Blinky the 3-eyed Fish

Okay, let's first focus on the last portion of the last sentence of Section 19.04 of Rev. Proc. 2000-20, "...and, if required for reliance, request a determination letter." You have to ask yourself, "What does this mean?". Fortunately, it's spelled out Announcement 2001-77, Section II. Note specifically, Section II.C.5., where it clearly says the document terms cannot be modified if intending to rely on the document opionion or advisory letter. So, going back, if you do not have a word-for-word document, in other words you have modified the document in some manner, you MUST submit the plan, before 9/30/03 in most cases, to be eligible for the extended RAP. Also, there is good information starting on page 1.387 of the 2003 ERISA Outline Book for your reference as well.

Saber, I am afraid you are incorrect. For a M&P or volume submitter plan to be granted the extension to the remedial amendment period, which is any date after 2001 I believe, the plan document restatement must be a word-for-word version (i.e. no changes to the standard document language) or MUST be submitted to the IRS. Failure to do so in the latter case would mean the plan was not timely restated for GUST. See Rev Proc. 2002-20, Announcement 2001-77, Rev Proc. 2002-73 to name a few.

Chris is saying he MUST submit for a determination letter because the restatement does not qualify as a word-for-word document. Chris, you say that you one time you wish to submit the 5310 and then you later say wish to forego the 5310? Submitting the 5310 will get your plan document reviewed as well as the termination, as far as I understand it, so that surely would be the way to go in this case.

Be careful what you say about us actuaries or we will rise up in a mass of pocket protectors and glasses and attack.

Good point, Merlin. However, in this case the situation has been discussed, but again I appreciate the insight.

I am not sure what was meant by "kept him out of the testing", but just for clarification, he should be in the denominator as a 0, since he is not excludable (before considering any add-backs, of course). Merlin, how do you know I am in Phoenix?

Merlin, I am not exactly sure of your first question. I am trying to determine if it's acceptable to payout the 50% owner first, even though he wasn't the first to terminate. The other restricted HCE's would continue to count in the liabilities. I have to confess I am not sure of the relevence of some of the additional questions, but here are the answers and you can enlighten me. Current owner will be the other 50% owner, now 100%. The employer is the plan administrator. I don't know the funded status on a PT basis, except that it's more underfunded than on a CL basis. I am not trying to convince them to not pay anyone. The now have to pay people, but can't pay everyone since the assets would then dip below 110%. The question is who can be paid. I doubt the client, who I work for no less, would be happy if I told him he had to pay the others and not himself "just because I said so." If he can be paid legitimately before the other restricted, then by all means he should. The plan assets will still equal > 110% of the CL after the distribution, whatever that combination may be, so it's not a question of the plan being in worse shape, since it's still in the same shape according to IRC criteria of this area.

No. The spouse is consenting to not receive the distribution in the form of a joint & survivor annuity. In a plan that is not required to provide that option, there is nothing to consent to not receive. Logically, no matter what the state of residence, it would be impossible to have to consent to not receive an option that does not exist.

I am curious as to why an interim valuation of the plan was performed. I have never done that in a pooled plan, but rather prepared the election forms with estimated amounts and finalized on the day of distributions with each person's exact share of the trust. Ask yourself what would have been done with no owner to take the loss.

Yes, to lock in the low rates and because he is past NRA and his benefit is decreasing.

Has anyone been able to find an insurance company that will issue this type of bond? I surely haven't and have made about 20 phone calls. Uncle! One other note, where does it say the IRA will need to be specially operated by the custodian? I understand that the employee is restricted from taking out certain funds, but I am not reading that the responsibility is one of the IRA custodian's, but rather the employee's.

I have a client in this situation and it's driving me insane. Say he chooses the lump sum option now, which the Q&A says will be credited with future interest at the current rate. Would he be required to take the unrestricted annuity amounts each year, which can't be rolled over, again according to the Q&A, or can he just wait until the plan is unrestricted to take the whole enchilada. I am not sure on what basis he could refuse the annuity amounts if electing a lump sum now, but am hoping there is an argument for it.

Barring that this is the first year for a plan, the determination date will be 12/31/02, which is prior to the QDRO. Thus, the QDRO is a non-issue for the 2003 top heavy determination.

The 318 attribution rules apply and the father is considered owning the sons' shares. Thus, he must take RMD's.

Katherine, re-read the post. The participant in question was employed in a division that was not covered under the plan. Let me add that the ERISA Outline Book does not agree with the post linked to above.

I have a related question. I have a plan with multiple terminated restricted HCE's. The most recent restricted HCE is a former 50% owner of the business. Based on the calculations the plan meets the 110% funding status with the recent upswing in the market after a distribution to him, but would not if multiple distributions take place. (The payout amount exceeds what the current liability is for a participant.) What to do here? Since they are all HCE's, what prevents the owner from getting paid now while the other restricted HCE's continue to have to wait? I am not aware of a pecking order requirement.

For the rule of parity to apply the former employee needed to be a participant in the plan. So no is the answer to your question.

The only problem with that is the plan is not being submitted to the IRS.

See Prop. Reg. 1.414(v)-1(d)(2) or read the ERISA Outline Book if handy. If it's not handy, I highly recommend changing that situation.

Just to be clear padmin the notice is given to the participant, not filed with any governmental agency.

By definition the Summary Annual Report is summarizing the 5500 and attachments in neat language the participant can conceivably understand. There certainly is not a requirement to summarize something that is not on the report in the first place, like realized gains/losses in your situation.

Can I get a yea or nay on whether a terminating volume submitter DB plan needs to have the document updated for the 2002 final and temporary minimum distribution regulations? I can't determine a definitive answer from Rev. Proc. 2003-10 or Notice 2003-2, which clearly suspends the requirement for active plans.

(a) agree (b) It depends on how the plan measures the eligibility period subsequent to the first eligibility period. Generally, while the first eligibility period must be measured from date of hire, the subsequent period can continue to be anniversaries of date of hire or switch to the plan year. So, the answer is the subsequent period will be April - March or Jan - Dec.

The recharacterization of what can be classified as catch-up contributions is done first. Then you determine what amount needs to be refunded and compute earnings on that. Simple example: In 2002 HCE - defers $11,000 which is 6% of salary and is over 50 NHCE - defers 3% of salary So HCE must return 1% to pass testing, which equals $1,833.33 Catch-up available is $1,000, so now only 833.33 needs to be returned Calculate earnings on 833.33 refunded. I would recommend you not ask people to reply to you by email since it defeats the purpose of sharing information with everyone. Also, all the information above could be total crap and someone out there would be able to rebut it.

First, my understanding in the same as Pax's in that while you can use the extension to the entity's tax return in lieu of a 5558, whether it be a partnership, corportation, etc., the 5500 would be due by the extended due date of that entity's return. A partnership would have no issue in relying on their extension since their return can be extended to October 15 for a calendar year partnership. However, since a corporate extension goes only to September 15, I am surprised the IRS/DOL has not made an issue with someone using a corporate extension and filing after September 15. I certainly wouldn't try this and would file for the 5558 if I needed the extra month. (Actually we file a 5558 for all clients who might have 5500 sent in after the first due date regardless of if their entity return is being extended.)