Belgarath

Yes, I agree that it is unlikely they would just let it slide.

If a DC plan has failed to distribute an RMD, would you enter this on the Schedule I, Line 4L? Or is this really meant to only report distributions that have been requested but not paid, etc.?

Well, now you are changing the rules a bit. The OP said there was no delivery of services to other corp so no ASG issues. The ASG rules are so fact specific that I wouldn't even attempt a guess without a whole lot of information. We never actually make the determination (nor do we for CG, as far as that goes) - we require that the client make the determination, presumably in conjunction with legal counsel.

It has to be the same 5 or fewer shareholders who own (or are deemed to own) stock in both corporations. So if Owner #1 owns 10% of corporation A, and zero% of corporation B, then there is zero ownership for purposes of the CG test. Or if you change the percentages to 10% of A and 5% of B, then for purposes of the test, there is only 5% ownership. See IRC 1563 and the accompanying regulations, as well as the Vogel Fertilizer decision.

Apparently some women thought that Wilt did...

Thanks all, but Tom, this grasshopper could never hope to compete with the Master! As for your puzzles, I gave up long ago. These days I look for the small victories to savor, like getting my shoes on the proper feet

While I hate CG/ASG questions, I'll give it a shot. No, and no. I'm assuming there is not any other attributed ownership, etc., etc...

Did the VS interim amendments actually require a signature by the plan sponsor? I ask only because many VS documents instituted a provision for unilateral amendments in response to the guidance in IRS Notice 2005-37. Many amendments since that time have a place for a plan sponsor signature IF they are electing to change anything that might be optional in the interim amendment, but if they don't, the provisions are automatically effective and require no signature. Be prepared to explain this to the IRS, as our experience is that most of the reviewers, particulalry the plan termination reviewers, do not know their own requirements and giuidance.

Yesterday... Income tax was due, I had to pay... All the funds I tried to hide away... I don't believe, I'll eat 'till May. Suddenly... I'm not sure that I am fiscally... Ready for responsibility... Oh yesterday, came suddenly. Why, I Owed so much, I don't know, I couldn't say May be Forms were wrong, how I long, for yesterday. Yesterday... Seemed like prison time was on its way... Now I need a place to hide away... While keeping IRS at bay. Why, I Owed so much, I don't know, I couldn't say May be Forms were wrong, how I long, for yesterday. Yesterday... Taxes due, I filed come what may... Losing all deductions that's my way... Of giving IRS my pay. mm - mm - mm - mm - mm - mm - mm.

Probably a foolish question on my part, but what does the current plan document say, if anything? Does it outline this method of counting hours? And if so, does it have a determination/opinion/advisory letter?

Agree. The initial 5 year period falls within the EGTRRA remedial Amendment period, so you should be ok. As long as you submit it fast!

And just this morning, we now had precisely the same thing happen. Some of these idiots need to get fired. Of course, I'm crankier than usual given that it is just prior to 4/15. It's been a long 3 months... So maybe if you ask me next week, I'll let them keep their jobs if they promise to play well with others.

Do you seriously expect the DOL to administer its own rules and regulations correctly? It would be nice...maybe it will happen in a galaxy far, far away.

Interesting. Again, it would seem that the IRS isn't being very neighborly if they provide this option to them, without informing the rest of the pension world that it is available.

The 2009 EZ? If so, doesn't seem very nice of the IRS to release it only to them - I can't find it anywhere!

GMK - I don't dispute at all that your step #3 is possible, but since the the participant has already specifically taken step 2a, which is to actually request a corrected 1099, then it seems that tax avoidance isn't the goal. Of course, it may occur to him later, especially if he reads these boards. Also agreed that cashing the check seems irregular and or illegal. I wonder if it really was properly made out to the other institution, or if it was incorrectly made out - in which case, I might agree with Kevin.

Hi Kevin - we'll just have to agree to disagree on this. What about a situation where the receiving company deposited it into a non-qualified annuity account instead of a qualified IRA annuity? Is it still the plan's responsibility to "correct" a mistake that was made by another party? Or into a non-qualified mutual fund account, rather than a qualified IRA account? I'm sorry, but there are a zillion things that can go wrong that are beyond the control of the plan, and for which it doesn't seem to me that the plan is responsible, even if it is later told about the error. Now, I may be dead wrong in my opinion, but I know that if a similar scenario was brought to us and the client wanted a corrected 1099, we'd tell them to fry ice. Of course, with any luck, we'll never have it happen!

Perhaps it is not the total amounts, per se, that are the problem. Perhaps it is that a SIMPLE-IRA cannot be maintained by an employer who "maintains" another qualified plan to which contributions are made or benefits are accrued during the calendar year. And the software might possibly be considering this a Controlled Group. Now, I rather doubt this is the case, but I toss it out as a possibility. Do you know how much, exactly, the software disallowed? Did it disallow the entire SIMPLE deferral, or does it not properly understand catch-ups and it just disallowed the catch-up amounts?

FWIW, I come down on the side of those who believe the plan has no responsibility to "correct" anything. Plan reported it correctly. As an aside, not that it matters in the least, but it doesn't appear that this participant is trying to avoid paying taxes. In the original post, the participant is asking that a 1099 showing a rollover actually be corrected to reflect something else, which presumably would be a taxable distribution. "Distributee now comes back to plan and asks for a "corrected 1099" showing distribution as ? not sure what, but something other than a direct rollover."

I've not spoken with anyone who has tried the following, but it might be worth considering: In the letter begging for a waiver of penalties, perhaps it would be worthwhile to suggest that if they cannot waive all the penalties, that a fair solution might be to only apply penalties that are identical to those that would be imposed under the DFVC program? These penalty amounts are relatively minor, and just possibly the IRS would say "ok" rather than a flat out rejection of a penalty waiver, where they would then impose the maximum panalty and you'd have to negotiate downward from there, which isn't a really good bargaining position. Or it may be a bad idea for other reasons. I'd be interested to see if anyone has tried a similar approach, or what their thoughts may be.

Well, to get REALLY technical, there could be an amount remaining in the policy equal to the accumulated taxable term costs that the participant has declared as income, and the policy could then be distributed without taxation if the fair market value is no higher than that amount. But some insurance companies do not track this amount, so it could be difficult to obtain such a number.

Maybe. It depends upon whether the Fair Market Value of the policy, after stripping value out via a loan or withdrawal or whatever, is zero. The insurance company should be able to confirm whether this will be the case or not. Some policies have much higher Fair Market Value than Cash Surrender Value (which is what led to all the new guidance being issued in the first place.)

Jenny - I think I understand your question - you are concerned that there is a prohibited transaction because the plan would be paying an expense that the employer is legally obligated to pay under the terms of the contract between the employer and the audit company. Is that correct? If so, why not just have them mutually agree to cancel the contract and make a new contract with the plan administrator? Assuming of course that the plan contains language to allow such payment, which in my experience is pretty standard. Perhaps some of the lawyer types will chime in with some thoughts here.

Thanks for the input. My dates were hypothetical, as I'm just trying to get a handle on the issue.

It already violated it before the merger. The plans should have been aggregated for purposes of calculating the loan limit,