QNPG

This is exactly the type of feedback that I needed to make my decision. Thank you for taking the time to respond. I am going to be safe rather than sorry and include the disclaimer on my emails and correspondence. Thanks again.

Should any attorney, CPA, appraiser, enrolled agent or enrolled actuary registered to practice before the Internal Revenue Service include a disclaimer on any correspondence or email produced even though some of these practitioners do not actually provide "tax" advice (such as TPA firms)? It is my understanding that the Circular 230 requirements apply to all written forms of Federal tax advice, and thus apply not only to formal legal opinions, but also to written advice contained in emails, private offering memoranda, draft contracts, letters, memos and other documents. It is also my understanding that practitioners who fail to comply with the requirements of the Circular 230 provisions may be suspended or disbarred from practice before the Internal Revenue Service, be publicly censured or be fined. I work for a TPA firm and I am an ERPA. I do not provide actual tax advice but the more I read the requirements, the more I am leaning toward the opinion that all practitioners listed above are required to include a disclaimer. Anyone have any thoughts on this? If you could, please provide the authority for your opinion. I appreciate any feedback. Thanks. edit: typo

The thing I enjoy most about this industry is that you can learn something NEW every single day! Thanks, Tom.

Tom, so the fact that the participant actually elected then received the first RMD on 9/30 but before 4/1 - she's still viewed as not taking a distribution before the RBD?

Since no employees, exempt from non-discrimination testing so I don't see a problem with not giving her a contribution in Co A Plan and her starting her own plan in the same year. It would be different if there were employees - it is my understanding that if the employer is part of a related group (CG) for one day in the plan year, then they are a CG for the entire plan year. Edit: So long as the PS formula is discretionary...

The first post-death minimum distribution calculation is made for the calendar year that begins after the date of the participant’s death. For the year that includes the participant’s death, the minimum distribution is still calculated as if the participant is alive. In my opinion, the RMD for the distribution calendar year 2011 would be calculated using the participant's life expectancy factor because the participant died in 2011. For 2012, I would follow the rule below: Reference material: EOB - Chapter 6 - Plan Distributions, Section VII, Part D, Calculating minimum distributions under the Account Balance Method - Section 8.d.: "Since the designated beneficiary is the participant’s spouse, the Life Expectancy Factor is the greater of: (1) spouse’s remaining single life expectancy, using the spouse’s attained age on his or her birthday falling in the distribution calendar year, or (2) the participant’s remaining single life expectancy, as determined in 8.b.3) below. See §1.401(a)(9)-5, Q&A-5(a)(1) and Q&A-5©(2) and (3), of the 2002 Regulations, and the example in 8.c.1) below. The spouse’s life expectancy factor, as described in (1), will be the controlling factor if the spouse is the same age (i.e., born in the same calendar year) or younger than the participant. The participant’s life expectancy factor, as described in (2), will be the controlling factor if the spouse is older than the participant, but only as long as the participant’s remaining life expectancy calculated in accordance with 8.b.3) below is longer than the spouse’s life expectancy."

It seems that the contribution can be treated as an employer contribution that has not been allocated yet (i.e., the HCE was not eligible to receive the contribution, hence it is still categorized as an employer contribution that has not been allocated).

Thanks, Andy. I appreciate the guidance. I'm going to look into that now.

Does anyone have any practical experience in understanding the definition of Predecessor Employer in Regs. Section 1.415(f)-1©(2). I am particularly concerned/puzzled by the phrase “a continuation of all or a portion of the trade or business of the former entity”. Two doctors operate a partnership which maintains a defined benefit plan. The doctors split and Doctor A assumes the sponsorship of the DB Plan. The employees who leave with Doctor B are paid their benefits under the DB Plan, except for Doctor B. Doctor B is apparently not paid because the plan is under-funded. His benefit is still held in the old DB Plan currently sponsored by Doctor A. Doctor B now wants to establish a cash balance plan for his business. Is the partnership considered a Predecessor Employer and, as a result, must Doctor B’s benefit under the old DB Plan be aggregated with his benefit under the cash balance plan in determining his Section 415 limitations? Any thoughts with citations or references would be greatly appreciated. Thanks.

Gosh, when I saw offset, my brain automatically went to Cash Balance. Sorry!

In a previous life, I worked on submission packages for LOD for quite a few cash balance offset/401k Plan arrangements. I submitted my first case in June of 2009 and it took 1.5 yrs to get a favorable LOD but one was received. (Thank God). Here was the last comment, in relevant part, before I received final approval: "Under an arrangement where the benefit provided in the cash balance plan is offset by the benefit provided under a profit sharing plan maintained by the same employer, there may be participants who do not receive any allocation to their hypothetical account balance (especially during the early years of the cash balance plan) because their accrued benefit under the cash balance plan is completely offset by their benefit under the profit sharing plan. It is necessary to insure that the requirements of Regs. Sections 1.401(a)(26)-5(a)(2)(ii) or (iii) are satisfied prior to applying section 1.401(a)(26)-5(a)(2) to determine whether the cash balance plan provides a meaningful benefit. In this case, the NHCEs do not receive a benefit from the cash balance plan. Since the offset does not apply to all participants, in order to satisfy IRC 401(a)(26) the cash balance plan must demonstrate that the net benefit is meaningful after the offset from the profit sharing plan. Similarly, if the offset is not uniform, such that a greater percentage of the profit sharing plan allocation is used to offset some employees, and a lesser percentage of that offset is used for other employees, the plan will fail Reg. section 1.401(a)(26)-5(a)(2)(iii). Here again, the cash balance plan will need to show that after all offsets the plan provides a meaningful benefit (.5% per year of service) to at least 40% of all non-excludable employees." What sparked this response from her was designing a plan very similar to what appears to be written above. Thought I'd share this in hopes that it would give you some guidance although the previous posts are very informative already.

