Mike Preston

What we have here is a failure to communicate...... The accountant needs to be told that it is never wise to finalize the contribution amount before a qualified plan expert weighs in. Isn't this just a case of the accountant recognizing the wrong amount for the 2015 deduction?

I do my testing on a spreadsheet that has an indicator, by participant, for "Plan" code. It then has a filter code so that the testing internals are ignored (but not the body counts) for everybody who doesn't match the "Plan" code of the filter. Change filter to "1"; change testing method to "Test on benefits", print; Change filter to "2", change testing method to "Test on contributions", print. Easy, peasy.

But, but, but....... this thread has long since left the comfortable confines of the original: "Do you include the value of the loan?" discussion because (I hope) everybody agrees that since there is absolutely no exclusion it is obvious that it IS included. Hence, it is perfectly reasonable to expand the discussion to cover a different fact pattern, such as: "I don't care how much the payments may contribute to the equation if they don't contribute enough to process the RMD based on the $40,000 account value." My point is that it isn't like this situation is "semi-rare". This issue is extraordinarily rare. Even the case you describe: "Consider an account that has $20,000 in marketable securities plus $20,000 in a promissory note ...." has to also see the promissory note payments be extraordinarily low or the age of the participant be extraordinarily high before the cash generated won't be enough to satisfy the RMD's. When you are dealing with extraordinarily rare circumstances, the actual numbers are extremely significant because a close analysis of those numbers might give rise to a solution that would not necessarily present itself otherwise.

What is the age of this person? I just don't understand how 4 quarterly payments won't generate enough cash to satisfy the RMD. Can somebody explain why so much effort is being expended in this thread without getting real numbers?

Fire the recordkeeper? Hire somebody in our industry to file a corrected 1099-R? The latter may be impossible if the TIN on the 1099-R is not the plan sponsor.

Usually, no. But the PBGC is extraordinarily responsive on questions such as this, so just call the PBGC and talk to the person this case is assigned to.

Pick your poison. If the amendment calls for 100% vesting of the -11(g) benefit but leaves the existing account balance without any vesting then you adjust your administrative system to handle it. If you can't, I see nothing wrong with attaching a statement to the report that essentially says that the administrative system can't keep up with the brilliant ideas that the compliance people have developed and should therefore not be used when determining the entitlement of said employee. This is not uncommon. Many people take the position that the -11(g) increases should not be reflected until the next year, either in the administrative reports or on the 5500. The only place those increases belong is in the non-discrimination analysis. In the case of balance forward plans it makes for a lot of fun. (or tsuris, depending on your point of view).

No.

I wouldn't endorse exclusion of interns by class without a bit more analysis. The issue is whether such an exclusion is deemed a violation of 410(a). I can see a circumstance where that might be the case. If so, it matters not that the resulting coverage test satisfies 410(b). So, the question becomes what, if anything, could be deemed a violation of 410(a)? We know one..... part timers. But there can be others. Here's one example: say a medical company has a class of employee known as "pediatric nurse" and an intern program where 100% of their new hire pediatric nurses come from those who have gone through the intern program. In my mind, this is a clear violation of 410(a) if interns are excluded by class if any of them would have entered the plan without the class exclusion.

In order to satisfy 11(g) the amendment must have substance. I don't see where an existing account balance has any bearing on the issue.

You don't count people twice. 410(b) is easy: 17/17 / 2/2 = 100%. For plan purposes you use compensation defined in the plan. For a4 purposes you use a 414(s) definition of comp.

The provisions dealing with Davis-Bacon contributions are extremely broad. I would be surprised (but not shocked) to learn that they couldn't be used to fund a match.

The plan administrator's fiduciary responsibilities extend to any interpretation it makes. At the least, they are inviting a law suit from the disenfranchised. They need (independent) ERISA counsel.

You don't count people twice. You test for reasonableness only if you are testing whether the definition of compensation satisfies 414(s). You use any 414(s) definition of compensation to satisfy a4.

If you think any have EVER been filed, get a 2848 signed by the client and call the IRS to ask them if they have record of any EVER having been filed. It may take a while on hold and then you will be asked to fax the 2848 while on the phone, but they are very helpful.

It can make a huge difference. And besides, no, you've got the whole universe of community interest on its heels with your assertion that monies have to come into the participant's hands before being a part of the community. Did you really mean that?

I think you will find that what you think doesn't seem right is in fact very right. I believe the most widely known example is the OJ case. As I understand it, the Goldman's have had no luck getting their hands on OJ's pension assets. I wonder if they attempted a retroactive QDRO? That would have been an interesting court decision.

Unlikely to ever become an issue at 4.402%. Won't round to an additional dollar unless comp exceed $96,955.59.

And just for fun, note that if you are really giving 4.4000000000000000% as a gateway you will fail gateway if it is based on 1/3 * ($35,000/$265,000) = 4.4025157%. There are some that use rounding techniques that make it appear that it will pass, but for sake of an additional $1 or 2 why take that chance?

No.

And if the document is not determinative, then the Plan Administrator has to interpret the provisions accordingly, paying attention to the fiduciary duty to administer the plan properly under ERISA.

I guess we are just going to have to agree to disagree. You think the regulation doesn't specifically reference plan year. I think the language used makes sense only if it most assuredly does. You think that anecdotal evidence of individually designed plans that have ignored the regulation's clear intent and nonetheless received determination letters constitutes some sort of precedent. I don't. I think that clients administering plans in accordance with your interpretation should be warned that their participants have potential ERISA claims against the plan. I gather you don't. Fair enough.

Are you being serious? smh

Thanks, Calavera, for saving me the time to look that up!

I believe you use full fiscal year comp. Obviously, when plan and fiscal year are the same then it matters not.