Gary

i am trying to determine how such a distribution might work logistically and the concern is if they roll money into an IRA indefinitely and think it can avoid taxes and ultimately holding me accountable for any harmful tax consequences. My understanding is that if the distribution is subject to the 5 year rule, it is completely taxable by the end of such period. and if that is correct then there are concerns with the distribution remaining in an IRA account after such period. just trying to determine if the fact set of my interpretation is on point or if there is anything else I might learn re: such a situation. thanks

An active participant died in 2007. there was no designated benny other than his living trust. plan provides that if no benny then the death benefit must be distributed by end of 5th caendar year following death. so it seems that the distribution must go to his estate by 12/31/2012. he would have reached 70 1/2 in 2010. so if lump sum goes to estate in 2012: does estate then pay required taxes? does it have to go to a benny in will immediately? other views? perhaps this is all for the tax advisor to decipher. thanks

yes, i agree effen. so as i see it, once i inform client he needs to go out and find firm to prepare audit? what if there isn't enough time before the due date of 5500 for client to obtain report from CPA firm? thanks

do folks (us practioners) generally contact the plan sponsor of a small plan once they find out that they are not exempt from the schedule I plan audit requirement and advise them to contact a CPA firm to get it handled? what if they don't have ample time to get the audit prior to filing of 5500 due date? curious how this issue is handled logistically. Do some of you contact clients just after the plan year ends to make this determination and inform them at that time? For example in January 2012 we can find out if a plan is bonded sufficiently at end of 2011 and then advise at that time. thanks

the retirement assets pertain to a private 401k plan and then a personal IRA account after rollover. In reviewing cal law I only locate statute in connection with public employee plans. so what i probably need is cal case law dividing private retirement plan assets. anyone know of any case law on the subject? thanks gary

are there any statutory amendments that need to be adopted before 12/31/2011 or shortly thereafter any one knows of? of course plans need to be restated by 4/30/12. thanks

the loan provision would only be for as much as 50k. perhaps if distribution were no more than 50k then presumably it could have been a loan followed by a deemed distribution due to failure to meet requirements. thanks i am not looking for a solution as much as i am trying to determine if i have analyzed the violation and potential consequences correctly.

more poorly behaving 1 participant plan sponsors. say plan has 300k in assets. owner/participant is age 69 and has worked past NRA pvab = close to 300k in 2010 owner withdraws 130k (in about 4 payments during 2010) and prepared a 1099R. no benefit election forms, etc. prepared plan allows for QJSA to commence at NRA if working or lump sum option not married and normal form is life annuity. owner now terminating the plan and will distribute balance. as far as i see it the 130k withdrawal is a plan operation failure and could disqualify the plan resulting in potentially loss of corporate deductions and entire pension taxable, etc. is that a correct interpretation?

a plan sponsor/owner is terminating his plan. it is pbgc covered and other than owner there are 3 employees. if each chose a lumo sum the owner would get say 300k and forfeit rest of pension. however, one participant in pay status has a lump sum payout value of close to 600k if he takes remaining distribution in lump sum. excpet the participant wants to continue payment as annuity. (100% j&s mind you) insurance annuity quotes have averaged about 900k. ouch! i suppose to due low interest rates, fees, commissions and who knows what. the owner is in his 70s and closed his company. if they buy annuity owner gets $0 instead of 300k (per above). what to do????? they can beg participant to take lump sum they can have owner maintain plan (thought MRCs will continue, etc., not desirable) sponsored by himself as sole prop. or maybe go through a distress pbgc termination i haven't spoken to owner but i believe he does not want to sacrifice entire pension. thanks

thanks a couple of things. I think it is $25 per day and I mistakenly put $15, but not relevant in this case. WHile they are 5500EZ filers, in order to get VC relief should they file thru VCF or just file thru IRS and hope IRS gives the same deal? I believe some filers try and file a 5500 (pre e filing days) instead of ez and send to VCF and request max fee. not sure if that has been heard of and i dont think it would work these days. And lastly, if it is only one plan wouldn't the maximum fine be $750? and not 1,500? thanks

My understanding is that if a 5500ez filer is late the penalty is $15 per day up to maximum of $15,000. I also believe this applies for each return. So if ten returns were not filed then the total fine could be $150,000. Are we in agreement? Now how might the statute of limitations apply if at all? That is, if after a certain amount of time has passed and there has been no word from the IRS re: late filing, does that mean the fine cannot be assesseed? thanks

the formula was 5% of compensation for the 2007 and 2008 plan years only. So after 2008 there is no "active" formula. I don't want to go off on a tangent. For practical purposes the formula is frozen but the plan does not explicitly provide that new participants cannot enter plan; albeit they will have no accrual. thanks.

