thepensionmaven

We took over a DB plan a few years ago and obtaining the last Valuation Report as well as SB was like pulling teeth (and we are not oral surgeons). The participant in question has terminated and client looking for me to calculate the amount due, through a current date. Upon his review, he's telling me the prior actuary counted a part-time employee as full time (1,000 hrs) for two years. Of course employers always complain the participant is getting too much money, but according to these new facts (and he supplied the hours worked for each year) the participant's place on the vesting schedule is lower than reported by prior actuarial firm. Instead of being 60% vested per the actuarial report, she is actually 20% vested. My dilema - should I redo the calculations with the correct information (my actuary's opinion) or "what's done is done" as per my ERISA attorney. Regardless of what the client "wants", if the plan is audited by IRS, they will consider this an operation failure and sanction the client.

I agree with you, but accountant and attorney insist as one of the trustees may have acted imprudently.

OK, but not to beat a dead horse, shouldn't the new plans be dated in 2022, not 2021? Not sure. TX.

Do you realize that by making these transactions (that the clients' accountant should be doing) you've become a plan fiduciary??

CuseFan, that was my first impression, thanks.

Yes, it IS possible, but per the attached, an extension either for the business or the plan (Form 5558) needed to be filed prior to the due-date. IRS announces tax relief for New York victims of remnants of Hurrican_ - www.irs.gov.pdf

Plan sponsor name changed from XYZ PC to ABC PC, one is a continuation of the other, same EIN. Original plan terminated, three new plans set up, one for each owner, one for employees. Would these be considered "new plans" and thereby following the above-mentioned cite from the EOB.

Sort of, but my question was two fold. I'm asking about the Sponsor, not the Plan(s). The original plan will be terminated and three new plans established in 2021 for the 2021 contribution, will be made prior to tax filing deadline as mentioned. As of this date, all monies are in the existing plan under the sponsorship of the "previous name" of the Plan Sponsor. The question is, who is the sponsor of the 3 new plans? Certificate of Incorporation dated 3/2022 refers to the name change of the sponsor, same EIN. New Sponsor is a continuation of the previous sponsor. We were thinking of keeping the name of the sponsor as it existed in 2021, to preserve an audit trail with IRS as the contributions have already been made under the name of the "previous employer," but no money transferred to the three new plans that have already been set up.but since they are really one in the same. I'm extremely (overly) cautious with all the IRS audits, especially with my ERPA designation, and want to be consistent. The "amended name" sponsor is currently applying for a fidelity bond and they are asking for the name of the Sponsor of the Plan.

Sure. I have the TAG spreadsheet, it was rather comprehensive, and just for controlled Groups. Perhaps wishful thinking, maybe TAG has one for ASG. I'm not a TAG client anymore, so I can not ask.

Reviewing my client's W-2s, I noticed box 12, Code "C". Not seen this before. Looking at the instructions, this is the cost of employee portion over $50K of coverage? Would this be considered a "fringe" benefit, to be added back to W-2, similarly to employee contribution to 40(k)??

What about any 1099Rs? How can you say the plan is "terminated" and issue no 1099-Rs? Even if you claim a trustee to trustee rollover, IRS still requires 1099-Rs. That would be the only issue standing in my way of doing the above.

Three separate plans, one for each dentist so they can invest to their heart's content, one for the employees with individual account for each. Original plan will be terminated, but we're not sure about naming of sponsor of employees plan as original sponsor existed on effective date of the new plan 1/1/21. My gut feeling is that the sponsor of the plan for 2021 should be the old PA, change the name and EIN for 2022 as the new sponsor did not exist until 11/1/21 and the deduction is for the 2021 tax year.

I have had the same issue ad infinitum in the past, have used the new sponsor name and EIN, and noted Item 4 with the name of the prior year sponsor. IRS has sent the client notices, which we have answered, they send another notice and an invoice from IRS for a delinquent filing mentioning we have not replied. This has taken many months to clear up -with IRS Notices and our responses; and many irate clients. Who do you think they blame - the TPA. Recently we were informed that we should either send or fax IRS in Ogden, UT informing of the sponsorship change, enumerating old sponsor with EIN and new sponsor with EIN. Apparently Ogden is the one to make the change. Perhaps this has worked as there have been no repercussions... or perhaps due to COVID (and the Hurricane Ida extensions), IRS is backed up.

