My 2 cents

Isn't the age 26 requirement just for purposes of obtaining health insurance coverage? I don't think it has anything to do with whether or not they qualify as dependents for tax purposes, federal or state.

Atlantic Richfield (sometimes known as ARCO) has been owned by BP (yes, I think the same ones) for about a decade. Have you contacted them asking about your father's pension? Had the plan terminated? If it had, your father's benefits may have been cashed out at the time. Have you tried checking with the Pension Benefit Guaranty Corporation (www.pbgc.gov)? If the plan did terminate, they may have some information concerning the disposition of your father's benefits. If the plan did not terminate, BP may have some information concerning the plan your father had been a participant of. Any documents your father may have kept (Summary Annual Reports, Summary Plan Descriptions, material in connection with the termination of the plan, if applicable) would probably be helpful in identifying the specific plan that had covered your father. Was your father receiving pension benefits, or were his benefits still deferred? If the former, you would probably want to contact people at the place the payments had been originating from. It is possible, if benefits were already being paid, that there would be nothing due after your father's death (if he has died).

I saw nothing in the instructions to Schedule C requiring that treatment. THe instructions tie the $5,000 minimum to reporting year, which I would take to be the period indicated as the fiscal plan year at the top of the form. And if it is not required, you certainly would not be looking for permission to report expenses based on a lower minimum!

Receivable contributions are treated differently. Form 5500-SF: If the plan is an accrual basis plan, include the cash amount of the receivable contribution. It would not be discounted back to the end of the year to which it applies. If the plan is not an accrual basis plan, receivable contributions are ignored. Item 2 a and b of the Schedule SB: Both items will always include any receivable contributions discounted back to the end of the plan year to which they apply. When there are receivable contributions, neither item 2a nor item 2b of the Schedule SB will ever match what is shown in the 5500-SF (or the 5500 Schedule H) as assets because of the discounting needed for the SB entries.

Well, if it were a defined benefit plan, the plan would have to go out and buy a deferred annuity that had embedded spousal consent requirements unless the participant and the participant's spouse consented to a different method of distribution. Would that be the default action (in the absence of spousal waivers) for a defined contribution plan that, for whatever reasons, includes joint and survivor provisions? If they do go through a formal divorce, the soon-to-be-ex-spouse will presumably be able to get a fair share of the annuity (or otherwise undistributed account balance) through the QDRO process. If the participant is looking to defraud his estranged wife by concealing substantial assets, I hope he gets caught.

OK, I looked at the IRS Notice and see that it does seem to apply to 5500 preparation. Thanks for pointing out where the 5500 is tied in to the proposed requirements. I still think that the tax implications of a 5500 filing are seldom going to rise to the level of significance indicated in the Notice. The following addresses the comment from earlier today concerning the need, prior to issuance of a PTIN, of a paid preparer having to use his or her SSN in the paid preparer part of the return: Prior to this year, the "paid preparer" information was explicitly optional. That is, service providers assisting in the preparation of 5500 materials as part of a group of services provided to the plan (whether administrative or actuarial) did not have to identify themselves as paid preparers on the 5500 form. The Form 5500 itself for 2009 does not appear to include any place to show such information. Perhaps there is something in the submission process (I have not been involved in any actual submissions to date). If so, is it mandatory (or optional, as before)? Otherwise, reporting paid preparer information would not be part of the 5500 filing at all. This assumes that the paid preparer does not have authority to make the filing on his or her own. Any filings we submit are expected to be on the written direction of the plan sponsor.

The Social Security website indicates that non-citizens with valid Department of Homeland Security work papers can obtain Social Security numbers. One does wonder when and how the person in question obtained a SSN. If (as is implied by the information in the first post) the person truly believed herself to be a citizen but was not, what documentation was she able to present when the SSN was obtained? Certainly, she would have had to give the doctor an SSN to obtain work, and if she believed herself to be a citizen, she would not have had any reason to provide the doctor with false information. So the implication is that she does have an actual SSN assigned to her. I don't recall ever having seen any plan provisions explicitly excluding illegal aliens from participation in the plans we service. Absent such a provision, even if she had somehow been able, without proper documentation, to obtain an SSN and work for years in covered employment, I reiterate my belief that it would be inappropriate, both legally and morally, to deny her the benefits promised her under the pension plans. Workers, whether citizen or not, owe taxes on their income. Taxes withheld from income are sent in by the employer to the government and serve to cover part or all of the individual's income tax obligation. If the amount withheld exceeds the tax liability, the excess is refundable (even, I presume, to undocumented aliens currently blocked from entering the US).

