Blinky the 3-eyed Fish

You sound like a hippie.

Midas, for the record, your situation is #2 of the items I listed. It's a misclassification of his draws. I seem to recall a prior discussion on these boards on this topic. No time to search for it though. My take is that because the W-2 classification is clearly incorrect the plan should not compound the problem. Instead add the W-2 to the K-1, treat the whole amount as earned income and proceed as if the accountant had done things correctly in the first place.

What happened? I haven't seen a mirror lately. Am I alright? Janet, who is altidude and why do you need to get used to him?

Why did he get a W-2? Was it from another source other than the partnership? If so, is it a related entity? Was it a misclassification of his draws during the year or did he just become a partner during the year? It's got to be one of those 3 I think.

The ability to change the QNEC formula after accrued is an interesting one. With a PS allocation, most (with the exception of one person on this board) would agree with the TAM, or at least follow it, and not change the formula after accrued. The QNEC is a little different though, as Kirk mentions, in that it's not the only means to get the job done, i.e. to correct a failing test. The HCE's could simply return dollars. So, to say that a QNEC would not be done by a client if made on a comp to comp basis for everyone but that it would be done if bottoms up is probably a fair statement in many cases. Thus, is there a cutback if the formula was changed? Now compare this with the switching of the testing method from say prior to current year, but making the switch after the plan year. Is this any different from the above scenario in the potential for a 411(d)(6) violation? I just seems to me as if the first case is one where the prevelant thought is it cannot be done, while the second case has a different mindset amongst practitioners. No answers here, just throwing out some comments.

A 4th is the 415 limit.

Okay lazy non-time waster, the answer is that you can pay out both. The retirement benefit is subject to 415, but the death benefit is only subject to incidental benefit rules. Upon satisfying that it too can be paid out in addition to the retirement benefit.

Here is the discussion on the subject you may remember. Your answers are there, so no need for me to say anything. http://benefitslink.com/boards/index.php?s...ncidental&st=15

I would also want to know to what degree the contributions exceeded the full funding limit. Although, I am not sure to why we need to know the plan size anymore. Basically, see IRC 4972© for some other options you may have not considered to avoid the excise tax.

You don't care since you are valuing his retirement at 1/1/2007. No, the dollar limit is increased past age 65, which he is 1/1/2007. As for calculating his accrued benefit you are valuing a benefit payable at 1/1/2007. Calculate what the plan provides. Now you need to see if his AB is over the 415 limit, so you convert the $900,000 benefit paid (I assume this was from a plan sponsored by a company that is related to the one sponsoring this plan) to a benefit at 1/1/2007. How you do this is of much debate. Personally, I like to use the current plan's actuarial equivalents for what I consider to be an apples to apples comparison; however, I caution that others do it differently. Now you take that figure and subtract it from the 415 limit you calculated at 1/1/2007. Compare the result to the plan benefits to see if the AB is over the 415 limit. A quick numerical example with made up numbers: annual plan benefit: 50,000 prior distribution benefit: 140,000 415 limit: 206,000 206,000 - 140,000 = 66,000 > 50,000, so the plan benefit is currently under the 415 limit

I am of the same opinion as Katherine.

1. Yes, assuming your EGTRRA amendment has the increased limits 2. You compare the plan's benefit to the 415 limit at the assumed age of retirement. So when are you assuming this person will retire? Of course, how is his NRA 68.5 with 10 years of participation? Is it a different age for vesting than it is for benefits? Where's the actuary on the plan?

KTF is old too. It's a good think Blinky is still relevant because I don't want to morph to Spongebob.

The 5330 is not filed with the 5500. You can obtain the instructions at www.irs.gov - search for 5330 under forms and publications. I can tell you without looking though that you are late. You made me look pax. The good news is you aren't late, which shows what I know without looking.

I only agree with you guys when you are right. Though, I do think that the client should be advised of all courses of action and the consequences of each. Some like audit roulette, but like Russian Roulette, there is a bullet in the chamber sometimes. As an actuary there are some courses of action that will cause me to fire the client because I will not certify to something incorrect.

Are Gburns and Mbozek on the same side here? That's like cats and dogs living together. I think we should be watchful for a very large vengeful marshmallow man coming soon.

Mbozek, I still don't follow how that cite supports not having an allocation formula in the plan. Also, you have to be playing devil's advocate. Disregarding the TAM issue, you really can't think it's easier to do an amendment (potentially each year?) versus just having a viable contribution allocation formula in the first place. I forgot about Gregory though. Ah, the memories of moxy....

You called? Should I add to this conversation that the Diamondbacks will be mediocre but the Suns are great?

Mbozek, can you copy and paste the part of RR 76-28 which supports your position? It wasn't apparent to me. I am also not sure why it's oxmornic (sic) to require an allocation formula in a sole proprietor's plan. It doesn't require a contribution to be made any differently and it covers all situations in case other employees become eligible. Would you too argue that TH language should not be required or any other provisions that may not apply to the current situation? The IRS would disagree. KJohnson is right on the money IMO.

I took the original post to mean there was no formula for the allocation, but he could have just meant no formula for the amount to be contributed. Of course no formula for the amount is very common and doesn't need a board resolution, so I guess we will see what was meant.

Absolutely!

That's just not possible. Not having a specific formula means you don't have a definitely determinable benefit and an invalid plan. Are you saying the formula question just wasn't completed in the adoption agreement?

Effen, you are incorrect. Ac correctly describes the rule that to be a predecessor plan here the plan has to be TERMINATED within 5 years before or after the DB's effective date. Ac, a merger is not a termination. I would hold that you currently do not have a predecessor plan.

I see I read your post too quickly. Disregard mine. Let me add that is a good point Katherine.

The provision to ignore rollovers it what determines if a balance is able to be cashed out in the first place. How is getting rid of that provision going to cause you more automatic rollovers? The opposite it true.