ESOP Guy

It will require more cost as it will require the help of a lawyer but it would seem you would get a better result if you made a trust the beneficiary and use the trust to divide the assets. Just spitballing ideas here.

The reason you can't find a citation is because I doubt it exists. It is simply you must always run a plan in accordance with the law and plan provisions even if you have executed an amendment to terminate the plan. The RMD provisions are still in the plan and still in the law.

richw68: Think of it this way. Up to 2/28/2011 the account was yours but your then wife had rights in it. On 2/28/2011 in a perfect world if everyone had perfect knowledge the accounts would have been separated into two accounts and your ex-wife would get her share. Her share as of that day would have included contributions made on your behalf up to that day plus any gain/loss. Then after that point she would have gotten her earnings in her account and you would have gotten your earnings on your account. Every thing would have been separated and fair in everyone's mind. But we don't live in a perfect world. So while there was only one account in reality it had two parts. Part 1 is your part and Part 2 is her part. What Fidelity is doing is now trying to come up with what Part 2 equals. They are trying get both of you to a point that is neither better or worse off then if the accounts could have been split on 2/28/2011. Hope that helps. (Edit note: I appear to have written this while richw68 was adding his reply.)

I have never seen expenses paid years in advance. I have seen expenses prepaid. The most common example is if the plan tends to pay the expenses and the plan is terminating. Many of the TPA firms I worked for required a payment of most of the costs of the final work up front. They got burned too many times of issuing final reports and never collecting. But the time spread was months not years. It did at times cross plan years. But most people didn't worry about timing of allocating the expenses as no new people were entering so by and large the same group of people paid early as they did if it had been later.

jpod: I have never thought of it in those terms. To me this is more an issue of pension people tend to only look to JUST pension law and if it allows an action to think it is allowable. This type of transaction very well could be allowed under pension law. But a contract is also a contract and you can't just ignore it because pension law says the breach of contract is legal. If the note says the note is due upon termination with XYZ corp and the person terminates the note is due and it can't be rolled to the new plan-- not because it isn't allowed by law but because there is no long a loan to roll-- it is due. Likewise I have seen plenty of notes the explicitly require the payment be made via payroll deduction while working for XYZ Co. Once again how does that work if they now work for ABC Co. Maybe you can get an agreement to assign both parts the loan and the payroll deduction. But at a minimum that would seem like the promissory note needs to be reworked. Is the reworking of the promissory note now a refinanced plan loan? I just think this is more complex then people tend to think of it because they tend to think ONLY in terms of pension law and not the whole transaction from a more complete perspective.

Along the same lines as RPG one needs to look at the promissory note also. Many of the notes I have seen require the person to pay via the company's payroll. Also, I have seen plan notes that become fully payable upon termination. So while pension law may allow the note to transfer the note under contract law doesn't allow it because it is suppose to be paid via the prior sponsor's payroll system or became due upon termination.

I meant to reply but forgot but Marcus brought it to the top again. I agree with Marcus I know plenty of ERISA attorneys that don't have a problem with the change you are making. But to be honest I think it is at least a grey area.

QDRO: So how would you word the amendment?

Are you just looking for a company that can print, stuff and so forth? Those kinds of companies are in every town. Good ones can save you more money then it they cost if your clients have any size. Their ability to get you lower postage rates by presorting can more then save you the cost of them doing the work. If they are of any size you should be able to send them basic files and they will print the personal data on the forms and match the whole thing up. If that is what you are looking for I would look for local businesses that can give you referrals. If you are in or near a urban area of any size you have local firms that can that kind of work.

QDRO: I like the amendment idea. If nothing else going forward you could write in the allocation section of the document that the 1,000 requirement is waived in any situation where that requirement conflicts with local labor laws.

I think MoJO has the right answer. Terminate the plan convince the people (or at least anyone who is a HCE) to take a taxable distribution. It sounds like the plan is too flawed to save. You then hope that one can run out the statute of limitations clock on the mess. edit: fix minor typos

We have an ESOP that covers a Canadian employee. She is on maternity leave. She did not work 1,000 hours. The plan requires one to credit someone on maternity leave with enough hours to avoid a break in service. But you aren't required to give enough hours to put her over 1,000 hours if she did not work it. But they are telling us Canadian law requires us to give her a contribution. What do you do when another countries laws appear to require you to violate the terms of the plan?

Double check the plan language it usually defines how the price for the put is determined. But in the end I don't know how they can show a price $8/share on the certificate and then pay $0/share. If they are putting $0/share on the certificates then they better be able to justify why they are not using the appraised value. This is the type of behavior the DOL loves to catch and beat people up over.

I will join the others in this-- you can't take the benefit from the person. They have earned a benefit under the plan and it is next to impossible to take it from them. You simply have to find out their correct SSN and id and change the account to reflect that information.

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.