1. On what possible basis would you deny this person any portion of the account to which she had vested rights? Payouts are not limited to citizens or even people currently in the US. If she is in Mexico, send the money to Mexico (or, if she maintains bank accounts in the US, it could probably be arranged that the funds be deposited there). You wouldn't think twice if she had been a naturalized citizen who, after retirement, had returned to the country of her birth. Pension payments go to people living elsewhere all the time. 2. Speculation here, but don't you have to catch someone employing an undocumented alien to impose any penalty on them? And what standards must the employer fail to meet for there to be any issues (especially given that the worker had been living in this country for years and believed herself to be a citizen)? 3. Presuming no fraud or falsification of identity, I would presume from this case that one need not be a citizen to get a Social Security Number. Certainly, anyone here on a green card must obtain one. Is there any reason to believe that the SSN she had been using was not hers? As for income taxes, they would be owed for the compensation received, irrespective of citizenship or resident status. She had presumably properly filed income tax returns through 2009. She probably ought to prepare to file a tax return for 2010, taking credit for any amounts already withheld. Presuming that she had been living in the US for an extended period of time and had even believed herself to be a citizen, it would certainly seem unjust and draconian for her to be denied the opportunity, in the near future, to return and resume gainful employment and to strive to actually obtain citizenship status.

Thanks for the link, but it is actually under "tax professionals" and is titled "proposed guidance for tax return preparers". It does not (at least openly) refer to the form 5500 filings. The form 5500 filing is not a tax return, and does not involve the payment of taxes or have anything to do with requests for tax refunds. If there is a specific reference within the guidance to the form 5500, I would very much appreciate its location, because otherwise I question the applicability of the proposed regulations to pension professionals who are involved with preparing 5500 filings but who are involved with neither corporate nor individual tax return preparation. Unless the IRS explicitly ties it into these rules, the 5500 filings are too peripheral to tax issues to trigger the need for 5500 preparers to obtain a PTIN.

I asked it before in another discussion thread and I will ask it here: Where does it say in any formal guidance or notices issued by the IRS that someone who does not work on tax filings or refund requests but who does prepare 5500 filing materials has to obtain a PTIN?

Consider what would happen if the person continued in service (i.e., no separation), with enough hours to earn full credit, but over an extended period of time pay is at a lower level (say more than 10 years)? For example, suppose that they were paid in part through commissions and increased competition or other factors have prevented the person from reaping the same level of commissions for many years, or suppose that the person is partially disabled and now employed full time but in a less well-paying position. When the higher, earlier compensation amounts begin to drop out of the 10 year period, is it necessary to calculate a grandfathered accrued benefit at the end of each plan year (as one is supposed to be doing for plans integrated at covered compensation)?

Since a hard freeze is, presumably, always an option for the sponsor (CBA plans excepted), we always approach 436 limitations as something the sponsor wants to avoid.

Did someone mention me? I was too busy trying to find something in the proposed reg saying that it applied to 5500 filings, which are (at least in my mind) neither tax returns nor requests for refunds. If someone could point out where in the proposed reg 5500 filings get brought in, I would much appreciate it, since otherwise it would seem to have nothing to do with them.

So, having decided that it would further the plan's asset allocation goals to invest plan assets in a specific piece of commercial real estate (as opposed to investing in a regulated investment vehicle focused on commercial real estate), after careful consideration of available commercial real estate (presumably not limited to the local area), taking into account a variety of aspects of the investment (including the financial strength of the tenant - wouldn't want the plan to buy a rental property and see the expected tenant go belly up!), the plan fiduciaries determined that this particular Denny's would be a satisfactory investment? Hope they are right! Woe to them if that Denny's franchise is run by the sponsor's brother in law, however!