We currently administer a profit sharing plan sponsored by a dental professional association. No individual accounts. Two trustees, one retired and a replacement was named November 2021 and as of that date, ownership changed to new PA. Under SECURE, we set up three separate plans, in name of the PA as it existed on 1/1/21 - one for each trustee, the third for the employees, effective 1/1/21 as the PA is on extension. All contributions have been made to the existing plan in order to coincide with the existing PA. The existing accounts will be transferred into their respective new plans with individual accounts in 2022. One of the trustees is itchy that the new plans were set up under the old PA, we told him it had to be this way as the new PA did not exist on 1/1/21. Since the money will not be transferred until 2022 and we are applying for a fidelity bond, and the bond will not cover prior acts, who is the sponsor and in whose name should the accounts be under? As of now, the new plan is set up under the name of the old PA but probably will not be funded until individual accounts are set up with a carrier, prior to the due date of the PA tax return.

Thanks, I attended the ASPPA ASEA webinar yesterday and the speaker had an excellent flow chart.

Sad but true, thanks. I was thinking about designing one with all the possible permutations in my spare time (whenever that is).

Does anyone know of an Excel spreadsheet for ASG determination?

One of the accounts has inquired about a QACA SHNE 401(K) for a huge home health care agency, composed of office staff, home health care workers, and nurses. From what I'm reading from ERISA Outline Book, but possibly incorrectly, each group can either be in one plan or 3 separate plans - as long as each class has a uniform percentage, with a minimum of 3%. All requirements for safe harbor status will be met. Each plan would need to pass 410(b)? I do not believe the plan could be effective mid-year as the 30 day notice was not met, but to be effective for 2022, as long as the plan is set-up, doc prepared and signed by 9/30. No profit sharing.

As well,but would prefer DB plans. Please email me steve@thepensionmaven.com

Perhaps I am misreading, or just plain not familiar, but § 1.402(c)-2, Q&A-3 seems to say the distribution of a loan offset amount is an eligible rollover distribution and Section 1.402(c)-2, Q&A-9(b),the accrued benefit is reduced by the amount of the loan offset in the event of the employees' termination of employment. The employee is terminating employment and will be working for the purchaser of the company as well as the current plan will be terminated. Reading 402(c)(3)(C)(ii) as well as Section 1.402(c)-3(a)(2)(iii)(B) of the QPLO proposed regulations, it would appear that, due to this circumstance, the loan is a QPLO and would be treated as an eligible rollover (and not taxable as his account balance is being reduced by the amount of the outstanding loan balance. If the above does occur, I don't see anything that states the rollover distribution (account balance less outstanding loan). Or are we saying the reduced account balance does not obviate the taxable loan balance and the only way this would be non-taxable is to have the buyer's plan accept the loan?

Participant wants to pay off the loan by reducing his account balance by the amount of the outstanding loan. Is there a cite that mentions this can or can not be done?

That makes more sense, thanks.

Perhaps incorrectly but I read the wording that if the amount of the loan offset ie the outstanding balance of the loan, is rolled over to an IRA or another employer's plan - not speaking of an in-kind transfer of the loan- the loan in effect would be cancelled, but then again, how can you rollover a loan amount that is not part of the account balance? in my example above, does not that mean he rolls over the full $17,000 and the loan is in effect, cancelled as you can't rollover money that is not in the plan? Or am I totally off base and reading incorrectly?

Mine as well, I asked for a copy of their plan. I suppose that "distribution of all benefits in accordance with plan terms as soon as administratively feasible after the termination date" would cover the 60 days if the buyer does not amend their plan.

Sounds good, I have one-life plan that is severely overfunded due to the fact that she froze the accrued benefit quite some time ago anymore due to cost consideration and a downturn in business; there is $1M plus in the plan. We were told by the EA you can only roll over to a QRP up to the 415 max each year for 7 years max.