My 2 cents

1. Investment losses 2. Heavy initial unfunded liability (funding obligation based on 7-year amortization) combined with high current cash flow. 3. Significant lump sums/annuity purchases when the IRC Section 436 restrictions and the 25-high restrictions were not applicable

Who was the trustee of the plan? They probably still have the authority (and the duty, probably) to terminate this plan. There was a plan fiduciary, and they are probably still PERSONALLY liable. Who signed the last Form 5500 filing? Maybe there were no damages to sue over, but (speaking as a non-lawyer) a threatening-sounding letter might prompt them to formally terminate the plan. Last time I looked, plan participants had neither the authority nor the responsibility to restate a plan.

To be on the safe side, you might want to look up a proper IRS number to call and use that number to see if this is legitimate. You will probably not want to try calling any numbers shown on what nearly everyone here feels may be a scam. If it is, the IRS probably wants to get this contact investigated. Given the strained resources the IRS currently has, investigatory reviews of 2005 Form 5500 filings appear to be most unlikely!

Do you mean that this happened recently? That is, sponsor filed the 2005 Form 5500 when it was due, followed by 9 years of deafening silence, followed by an IRS-imposed change and a fine? Really?

When a partial termination appears to have occurred, it is always a good idea to cover vesting through an amendment, since otherwise it is not necessarily clear that even those displaced have been fully vested. Note that when a defined benefit plan freezes all accruals, that could be considered a partial termination. To freeze benefit accruals, of course, there must always be a plan amendment. When freezing accruals, it is a really good idea to freeze plan entry, and since the freeze could be a partial termination, it is also a really good idea to grant full vesting to all those still employed on the freeze date. Some provisions concerning rehires may also be a good idea, so if a participant who had terminated before the freeze is later rehired, it will be clear what is to be done. For example, if someone had terminated with 40% vesting, was not active on the freeze date, and was subsequently rehired, what will be done with respect to the 60% of the pre-break accrued benefit that was not vested?

This is a bit like the comment Fermat made in the margin of a book concerning an easy to understand numerical theorem (there is no combination of a, b and c (all positive integers) for which an = bn + cn, where n is a positive integer greater than 2) that became known as "Fermat's Last Theorem" and which took 350 years to prove. After stating the theorem, he wrote "I have discovered a truly marvelous proof of this, which this margin is too narrow to contain." In this instance, my mind is too narrow to be concerned with the proper taxation of life insurance policies that had been held in a 401(k) plan, or I would be clamoring for your answer.

What does that mean? Is it the good news that they are no longer requesting the 2013 5500? Probably the better news that there is no further threat of penalties for the "late filing"

Sorry to say, but you will need to see the fine-tuned details as spelled out in the plan document. It has been my experience that the approach taken in the vast majority of plans offering a joint form (invariably not a true joint and survivor form, in that if the joint annuitant dies before the retiree, the amount payable to the retiree is not reduced) with a certain period is to only apply the reduction after the end of the certain period. I have, however, seen plans calling for the monthly benefits to be reduced during the certain period if the participant dies first before the end of the certain period. Such plans have specified that if both the participant and the joint annuitant die before the end of the certain period, the certain payments would equal those being paid immediately before the second death. The conversion factors are not easy to develop! As a second point, it is probably required that the applicable life expectancy be at least 20 years. If the applicable life expectancy is less than 20 years, you can't offer a joint and 20 years certain option at all.

Is there even a line 2b(10)(b) on the Schedule H? I am only seeing 2b(10) as a single line.

What would be the purpose of that?

As noted before, I do not work with 401(k) plans, but would the plan sponsor be choosing the investment advisor for a self-directed account or would the participant do the choosing?

I don't work with 401(k)s, but it sounds a bit fishy to me.

Would it be considered a federal crime to call the IRS and impersonate a plan official to tell the IRS that they are mistakenly threatening the sponsor with adverse consequences because no 5500 was filed for a year in which the plan did not exist ? If so, then either the plan sponsor has to actually contact the IRS themselves or provide the TPA a PoA to authorize them to do it for them. If not, since no confidential information would be communicated in either direction, why not do that? Just saying.

Being done in a way that will not deny Ms. Hired-by-D-in-2005 credit for her service (up to 5 such years) with D, right?

This question doesn't really relate specifically to cash balance plans, does it? Same issue applies to plans in general, no more and no less than to cash balance plans.

