ESOP Guy

I haven't used this firm for a few years now but have always like their service. They have a two levels of service one is a quick and easy online search. The higher level they will do a search that meets the DOL rules for a search and send you a closing letter to that effect if they don't find the person. Thus, you have something to document your search if you need to prove why you forf a lost person. http://pbinfo.com/address-location-service/

Again, not claiming expertise, but I think the combination of a tax-qualified plan, and a mortgage, is a classic UBTI situation. (Debt-financed income leveraging tax-favored money.) My memory is the same as Bird here. The leverage can create a UBTI. Now it is possible there isn't any income or maybe not enough to create a tax liability. But I think you have to at least fill out the form to know that. I would run this by an accountant. This really isn't pension law it is a tax law question and a CPA for any decent size will have someone who knows how to compute this tax and complete the form.

The important issue here is how they are segregated. It has to be in some kind of account in which the legal title is the trust and not the employer. One of the concerns these rules are trying to address is if the plan sponsor went bankrupt today could the sponsor's creditors get to the money. If the account the money is in is titled in the sponsor's name then the answer would be "yes". If the account the money is in is titled in the trust's name the answer would be "no", the money is no longer an asset of the sponsor.

CH93 is correct. You need to find out what they mean when they say they have segregated the assets.

Kathy: At a Sungard seminar a few years ago the person teaching the class suggest a similar strategy. It was a plan for everyone who last name started with the letter A-M and the other plan for N-Z for the same purpose avoid the audit. I didn't look in to it very hard at the time. But as far as I could tell it seems to meet the letter of the law. I however understand your concern. I will admit I don't want to give an opinion on testing. This is one of those topics I would want to research a good long time before telling anyone anything. Testing is too important to get wrong.

I am fairly new at my current job. They use FT William for 5500s. I have never used FT Williams before. We use the internet version. (Maybe that is the only version.) When the 5500 is all done and ready to be signed we send an invitation to the client to e-sign the 5500. When they do that it transmits to EFAST2. Here is the thing I find odd and I am being told by people here this can't be fixed and I wanted to double check to see if this is true. I get no notice if the form has been signed. To me if I were building this system I would have the system send out an e-mail to people who sent the invitation saying "client just signed". On October 15th I had to keep going out ever few hours to see which clients had signed and which one hadn't. Is there really no way to set the system up to get an e-mail saying client just signed? If nothing else I would like to know so I can double check it was accepted by the DOL or look to see if there are any issues. Like I said adding a feature like that seems so obvious to have I am hard pressed to believe it doesn't exist.

I don't do any of these any more. But as recent as earlier this year I worked with a firm that had 401(k) plans and ESOPs and I found that to be true just about every time. I remember one time a few years ago I did one for a Safe Harbor Dr. plan and I spend almost $700 of time to compute the Dr. owed the plan under $20 to the plan. (Lots of deposits late just a few days) And the ironic part of it all was because one of the late deposits was the one where he deferred his bonus he got around 80% of the earnings. So he was the primary "victim" of his own late deposit. Like so much of this field the rules were well intentioned and there can be real abuses that needed to be stopped, but they took a one size fits all sledge hammer approach to the solution.

12AX7 I did a few quick Google searches over lunch. Not sure if this helps or not. Look starting page 9. Not your exact situation but maybe that will give you a starting point. http://www.irs.gov/pub/irs-tege/5330_phone..._transcript.pdf

yes also

The IRS has lots of clarifications to make. Like and Like

Compensation limits are based on the the calendar year the first day of your plan year falls. In this case it was 11/1/2011 so you use the 2011 compensation limit to compute contributions for pye 10/31/2012. That first day rule is true for just about every limit with the very notable exception of the 415 limit. That is based on the last day. So you would use the 2012 415 limit for the pye 10/31/2012 calcs.

My thinking on amended returns is you only change what is being amended. So I would answer the question the same as you did the first time. To change your answer implies you are amending your answer. So in your case it sounds like the return was amended. If you don't check the amended box this time and I was an IRs employee (this is coming from a former IRS employee for what it is worth) I would interpret that to mean you really didn't have an extension the first time. You after all amended your answer.

I tried to find a cite for my position real quick but couldn't. I really was thinking the instruction to the 5330 answered your question but didn't find it. But my understanding is the correction is not done until all of the interest is paid. So the date of correction is the date the last of the interest is paid. My understanding of the logic behind that answer is the PT is the use of money and you are paying the tax on the interest. So until all the interest is paid you still have a PT.

GMK: You and my son would get along so well. The other day my son and his friends from AP chemistry were just laughing it up about this web site with chemistry jokes. His favorite was "did you hear about oxygen and potassium going out on a date? It was OK.". Some how I imagine that is up your alley also.

