thepensionmaven

We have a sole participant DB plan, the owner died, having taken one RMD from the plan. No distributions were taken in '05. Is the RMD for '05 calculated on his single life expectancy or the beneficiary's? The beneficiary is under 70 1/2. Would the beneficiary have to take a distribution prior to the rolloveer of the plan to an IRA, on whose life expectancy is it calculated, and why??? Thanks, Steve

A participant with a plan loan outstanding terminated employment. His account balance will be reduced by the amount of the oustanding loan. Assuming he will not rollover, is the 20% withholding based on the actual account balance plus the amount of the outstanding loan? Thanks, Steve

I'm looking for a sample 60 day notice to employees for a benefit freeze. Can anyone help? Thanks. Steve

Where can I find more information on the above Safe Harbor 401(K) Maybe Notice, and possibly a sample? Thanks. Steve

We have a client whose 2001 Pension Plan Return is under examination. Two plans, MP and PS. Two accounts for each plan. Two doctors, one term vest doctor and one common law employee. For 2001, max comp was $170,000, max contribution $35000. The two doctors made $14,000 contributions to the MP, $21,000 to the PS, each. The auditor wants to declare a funding deficiency for the MP because he says the plan is $3,000 deficient for each doctor. Quite simply, the doctors contributed the $3,000 in error to the PS plan. I can understand making the transfer to the MP plan, but not the $3,000 "deficiency" and payment of any excise tax. Anyone have any similar experience with an audit like this? Thanks, Steve

We handle a safe harbor 401(K) with the non-elective contribution. The principals have not deferred any amounts and probably will not for 2004. There are 4 other participants, all NHCEs but only one is deferring salary. Client does not want to make any contribution if he does not have to. Under what circumstances is the client NOT obligated to make a 3% contribution. Thanks, Steve

PC sponsors a DB plan which has been overfunded for years. He reached age 70 1/2 and was advised to take out as much as he possibly could in order to bring the overfunding down. Principal recently died after having taken a few distributions from the plan. The plan is overfunded on the GATT rates. What lump sum do we quote for the value of his portion of the pension plan as of his date of death for the estate tax return?? His share of the assets (it's only him and his wife in the plan) on the plan rates or the GATT rates? What happens to the overfunded piece- is it just gone to taxes? How does the excess tax get calculated? Thanks. pensiondoc

We are in the process of amending a defined benefit plan formula. Anyone with a sample 204(h) notice?

I believe K-1 income for an owner of an S- Corp can not be used as active income in determining the contribution for the owner. Pension Answer Book as well as RR 59-221 seems to bear this out. Recently, I was told that as long as the K-1 represents compensation for services rendered to the coproration, it is ok to use the K-1 for pension contribution. Isn't this in direct conflict with the Revenue Ruling and Penson Answer Book??

Are premium only plans subject to the separate trust requirement or can the employer pay any premiums out of their general account.

We have a client that set up a "cafeteria Plan" for 2000, which consists of premium coversion, med reimbursement and deendant care reimbursement. The only portion they have utilized so far is the premium only portion. I have only done 5500s for premium only plans, ie page 1 5500 and Schedule F. Would the filing requirements be the same?

Referring to "salary". Client setting up their own payroll system for cafeteria plan on something like Quickbooks, or some such program. Do they take FICA and FUTA before the salary defferral % is applied to compensation. If know that with a 401(k) contributions are subject to FICA and FUTA, but is it the same with a premium only plan? Thanks.

Is compensation for a premium only plan before or after FICA and FUTA??

I believe the client is speaking of a 125 flexible benefits plan. I have looked at the Flexible Benefits Answer book. Anything better out there??

I do not know terribly much about medical reimbursement plans, but have a client that wants to know a bit more. They want to set up a medical reimbursement program and wish to know how it works. I assume employee contributions, like 401(K) are withheld from pay. Where do these contributions go? When a physician asks for payment up front, how does the participant get reimbursed. Where can I get the "basics". Thanks.

We have a client that currently sponsors a money purchase and a profit sharing plan. Some of the participants have mention that they want a 401(k) plan; the client has agreed to amend the profit sharing to include the safe harbor feature, since he has alwys contributed more than 3% anyway. Rather than restating the whole profit sharing plan to a safe harbor 401(k), does anyone know of a simple snap- on type of amendment to add a safe harbor feature to a profit sharing plan??

