ESOP Guy

I guess I am curious why you don't think password protecting will not cut it any more? I ask because we use that alot.

For what it is worth I once worked for a company that had a requirement that one had to be deferring on Dec 31 to get the match. Every few years someone would get mad when they figured out that they had stopped their deferral in Nov/Dec time and was not going to get any match. So I suspect this can be done. Just not sure it should be done. Have they thought through the following facts? What if someone sets to def on Dec 31st of the prior year and on Jan 2nd set it back to zero. Unless a pay day happened to fall exactly right nothing comes from a person’s check, but they were deferring on the 1st day. They do that to preserve their right to a match if they decide to defer latter in the year. This is just one of several wrinkles one could come up with to make this idea a pain. I guess to preserve your right and make it more clear you one could defer for the 1st pay check and then stop. I am just editorializing here, but this is yet another example of a plan sponsor making a provision that could make the plan too complex. Sometimes keeping it simple stupid works.

Google can ruin everything, even a good riddle http://answers.yahoo.com/question/index?qid=1006052402489

I have found these guys charts on this topic a real help. http://www.keeblerandassociates.com/files/...down%202011.pdf

And while there isn’t an explicit requirement to get the assets appraised by an INDEPENDENT appraiser in this case it isn’t true that the assets don’t have to be valued. Only ESOPs are required to have the INDEPENDENT appraiser, all plans are required to know the value of their assets. Knowing the value of the assets is the job of the trustee and fiduciaries. I will grant if there are no distributions/loans etc going on there might not be an meaningful impact on the plan. Some of the Fiduciary experts (like Peter Gulia) might be able to give us better insight in how serious of a Fiduciary violation this is. Come on Peter you like giving quizzes can you help answer this quiz? But if they want a loan how do you know what 50% of the account value is without a recent appraisal? You will need to know the value to compute a correct RMD also. This sounds a lot like a ROBS, link below talks about them. The IRS has just announced recently that they are giving ROBS even more attention. Also, without the independent appraiser you have to answer the question on the 5500 admitting that you did not get the independent appraiser. Every client I have, very small number, who we put answer that way gets a letter from the IRS asking about it. And they ask a ton of questions on how the value is being set. They will not like the answer we are not valuing it. I strongly recommend they come up with a rational way to set this investments value every year and change it to reflect those fluctuations. link about ROBS http://www.irs.gov/retirement/article/0,,id=231594,00.html Edit: I believe all document would require the trustee to know the value of the assets in the plan so gains/losses can be allocated properly. So failing to value assets could be a failure to operate per the terms of the document.

The best rule back then was the carry forward of the unused deductable limit. I saved more than one client from huge excise taxes after they put more than 15% of compensation into a plan. If the company had been around for a while there was almost always a year they hadn’t put the 15% in so they had a carry forward. So they got to deduct the excess and not pay the excise tax for taking too large of a deduction.

Even the IRS only goes back to 1989 http://www.irs.gov/pub/irs-tege/cola_table.pdf

Did you talk to the DOL before you had the client reset their PIN? The EFAST2 help phone line is very helpful. Although I have never called on a day like 10/17 (10/15). They might have been able to help explain what it would have taken to fix the process stop error with less frustration. But with our clients the more common fact set that caused what you said happen was as follows. The client set up a Userid, they got the PIN and stopped the process. They had their PIN. But the next step in the process is set up a password. Without a password the PIN is useless. So if they then go out and go through the process to reset the password it gets them a valid password and now the PIN will work. So we now emphasize to our clients to make sure they have a valid Userid, PIN and password. The best way to do that is to have the client logon to the EFAST2 website under their userid. If they can do that they have a valid userid, PIN and password. We also encourage them to print their user profile page as it has their userid and PIN on it. So that gives them a hard copy of the PIN they can file and reference next year.

I am not sure that a profit sharing contribution can’t be put into the plan before it is allocated. I handle more balance forward PSP than daily. But you see a pre-paid PS cont on a regular basis. They can’t take it out of the plan once put in. I don’t understand in a daily environment putting it in a fund that can lose money either. I am not aware of a rule that stops a PS cont from being put into the plan throughout the year. In ESOPs this happens all the time. The ESOP loan is paid monthly for example, but the allocation of the contribution to fund the loan payment is made as of the last day of the plan year. I am not aware of a special rule that makes ESOPs different than any other DC plan’s ER contribution. As an alternative idea for the client that no longer wants to fund a contribution. Does the document allow for the plan to pay expenses? Does the employer normally pay the expenses not the plan? If “yes” to both of those questions you could allocate the contribution and allocate the expenses to the people. The two won’t match up perfectly as the allocation methods are most likely different for the two types of allocations. But it would allow the client to reduce their future out going cash flow for the plan and be within the law. Not a perfect solution but an idea.

GMK I don't think the 80-120 rule can apply here. The rule has two parts: 1) they have to have between 80-120 at the beginning of the year 2) AND filed as a small plan in the prior year This plan did not file as a small plan in the prior year. It didn't file at all in the prior year because it didn't exist. So it starts as a large plan. So Tom's comments are applicable.

