Pension RC

I just was asked by one of our defined benefit plan sponsors for the amount of a lump sum that was paid in 1987. I am unsure if our firm even administered the plan back then, and we certainly don't have information pertaining to the lump sum. Does anyone have any suggestions of how I might go about researching this? Thanks!

A frozen defined benefit plan covers 8 participants, 4 of whom are partners in the ownership of the company. The partners would like to terminate the plan. Although it is underfunded, they would like to make a contribution to make the plan whole. For tax deduction purposes, how would the contribution be allocated? In partner situations, is the allocation of the deduction done pro-rata based upon the funding targets? PVABs? I have heard that it is possible to do it another way using theoretical reserves. Does anyone have more information about this method? Thanks!

I have a defined benefit plan client that is an S Corp that includes only two owners (51%/49%). Can they file a 5500-SF One Participant? Thanks!

I had prepared and uploaded a 5500 that was due on 8/15/2014. It was all ready, with attachments, on 8/14/2014 and the only thing left was for me to "local sign" (file electronically) on behalf of the administrator. I was at work all of 8/15/2014, but, for some reason, totally forgot about local signing, which would have taken me about 1 minute. This morning I realized what happened and immediately local signed and see that it was accepted. Does anyone have any thoughts/experience on how I can avoid unwanted consequences? Should I call the DOL? Thanks!

A one-man plan is terminating. The 417(e) lump sum (which exceeds the lump sum based upon plan assumptions) is less than the assets, which are less than the 415 limit. The plan document states that excess assets are returned to the employer (who is the participant). When preparing the distribution election form, should the amount of the lump sum be the 417(e) lump sum? The current value of assets? If it should be the 417(e) lump sum, are the remaining assets simply transferred to the employer's business account? His personal account? Thanks for any responses!

Thanks!

If a person has a DB Plan and a SEP, and they contribute the $52,000 limit to their SEP, are the two plans subject to the 31% limit? In other words, is it true that the combined SEP and DB contributions can't exceed 31% of earned income? Thanks for any responses!

Is it acceptable, for the "manually signed Form 5500" attachment, to have the plan sponsor's electronic signature? Thanks!

A lump sum restriction went into effect because an AFTAP wasn't certified timely. Once it is certified above 80%, are lump sums allowed immediately, or is there a wait time? Thanks!

Thanks very much for your responses!

I am working on a plan of about 1000 participants. I provided the client the 2014 quarterly amount, which was 25% of the 2013 minimum. Subsequently, I realized that, in calculating the death benefit portion 2013 funding target, I hadn't accounted for the 417(e) PVAB. If I would have, the 2013 funding target and, consequently, the 2014 quarterly would have been higher. I think that I should be accounting for 417(e) since, when a death benefit is paid, 417(e) is taken into account. Therefore, I see myself as having a few options: 1) Tell the client that the quarterly is actually a little higher. I would need to increase the 7/15 quarterly to make up the shortfall in the 4/15 quarterly (plus quarterly interest). 2) Leave the quarterlies and the valuation as they are, not accounting for 417(e) is the death benefit FT. Not sure how I'd answer the question about the SB about whether the quarterlies were paid timely. 3) Leave the quarterlies as they are, but change the valuation so that 417(e) is considered for the death benefit FT. When the 9/15/2014 final contribution for 2013 is made, have it include the quarterly shortfalls (plus quarterly interest). Again - not sure how I'd answer the question about the SB about whether the quarterlies were paid timely. Does anyone have any suggestions? Thanks!

On second thought - Isn't it okay since she doesn't own more than 50% of the first company?

A 50% owner of a company earned a benefit under the company's DB plan. Now she has started her own company of which she is the 100% owner and she would like to start a new DB plan. My reading of IRC Section 415(g) is that her benefits from both plans must be aggregated for 415 purposes. Is this correct? Thanks!