I seem to recall that the funding calculations for 2010 are based on two things after Section 436 forces a freeze as of the start of the 2009 plan year: a. No accrual for 2009 taken into account b. Yes future accruals for 2010 forward are reflected as though the plan were not frozen in 2010 You do not take into account the fact that accruals are currently frozen due solely to the workings of Section 436 but you do take into account the fact that in one or more already completed past years there were no accruals. Also, consider whether the recently enacted relief legislation would come into play.

Thanks for the citation, which certainly looks like a resounding "yes" for the opening question in this discussion thread. As this is solely applicable to non-discrimination testing, I would imagine that a uniform 30% of pay credit (which would certainly fail 415 testing if the plan were actually a defined contribution plan) would be considered acceptably within the safe harbor under a defined benefit cash balance plan.

I would be interested (at least a little) to see the notes of the meeting (or other plan records) documenting that the decision to invest plan assets in a Denny's restaurant, whether as rental property or equitable in nature, met all applicable fiduciary standards and was not driven by personal interests of the decision maker(s) or the business interests of the plan sponsor. My deviously suspicious mind cannot keep itself from thinking that there must be some familial or other connection between those making the decision and those involved in running the restaurant.

Each individual encompassed by the plan's definition (i.e., each parent and the sibling, in the case at hand) has, independently, the right to direct that his or her share be rolled over to a non-spousal IRA. It would make no sense to exclude situations where multiple individuals share in some predetermined way in the death benefits. The right being restricted to individuals would just preclude the estate or other non-natural person entity (such as a charity or perhaps trust) from having access to the right to roll the proceeds over.

Can "safe harbor" and "cash balance plan" be used in the same sentence?

Perhaps the safest course is to treat a plan that does not exclusively cover people under a CBA as a non-CBA plan. In that case, you would provide the statements currently to all (with no delayed applicability).

They can cross-test it based on contributions, can't they? Sounds non-discriminatory on that basis. How else would a cash balance plan ever pass testing?

The plan document itself must specify who has the authority to amend the plan. It will usually be the plan sponsor or the principal employer, although it could be the pension committee or the benefits committee. But the plan will specify. And things have to be done that way. Theoretically, if procedures are not properly followed (i.e., if the person who signed the amendment did so without valid authorization), the IRS could challenge the validity of the amendment. Not sure if that happens with any frequency. It is probably more likely that plan participants will litigate over that point.

Our understanding is that a plan with 100 or more participants files as a large plan and a plan with under 100 participants files as a small plan. A plan between 80 and 120 participants may elect to remain in the same format as the year before. A plan that filed as a large plan last year that has between 100 and 120 participants now files as a large plan. A plan that filed as a large plan last year that has between 80 and 99 participants may either file as a small plan now (based on this year's count) or elect to continue to file as a large plan. A plan that filed as a small plan last year that has between 80 and 99 participants now files as a small plan. A plan that filed as a small plan last year that has between 100 and 120 participants may either file as a large plan now (based on this year's count) or elect to continue to file as a small plan. A plan that had 130 participants last year and 111 participants now has no option - they must file as a large plan.

For a terminating plan to retain its qualification in the termination process, any statutory compliance requirements effective on or before the effective date of plan termination must be in place. For example, that means that any plan terminating on or after the start of the plan year beginning in 2008 must have in place all of the benefit limitation language required under IRC Section 436. Non-terminating plans may have an extended deadline for making the necessary amendment, but plans that are terminating have to jump ahead and get all of the necessary provisions in place in order to qualify in form as of the date of plan termination. You can't adopt a retroactive compliance amendment after the plan has been terminated and benefits distributed.

I would not think that a 204(h) notice would be required. Those still active were, as you say, properly notified in 2008 that there would be no further accruals. All plan participants have been notified that the plan is terminating effective 8/31/10. Any subsidized early retirement benefits or subsidized payment options must be provided for in the termination distribution, so there is no potential cutback there. How would the plan termination eliminate anything that the active participants would have an expectation of receiving? The mere termination of the plan would not be an event in itself requiring 204(h) notification.