The whole withholding issue in this case can be a bit of a headache. Also be careful when paying the person. I used to work with a plan that had Latin Americans who would come to the US. They would earn a benefit. When it came to request distributions there were troubles with people stealing the payments. It got to the point where the company would only pay to certain banks that tended to be international banks with a US presents and put in place policies to help make sure the person picking up the benefit was who they say they were. One got the impression there was clerical staff in the local offices getting payoffs to help the thieves know when a payment was coming and getting needed data to make the theft happen. Although I have seen enough of these plans that if one is willing to learn how to do it right and can get the client to accept a bill to cover your extra time they can be worth it.

Oh now I get it you were referring to that weird "metric" calendar system used mostly by people who play the wrong kind of football.

Next MONTH there will be an 11/12/13?????????

The question is-- was this person termed or not. If termed RMD is needed if not no RMD. While what I am about to say isn't 100% this is how I try and help my clients with these kinds of issues. The problem is retirement law doesn't do a very good job of defining when someone is retired for these issues. On the other hand many other aspects of employment law do define it well. For example when he left and went on call did the company issue a COBRA notice about his health insurance because they thought he was terminated for that purpose? It seems to me it is hard to argue he is termed for COBRA but not for the plan for example. ( I seem to recall COBRA notices can happen besides termination so one needs to be clear on this one) Since he is in upper management is he in a non-equalized plan that only pays when he terminates and got paid? Once again it is hard to argue he is termed for one but not the other. I think you get the idea. Look and see how the company treated him outside of the retirement plan. Did they treat him as terminated and the coming back is a rehire, or did they treat him as an on call employee. If the company is consistent on this issue I think they have a much stronger case whichever way they go. Like I said not 100% but some times retirement people just look to our rules and that strikes me as too narrow of a way to look at the problem.

pmacduff: Not trying to state the obvious and not saying this is a good answer but..... If push comes to shove remember the rule is the assets merely have to be segregated not invested per the participant's investment elections. So the trustee could open a checking account in the trust's name and put the funds there until they can be deposited. Although if the gap between deposit and allocation to accounts gets long enough one could have someone raise the issue if the fiduciary is doing their duty right/well. Also, the 7 day safe harbor rule is just that a safe harbor. I forget the exact language in those rules but it does say something to the effect that the deposit has to be done in a reasonable time. The language to me at least opens the possibility one could go beyond the 7 day period and not have to put lost earnings in and not be in violation of the rule if there is a good cause. My fear back when I worked on 401(k)s was getting in a fight with the government over was what we thought was a good cause and if it was a good cause in their mind. Once again I am not saying anything about the new provider or saying these idea are great just offering ideas how to solve your client's practical problem of what do do with the 401(k) money until they can deposit it.

Your question is confusing to me. Did they not file the years AND there were people who are suppose to be reported, or did they not file because there was no one who needed to be reported? The 2nd part of your question makes it sound like there wasn't anyone who needed to be reported for the years in question. IF THAT IS TRUE there was no missed filing. You don't have to file an 8955-SSA if there is no one to report. If there were people who were suppose to be reported and got missed that is different. I suspect the "correct" answer is go back and file the right year's form and so forth. As a practical matter I would just put the people on this year's form and move on. I have never seen anyone get in trouble by doing that. But I repeat I suspect that is NOT the strictly correct answer.

I have told clients that the rules say any RMD regardless of size needs to be sent. I had one that sent the $1.50 RMD and I have one that refused to send the $0.75 RMD. I have always thought the solution is to amend the plan to allow the person to take their whole balance in those situations.

You could also just exclude people who are HCE's by family attribution from that part of the match formula. No one cares if you discriminate against HCEs.

QDRO I am more then happy to be told I am wrong. So are you saying all employees are party in interest, but since the question is about ex -employees they are no longer a party in interest? (which is clearly is what Mary22 is saying so are you agreeing with her would be another way to put the question.)

Mary22: Could not find anything quick that had a good cite and I have a full morning. But I did find an ASPA Q&A that seems to say what I am saying just doesn't tell you where they get it. Here it is: http://www.asppa.org/Main-Menu/confswebcas...11/docs/qa.aspx Look at the 2nd question down. This area this Q&A is talking about is why I have always understood participant as part in interests. There is a class exemption in the PT rules for participant loans. My understanding is the reason you needed the exemption is the general rule would lead you to conclude you can't make the typical 401(k) loan. Sorry, I can't help more maybe it will give you the clue to find more or more likely one of the people on the board that is really good at quoting the rules will help out.

Yes the owners account gets lost earnings.