A one-person defined benefit plan was started effective 1/1/2012. On the 2012 SB, the funding target and assets were both $0. In 2013, prior to 9/15/2013, $75,000 was contributed, which satisfied the 2012 minimum required contribution and created a small prefunding balance. On line 16 of the 2013 SB, would it be correct to put 80% to show that the prefunding balance is available to apply towards the 2013 minimum? Thanks!

We have a problem. In a H-W plan, the husband recently took a full distribution of his benefit as a rollover. For some reason, two points were ignored - 1) the 110% test and 2) the fact that the AFTAP would be less than 80% after the distribution. Other than fully repaying the distribution with earnings - are there any other solutions? Thanks!

I have a self employed client with a DB plan and a 401k/PS plan. She usually makes the maximum 401k contribution with catch-up, contributes about most of her net Schedule C (minus 1/2 SE tax) to her DB plan, and 6% of her remaining plan comp to the PS plan. Faced with the reality that she is approaching the DB plan's 415 limit, she is wondering about reducing her DB contribution and opening a SEP and contributing the excess into that. Am I correct that this doesn't make sense, because whatever she could contribute to the SEP, she could have contributed to the PS plan? Thanks!

February is the second month in a row that the 417(e) segment rates have gone down. Can anyone suggest 1) a cause for this recent trend, 2) if the trend is expected to continue, and 3) where they might be in May 2014? Thanks!

A one-man plan has always had an AFTAP over 100%. However, the 2013 AFTAP wasn't certified and, shortly thereafter, the plan was terminated and the one-man received a lump sum distribution. Was that lump sum in violation of 436, since the AFTAP was deemed to be less than 60%, or is a plan termination different? Thanks!

The regs state that, "The benefits taken into account are based on the participant’s or beneficiary’s status (such as active employee, vested or partially vested terminated employee, or disabled participant) as of the valuation date, and those benefits are allocated to funding target or target normal cost." Am I correct in understanding that this means that, for a terminated participant who is partially vested, the funding target would be based only the vested benefit? Thanks!

I am working on one-man (doctor) plan. His normal retirement date is 1/1/2019, when he is 62. However, for some reason, the plan was set up as 10% of average comp per year of participation starting on 1/1/2006. Therefore, he will be fully accrued at 1/1/2016. His 415 lump sum limit is based upon his average comp, which is only about $140,000 (and it is very unlikely that he'll be able to establish a new high-3 average comp, as his recent comps have been low). He would like to terminate the plan 1/1/2015 or 1/1/2016 and be able at that point to take a distribution equal to his 415 lump sum limit. However, since he will only be 58 and 59 on those dates, his 417(e) lump sum will be considerably lower than his 415 limit, as it the 417(e) lump sum will be discounted from age 62. I don't think that it is reasonable to amend the normal retirement age to anything lower than 62. Does anyone have any idea how I can enable him to take a distribution equal to the 415 limit? Any thoughts would be appreciated!

Good thought. I checked and that's not the difference. Thanks.

I am doing a 2013 valuation for a one-man DB plan. As expected, my valuation system is producing a funding target used for the maximum that is larger than the MAP-21 funding target. However, it is calculating a target normal cost for the the maximum that is LOWER than the MAP-21 target normal cost. How is this possible, if the all of the MAP-21 segment rates are higher than the segment rates used for maximum purposes? Any thoughts would be appreciated!

Thanks.

If a plan was started in 2013, no past-service is credited, and the beginning of year assets are $0, is the 2013 AFTAP 0% or 100%? Is there official guidance on this? Would it make a difference if the valuation date was 12/31/2013? Thanks!

Thanks, Andy. First of all, why should contribution first be allocated the employees and not to the doctor? Secondly, do you think it is plausible to allocate based upon the increase in their 417(e) lump sums caused by the 2013 accrual? Thirdly, I'm not sure I understand your explanation of why it's important to understand the purpose for which the accountant is asking the question? Would the allocation method always be the same? Finally, how could the employer take a deduction if no contribution is made? Thanks.