Belgarath

At least in the small plan world, because they do not want to pay the money (either out of pocket, or out of plan assets, which for a typical small employer is roughly the same thing, 'cause the owners have the bulk of the account balances) for proper Trustee/Fiduciary services. So they (the owner(s)) do it themselves. Now, for a financial advisor to be a Trustee/Fiduciary - assuming they avoid any PT issues to start with? I would say, in general, that's nuts. But if the financial advisor is making enough money off the plan to justify the risk, that's something I can't assess. Had the Trustee purchased appropriate liability insurance/bonding to cover himself?

Same as a C-corp.

Ok, then it depends upon the VALUE of their stock, and possibly their compensation level if you are looking at the 1% ownership test. Take a look at 1.416-1, Q&A's 16-19. I think this will give you the information you are looking for.

I'm a little confused as to the "ownership." Did he sell only the non-voting stock? Does he own any stock at all?

Diet - I don't know what the old 2678 prior to revision looked ike, but can you now use it to do a W-2 for the employer? doesn't look like it? http://www.irs.gov/pub/irs-pdf/f2678.pdf

Maybe he has time to marry a 35 year old, and reduce his RMD by over 50%. At least that will reduce his penalty until he can get it sold.

Yes, that does help. Thanks!

Gosh, I'm confused now. A normal state of affairs for me. Frizzy/Doug - I have a couple of questions: "I think using the term "11(g)" is throwing everything off. A defined benefit plan can be amended after the fact to increase benefits at any time. Therefore, no special exceptions, such as a 11(g) for plan corrections is needed in order to allow it. I think that's the whole point of 1.401(a)(4)-11(g). 11(g) allows a special exception for a plan that is past the deadline to amend to increase benefits to do so to pass 401(a)(4). A defined benefit doesn't need a special exception like 11(g). Can you add this amendment? Yes. Is it allowed to be added because of 11(g)? No, it's allowed because Defined Benefit plan amend after the fact." Frizzy - can you provide any sort of a citation for this, and is there a timeframe? For example, if it happened 5 years ago, I have trouble imagining that the IRS would give you a free pass to retroactively amend to bring in an excluded participant, without running it through VCP. And if there is no formal guidance, then I can certainly believe the IRS informally (as Doug suggests) allows the retroactive amendment within the 11(g) timeframe. I also recall some discussion amongst the actuarial bunch (of which I'm distinctly not a member - math isn't my strong point) that there was debate due to the IRS being a pain about the deduction when you did retroactive DB amendments - could you deduct it as required funding for the prior year. I realize that's a separate subject, and I don't want to hijack the question at hand unless it has any bearing. I'd just feel a lot more comfortable with all this if there is in fact some official guidance. If not, oh well. I'm also wondering if, since Revenue Procedure 2008-50 is so prevalent for corrections now, whether the IRS would follow the informal procedure Doug refers to from an unofficial statement that long ago, or if they would NOW say you have to go through VCP? I appreciate any comments or insight you may have. Thanks!

Can you use an 11(g) amendment to pass 401(a)(26)? You clearly can for 410(b), but I wasn't aware you could for 401(a)(26) - probably because it has never come up! But a quick look through 11(g) doesn't show me where it can be used for a 401(a)(26) violation. Guess I'll have to look into this a little more. Hmmm - I still don't think you can. I think you'd have to go through VCP, where the IRS might very well approve it using the 11(g) methodology. But I don't think you get a free pass by attempting an 11(g) amendment. I'll be interested to see what others think.

I want to see the DOL apply pension oversight rules to auto repair shops. Imagine the fee disclosure when you are paying "x" per hour for labor, for a three hour job, but one job has parts that cost the dealer $125.00 - which they mark up 100% and add $250.00 to the labor, and the other three hour job has parts that cost $1,000, which they mark up 100% and add $2,000 to the labor.

you may find this interesting. And there was another discussion threas even more recently that referred to the Snyder case. Search under "bonding" and you'll find some discussion. http://benefitslink.com/boards/index.php?s...&hl=bonding

Dumb question here, but does a regular old integrated plan design produce better results? I'm assuming not, but just thought I'd ask...

Since I don't know much about these types of plans, I'm just curious. Was this employee either a fiduciary, or someone whose position at the company placed him in a position to have more information about the plan workings than other employees? If not, ignoring the ETHICS of the situation, was there anything illegal about his activity?

