emmetttrudy

Sole propr maintains a db and 401k plan. he wants to temrinae the db plan. due to some asset gains the amount of asssets in the db is higher than his 415 maximum lump sum. can he roll the difference into his 401k plan, which is not terminating, and take a distribution of the 415 max, without any penalty?

The owners of Company A also own 100% of Company B, so they are a related employer. But does that automatically mean they must be covered by Company A's plan? Perhaps they arent required to be covered and the eligibility question isn't applicable.

The owners of Company A sponsor a 401k Plan, which excludes leased employees, and also own 100% of Company B. Company B has approximately 10 employees who are leased through a management company (i.e. not employed directly by Company B). Company B terminates its relationship with the management company and hires the 10 employees directly on 10/1/2011. Do these 10 employees now become eligible for the plan sponsored by Company A? If so, are they considered hired on 10/1/2011 and must meet the eligiblity requirements, or does their service as a leased employee count for eligibility?

An HCE's lump sum is restricted and the partiicpants ends up taking a rollover into an escrow IRA (i.e. an areement that if the plan terminates down the line without sifficient assets, they could dip into the IRA and take some money back). What if a year after the escrow IRA is set up the Plan passes the 110% test. Are all the restrictions lifted on the escrow IRA and it no longer has a potential liability to the plan?

In my experience loans are typically offered more often in 401k Plans as opposed to DB Plans. But that's certainly not the issue here. The DB Plan in this instance does allow for loans, and even if it didn't it can easily be amended to allow for a loan.

thank you

Self-employed doctor has a DB plan and DC plan, no employees. He took a loan out of the 401k Plan on 7/1/2011 for $50,000 and just repayed the entire thing. Now he is terminating the 401k Plan but keeping the DB Plan. Does his loan from the 401k Plan limit the amount of loan he can take from the DB plan after the 401k Plan is terminated? Does the $50,000 threshold apply to each plan or the combination of the two?

same here

Trying to determine if an HCE is eligible for a distribution as of 11/1/2011. We have the FT. TNC and FT of the individual participant as of the most recent valuation date, 1/1/2011. Is the correct methodology to take the 1/1 numbers and increase them for 10 months at the plans effective interest rate to come up with an estimated 11/1/2011 liability? And is the total liability you compare to the assets the FT + TNC, or just the FT? Once I increase the plan's FT, TNC, and participant's FT with the EIR, then: Contribution Required to Pass Test = 110%(FT + TNC - Participant's FT) - Assets + (PVAB of Participant)

A participant has an outstanding loan and because of a disability they have moved from full time employment to part time. Their part time compensation is not sufficient to make the loan repayments. What are the options? If she stops making payments and the loan is defaulted would she be eligible for the exception to the 10% early withdrawal penalty?

Correct two HCEs. Thanks for the response.

DB plan has two participants - both HCEs, one of whom is the 100% owner - receiving 8% of pay. 401k PSP provides for a 3% Safe Harbor contribution. My understanding is that since a key employee benefits in both plans they must be aggregated for 401(a)(4) testing. Is this correct? However, since both employees are HCEs, and both receiving the same benefit in both plans, I dont think there are any testing issues.

We're seeing at least 12 months for recent applications. One of our Cash Balance Plans is going on 14 months now.

1065 K-1

Company is a one member LLC who receives a K-1 each year. It is a Beginning of Year Valuation. For 2011, he deductibl contribution is lmited to 2011 Schedule K-1 less 1/2 SE tax, correct? So let's say the Minimum Required Contribution is calculated at 1/1/2011 to be $100,000. But the 2011 Schedule K-1 ends up being $50,000. The full $100k has to be contributed to meet the minimum funding requirements. What impact does this have on the contribution amount and/or deduction, penalty for nondeductible contributions, etc?

Is a one-person plan considered a participant-directed plan for these purposes? The regulations aren't specific, but it would seem it is.

A lot of threads on whether you can or can't invest in gold coins in a 401k PSP. But, I havent see anything reference doing so in a Defined Benefit Plan? Do the same rules and exceptions apply?

Is there a notice requirement for a one person plan (one owner, or owner + spouse) that has quarterlies missed? They intend to make full MRC, but just not practical for them to contribute quarterlies, and seems silly they would need to notify themselves.

Are you saying recalculate it using NRA of 62?

The regulations seem to amend the anti-cutback regulations under section 411(d)(6), so a plan amendment that increases the NRA will not violate the anti-cutback rules merely because the amendment eliminates a right to an earlier in-service distribution. But when it comes to payment of the lump sum it appears the participant's distribution amount must be at least as large as it was using the NRA prior to the amendment. Maybe I am misreading the Notice?

thank you. i have seen that but doesnt the quoted part below say a terminated participant would still be eligible for payment "in at least the same amount as under the prior plan terms with respect to benefits accrued"? This leads me to believe that when calculating the lump sum, the participant would still be entitled to the larger amount using NRA 59 "In order to comply with § 411(a) and 411(d)(6), a plan subject to § 411 for which the normal retirement age has been raised to comply with the 2007 regulations must ensure that a participant who became or would have become eligible for payment of benefits at the normal retirement age under the prior plan terms, and who has severed from employment with the employer or employers maintaining the plan, continues to be eligible for payment at the same age and in at least the same amount as under the prior plan terms with respect to benefits accrued prior to the applicable amendment date (within the meaning of § 1.411(d)-3(g)(4))."

The NRA in the DB plan was amended from 59 to 62, effective 1/1/2009. A participant terminated 3/1/2009. She had previously been given a distribution estimate using Age 59 for the NRA. After she terminated she was given a distribution packet reflecting the NRA to be Age 62, and of course, this amount was significantly less than the estimate using NRA 59. Isn't there a protection of benefit issue here? Would the participant not be due the higher amount that she had accrued through 12/31/2008 based on the NRA of 59?

I should mention that the client has the IAS19 report for the Plan as well. Is the benefit obligation (ABO) calculated under these standards a good estimate of the plan termination liability?

Without actually performing the calculations of plan termination liability is there any reasonable way to estimate the PVAB for participants only knowing the Funding Target for a frozen plan? Plan Sponsor thinks difference b/t Funding Target and Market Value of Assets is what they would need to fund to terminate the Plan and pay everyone out 100% of their benefit. This is not the case, I know typically the lump sums are greater than the ongoing liability. Is there a "rule of thumb" about how much?

But there is no requirement, for example, that you have to notify them 15 or 30 days before the change takes effect, right?