Gary

Most of the participants in the DC plan are in the DB plan. All DB participants have same rights, but NHCEs have a lower pension relative to owners in DB plan.

Say a company sponsors a DB pension plan and a DC 401k plan. The db plan provides for plan loans to all participants on same basis. The 401k plan does not allow for plan loans. Anything seem unreasonable about that? thanks

Is it ok to fill in the irs.gov 2009 form 5500ez and print and use it? As opposed to needing to use relius or prosystem, etc. Unfortunately the irs.gov web site does not have a 2009 schedule sb form. Anyone know where an approved form for printing and submitting to IRS is available? Perhaps it is not available since it is not required to go with 5500ez. and using dol web site is tedious just for sch sb. thanks

No down side except it will have to be created now, and IRS might have problem that it wasn't done previously.

Say a one participant plan wants to defer $22,000 for 2010 (over age 50). My understanding is that if his compensation is $22,000, he can defer 100% of his pay or $22,000 to the 401k plan in lieu of receiving his compensation in cash. Does that make sense? How would he pay his employee FICA taxes? Or should the maximum deferral be 22k less FICA taxes in this case? Or could he pay FICA taxes out of personal funds? thanks

A one participant plan was underfunded at plan termination. The plan was not covered by PBGC. Plan assets were distributed to the extend funded as provided for per 411(d)(3). IRS sends letter saying that they need a signed "election to forego benefits" statement as per PBGC 4041.21(b)(2). My understanding is that a non PBGC plan can simply pay benefits out to the extent funded and the statement the IRS requests is not applicable. Any views? Am I missing something? Thanks

Good information. Thanks. What about restating and not submitting for DL? Say plan is terminated in a few years prior to next restatement and DL applied for at termination. This is allowed isn't it? A DL is not mandatory? So only down side I see is that if plan has a problem and there is no favorable DL letter in the past, there could be issues? FYI It is a husband and wife only 401k plan. thanks

A 401k plan was not restate yet for EGTRRA. What would IRS do if submitted now? Is it best to restate and not submit for DL? FYI It is a pre approved Sungard Relius plan doc. Any other suggestions? Thanks.

The point is that I was trying to verify that if the plan owned the buisiness and recieved income from business it would be UBIT.

Is it necessary and useful to provide a SAR if each participant is self directing their entire account, receives statements and has on line access? I suppose the SAR would provide info re: bonding. thanks

the deferrals are relevant since they impact the basic match and the match is an employer deductible contribution that does count toward the 6% limit.

Yes, we can amend plan to remove SH match for owners. The overall limit exceeds 6% due to the match plus the 7.5% gateway for the NHCEs. Plan is combined with defined benefit plan. So we would need to reduce the owners match. Can elective deferrals be removed after they have been contributed? Not referring to excess deferrals. Of course from this point on owners can stop making deferrals. Thanks.

Yes they can reduce their elective deferral as an option. Agreed. They also make profit sharing contributions that's how it would exceed the 6% Thanks

An employer has a basic match safe harbor 401k plan that provides the basic match to all employees, including HCEs. The two owners want to maximize their deduction for their 401k and db plans. they are not covered by PBGC so if their DB contribution is greater than 25% of payroll their DC deduction limit is 6% covered pay. In order to avoid exceeding 6% to 401k plan the owners can waive their 401k match. I didn't come across anything specifically allowing this, but is it ok? Thanks.

So in summary, it seems this can potentially be a satisfactory commercial real estate investment for the pension plan; though I still wonder if a tenant using real estate for unrelated business can be an acceptable real estate investment, but for moment it appears to be a potential real estate plan investment. However, if the plan sponsor uses restaurant to produce business income for the plan then we agree that this would create UBIT? Thanks.

