Pension RC

Column b of the Form 6088 asks that you indicate if each participant listed is an HCE. For this purpose, is a former HCE considered an HCE? Thanks for any responses!

My understanding is that, for valuation purposes, accrued dividends are not included in the market value of assets. Is that correct? Thanks very much.

I work on a mid-sized DB plan that generally doesn't pay lump sums, but has opened up a lump sum window until the end of the year. One terminated participant, who would like to take the lump sum, was born on 7/1/1960. Therefore, he will complete 59 1/2 years on 12/31/2019. If his distribution is not processed until 12/31/2019, can he avoid the early withdrawal penalty? Thanks for any responses!

It's a Sub S corp. Thanks!

I have a client who receives income on a W-2 and on a K-1. For 2017, his W-2 is $140,000 and his K-1 income is -$26,000. Do I need to subtract the K-1 income from the W-2 before calculating the 25% of compensation limit for profit sharing, or can I ignore the K-1 negative income? Thanks for any responses!

I just had a client ask me how long she is required to retain records (employment and other). Her auditor is telling her that she has to keep record forever. We generally keep paper copies for 7 year, and I just learned that we keep everything electronically - forever. Is there any formal guidance on this? Thanks for any responses!

Is there any issue with unfreezing a plan and soon thereafter (maybe a month) terminating the plan? Thanks for any responses!

Thanks for your response regarding the consent issue. Assuming that this would be addressed, would an RMD be required?

A participant in a traditional DB plan retired and elected a life annuity to begin at age 65. When he is 85, the plan sponsor terminates the plan and lump sums are offered to all participants, including current retirees. The participant elects to rollover his remaining benefit, and the rollover is processed on 6/15, after he's already received 6 life annuity payments during the year. Does an RMD equal to 6 monthly payments need to be paid before the rollover is processed? Thanks for any responses!

The IRS instructions for calculating an Required Minimum Distribution from an IRA state that you use the age that the participant will turn on his birthday in the current year. I assume that this applies to any DC plan RMD. I've been told that one could use attained age as of the last day of the prior plan year (as long your consistent year to year). Is there any basis for this? Thanks for any responses!

Form 5330 has places for the filer (plan sponsor) and paid preparer to sign. It's not clear to me from the instructions if both of them need to sign. Do they? Also, I see that the Form 5330 instructions only provide a mailing address for filing, which suggests that they need original signatures, but the instructions also allow for the paid preparer to electronically sign. Is it true that this form must be mailed and that the plan sponsor's signature must be a wet signature? Thanks for any responses!

Does an election to apply the balances to the required minimum or quarterly need to specify the amount applied? Specifically, Plan year is 6/1 - 5/31. 6/1/2016 Minimum is $700,000. Prefunding Balance as of 6/1/2017 is $150,000. Plan was frozen 6/1/2017. 6/1/2017 valuation is not complete yet, but minimum will surely be much less than $700,000 since there is no target normal cost. It will probably be about $300,000. Therefore, the 9/15/2017 quarterly will probably be about $67,500 (=$300,000 * 90% * 25%). Can the plan sponsor just elect to apply whatever is needed to cover the quarterly? Should he elect to apply the whole $150,000? Thanks for any responses!

We have a DB plan that terminated in February 2017. After all of the participants were paid, there were still surplus assets. The plan sponsor would like to reallocate 20% of the surplus to the participants so that the excise tax on the remaining surplus is reduced to 20%. A couple of questions: 1) A participant terminated employment in May 2015 and was paid in November 2016. Must she be included in the allocation? 2) The plan benefits were paid to participants on various dates, as the distribution forms were returned. As such, the PVAB's were adjusted to the dates of the payouts. Now that we are allocating 20% of the surplus (and assuming that allocating based upon PVAB's isn't discriminatory) the PVAB's for the allocation would all be as of a single date - correct? Any responses would be appreciated!

Involved in a PBGC plan termination and the Form 500 was already filed, so the 60-day review period has started. I just found out that one person, whom we assumed never worked 1000 years in a year, actually did work 1000 hours in 1 year and, since the plan is terminating, is 100% vested in a 1 year benefit. We plan on sending distribution forms to this person. Is it necessary to file an amended Form 500, which would start the 60-day clock again? Thanks!