...so that if G hires anyone else in the future who had worked for D, their service with D would not count? Or is the prospective amendment supposed to exclude any service with D occurring after the effective date of the prospective amendment? If the "prospective" amendment is supposed to keep the new employee from receiving any credit for the service she had completed with D prior to her employment by G, well, to quote from The Princess Bride, "You keep using that word. I do not think it means what you think it means." I may be getting cynical, but isn't it almost a given that documents might not say what was intended?

I agree with Lou S - you need to get a sentient being (preferably a warm-blooded one) to look at this. EFAST2 does not meet this criterion. Call the IRS number EFAST2 gave you (was there no contact information on the CP-406?) and push until you talk to someone with enough intelligence to understand that there is no 2013 5500 due for a plan first effective 1/1/14.

Agreed! It is still going to be a defined benefit plan, with no necessary match between assets on hand and the sum of the account balances. Allowing self-direction in a defined benefit plan is quite different from self-direction in a defined contribution plan. In extreme (or even not-so-extreme?) cases, it becomes a "heads I win, tails you lose" situation since the punishment for overly aggressive selection by the participant will fall, in large part, on the sponsor, especially since the absolute worst that can happen to the participant is to have an account balance equal to the cumulative pay credits, while the assets backing that account could be wiped out entirely.

Number 3 is the key - if the plan calls for offsetting new accruals by the actuarial adjustment applied to prior benefits, attainment of age 70 1/2 does not require any doubling up. It is a given that if the plan provides any accruals at all, they cannot be shut off at NRA or any other age. Some plans, purporting to follow suspension procedures, do not provide actuarial adjustments for deferrals. It is indisputable that there must be at least a comparison to actuarially adjusted values after 70 1/2, but if the plan provides for using the greater of straightforward application of the benefit formula (service and earnings) through the end of the year or the actuarial equivalent of the prior year's higher amount, it need not switch to an A+B approach just because the person has reached 70 1/2.

In many instances, the service provider is a corporation or partnership, and the fees are not paid directly to an individual. My guess would be that issuance of a 1099-MISC is only appropriate when the fees are being paid directly to an individual (who would then have to report that income on their individual taxes, probably as self-employment income). I wouldn't know what kind of reporting is required of the plan or trustees when the fees are paid to the employer of the individual providing the services and that individual is paid a combination of salary and bonuses by their employer. All I know on the subject is that the individual providing the services who is employed by the company being paid for those services is likely to have any or all income related to those services reported on a Form W-2 issued by their employer. This is the case even if the services are legally considered to be provided by the designated individual (for example, if we are talking about a defined benefit plan's enrolled actuary) and not by the employer of that individual.

I think the issue here is that it is not explicitly part of the plan design - the plan doesn't apparently actually say anything about no HCEs allowed. So think of it as more along the lines of not being allowed to sit at the popular kids' table.

Plans may provide that if a participant continues employment after Normal Retirement Date, then one may offset continued accruals under the formula by actuarial increases. Example: Person is working after Normal Retirement Date. The plan may specify that the amount payable at the end of this year is equal to the greater of the amount determined using service and earnings through the end of this year or the actuarial equivalent of the amount payable as of the end of last year. Not actuarial increases plus continued accruals. It is my understanding that this practice (if specified in the plan) is perfectly acceptable and can continue past age 70 1/2. Or perhaps by saying that the question makes no sense, you mean something like "Of course you can't make an 'administrative decision' to provide smaller benefits than the plan calls for!"

Perhaps they took the former NHCE who became an HCE aside and made him or her an offer they couldn't refuse. Not that participation in the plan is so fabulous to begin with (no match! no non-elective contributions!), but isn't it just a bit troubling that there is a secret policy, undocumented in the plan, that HCE's cannot participate? Is this the same employer from another recent post who doesn't want to spend any money on the plan and whose HR people don't want to have to spend any time or effort on the plan?

"Although the plan has no difficulty with any coverage or non-discrimination test, the employer’s human-resources people want to “do something” to urge more employees to choose retirement savings. But whatever is to be done must involve no work time of the HR people, and must not ask the employer to spend any money." Wow! That sounds like such a great company! Where do I sign up!

Not a lawyer, but wouldn't post-bankruptcy assets be protected from the pre-bankruptcy creditors?