Mike Preston

There are too many issues in this arrangement to delve deeply into them here. Both companies need to have competent labor relations and ERISA lawyers weigh in.

What does the plan say about allocation dates? There is a general prohibition on taking a deduction on any amount attributable to future periods. See the 401(k) and 401(m) regs for citations. So, if there were no plan allocation dates between 1/1/14 and 1/31/14 there simply is nothing to deduct on the 1/31/14 tax return. If there are monthly allocation dates then perhaps some portion of the 5/14 contribution is deductible on the 1/31/14 tax return. If the client insisted on deducting it I would want a hold harmless, at the least. But more probably I would recognize the client as Trouble with a capital T and resign (or not accept the takeover).

Well, go ahead and take a look at the spreadsheet that Tom posted. Make note of the fact that the spreadsheet is designed for no more than 6 partners and for no more than 10 non-partners. Also, the spreadsheet makes the assumption that the FICA adjustment is based solely on the reported income subject to self-employment. That is, there are no complications such as: 1) one or more partners show a loss; 2) any partner has any unreimbursed partnership expenses; 3) any oil and gas depletion; 4) the 1040 SE is being completed using one of the alternative methods; 5) other things that I might have excluded from this list. If I were re-doing the spreadsheet today I'd include a self-employment over-ride to ensure I could just run with what the accountant prepares. Also note that the spreadsheet is not based on new comp allocations and would need to be modified to take that into account. Good luck.

I'm pretty sure you got it from me, Tom. The only "instruction" is that it is supposed to be a manually iterative calculation with a keyboard shortcut of Ctrl+Shift+I (which runs the macro named "Iterate"). All the macro does is copy the row 35 "results" over the row 9 "inputs" (you are supposed to do that over and over until there are no differences between rows 9 and 35). With that said, I haven't looked at the thing in years so I do not claim that the formula for the FICA adjustment in row 24 is accurate for all years (it may have been programmed for a specific year). When I sent it to you, Tom, it would have been sent with an email with instructions. I don't think the spreadsheet helps the OP with his question, but since I don't completely understand what it is that the OP is after, I could be wrong.

I can't imagine .pdf files *NOT* being usable for years and years to come.

Why did you lose the saved e-mails? Hard disk crash without backup? Change in e-mail program with conscious decision to abandon existing e-mail store? Hillary Clinton is your e-mail tech advisor? Other?

Seriously? Have you absolutely no clue as to how this message board operates? I did give insight. I said that there is critical information missing that is necessary to have before a targeted discussion will be fruitful from my perspective. I even allowed for the possibility that somebody else might have a different perspective and therefor the time for a less focused discussion. But most importantly I gently prodded you to provide the facts needed for a targeted discussion before having the expectation that others can provide useful commentary. If this isn't clear, then by all means poke the bear one more time. You might find the response entertaining. Then again, you might not.

My thoughts are that I don't have time for a dissertation. Maybe somebody else does. Get the facts and then you'll see if somebody has the time to revisit this topic.

I'm biting my tongue.

When was the plan document signed?

There must be an avenue for a fee free distribution. If there are options available other than a fee free distribution the plan may charge for the enhanced distribution option. Think "check" and "wire transfer". Fees must be communicated in advance. Best if in the SPD.

But there are other rules that govern fiduciary conduct.

Sure, facts would help. But in the end it may end up being a judgment call. After you get all the facts, remember that the underlying principle is whether or not a PII received an advantage. In this context an advantage to T's wife could be construed as an advantage to T merely because of the marriage. And T's wife being an officer greatly expands the universe of what might be considered an advantage. If it smells like a duck.........

Ask the auditor what state tax form would be used to report the gain. It will probably point to a form that includes reference to a Federal form. Use the instructions to both form to prove to the auditor that there is nothing taxable.

There is simply no way to disclose the fact that the plan, as operated, does so with a disguised 410(a) violation.

I'm pretty sure that 410(a) is an operational violation from which a 5300 or 5307 provides no protection.

And if you routinely hire those people as employees and their entry dates end up being later than the statutory entry date you have a defacto violation of 410(a). Satisfying 410(b), whether by reasonable classification or no, doesn't cure a 410(a) violation.

If the net effect of the language you add is that interns who stick around long enough that they are excluded beyond the statutory eligibility date and then magically become participants when their status changes from intern to non-intern you are hosed. It is effectively designing the plan with a waiting period longer than statutorily allowed.

It has to be one or the other, it can't be both.

It depends on the document language, but if the provisions are "normal" the lump sum is the hypothetical account, which is $105,000. However, the annuity the participant is entitled to receive at age 66 would typically be calculated as described in B, unless it is a PBGC plan in which case it appears to be C.

Well, the anecdotal evidence is piling up. Good to know.

I'd be interested in reading the Q&A. All of the other are conjecture or hearsay (the purported conversations with government employees) except the instructions to the 5500 which are crystal clear: you must be consistent from year to year. I understand that there are no specific instructions on how to formally request permission to change. But I would hope that an organization that unilaterally forces a change on clients also takes responsibility for that change should the government come calling. How difficult could it be to write a letter to the DOL requesting specific guidance?

Tom, seriously?

I'd be cautious about changing from cash to accrual on the 5500. I think that can only be done with IRS approval. Not to be blunt, but it seems like your company failed miserably when doing its due diligence before acquiring the TPA.

Was there an amendment?