Just to expand upon jpod's answer - the 415 limit is for the calendar year in which the limitation year ends. So assuming your limitation year ends in 2012, then you'd use the 2012 limit.

Thank you both. Effen - no, unfortunately I can provide you with specifics, as it is, at least at this point, theoretical. But based upon a comment that the EA made last year on a plan, it might become a reality at some point. For us non-DB types, it seems counterintuitive that an overfunded plan could require a minimum funding contribution, but very little in this business surprises me any more!

Question - and this is theoretical - is it possible for a DB plan to be overfunded for 415 purposes, and yet still have a required minimum funding contribution? If so, how is this possible? Is there a "disconnect" between minimum funding calculations and 415 maximum calculations that makes this possible? Thanks!

Interesting question, and I think you'd need one of the ERISA attorneys to chime in here. I don't know if there are court cases that set a precedent for this specific question. Bankruptcy Trustees are always looking for creative ways to reach plan assets, and I don't know which view would prevail here.

Provided by whom, and for what purpose? Do you mean for the new participant-directed DC plan fee disclosures? Or regular life insurance company disclosures mandated by State banking and insurance laws? I'm assuming you mean the former. And I don't think there is any concrete discussion of this. I'd first ask the insurance company, as any company selling insurance in plans will need to be able to provide this for their customers. Beyond that, I think I'd look at the DOL model disclosure "comparative chart" and try to toggle something together based upon the annuity requirements, in conjunction with whatever you get from the insurance company. Good luck!

As far as I know, yes. You'd have to then look to State law to see if thereis any protection from judgements in that State.

Right, so they will file VCP before 1/31/2012, which is within 1 year of the deadline, so they get the reduced fee ($375) and they don't have to file for a determination letter.

I think you are right. I was trying very hard to be wrong on my original conclusion.

