rcline46

Sounds to me like the broker is trying to get a fresh commission. Now the hospital cannot intervene, but they can say we have enough vendors, we are not adding a vendor. Also, there needs to be 404(a)(5) disclosure of fees even in a 403(b) since it is sef directed. If it is a broker, it is a custodial account. If we are talking about an insurance (annuity) contract, it is an insurance agent, and new contracts give very nice commissions. There are insurance regulations against twisting. You have uncovered a dirty little secret about 403(b) plans - fees are much worse than 401(k) plans and there is more room for unscrupulous players to operate. Not saying this 'broker' is one, but now a second move to an unapproved vendor? what is wrong with the approved vendors? Just saying.

What you have are six un-registered mutual funds amoung which the participant has choices. The broker must reveal his fees, as well as reporting all fees (buy/sell) or commissions each quarter. He is not permitted to 'net' to a gain or loss. This set up is not a self directed brokerage account as the participants do not order the buy/sells. The broker has full discretionary (ie FIDUCIARY) control. And since the participants can choose from only 6 choices, all would be considered a DIA. For fee disclosure you have managed to have the worst of all worlds.

You also have to make sure the K-1s issued are EARNED INCOME and not PASSIVE INCOME in the holding company.

We do not put the fail-safe provision in ANY plan. We want the flexibility to use any correction method.

Not distributing inside of 12 months after terminating the plan is a problem, and illiquidity is no excuse. The IRS could have a problem with the 3 year delay and say the plan was never terminated. If so, I sure hope you did a plan freeze. Oh, you want to count the accrual years. Well, you could not with a plan freeze. Your only hope is unfreeze the plan and rescind the termination, figure out how to file the SBs for the missing years without incurring penalties, and then you can have what you want. Otherwise, I think you are up a creek without a paddle.

If the amendment was signed by an appropriate officer, say the president or any other officer who can sign contracts for the organizaion, then I would accept it. After all, a plan is a contract. In recent years, the only time I have seen a resolution being required by the IRS is for plan terminations. Have not been asked for one on 5307s, VCP submissions or anything else.

So what if pvab is greater? The ILP amount is only to determine the maximum premium, nothing else.

I had to add 'not' to my prior post. I understand your question - the participant had to be still employed.

I think the process is like this: Top Heavy in a DC plan is given to anyone who is a participant in the plan at year end (no hours requirement). If you terminate a plan prior to year end, the no one would be a participant at year end. However, the Final 415 Regulations introduced the concept that the plan termination date creates a 'short year' requireing the normal pro-ration of certain items and also treating the termination date as if it were the year end. This then creates the need for a Top Heavy contribution. Note: this 'short year' is not treated as a short year for 5500 purposes.

We have successfully removed many plans from PBGC coverage once all employees have been paid.

OTOH, I think you can stop the discretionary match at any time. I do believe you should give notice to the employees that the match is being stopped, especially if your document says it will be made on a per payroll basis. I do not think, nor have I ever heard of this being challenged on a definitely determinable basis. It was determinable while being given, but an allocation of -0- is also definitely determinable.

Does any have a format to share, or directions to, the current FAS 87 (I know, it has been renumbered somewhere by the AICPA) report for defined contribution plans? Apparently the CPA for a client no longer will do it, or they changed CPAs or something. Thank you.

1.401(a)(4)-7(b)(2) for allocations rate, -7b3 for accrual rates.

Assuming the freeze was done correctly (hard freeze) the employee never becomes a participant in the DB plan. I am making assumptions also as to the entry date as defined in the document and so forth. How do you give an accrual to someone who never entered the plan? Top Heavy only applies to plan participants. Top Heavy for a person in only the DC plan when there is a DB plan is 5% when not a participant in the DB plan. Gary implied there was also a DC plan. I am not aware (but willing to learn) where it says the employee must get an accrual in the DB plan when they are not a participant in the DB plan.

You need to explain to the client that the PVAB is calculated according to 417(e) rates published by the IRS, and that the PVAB is not a guaranteed benefit as it is subject to interest fluctuations, and upon a person terminating it must be calculated to the date of payment. Showing it on an annual statement provides misleading information to plan participants. If necessary, get your actuary to explain it to the client.

Does the plan have any requirements for receiving the contribution such as a 1,000 hour requirement, or an end of year requirement? Once the money is in the participant's account, you cannot then forfeit it to pass testing, the only 'correction' would be to add contributions to other accounts. What does your document say about people who may change groups during the year? Details are needed to receive an answer that you can use.

No loan can exceed $50,000, so this whole discussion may be moot.

Of course, land in a plan is usually a VERY BAD choice for lots of reasons. Read prior threads on this issue and make sure your client understands the very real issues. Your client may nave good intentions, but remember the road to h e double hocky sticks is paved with good intentions, and that is where 99% of plans with real estate in them end up.

Who has the power to appoint the board members? If the same entity has the power to appoint (a majority) of each board, you fit in nicely.

I cannot believe the incredible amount of mis-information and mis-use of terminology used by the broker and participant reported in this thread. Even the immediately prior message by MEGK - there just is no such thing as an annual SPD. Maybe an annual SAR, but not an SPD. In any case, the sponsor MUST provide the documents in 30 days.

Now, if you want PBGC coverage to get the big deductions - so the premium is 3 X 3 X 25 or $225 and no big deal. So do you want in or out? At least in this case you get a choice!

So far, correct. Why not have the daughter buy an option to become an owner? Then no PBGC coverage.

I think if the redone doc was effective in 2011 as you indicate, you use that document if you are testing for 2011. It does not matter what the previous doc said. However, you company at least, and that would imply you, should have access to ALL prior docs and amendments at least back to the GUST restatement. It is legal to delay the SH NonElective or Match for the 1 year, but then that brings TH and testing back in for those not subject to the SH contributions.

The owner and beneficiary of a policy in a DB plan must be the plan. The beneficiary of the plan's benefit (which then includes the proceeds of the policy) can be anyone permitted under the plan rules. The agent is correct.

Just being a non-responder does not necessarily trigger the ability for an automatic rollover. You have to be sure the address used is correct, and if so, your communication must specify (including the rollover holder) what will happen if they do not respond in a 'reasonable' time frame. If not sure of their address, need to use some documented method of trying to locate them. (IRS locator, private locator). If a DC plan without annuities, I think 411(a)(11) provides what you want without amendment.