If a terminating plan has a short final plan year due to the completion of distributions, but files a 5558, is the extended due due what it would otherwise be if the plan wasn't terminating (9 1/2 months after the normal end of plan year), or is the extended due date based upon the end of the short plan year? Would you happen to have a citation? Thanks for any responses!

I am working on the termination of a DB plan. There is one participant who is active and receiving a benefit. On the Form 500, would he be counted as an active or as a retiree? Thanks for any responses!

A participant was paid an RMD in 2016, but she lost the check. Therefore, the check was cancelled and reissued in 2017. Should a 1099R be created for 2016 or 2017? What about if the payment was made through a third party distribution service? The plan wrote a check to the third party in 2016 and the third party sent the check to tyhe participant in 2016. In 2017, the third party cancelled their check and reissued. Does this situation have a different answer? Thanks for any responses!

Is there are permanency issue with starting a plan 1/1/2016 with a 10%/year accrual and then freezing the plan effective 1/1/2017? Thanks for any responses!

A 401(k) plan covers a doctor, age 71 and his wife (not yet 70 1/2). I recently sent required minimum distribution paperwork to the doctor. Today, his financial advisor called me and said, "Don't worry. We've already satisfied his 401(k) RMD by increasing the amount he took as an RMD from his IRA." I thought that the RMD has to come from 401(k) plan assets. Who is correct? Thanks for any responses!

I generally don't deal with 403(b) plans, but I'm trying to help a friend (the ex-husband in the case below). A professor participates in the university's 403(b) plan. She is divorced and a QDRO awards her ex-husband 40% of the marital portion of the 403(b) benefit, which winds up being about $72,000. The ex-husband needs the funds, so, even if it's rolled over into his IRA, he will immediately have the funds distributed from his IRA. The participant has offered to pay him by check, but will charge him for doing so. 1) Can the participant charge for paying by check? 2) If the ex-husband is 56, will he need to have a) 20% withheld for federal b) applicable state withholding withheld, and c) the 10% penalty? Will this be true if he rolls it over and has it immediately distributed? Thanks for any responses!

I am working on a terminating DB plan. The plan is vague when it comes to age to 417(e) purposes. From what I've read, it appears that, if a certain age methodology was used for calculating lump sums (such as years and months) while the plan was active, then changing it to anything else to pay termination lump sums would be a 411(d)6 violation. Would you agree? Is there an argument to the contrary? Thanks!!

Is it possible for the termination liability in a cash balance plan to be lower than the sum of the individual hypothetical accounts? Thanks for any responses!

We took over the administration of a profit sharing plan in 2011. A QDRO was written in 1987 awarding 50% of a participant's benefit to an alternate payee. In 1990, the participant was paid about $6,000, but the alternate payee received nothing. The participant subsequently passed away. Now the alternate payee is asking for her benefit. The plan sponsor claims that $6,000 was 100% of the benefit. We don't have sufficient document to prove whether $6,000 was 100% of the benefit or 50% of the benefit. In fact, we don't have any reports for the plan prior to 2003, so we can't really estimate what the participant's benefit was in 1990. She is threatening to get her attorney involved. Can anyone opine on what the outcome would be if she pursued this matter legally? Thanks for any responses!

Takeover plan. Plan effective 12/1/1956. However, the 5500's have always listed the effective date as 5/1/1956. Should this be corrected going forward? Will correcting this cause the IRS to request that all of the past 5500's be amended? Thanks for any responses!

We have a takeover plan. The prior administrator only prepared the Schedule SB, but the plan sponsor prepared the 5500-SF each year. for 2015, we prepared the 5500-SF. The plan sponsor makes one contribution, which is deposited shortly before the extended deadline. In past years, when the plan sponsor completed the form, they listed the prior year's receivable as the contribution, so the contributions on the 5500-SF didn't match the contributions on the Schedule SB. When we prepared the 2015 form, our trust accountant decided that, in order to bring up the 5500-SF to date, he counted the prior year's receivable and the current year's receivable. This way, when we prepare the 2016 form, the contribution on the 5500-SF will match the contribution on the SB. The 2015 form was filed and we explained what we did to the plan sponsor.. My contact at the plan sponsor just sent me an e-mail. She is very upset that we switched the methodology without asking her first. She is concerned that, one day, when she prepares the form, she'll switch back to the old method and list $0 contributions, which will look bad. It sounds to me that she is making a big deal out of nothing. Would you agree? Any responses would be appreciated!