I think I may have missed something. See the portion I've underlined from Revenue Procedure 2007-44. Since the 5 year cycle ended 1/31/11, it appears that this would give the IDP plan sponsor until 4/30/12. Thoughts? 01 An employer's plan is treated as a pre-approved plan and is therefore eligible for a six-year amendment/approval cycle if: (1) The employer is either a prior adopter described in section 17.02, a new adopter described in section 17.03, an intended adopter described in section 17.04, or the adopter of a replacement plan that meets the conditions described in section 17.05, and (2) The sponsor or practitioner maintaining an existing or interim pre-approved plan (defined in (3) below) timely submits an opinion or advisory letter application for the plan: (a) by the application deadline of October 31st or January 31st, whichever is applicable, in the first year of the six-year remedial amendment cycle for pre-approved plans, as described in section 18 of this revenue procedure, and (b) receives a favorable current opinion or advisory letter from the Service before the employer adopts the plan as described in sections 17.02 through 17.05 below): (3) For purposes of this section 17: (a) An existing pre-approved plan is a plan that has received a valid opinion or advisory letter for the six-year cycle immediately preceding the opening of the current six-year cycle (or, in the case of the initial six-year remedial amendment cycle, February 16, 2005 for defined contribution pre-approved plans or January 31, 2007 for defined benefit pre-approved plans). An existing pre-approved plan contains separate interim and discretionary amendments attached to the plan that have not been integrated into the plan document in restated form (but that will be integrated before the plan is submitted for an opinion or advisory letter under section 17.01(2) above). (b) An interim pre-approved plan is either: (i) a plan that has not previously applied for or received an opinion or advisory letter because it was not in existence before the deadline for submitting such plans in the immediately preceding period (e.g., GUST deadline), or (ii) a plan that has received a valid opinion or advisory letter for the six-year cycle immediately preceding the opening of the current six-year cycle (or, in the case of the initial six-year remedial amendment cycle, February 16, 2005 for defined contribution pre-approved plans or January 31, 2007 for defined benefit pre-approved plans). An interim pre-approved plan does not contain the interim and discretionary amendments in separate documents because they have been integrated into the plan document in a restated format for purposes of submitting the plan for an opinion or advisory letter on or before the applicable date under section 17.01(2) above. © A newly approved version of a plan is a plan described in section 17.01(2)(b).3 .02 An employer is a prior adopter if: (1) the employer adopted and made effective a pre-approved plan as of the last day of the six-year remedial amendment cycle immediately preceding the opening of the current six-year cycle and that employer's pre-approved plan was an existing plan, or an interim pre-approved plan (under section 17.01(3)(b)(ii)) that has a valid opinion or advisory letter for the period preceding the opening of the current six-year cycle, and (2) the employer, within the announced adoption period described in sections 16.03 and 16.04, (a) adopts the newly approved version of that pre-approved plan or (b) adopts the newly approved version of a different pre-approved plan maintained by either the same sponsor or a different sponsor. .03 An employer is a new adopter if: (1) the employer maintains an individually designed plan, or (2) the employer is not currently maintaining any qualified plan (individually designed or pre-approved) and has not maintained any such plan during the current five-year remedial amendment cycle applicable to the employer, and (3) the employer adopts either an existing pre-approved plan or an interim pre-approved plan before the end of the employer's five-year remedial amendment cycle as determined under Part III of this revenue procedure, An employer may only adopt an interim or an existing pre-approved plan that is not the newly approved version of the plan if the employer adopts such plan before the beginning of the adoption period described in section 16.03 and 16.04 during the applicable six-year cycle. Such an employer must re-adopt either the newly approved version of the same plan or a newly approved version of a different pre-approved plan during the adoption period. Any employer whose five-year cycle has not ended may adopt a plan during or after the adoption period, but such employer must adopt the newly approved version of a pre-approved plan. .04 An employer is an intended adopter if: (1) the employer currently maintains a qualified individually designed plan and (2) such employer and a sponsor or practitioner who maintains an existing pre-approved plan or an interim pre-approved plan execute Form 8905, Certification of Intent to Adopt Pre-approved Plan4 , before the end of the employer's five-year remedial amendment cycle as determined under Part III of this revenue procedure.5 However, if the employer's five-year remedial amendment cycle ends during or after the announced adoption period described in section 16.03 and 16.04 associated with the applicable six-year cycle, rather than execute Form 8905, the employer should instead adopt the newly approved version of a pre-approved plan (and will be treated as a new adopter under section 17.03).. 05 Replacement Plan (1) An employer is an adopter of a replacement plan (defined in section 17.05(1)) under the following situations: (a) The employer timely adopted a pre-approved plan that is to be replaced by a "replacement" plan (that is, the plan document remaining after one of the situations described in section 17.05(1)©); and (b) A sponsor or practitioner maintaining the pre-approved plan does not request an opinion or advisory letter during the current six-year approval/amendment cycle because the plan is to be replaced by the plan of another sponsor or practitioner as a result of a change in business circumstances described in section 17.05(1)©; and © The sponsor or practitioner of the replacement plan and the sponsor or practitioner of the replaced plan are related in one of the following ways: (a) one was merged into the other before the last day of the submission period as described in section 17.01(2) or (b) as of the last day of the submission period as described in section 17.01(2) both are members of the same controlled group of corporations within the meaning of § 414(b) or are trades or businesses which are under common control within the meaning of § 414©. (2) Effect of Adoption of Replacement Plan (a) If the employer intends to adopt the replacement plan, the employer will not be required to execute Form 8905, Certification of Intent to Adopt Pre-approved Plan. (b) If the employer applies for a determination letter for a replacement plan, the application must include a statement from the sponsor or practitioner maintaining the replacement plan indicating that the sponsor or practitioner maintaining the replaced plan was bought out or merged with the sponsor or practitioner maintaining the replacement plan. .06 If an employer described in section 17.02, 17.03, 17.04 or 17.05 adopts a pre-approved plan or individually designed plan after the adoption and/or submission deadline established by the Service for the current six-year remedial amendment cycle and the employer is unable to utilize its five-year remedial amendment cycle, (e.g., the employer's submission deadline under the five-year remedial amendment cycle precedes the adoption and/or submission deadline under the current six-year cycle), then the adopting employer may be eligible to correct for late adoption under the Voluntary Correction Program. Examples 13 through 17 below illustrate an employer's eligibility for the six-year cycle. In the following examples, both the tax year of the employer and the plan year are the calendar years and, except as otherwise provided, the plan has been operated in accordance with the plan terms, including any interim and discretionary amendments. Example 13: Employer L adopted and made effective Plan X on January 1, 2005. Plan X is a pre-existing defined contribution pre-approved prototype plan sponsored by Sponsor M. Sponsor N of Plan Y, also a defined contribution prototype plan, timely submitted an application by January 31, 2006. In 2008 the Service announced that February 1, 2008 through January 31, 2010 would be the two-year window for employers to adopt restated pre-approved plans and file determination letters, if necessary. Sponsor M notified Employer L that it no longer qualified as a sponsor because it did not have the requisite number of employers (30) reasonably expected to adopt the pre-approved plan. Therefore, Sponsor M did not submit a new opinion letter application within the six-year cycle by January 31, 2006. Employer L timely adopts Plan Y of Sponsor N within the two-year window period. Employer L will be considered to be a "prior adopter" within the meaning of section 17.02 of this revenue procedure and has timely adopted the plan within the six-year cycle. The result would be the same if Employer L switched to Plan Y because Sponsor M did not timely submit an application by January 31, 2006 for that prototype plan, or Sponsor M timely submitted an application by January 31, 2006 but later withdrew the application, or Employer L was dissatisfied with Sponsor M for other reasons. Example 14: The facts are the same as Example 13 except Employer L adopts a different defined contribution pre-approved prototype plan, Plan Z, sponsored by Sponsor M within the announced two-year window period and Sponsor M timely submitted an application for an opinion letter by January 31, 2006 for Plan Z. Employer L is considered to be a prior adopter and gets the six-year remedial amendment cycle. Example 15: Same as Example 13 except Employer L adopts a defined contribution VS plan, Plan V, instead of a prototype plan within the announced two-year window period and the Sponsor timely submitted an application for an advisory letter for Plan V by January 31, 2006. Employer L is considered to be a prior adopter and gets the six-year remedial amendment cycle. Example 16: Employer P, whose EIN ends in 6, has never maintained a qualified plan. Sponsor S timely submitted an application for an opinion letter for Plan Y, an existing pre-approved defined contribution prototype plan, by January 31, 2006. Employer P adopts Plan Y on December 15, 2006, which is prior to the end of Employer P's five-year remedial amendment cycle (Cycle A). Employer P is a new adopter and gets the six-year remedial amendment cycle. Example 17: Employer Q, whose EIN ends in 1, currently maintains an individually designed defined benefit plan (IDP). Employer Q decides to switch from an IDP to a defined benefit pre-approved plan. On January 15, 2007, Employer Q and Sponsor S execute Form 8905, Certification of Intent to Adopt a Pre-approved Plan. The defined benefit pre-approved plan adopted by Employer Q was timely submitted for an opinion letter by the applicable deadline. Employer Q is an intended adopter because Employer Q and Sponsor S signed Form 8905 timely (i.e., before the end of Employer Q's five-year remedial amendment cycle).

