SoCalActuary

Did the piloting ever get the actuarial to agree? (Adjectives galore)

Plan document says one month lookback to determine 417e rates. It is early in January and the December rates are not yet entered. Any good guess on the rates? It looks like they will be a small amount higher than November rates. A participant wants their lump sum right away (probably to use their LS for immediate bills). 25 year olds have no understanding nor patience.

This sounds wrong. If the prior year benefit was 60% of average pay, and the current benefit is 70%, that is a 16+% benefit increase. AE at this age does not reach 16% increase.

Sue for abandonment and divorce, says this non-attorney spokesman

So long as you get to 100% after 3 years, yes.

I never saw DJ mention "percent of HCE vs NHCE" affected. His facts say all 8 NHCE are going to be covered, so we may be beating a dead horse, but discrimination is not about counting one for one.

Not really. Just do it. Additional service may result in increased accruals. On your reduction of benefits, do you have actuarial equivalence increases for deferred retirement. If so, that basically makes the payments neutralized.

Participant made the mistake, and trustee executed the instructions from the participant as written. I am wondering if the trustee has the authority to reverse the transaction, also considering whether the trustee even wants to.

Being 412e3, you do not get the judgement of an experienced enrolled actuary, "because it is not needed", and the CPA / agent keeps control. But if you discontinue the 412e3 structure, you have to decide if the future payments to the policy will continue within a cash balance structure. So I suggest you modify the policy to reduce or eliminate the unneeded death benefits you pay for, but keep paying premiums for cash value buildup. This will avoid the surrender issues that come from cancelling the policy. If your agent won't do this, switch to a new agent who will, and inform the insurer. Cash balance plans are well suited to your goals of funding your retirement target sooner rather than later. You can keep your rebuilt annuity contract within the plan while funding the additional benefits within a trust.

You are making the assumption that the benefits will be forfeited (not taken) for two years. I believe the IRS calls that a bad funding assumption, essentially a reduction in plan benefits. Certify the underfunded as if the benefits are payable at 62, and you get the desired result for a26. However, this also adds funding requirements, which is the logical choice anyway.

Participant has existing accounts in 401k plan and wants to convert part of the pre-tax accounts to in-house Roth, accepting tax consequences. They get sloppy and check the box to convert all of their account. Trustee has completed the transfer in the past few weeks. Participant realizes their error and wants to reverse the transaction. Trustee wants an opinion on what is allowed and what is taxable. Simple answer would be that it was already done, no looking back. But can the Trustee allow the correction and restore part of plan accounts back?

The plan sponsor has an insurable interest if they would suffer an income loss by the death of their employee. Maybe they also have some form of severance liability to the insured's family. Now there is also the taxation issue of who if any paid the PS-58 cost, and how they recover their investment?

The simple issue is about adopting employers and recognizing service. If this is still the same plan, you add Corp B as an adopting employer. When Corp A closes, you need to make sure that credited service from Corp A is recognized. And you amend the plan so that Corp B is now the Plan Sponsor.

Can they use the past service? It appears they already have service in this plan from employment in Corp A. The owner is still a participant.

Extending this issue: one person DB plan was frozen in 2013. New employee hired in 2015, and would be eligible in 2017 if plan not frozen. No intent to provide benefits for new employee. Does this comply with 401(a)(26)? A prior thread says that you need to comply. The one-person plan is top-heavy, but owner is getting no new accruals. So the issue appears to be: No new participant, new participant with a minimal accrual, or new participant with topheavy accrual?

Extending the question, what if the SHM is not payroll-based, and still deposited after due date of 5500 with extension?

After considering your tax problem, certainly I understand why you would remove the IRA deduction from page 1 of your 2017 form 1040. If the payment was made in 2018, then correcting the instruction to the IRA trustee works. If the husband's S-corp provided W-2 income and pension contributions for 2017, then those payments could be 2018 payments with a corrected 1120-S for 2017 showing no pension costs.

The approach uses a taxpayer election to deduct defined benefit cost for the plan year beginning in the fiscal (tax) year. This is an authorized election.

Pick your annuity start date, when the funds are available for lump sum payment. It will decrease from 62 to 65 because the annual dollar limit will remain the same but the life annuity value will decrease with age. Once you have your ASD, compute the limit for that date. Delaying the date funds are available will decrease the amount payable. You can and maybe should make sure the funds are available to make that distribution, but a couple of cautions. The benefit is eventually taxable, but is the contribution deductible? If you have otherwise taxable income, you get a tax benefit from the contribution. If not, don't make the contribution. If you can make the deductible payment, do so, even if you have to borrow funds to make the payment.

Just sayin' I've never seen this enforced by the IRS, unless the minor child has actual ownership. Consider that former politician in NC who fathered a child, John Edwards. Do you think he was in a controlled group with his groupie?

An IRS agent wants an EZ filer to change to full 5500 filing with schedules, because sole participant takes RMD and has non-standard asset (private loan). I don't see that in the instructions for 5500EZ. Any authority for this request?

If made too late for minimum funding, but the tax return is not due until October 15, he will want to deduct it. Pro or con, what do you all think? There is a line of discussion that the contribution must be applicable to the prior year end form SB, and therefore not deductible because it is too late for minimum funding. However, if included in the 5500 form as a receivable, accountants argue that it is on account of the prior year.

To ESOP guy, there are both DB and DC contributions which were made while there was no earned income. The guidance is that you refund the non-deductible amounts. I don't understand how the funds could possibly stay in the DC plan if they were not justified. On a related point, the plan sponsor will NEVER be able to operate the plan long enough to make the contributions deductible, since the business is now closed. To Madison, you mentioned that earnings should be refunded. I suspect you are correct, but I have not found the basis for that, beyond the normal common sense opinion that they did not belong to the plan.

Thank you to David. I had not seen this Notice posted yet.

A plan sponsor starts a plan and makes contributions which turn out to be non-deductible because they turn out to have no earned income. This goes on for two years. Year three and four, they have earned income and can deduct part of the contributions made. IRS audit of personal and business returns results in denial of deduction for years one and two. The letter arrives in year five. How do you determine the refunds, given that the non-deductible amounts have now earned substantial investment returns in the trust? Do you attribute interest to the non-deductible funds? How and where would that interest be reflected? a. One theory is that the funds were invested in a trust that was not tax exempt during the first two years, so the trust should file taxes for that period only. b. Another theory is that the trust was tax exempt in intent and did hold tax-deferred assets. So the non-deductible contributions are the only amounts refunded. c. Another theory is that the refund includes income attributed to the non-deductible portion and should be refunded as well, and treated as taxable investment return. Since the IRS denial of deduction letter does not instruct how this is to be treated, I look for opinions and precedents.