owner plan - DB Plan with insurance (Incentive Life. He is 67 yrs old and terminated the plan. He wants to buy the policy outside of the plan and change the ownership from the plan to himself. I received the Policy values (PERC values). There seems to be a discrepency between the IRS and DOL on what to pay to the plan to buy the policy outside of the plan. Specific Question --------------------- The DOL says to use the cash surrender amount to pay to the plan and get a 1099 for the difference between the cash surrender amount and the perc amount. The IRS says the PERC amount is the amount owed to the plan. Which one is correct? Cash Surrender amount is $25,864.74 and the PERC amount is $68,313.00

Why the top paid election was chosen in the document I do not know..... But for discussion purposes, I understand that the owner is a HCE regardless of compensation amount, but if you were do just do the mathematics, if there are a total of 2 employees and 20% of 2 is 0.4 and you round up, that is 1 employee. Correct? So the question is: is my HCE count 2 - the one HCE and the one employee from the test calculation? Which one had the highest compensation in the prior year? It depends on who has the highest compensation. If the non-owner has the highest - you will have to include both.

Why would they want to do that? If they are both HCE's - they would pass automatically. Class allocated - give owner a contribuiton the non-owner - 0% - still pass since there are no NHCE's.

Yes - we can agree to disagree since the correction method is to make the RMD before 12/31/2010 - in which we are going to do that. you do not have to get it back from the IRA as long as it is paid by 12/31/2010. Thanks for everyones opinions.

There is enough money in the account still to take the minimum distribution before 12/31/2010. I dont see why there would be an excess rollover if they are still taking the RMD before 12/31/2010. The amount at 12/31/09 includes the amount that was rolled over. Thanks - I agree with Bird!

We have a client that is an owner. He turned 70 1/2 in August 2010 - but requested an in-service withdrawal in April 2010 (before he was 70 1/2). He rolled over his entire account balance to an IRA. He is still contributing to the plan and also received a profit sharing contribution after the rollover. When we rolled the money to the IRA he was not 70 1/2 yet - should we had taken the RMD before the rollover to the IRA - or do you have to wait until they turn 70 1/2 to take it? He has enough money in his plan right now to take the RMD for 2010 (not delaying it until April 1, 2011). The rollover company (IRA) is saying that when we e rolled over the money from his plan - we should have kept back the RMD amount and that the money needs to be distributed before 12/15/2010 otherwise there will be penaltys. I dont think that is correct when he isnt in any violation - he is still taking his RMD before 12/31/2010 (based on 12/31/09 balance) - he is just using money after when the rollover happened. Does it matter what money he uses as long as he takes it before 12/31/2010? Thanks

I've had the sam issue - what if the document for the plan excludes illegal aliens - in which she was one since she was not a citizen and perhaps she didnt have a green card and was here illegally? Does she still receive benefits? Does this put the plan in jeopardy? Thanks - curious.

We have a DB plan where the asset is an annuity. The plan in terminating and they just want to reregister the annuity into the participants name. The insurance company says this is not a taxable event. I would think that it is - because it is changing ownership from the Plan name to the participants name. It is NOT going to an IRA. This doesnt qualify for a 1035 exchange - correct? Thanks

Are you able to file a 5500SF for a 412(e) plan? Usually you dont fill out a schedule I - so what would you do with that information on the 5500SF? Where would you but the premiums paid? There is only 3 participants in the plan. They have both insurance contracts and annuities. Thanks for your input

One previous post mentioned that they had problems with the DOL signing process if the client did not get a DOL password... I assume they quit the DOL registration process after they got their UserID and PIN, but before they gave themselves a password. This seems to coincide with your note, since to "log in" to the DOL site, they need their DOL UserID and password. Without the password, they couldn't log in to the DOL site. So it may be more probable that the DOL registration process be completed all the way to getting a password, more than having to log back in to the DOL site first. I know essentially none of our clients have logged back in to the DOL site before signing. Make sure they sign as Plan Administrator - otherwise it gets rejected. Plan Administrator must be signed.

What if you have a missing participant from a terminated plan (check was returned). Participant is no longer in the United States. The balance is under $500.00. What do you do with the funds? Can you open IRA's under $500.00? Doesnt seem to make sense. Thanks

We have a cash balance plan that started in 2008 - 12/31/09 is the 2nd year and the contribution amount was $215,000.00 that represents the 2.50% to non-highlys and 36% to the owners. There was some interest credits for 2009. The file says the maximum amount of contribution is only $206,000.00. I know it is because of the interest that was credited. Can they still contribute the Target Normal Cost at Risk - which is still the $215,000.00? Or will they be overfunded in the contribution? They want to stay on top of the funding and not get behind and underfunded. Thanks

Thanks - that is what I thought too. We do it the same!

Confusion: Can you have a 412(e) Plan with 100% life insurance? I thought the 412(e) plans had to follow the 74-307 rules and limit life insurance to 50%. Also what about a group life or annuity contract? I didn't think you could have either (100% insurance, and a group contract). If you can have a group contract - how do you pay particiapnts out when terminated and adjust the contract? I always thought 412(e) Plan was 50% insurance (or less) and annuities, or 100% annuities. I also thought they had to be individual contracts also. Thanks

We have a former client who didnt send in the 2006 5500. They want to file it now. Do they have to do it electronically? They got a letter from the IRS about it and they can not file it thru the DFVC program because they were already notified by the IRS. Just want to know if they file electronically for a previous year 5500 when it is late. Thanks

Where do you mail the 5500ez for 2009 (using 2008 EZ form)? Thanks

If I person has rolled over their profit sharing money to another profit sharing plan - would you consider that seasoned money or rollover money? If they want to pay their life insurance premiums by using this rollover or seasoned money - what is taxable? the premium, ps-58 costs? What do you issue a 1099 for? Do you still do PS-58 costs for premiums made with seasoned or rollover money? No one seems to agree on this question. Thanks

Can you use paper form and mail in to file a fiscal plan begin 12/1/08 and fiscal plan end 11/30/09? Or do have to use EFAST2 (i-file) to file it? Is it capable to do 2008 fiscal plan ending in 2009? Thanks

If the match is 100% vested then it would be refunded. According to TAG (technical answer group) the 10% penalty does apply if the refund is after the 2 1/2 months after the end of the plan year.

No - the match is not refunded - it should be forfeited for the failure.

I guess Im confused on how you have an underfunding of employee money when the money comes from the employees paychecks. I think the employer needs to make up those forfeitures from company money.

Did they do a match in 2006? If they offset employee money - what did they do with the money they received from the employees paychecks for the deferrals?

Where can you get a 1099R for 2006? i need to do a corrected form for a loan default (or do you need to do a 2006 form?). All the legalalities have already been done and interest and penaltys are being paid. I just need to do the form so the accountant can do a correctede tax return. Thanks

What if you convert it to a regular DB plan and it is to overfunded to terminate? You would have to pay taxes on it, isnt that correct? Is it easy to convert it to a regular DB plan?

Can you use the cash accumulative in the insurance policy in a 412(e) plan to pay the premium for the insurance? Do you have to make the annuity premium since there is not a minimum funding requirement? The plan wants to terminate and rollover the funds to a profit sharing plan - but does not want to make the contribution for 2009 for the annuity and use the cash in the insurance policy to pay the premium for the insurance so it will not lapse. This is an owner only plan (1 participant) - can they do this? Can a 412(e) plan be frozen as long as the insurance doesnt lapse? They want to keep the life insurance going because of the surrender charges. How does this effect their benefit? Thanks