Just want to see if I'm missing something here. An employer with an EIN ending in "5" has a custom DB. To me, that means either he had to restate by 1/31/11, or complete an 8905 by 1/31/11, and then restate into a prototype or VS by 4/30/2012. Am I missing something? Thanks.

Thanks to both of you. So I guess the heart of my question is: does Relius have or produce, when amending via its amendment module, standardized amendment language so that the amendment is for 1 year only and automatically reverts back to "maybe" for the following year, or must I just draft some customized basic language that accomplishes this? So that as Jim suggests, one amendment amends "in and out" - "in" to safe harbor for 2012 and "out" of safe harbor for 2013? As an aside, does this "in and out" amendment mess up prototype status? It shouldn't, as amending out of safe harbor and back into it are both permitted elections in the Adoption Agreement. But does the IRS have a problem with the "in and out" on one amendment, or do they want to see two separate amendments? The plan in question that raised this issue is a prototype, and not a VS. Gracias.

I'm very new to Relius, so apologies for foolish questions. So, let's say you have a 401(k) that wants to use the "maybe" election in 29(e)(2) of the adoption agreement. Then, in a timely fashion of course, they decide they do want to amend the plan to provide for the 3% safe harbor contribution. My question is this: does the amendment wording provide for something to the effect that "this amendment to provide the 3% safe harbor non-elective contribution is effective for the plan year beginning 1/1/2012 and ending on 12/31/2012. For 2013 the plan will automatically rever to the the Discretionary ("maybe") election in Section 29(e)(2) of the adoption agreement, and will remain so unless and until changed by any further amendment" - or something to that general effect. In other words, 1.401(k)-3(f)(1) clearly pwermits such an amendment to be for one plan year only. But does the Relius document permit this? If not, then it is a real bore to have to amend in and back out of safe harbor status year by year, rather than only having to amend in. Thanks - I appreciate any responses.