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Mike Preston

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Everything posted by Mike Preston

  1. Mike Preston
    I have no idea what you mean by "regular price".
  2. Mike Preston
    Uh, I didn't think it ever worked with future dates.
  3. Mike Preston
    I agree with the conclusion, but the statement "Top heavy minimums are required only for NHC." should be "Top heavy minimums are required only for non-keys, not that it makes a difference in this case."
  4. Mike Preston
    There are some real benefits associated with transferring mortality risk.
  5. Mike Preston
    There are two circumstances where what you have described actually works. First, as Bird indicated, going to an insurance company and purchasing an annuity in the normal form will typically be more expensive than settling a participant's benefit in the form of a lump sum. Second, going to an insurance company and purchasing an annuity in the form of a 100% joint and survivor benefit where the plan provides that the 100% joint and survivor benefit is fully subsidized is much, much more expensive than a lump sum. The key to making it all work is that the insurance company, in both cases, offers a lifetime annuity. There is no option to convert to a lump sum at a future date.
  6. Mike Preston
    I don't see how the PBGC would care. It was a standard termination, right? The implication is that without this $900 the plan paid everybody out what they were entitled to, right? So this $900 effectively were excess assets to be allocated amongst the 12 participants, right? If right, right, right then the PBGC won't care because they NEVER care about the allocation of excess assets.
  7. Mike Preston
    $0/X = $0.00 where X is the MDIB factor.
  8. Mike Preston
    It depends on how the Plan Administrator chooses amongst its options. First, you typed XYZ when you meant ABC. No matter. The key issue is whether the Plan Administrator treats the plan as terminated on the original termination date or whether, pursuant to Rev. Rul. 89-87 the original termination date is lost. Obviously a job for ERISA counsel here, but I would be surprised if the termination date didn't hold. If so, no SB for 2018.
  9. Mike Preston
    Pooled plan or individually directed. Might require a bit more administrative gymnastics if the latter, but still doable.
  10. Mike Preston
    SoCal.... people are missing the point of the OP. The methodology described is a variant on the springing cash value gambit. Invent a policy with a surrender charge. Pretend that the amount being treated as a taxable distribution is the amount that would be distributed from the annuity immediately after purchase where the surrender charge is in full force and effect. Provide for the elimination of the surrender charge over time along with the ability to convert to a lump sum at some time in the future when the surrender charge will be eliminated. Magic, right? Wrong. It doesn't work. It is malpractice to suggest it. Strong letter to follow.
  11. Mike Preston
    No.
  12. Mike Preston
    I don't think you want them.
  13. Mike Preston
    Well, I found it in the instructions to the 5500. I could very well have pulled up a year earlier than 2017. If nobody beats me to the punch I'll pull up the last few years and see if I can pinpoint when it changed.
  14. Mike Preston
    I'm not saying anything with respect to the ultimate decision as to what needs to be adopted, and when, but if you do end up with a controlled group keep in mind the instructions to the Form 5500 which includes this requirement in order to file an EZ: ...2. Does not cover a business that is a member of a ‘‘controlled group"....
  15. Mike Preston
    Depends on what the plan says. Is owner happy with mortality risk?
  16. Mike Preston
    < 250k, though, so no EZ for now.
  17. Mike Preston
    Seems so.
  18. Mike Preston
    Indeed.
  19. Mike Preston
    No way. But whether a 5500-SF is required depends on the document provisions. If the employee is a participant by plan terms, even if no deferral and no ER contribution, then an SF is required.
  20. Mike Preston
    No break. Must go into the 3-year average as a zero.
  21. Mike Preston
    Yes, that is what I thought I was saying.
  22. Mike Preston
    There is nothing that isn't Kosher. At least as long as it is done properly!!! I see a lot of people not doing it properly. Which, of course, means that those aren't Kosher. See the loop?
  23. Mike Preston
    Very messy with one month in a now closed tax year and one month not. In a perfect world I would say this is a "mistake". Mistake is a term that implies reversal is possible and that there are no negative tax consequences associated with such reversal. But you won't find "mistake" in EPCRS which instead leans to "operational error" for such things. In any event, I'd go with correcting this obvious mistake as simply and cleanly as possible. If possible at this late date, have a corrected W-2 issued, pull the money out of the plan and give it back, give less back than what was taken in error if there has been a measurable loss, and if so, make up that amount with a payment directly from the employer. I know. Heresy.
  24. Mike Preston
    No, it is not. Yes, they can. Yes, it can.
  25. Mike Preston
    I have seen this before in the wild. Very sad unless the client is kept in the loop and keenly aware of what is going on. Alas, over time they are seduced into thinking the plan is more akin to a DC plan than a DB plan. What I have seen is that the Trustee decides to create investment pools that mimic participant entitlement. Things are theoretical until a participant terminates employment at which point the plan is amended to magically make the entitlement match the assets. There is no way to ensure that this will always "work" but there are seemingly many clients who really like this design. When things don't "work" as advertised they usually leave the nest and brave the real world. It is then left to those of us who practice without psuedo-accounts to untangle the mess.
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