Any amendments around to switch a profit sharing plan to a safe harbor 401(K) rather than amending the profit sharing to a 401(K) and then adding safe harbor language?? Just wondering if someone had a simplified way to do this, like a Board Resolution.

Our firm has been involved with a PBGC audit of a terminated plan for over a year. We have to pay out some additional funds due to changes in interest rates. Plan has been terminated, all accounts closed, some of the participants are not employees. How do the people get paid if there are no more plan accounts? From the corporation as non employee compensation, and then given a 1099 MISC?? It seems ludicrous to open up plan accounts when the plan has been closed for almost 2 years. I asked the auditor who told me "it is a legal question, and I do not have the answer."

You are correct. The principals can waive. Don't call it a waiver, because IRS does not like waivers; it is called "a non-discriminatory reallocation of assets". We have a form for this purpose. Must be signed by owner-participant and spouse as well as trustees of the plan. Both principals should waive if they are 50-50 owners. Assume you are not filing with IRS, although you did not say? If you are DO NOT file the reallocation papers with IRS. steve

I thought I had exhausted this topic ad infinitum prior to the October 15th deadline for calendar year 5500s. Please see those previous threads for any other help. In those threads, I believe it was determined that as long as the client got the 5500s in with a letter explaining why the forms were late (it was advised to blame it on software problems that were beyond control of the plan sponsor), the DOL would NOT assess any penalties. Basically, I believe the thought was that they realize they messed up, would not allow an extended extension because there is not provision in the law for it. The law calls for penalties if a return is filed after the 90 days after the 7th month UNLESS you can find "reasonable cause." That's where the letter comes in. "Justifiable cause" is putting the blame on the software vendors, ie outside the control of the plan sponsor. I am surprised to hear that DOL is assessing penalties. Maybe upon appeal with the letter (which was supposed to be sent with the 5500s), you will be OK. Do you need the letter???

I will offer what I can. What exactly do you mean by "contract administrator"? Working as an independent contractor trying to set up your own business which hopefully will grow and prosper over the years? Or working for a firm on a case by case basis, and being paid by that firm on a 1099 basis? I started my business about 20 years ago as a sideline to supplement my income while working in the pension department of a large insurance company. You just have to put out the word that you are a pension administrator, you are available, your prices are reasonable and your turnaround time is faster than the big guys. Word of mouth helps as well. Develop a fee schedule you can live with. There are a lot of surveys out there and a lot of different prices. Align yourself with a group of professionals, either attorneys, accountants or insurance agents. When I first started I got a lot of referrals from insurance agents. As a contract person, you are an independent contractor. You have to buy the equipment, the software (it ain't cheap, either, that's why I developed my own) and you absolutely positively need E & O insurance, which is very expensive. Subscribe to a monthly service to keep abreast of what is going on and join the Technical Answer Group, TAG for short--$95 per month. You ask a technical question, they get back to you within 24 hours with the answer and the citation. Hope this helps.

We called the DOL hotline number Friday and spoke at length to a Mike Auerback specifically about any filings that couldn't possibly make the October 16 deadline. After telling me how lucky I was that I was given an automatic extension from July 31st to October 16 (at which point I told him I didn't get HIS point--the extension is automatic and thanks for the favor), I specifically asked him how late a "late" return could be filed without incurring any penalties. He just hemmed and hawed and refused to answer, until I pinpointed... a week, 10 days, a month, 6 weeks?? We ended the conversation by his admitting that a return filed within 30 days of the October 16 deadline would not incur any penalties. Whew!! Like drawing blood from a stone.

Any thoughts on how to handle the undue stresses and stains of meeting the October 16th deadline?? Any thoughts on mailing the forms after October 16th. One org seems to think we can attach a letter to the 5500s stating the profound lateness of the software as an excuse for a late filing; while another org says they spoke with DOL and there is "no way" they will issue an extension-- they would rather see incomplete forms than no forms. Go figure.

Any way to get a copy of the ASPA note? ASPA as a typical profit org will not be sending out to their general public. They want the money for the subscription service before they do anything.

It has been our experience that even if the plan is not funded for a certain year, a trust instrument (ie plan and trust) was indeed established. Therefore, a form 5500 is still due. Obviously the Schedule I would show zero both beginning and end of year. If I am not mistaken, prior to 1990 you did not have to file a 5500 on a profit sharing plan if no contribution was made. Anyway, the 5500 should show a contribution if one was accrued. I would check with the client's accountant to see if a contribution for '99 was accrued. The client still has until 9-15-00 to contribute if an extension was filed.