rcline46

I had the same problem earlier this year, but HCE was owner, and the answer was NO - restriction not removed (also a 436 restriction in the plan). Do a thread search on death restriction and see what you find.

Its only a pain to you when you do it for free. If it becomes painful enough for the ER, they won't do it anymore - get my drift?

Use full yield curve calculation - helps some, pick a good month! Even for 2009 you can still do it.

An ongoing DB plan can only pay an annuity of some type as an RMD - search for threads from about two years ago.

Gary, if this is for a qualified plan, you must use the monthly factor times 12 for annual. I don't remember where it is, but the IRS was rather firm about it when discussing distributions.

Trustee to trustee transfer. Bet it is in your documentS, yes plural. Not under distributions, but usually found in the trust section!

yes

Not have adopting employers sign in a controlled group/affiliated service group situation is a no-no, a serious situation because you have participants in the plan who are not employees of the adopter of the plan - should be EPCRS for retroactive amendment. But you only said related employers without specifying. THey can be related and NOT part of a CG/ASG! And the one you said was NOT related. This makes it a multiple employer plan and if the plan is a prototype plan (standarized OR non-standarized) the plan cannot be a multiple employer plan. Not only that, but the unrelated employers must have ALL testing done separately. Likely this has not been done, so X number of years of testing and maybe corrections need to be done. So yes, you have a VERY BIG MESS. The company administering the plan has LARGE LIABILITY, potentially depending on their service provider agreement and information provided to them. THe plan sponsor(s) also have problems. Can we of assistance here - I see some really nice fees!

I do not see any such limiting language in the prototype basic plan document.

This is where you MUST read your document carefully under ACP corrections. SOme documents have language in them that you do not contribute an amount which will make the ACP test fail! Read the entire section.

Lori, you do change ownership from the plan to the participant, of course. This makes a distribution of the policy and taxes are owed.

Belgarath, and Lori - If unincorporated then the 'contribution' attributable to the cost of insurance was also not deductible. This leads to a real bag of worms, doesn't it. THe net effect we used was to deduct the premium and then issue PS58 because that seemed to 'undo' the deduction. But that was MANY years ago, so I might have forgotten something. In any event our advice on recouping the PS58 was and is to always consult with their tax advisor. Of course almost no CPA or Tax Attorney knows the final answer to this! And of course even if audited I doubt the auditor could figure it out.

Dig out Rev Proc 2008-50 and read the section. It offers the options.

Insurance policies cannot be rolled into an IRA. However, accumulated PS 58 costs form a basis against the cash value of the policy (ie the PS 58 costs are recovered tax free). It is probably better to take the policy and enough cash to pay the taxes and keep the policy and roll the balance into the IRA.

I was probably already out the door! Besides, the booths were closed on Wednesday. That is good news - If passing 410(b) by using the ABPT, no gate way. Makes some sense because you are looking for 70% on the plan as a whole, and including deferrals in the test. No deferrals included in the a4 testing. I hope SAI's tester got it right.

You know how I hate to quote regs - but here goes.... 1.410(b)-5(d)(5) - Determination of employee benefit percentage.. This references directly 1.401(a)(4)-8©(2) (amoung other sections). Going to 1.401(a)(4)-8 you immediately run into gateway. Of course when written for 1993 there was no gateway, that came into -8 later. I don't think you can get to 8© without going through -8(a) and have to introduce gateway. I am willing to be disabused of that if you have something else.

Austin - if you are trying to pass coverage using the ABPT instead of the ratio percentage test you could get caught in the gate way. SAI - you said you used multiple tests - Austin's suspicion may be on target because you can get past 410(b) by permissively aggregating plans until you get by coverage. I am suspecting you are not getting by 401(a)(4) on a benefits basis from your question. This is where life can get really tricky. I also assume you are NOT worried about ADP/ACP testing, only profit sharing testing. YOu have accrued to date rules to use as well as annual - many forget the accrued to date because most software cannot do it, you have to work by hand. You have multiple definitions of compensation (if your documents are good enough) which can be very effective. Within your permissively aggregated plan, you also can do component plan testing to get by 401(a)(4). This is really cool and totally arbitrary. See 1.401(a)(4)-9©. YOur situation may not be hopeless, but your client must be ready to spend money on testing. It will be less expensive than the contributions you are looking at.

Yes, but it requires a document amendment, and cannot be do this year. Effective 1/1/2011.

The question is why they don't want the prior TPA to terminate the plan. Best guess is they thought it was too expensive. The other TPA may have insisted on filing with the IRS - which is strongly recommended with 412(i)/412(e) plans, and the client is trying to be cheap. YOu really need and actuary to do this - you have problems you are probably not aware of, such as correct valuation of the insurance products, 415 limits on the distribution, possible waivers if short. Lots of stuff. Hope you are billing by the hour and not a flat fee.

Read your FInal 415 amendment for the answer to your question. It is spelled out in that amendment exactly what happens.

Permissable - yes. must be valued every year, must be kept in a secure facility and a host of other problems.

Cash balance only works first year, then PPA takes over and voila - cost starts deviating from the cash balance formula and it is as if you were back with a traditional formula - such as a career average plan.

Jim Holland is no longer at the IRS. His infamous 10 year phase in of benefit increases went away and , imnsho, so will this. It is impossible to determine and calculate (or at least extremely difficult) and so likely to be ignored by (many, most, all - pick your answer). I do not think it is in any regulation or notice that can be pointed to with authority.

If you go to www.irs.gov - it has an excellent description of all types of plans. It is a very good resource.

What does the document say about the use of forfeitures? They may have a failure to follow the terms of the document.