Does the plan document state that the period to determine compensation to be used is annually or monthly?

Here is a link to the IRS website: The Fix Is In: Correcting Plan Mistakes - Correcting a Failure to Implement the Plan’s Automatic Enrollment Provisions http://www.irs.gov/retirement/article/0,,id=212043,00.html Hope this helps.

Is the new manager considered an hourly employee? If so, then the answer to your question is no but not for the reason of her being a non-resident alien. If she is considered an hourly employee, she's excluded for that reason.

If the document states that the employer profit sharing contribution is discretionary, how could Fidelity tell them that they're required to make a contribution for any year that's not top heavy and the KEYs (not HCE) are not contributing? Employer profit sharing contributions are tested under 401(a)(4) - unless it is a design-based safe harbor formula. ADP/ACP is the exclusive means of satisfying the 401(a)(4) non-discriminatory requirement for 401(K) deferrals and 401(m) match. I don't see how an excise tax would be due if there is no required contribution (not subject to Code Section 412) or stated in the document. Maybe you haven't listed all of the facts or someone has given you bad advice? Hope this helps.

See Part IV, Section 8 and Section 9 of Rev. Proc. 2008-50. There are several factors listed there to determine whether the error was insig or sig. If it was significant, it has to be corrected (or at least substantially corrected) by the end of the "correction period". Correction period is defined in Section 9. Hope this helps!

Nonsense, Poje is being modest. Heard him speak at ASPPA once, he wrote the book on this stuff. Even Sal Tripodi has to seek Poje's approval to ensure this thinking is correct. I agree with ERISAtoolkit. Tom Poje is always very modest. I have the book that he wrote and LOVE it and use it every day. Go Tom!

If you use a Relius document: The IRS position is that using a separate trust destroys automatic reliance on a pre-approved plan unless the separate trust was specifically approved for use with the plan. [Rev. Proc. 2005-16 permits minor changes to the trust or custodial provision of a nonstandardized or volume submitter plan, but it does not permit the entire replacement of the trust provisions with a separate trust.] Relius submitted a specific list of trusts as a courtesy to their clients. The IRS has approved a list of trusts for use with the SunGard Prototype and Volume Submitter Defined Contribution Plans. It does not matter whether the plan being used is based on the Corbel or PPD documents. The IRS does not issue formal approval letters for the separate trusts. Rather, the IRS merely retains the trusts in the file containing the SunGard pre-approved plans.

A small excerpt from Janice Wegesin's website concerning your question: "Presumably IRS will accept the prior version of the form through the end of this month, allowing software providers time to update their products. Unofficially, the IRS generally permits the prior version of a form to be used for a minimum of 90 days unless they indicate otherwise." This statement was printed July 8, 2011. The title of the article is "At Last! Form 5558 Rev. June 2011). [http://www.irs.gov/pub/irs-pdf/f5558.pdf] Hope this helps.

Take a look at a previous discussion regarding this topic: http://benefitslink.com/boards/lofiversion...php/t24173.html Hope this helps.

That was very refreshing and a nice break from work! Thanks, DR

No. An offset arrangement requires the existence of a DB and DC where the DC is offsetting the DB benefit. (Never the other way around)

An offset arrangement is a type of defined benefit/defined contribution combination where the benefit being accrued in the defined benefit plan is being offset (or reduced) by the allocation being earned in the defined contribution plan. So, if a person had an accrued benefit of $600 per month at NRA and an account balance of $10,000, the account balance in the DC would be converted to a monthly benefit and that amount would reduce the benefit to be received from the DB plan. Unless your employer sponsors a DB Plan, I think it's safe to answer no to that question. If a DB is sponsored, I would evaluate the compliance testing for further details.

These questions are related to section 23(d)(3) of the Corbel DB non-standardized adoption agreement and section 5.2(j) of the Corbel basic document of the adoption agreement (EGTRRA updated). We are adding an employee as a participant pursuant to the above provision of the document. Questions: (a) Is the accrual calculated using the accrual rules as adopted in the adoption agreement? (b) Can this be just a one year accrual, i.e., for next year, if the plan passes the test without this particular employee, can we exclude him at that point? © Do we count him as a participant in the year of failure or in the year we are doing the correction, i.e., do we need to calculate a pension contribution for him in the year of failure or in the year of correction? Any guidance would be greatly appreciated!

AndyH, at the risk of asking a silly question... does your situation meet the exception mentioned in 1.410(b)-(5)(d)(7)(ii)?"(ii) Exception. Paragraph (d)(7)(i) of this section does not apply if early retirement benefits with average actuarial reductions described in that paragraph are currently available, within the meaning of §1.401(a)(4)–4(b), under plans in the testing group to a percentage of nonhighly compensated employees that is at least 70 percent of the percentage of highly compensated employees to whom these benefits are currently available." No, that is what I meant by "(which does not apply to my situation)". The percentage for purposes of this exception is well below 70%. This is why my situation is not common - there needs to be both heavy early retirement subsidies restricted by age and class exclusions. I think you wrote "which does apply to my situation". Either way, its a difficult topic. Sorry I couldn't be of some help. Yes, sorry for the confusion, I just noticed that myself and corrected it. Thanks for your comments. It is a difficult question. I don't think a lot of people know about this rule. I was told once to never give up... This may help you: http://www.irs.gov/pub/irs-utl/d9240.pdf Page 32 and 33, particularly.