Dinosaur

Can a plan be amended mid year to exclude a category of employees?

There is no election. We prepared a 11/1/2010 valuation with a range of contributions for the plan year. Once the contributions were deposited an AFTAP will be prepared showing 80.10%. Since there is no election, do I put the full amount of the contributions (discounted) on line 19c?

I am preparing the 2010 Schedule SB for a 10/31/2011 year end. Say the minimum required contribution was $20,000 as of 11/1/2010. The client makes a contribution of $30,000 on 7/1/2012 and $10,000 on 7/12/2012. The $30,000 contribution satisfied the minimum required contribution. The additional $10,000 contribution brought the AFTAP up to 80.10%. Is 19b the discounted value of $10,000 (since brought the plan up to 80%?) and 19c the discounted value of only $30,000? What if the full $40,000 was deposited on 7/12/2012. Would you break up the contribution between 19b and 19c? Would it make a difference if the plan was frozen on 6/1/2006 and the plan doesn't pay lump sums over $5,000?

This is the case even though the participant elected a lump sum and must be paid as an annuity until the restriction is lifted?

We have a DB plan that will be paying a restricted HCE the actuarial equivalent of the straight life annuity benefit. The plan is only about 90% funded so certain HCE's cannot receive full lump sum. This plan has employee contributions from back in the day. If the restricted employee is due, say, $15,000 in 2012. According to information I have read, he cannot roll over these payments to an IRA. Also, his employee contributions total $6,000. He will have the option to take the rest of the lump sum (with option to roll over to an IRA) when the plan becomes 110% funded or the plan terminates. When his Form 1099R is prepared is it as simple as this: total distribution = $15,000, taxable amount = $9,000 ($15,000 - $6,000). In 2013, the total amount of these payments would be taxable.

Perfect. Thanks so much

A DB plan has an Early Retirement Benefit (ERB) if the participant has attained age 60 and completes 20 years of service. The reduction is 1/2 of 1% for each month that retirement precedes normal retirement age. Normal Retirement Age is 65. Now the plan terminates in a standard termination. Say an active participant is age 61 and has 19 years of service at plan termination. At date of plan termination the participant did not meet the service requirements for an ERB. Since the plan terminated, does the participant still get the ERB at date of distribution since the participant would have had 20 years if the plan did not terminate? Is this preserved? How about if an active participant is age 58 and has 17 years of service? I think that if the participant would have the 20 years by normal retirement age then you would value the ERB. I remember doing this a long time ago but can't find anything on it.

I guess it was just passed by the Senate. Maybe that is why I can't find any more information on it. From a BenefitsLink story: March 15, 2012 (PLANSPONSOR.com) – The U.S. Senate passed a highway bill that includes a provision for pension relief. Senate Passes Pension Funding Relief: The U.S. Senate passed a highway bill that includes a provision for pension relief. The measure expands the period used for determining interest rates to calculate pension liabilities to 25 years. The interest rates used in 2012 must be within 10% of the average of benchmark bond rates for the 25-year-preceding period, according to news reports.

In March, 2012 it was published that there was some funding relief with respect to interest rates used in actuarial valuations starting in 2012. "For 2012 the interest rates must be within 10% of the average of benchmark bond rates for the 25-year-preceding period, according to news reports" Are there any published interest rates somewhere to conform with these new guidelines? We have just been using the regular published rates that we used for 2011. What are other people doing?

We prepared a beginning of year valuation (as of 1/1/2011) for a sole proprietor DB plan. The client had a one time Schedule C income of about 1 million. Is it possible to revise the valuation to reflect the one time Schedule C income to develop a large 2011 contribution? If so, how?

Thanks.

The IRS has not posted the funding segment rates for a valuation beginning in 2012 (specifically 1/1/2012). Is it posted somewhere else for 2012? Prior years are found here http://www.irs.gov/retirement/article/0,,id=174520,00.html

Since the participant is only receiving 12 retro payments then the 415 limit is not affected (I thought). Also, if the participant is paid, say $160,000 as 100%JS, and the participant receives the lump sum benefit as of 9/30/11 (say plan terms 9/15), the participant would receive $160,000 more than if received lump sum only.

Have a defined benefit plan (owner and wife) with excess assets. The owner is still working and beyond NRD. This is what we propose to do to use up some of the excess assets: - amend plan to allow for distribution at or beyond NRD and allow for Retroactive Annuity Starting Date (RASD); - owner will make election to receive RASD (only 12 months so do not effect 415 benefit); - terminate plan (and file with the IRS) - owner and wife elect to roll over benefit to IRA - any remaining excess asset will have 50% excise tax or may be transferred to existing 401(k) plan (qualified replacement plan) and reduce the excise tax to 20%. Question: what would be the RASD? If the owner was making his election today is the RASD 9/1/2010? Then the calculation date for the optional forms of benefit would also be 9/1/2010? Anyone see any problems?

Sometimes they are received by the DOL but do not show up with the search (by either name or EIN).

This means that the DOL has received the filing but it has not yet posted on the website. You should call and talk to a live person at EFAST to let them know that it has not posted.

Not out yet http://www.irs.gov/retirement/article/0,,id=177406,00.html

Yes, I had that happen for 1 plan. I called EFAST2 and they said to wait a day or 2 then call them (EFAST2) again if it didn't show up. The plan appeared on EFAST2 on the second day (after 2 business days). As long as you have an acknowledgement # then you are OK.

Thanks

The valuation date can be automatically changed from the last day of the plan year to the first day of plan year (i.e. end of year 12/31/2010 to beginning of year 1/1/2011) without approval, correct?

The approval for this is Q&A 3 from the 2010 Gray Book. Although this wasn't discussed in the Q&A, the deadline for the election should be the filing date for the Form 5500. See also http://www.regulationdocs.com/regulations/...30(h)(2)-1/#(e) Thanks for the reply

When is the deadline for the Plan Sponsor to make this election?

anyone have any ideas?

When is the deadline for changing the look back month for segment rates? For example, the plan year is from July 1, 2010 to June 30, 2011 (the valuation date is June 30, 2011). We are using the June funding segment rates (no look back). What is the deadline for the Plan Sponsor to make the election if he wants to change it to the first, second, third or fourth look back month? I understand that since this is a plan year beginning in 2010 that there is automatic approval but I couldn't find when the election had to be signed.

Thanks for the information. Very helpful. Assume that the retro payments are paid now in a joint and 100% annuity (retro for no more than 12 months). Can the participant then immediately elect a lump sum now? He is not terminating employment and he is over NRA. Assume plan is not terminating.