My code in my possession is as of 1/1/2008 so it may not be accurate enough in this situation. Anyway, if a db plan is not covered by pbgc than it is my understanding that an SAR is still required. Agreed? thanks

If say as of 1/1/2009 the AFTAP is < 60% and benefits are frozen as of 1/1/2009. Say the plan is calendar year and for the 1/1/10 valuation my understanding is that the funding target is based on the frozen benefit as of 1/1/2009, but that there is a target normal cost for an accrual during 2010. Is this correct? I'll go through the regs more, but just wanted a preliminary opinion. Personally it seems that if there is a 436 freeze than there would be no accrual for a target normal cost. thanks

Say a pension plan purchases a Denny's restaurant and that the plan owns the property and charges the tenant rent to use the property, but the plan does not receive income from the restuarant itself. Based on a UBIT IRS publication my impression is that this would generate UBIT because even though the plan is just renting the property the tenant is using the property for a commercial business unrelated to the purpose of the tax exempt plan. Does that seem correct? Now let's say instead that the plan is experiencing the profits/losses from the restaurant as a commercial business. Does this create UBIT? My understanding is that it does as well. And finally, as a generalization say a pension plan owns a portion of a limited liability partnership. If the partnership only generates income from dividends and interest than it would not generate UBIT, but if it also experienced profits/losses from the business of the partnership it would generate UBIT. Does t his seem correct? Thanks. FYI the pension plan only has two participants

Say a pension plan purchases a Denny's restaurant and that he owns the property and charges the tenant rent to use the property, but the plan does not receive income from the restuarant itself. Based on a UBIT IRS publication my impression is that this would generate UBIT because even though the plan is just renting the property the tenant is using the property for a commercial business unrelated to the purpose of the tax exempt plan. Does that seem correct? Now let's say instead that the plan is experiencing the profits/losses from the restaurant as a commercial business. Does this create UBIT? My understanding is that it does as well. And finally, as a generalization say a pension plan owns a portion of a limited liability partnership. If the partnership only generates income from dividends and interest than it would not generate UBIT, but if it also experienced profits/losses from the business of the partnership it would generate UBIT. Does t his seem correct? Thanks. FYI the pension plan only has two participants

Thanks David That is exactly what I was looking for. Gary

I'll check into the upper (12) calc, but it would be ideal if I can get a52 and a53 as an annual payment of 1 per year at beginning of year as opposed to a monthly payment of 1 per month at beginning of each month and dividing by 12. So I am curious to get 1 + vpx + v^2 2px + ... or put another way (Dx + Dx+1 + ...)/Dx. Thanks much. I know there are equivalency adjustments but I would like the above.

In trying to verify some factors: I want to get a response to the value of a52 and a53 with payment of 1 each year at beginning of year. Based on GAR94 and 4%. Some of my data includes that q16 = .000296 l16 = 1,000,000 q117 = 0.50 l117 = 1 l118 = 0 q120 = 1.00 I compute a52 as N52/D52 where N52 = D52 + D53 + D54 + ... D120 and D52 = l52 * v^52. First please confirm the above data then please let me know your result for a52 and a53. Thanks. Gary

A plan sponsor is a closely held owner of a business with say 10 employees. He has a defined benefit plan and a cross tested 401k profit sharing plan that provides a separate rate group for each participant. When amending the defined benefit plan is a resolution required as well, authorizing the amendment? I don't always no or see th point of a resolution, especially with a closely held business. The plan document does not make mention of a resolution needed in its plan amendment provisions. Now for the 401k plan. After the year is over the owner decides on the percentage allocation for each participant. To document this, is an amendment required? A resolution required instead? Or both? It would just state the amounts provided to each employee for the specific plan year. Thank you.

Great answers. I presume the self directed issue does not arise if it is a defined benefit plan? However, it seems a self dealing PT arises unless it is a true investment at a museum. In the case of a Db plan where participant has reached normal retirement age it seems it would be prudent to just treat it as a distribution. Any thoughts? PS DB board was silent on this matter thus the reason for me to roam over to 401k board. thanks

A one participant/owner implements his own profit sharing plan. No other employees. His plan has say 100k in assets. The owner wants to invest in art work with some of the plan assets. As far as I know this is an allowable investment. Does anyone know for certain that such an investment is permissible? Or know otherwise? Thanks.