A professional sve employer has 8 active employees with an accrued benefit and 11 terminated vested employees with an accrued benefit the plan has not had any accruals (not explicitly frozen, bit formula expired some years ago so no new accruals) for several years. There are 19 additional employees who meet the plan's eligibility requirement, but of course have an accd ben of $0. So the question is how many "active participants" are there? Of course the PBGC premium filing instructions provide that a participant is someone that has a benefit liability (whether active or inactive). So on that basis there would be 8 active participants and 11 inactive participants. But is that the proper definition for "active participant" when determining number of active participants in order to determine if a plan is covered by pbgc. Any comments supported with a cite of course thanks

all the db plans i work with generally have 10 or fewer participants. And when the plans are terminated they generally all take lump sums. i have a first now; a situation where a participant wants to continue receiving his annuity. so they will have to purchase an annuity with that said; any recommendations as to how to choose an insurance company for this? not sure if the plan sponsor will want my firm to investigate which company or if they will want to do it. comments from anyone with recent practical experience is appreciated. thanks

that's a great poem. yes things have changed and although i go back as far as '84 i do remember all of those things.

yes, i could print form and complete by hand. I was trying to avoid that antiquated method ;0) since it is for a client, but given that this should not be a recurring matter, not a bad option thanks

Thanks Tom I am aware of that site. Only problem is, for example when trying to view the 2008 Sch R it does not have a version that can be completed/edited on the computer. It doesn't even appear to be a format that the DOL would even accept. thanks

I am trying to obtain Form 5500 Schedules I and R. Aside from third party software where, how can I obtain those forms such that they can be completed on the computer and then printed or scanned to a pdf file? So this ins't a form that says for information purposes only. IFILE does not have such schedules. They start in 2009. thanks

Say an individual gets married at age 30 and gets divorced at age 40. He terminates from a company just prior to marriage. He leaves that company with: a defined benefit pension of $500 per month payable at age 62. Since this entire benefit was accrued prior to marriage it would seem that it would not be part of marital property. At age 30 (marriage) the the pvab was say 10,000. And at age 40 (divorce) the pvab is say 20,000. So, in essence he earned 10k on his pension while married but it is not marital property. Now, turning to his account balance. He leaves the same company with a 401k account of 20k at time of marriage, which he rolled into an IRA account. At time of divorce the account is worth 40k. No contributions were added to the account as it is all investment income. Should the 20k of investment income (though based on the basis that was all pre marriage) be considered marital property? And say now, a couple of years after divorce (but prior to any division of assets) the account is worth 30k. Should the loss of 10k be marital property? In conclusion, is the analysis of the determination of marital property related to the account balance a subjective analysis or is there precise law on the account balance portion that is marital property? thanks

say a plan has a MRC for 2008 and 2009 of $0. In 2010 the: MRC = 1,000,000 Max deduction is 1,300,000 Say plan sponsor contributes 1,000,000 by 9/15/11 to meet 2010 MRC. However, they are one year behind with tax deduction so they intend to deduct in 2011 (we'll get back to that). When preparing the 2011 valuation the 2010 contribution is included as a plan asset for 2011 valuation. My understanding is that the 2011 max deduction is computed as the greater of: 1) cushion calculation 2) sum of 430 MRCs calculation The cushion calculation is only 200,000 since the sponsor made that 1,000,000 contribution for 2010 plan year. So if that were the maximum the outcome would be that sponsor would only deduct 200,000 of 1,000,000 contribution in 2011. Under the sum of MRCs under 430 my understanding is that computation is: = 2008MRC + 2009MRC +2010MRC +2011MRC less deductions taken through 2010 ($0 in this case) this would be = 0 + 0 + 1,000,000 + 0 = 1,000,000 2011 MRC = 0 as shown above. So conceptually the max deduction for 2011 would be computed as 1,000,000 which is the amount contributed in 2011 for 2010 min funding. So in the example above, the conclusion is that sponsor made 2010 MRC of 1,000,000 timely and then deducted that amount for 2011 instead of 2010. Does the above seem to apply the post PPA max tax calculation properly? As a final footnote: A practioner believes that as a general rule if a max tax deduction is say 300k for say 2009 that contribution can be used as a 2009 contribution to meet min funding but can be deducted in 2010 if desired. My feeling of the above sentence is that pre PPA it was probably true but post PPA I don't think such statement applies. That is, a plan contribution to meet MRC for 2009 is part of plan assets for 2010 and thus the cushion max tax will be lower as that contribution is now an asset for 404 purposes and pre PPA 404 assets could be different from 412 assets. Comments? Thanks much.

if a company restates their db plan for egtrra and it is a pre approved volume submitter plan with favorable opinion letter (of course) and essentially makes no changes to pre approved document provisions is there much reason to apply for det letter?

say a plan uses a 12/31 val date. so for 2011 the val date is 12/31/2011. the 2011 pbgc premium filing is due 4/30/2012 it is often difficult (if not imposible) to obtain data in advance of the deadline to do the val. anyone experience this? any suggestions? thanks

an employer sponsors a DC plan and a DB plan. The DC plan includes the top paid group election and the DB plan does not elect top paid group. Plans are to be combined for testing in 2011. My understanding is that (in absence of plan amendment) if both plans do not elect to use top paid group then the top paid group election does not apply. I believe this is based on the consistency requirement found in notice 97-45. any similar or differing views? thanks

Now that the funding relief has been in effect for a while is it still interpreted that it is based on only the particular year and not the total funding shortfall? I will look over notice 2011-3 as well. thanks

thanks; that was my on-going understanding re: safe harbor after start of plan year. just got a little off track when I began to think that the reg i cited could apply a post beg of yr safe harbor. as you say that only applies to the maybe notice situation provided before plan year. i'll go back to the reg and verify the bigger picture context of that section. thanks.