We use Pension Reporter, but we are not having that problem. Once submited we can find them on the EFAST2 website within min. Not trying to ask the stupid question.... Have you double checked you didn't get a fatal error on the filing?

I don't think the document needs to say anything about this situation. If on the day the payment is made if the person is rehired the payment can not be made. So depending on how long it takes for the payment to be made will drive how long the person has to stay unemployed. I have seen this before. Not saying it is right.

We use Datair's Pension reporter and starting about yesterday the system is clearly be stressed by the last min. filers. So I feel your pain if nothing else.

TPApril I would agree with your numbers. As an aside remember it is fully corrected. Around here since we often times don't know about the late deposits for 2010 until 2011 no earnings correction is made until 2011. And fully corrected means not just def deposited but earnings also. So with our clients it seems like a number is reported for a min of two years.

I prefer having them coded as earnings. I agree contributions is a bad answer. For John Hancock and Nationwide it requires a special process request. I believe there is a fee to have the special process request processed.

I am reviewing a Money Purchase Plan 5500. It would seem you would answer Q3, correct? Can Q4 even apply to a MPP? The instructions would seem to say there should be an answer to Q4 for a MPP. Thanks.

8/31 and 11/15

My understanding is "no" that is not a special extension so do NOT check that box. See this link. The Jan 2012 date is now the normal due date because they got the forms out. Although deep down I can't imagine they will do anything if you check that box. http://www.irs.gov/retirement/article/0,,id=117588,00.html edit: Even that link doesn't make it 100% clear. But I do think it makes it more clear the Jan 2012 date is the normal due date for those forms.

To me even if the money is put into the forfeiture account it ISN’T a forfeiture so you shouldn’t treat as such. It is a pre-paid contribution to me. You don’t see them as much in daily recordkeeping, but they are more common in balance forward. So to me you could simply short a future deposit take the missing money from the forfeiture account (as long as we are talking about the same amount). Example: If you were suppose to put $10,000 in deposit one, but put $11,000 into the plan. Put the extra amount into the forfeiture account for now. Suppose a few weeks later you are suppose to put $13,000 into the plan for deposit two. I would have the employer put $12,000 into the plan and take $1,000 from the forfeiture account to make everyone’s accounts whole. The problem is now solved and you don’t have to worry about returning money to the employer.

I believe you should check the promissory note also. If you are using one of the ones from a service often times they are written with the payroll deduction is part of the note. The note is a contract so a person may not always be able to stop the payment. Some are written such the only way to stop the payment is to stop being paid, i.e. terminate. I feel for this person. However, sometimes the law just isn’t kind. However, the plan has to follow the law anyway.

This has been hashed out a few times already. http://benefitslink.com/boards/index.php?s...amp;hl=8955-ssa http://benefitslink.com/boards/index.php?s...amp;hl=8955-ssa http://benefitslink.com/boards/index.php?s...5-ssa&st=15

You might want to check the document. Most document also tell you what to do if you have a lost participant. In many cases you can forf the money, but have to restore the account and pay the benefit if the person comes back. The hard part will be without a good SSN this person can't be reported on the SSA so how they will ever get notice to come collect seems remote. By the way before you declare the person lost you need to be able to document you searched for the person to a level that meets the DOL rules.

I am a little unsure of the timeline, but this might help. When you restate a document you are SUPPOSED to document the effective dates of all prior changes that affect the current plan back to the restatement date. Simple example: The most recent restatement signed in spring of 2010 was for a restatement that could be effective all the way back to 2002. So if one amended the old plan in 2005 when you write the restated document you are suppose to note in the plan the provision in effect from 2002 to 2005 and then the provision from 2005 forward. I have an ESOP document that was recently restated that in the eligibility section has three different provisions that depend on what years in the past you were hired. Those changes match up to the amendments to the old document. So I guess the question is did the restated document show the effective dates of the old provision and the new provision? If it does than that would seem to be how one should answer the question. By the way if this is a prototype you might want to search in the plan provision appendixes for the noting of the effective dates. We use the Relius document and there is an appendix dedicated to just those effective date changes. If it doesn’t note the effective dates of the provision changes it might turn out you have a poorly drafted restatement. In fact I have always understood it if you don’t note all those effective date changes in a restatement you have a serious document problem. But I suspect there are people who read and comment on this board that can speak more to that than I can.

Jim: It has been a few years since I used the Fire system. It was for submitting my client's 1099-Rs. The employer switched to out sourcing the printing of the 1099-rs and filing. But it is a very easy system to use and it wasn't that hard to get set up. I found the number to call for help useful. Obviously, starting late Jan through March everything gets busy as it is used for 1099s and other information returns. Here is a link to the IRS it gives links to the relevant Pubs. http://www.irs.gov/efile/article/0,,id=165534,00.html So far we at this firm have decided to just mail them to the client and have them mail it to the IRS since it seems like you need to get some kind of varification the client signed a copy. At that point is it really that much harder to have them put it in a pre-addressed envelope?

If by chance you are using Omni+ it wouldn't be too bad after you learn how to set up an Omni+ plan for web and VRU. I have no knowlege of other recordkeeping software and easy of getting it to communicate to a website/VRU. Have you talked to your software vendor. It might have a system to allow you to set up a website that is tied to your recordkeeping system.