doombuggy

i hope I picked the right forum to post this crazy question. Db plan (which i don't work on, I just do DC stuff) had a plan term date of 12/1/11. The trustees had intended to move the assets over to a MPP set up with a 0% formula to take the assets but the assets were not transferred prior to 12/31/11 (they went sometime earlier this year). So MPP had $0 at Fidelity and DB plan had lots on 12/31/11. DB plan also has a mortgage that reads: [blah, blah, blah] and {insert name}LLC Defined Benefit Plan with trustees {insert name} and-or {insert name}, herein called "Mortgagee," which term includes Mortgagee's heirs, executors, administrators, trustees, successors, legal representatives and assigns, and shall denote the singular and/or plural and the masculine and/or feminine and natural and/or artificial persons whenever and wherever the context so requires or admits, and whose address is..... I think the trustees are looking at this are the DB plan is the Mortgagee and that this automatically transfers the mortgage to the successor plan, the MPP. Your thoughts? I had originally posted this in the DB forum and was asked addtional questions: Yes, the DB plan has been properly terminated, no it is not covered under PBGC. The plan covered the owner and his wife, she retired earlier in the year and got her distribuiton already. he was the only one left on plan term date of 12/1/11. Liquid assets were not moved prior to 12/31/11 as thought. They were moved sometime earlier this year (I do not have financial statements for either plan at this time). I think the plan sponsor thinks that the wording quoted above is sufficent to inidcate that the mortgage is now as asset of the MPP because the DB plan is terminated. I disagree and think they need some kind of document (but what?) to transfer the "ownerhip" of the mortgage from the Db plan to the MPP. thoughts?

The DB plan covered the owner and his spouse. She retired earlier in the year, so only the owner was left in the plan as of the terminaiton date of 12/1/11. While the DB plan is not mine, I certainly know that it needs to go thru a terminaion process. My co-worker has done this. No it is not covered by the PBGC. The MPP was created to take the assets of the DB plan for the sole remaining partiicpant/owner of the plan sponsor. I know my co-worker issued the proper distribuiton paperwork, with the intent that the distribuiotn was to take place before the end of last year. It was discovered in January when he was working on 1099-Rs that the assets were not liquidated in 2011. My concern remains with the mortgage that I quoted in my initial post. The plan sponsor seems to think the wording of the legal document/mortgage would automatically transfer the mortgage to the MPP from the DB. I don't feel that this is the correct answer. I personally think they need some kind of document that states the mortgage should be transferred to the new plan. While I think it is more uncommon, at least to me, that plans hold assets that are not readily liquid (real estate, mortgage, art, etc), I felt that there might be others on this forum who have more experience with non-liquid assets. In this case, the "from" plan happens be a DB plan, so I thought I would post the question here. I'll try another fourm. Thanks.

Rats, I just lost everything I typed and need to do this over... i hope I picked the right forum to post this crazy question. Db plan (which i don't work on, I just do DC stuff) had a plan term date of 12/1/11. The trustees had intended to move the assets over to a MPP set up with a 0% formula to take the assets but the assets were not transferred prior to 12/31/11 9they went sometime earlier this year). So MPP had $0 at Fidelity and DB plan had lots on 12/31/11. DB plan also has a mortgage that reads: [blah, blah, blah] and {insert name}LLC Defined Benefit Plan with trustees {insert name} and-or {insert name}, herein called "Mortgagee," which term includes Mortgagee's heirs, executors, administrators, trustees, successors, legal representatives and assigns, and shall denote the singular and/or plural and the masculine and/or feminine and natural and/or artificial persons whenever and wherever the context so requires or admits, and whose address is..... I think the trustees are looking at this are the DB plan is the Mortgagee and that this automatically transfers the mortgage to the successor plan, the MPP. Your thoughts? If you agree, when would this take effect? This is critical as if the MPP has no assets on 12/31/11, it doesn't need a 5500 for that year (it's first year). if you disagree, what do you think is needed to transfer the mortgage over to the MPP? Thanks for your thoughts!

I am working on a takeover plan that our firm did a new EGTRRa document for last year (not sure why, I did not handle this myself). It appears that the plan has a different service requirement for entry into the plan for Profit Sharing than it does for deferrals (regular and Roth) and match. For deferrals, Roth & Match (which they apparently no longer do the discretionary match but did at some point in the past) you need to be 21 and have 3 months of service. you will get in on the 1st of the month following the eligibility requirement fullfillment. For proift sharing however, you need to be there for a year; entry dates are 1/1 and 7/1. They use the elapsed time for hours. Plan has a safe harbor non-elective. As I read the Datair document that was done last year, if you are elig for deferrals, you are elig for safe harbor. I am being told that the old EGTRRA document had the safe harbor elig lumped in with the profit sharing ("It's an employer contribution"). I haven't had a plan with mis-matched entry requirements in a LONG time; the last plan I had like this did NOT have safe harbor. What are your thoughts? Can you have a longer wait period for the safe harbor like that? The plan has three people who are not eligible for the profit sharing portion and it is top heavy. What the question boils down to is should that 3% they are getting be top heavy (vesting schedule) or safe harbor (no vesting schedule). The dollar amounts are the same. I think it should be safe harbor, but I am getting the T/H agrument from someone else.

The plan is not very important to this client (actually, to his new wife who is the office mgr) so they have decided to terminate the plan this year. The plan has several people, including these two, who are eligible partiicpants. Only the owner and the spouse have made deferrals into the plan, and subsequently received the safe harbor match. The plan was implamented in 2008. They had $20,064 in deferrals from 2010 that were not deposited timely. This was reported on line 10a of the 2010 SF. They also owe $6246 in SHM from 2010, but that is not reported on the 5500. As of today, they still have not paid these deposits from 2010. so my question is should I report the deferrals on the 2011 5500, since they are still oustanding? they made no deferrals for 2011 (well, according to the writtend census data they sent me last week, as they never sent the requested W-2s). and there were no deposits of any kind made into the plan in 2011, nor so far in 2012.

Ours is very similar too. We are all either ERPAs (there are 4 of us here) and we also have en enrolled actuary, so it pretty much covers everyone in the office anyway.... It is at the bottom of 99% of our letters (I think some old templates don't have it, we use ACT) and each of us has it in our signature for emails.

we have the disclaimer on our correspondence, and I believe it is in our email signature too...

So this client rehired an employee who previously terminated in 2009. He was put on the 2010 8955-SSA and was rehired in March of 2011. So..... Does he go on the 2011 SSA as a B with the new acct bal total? Left off enitrely, since he's not entitled to a distribution at this time? When he terminates again he'll go on as a B for that year.

Tom, when I read your comment about NHCE< iwent back to check. This is a doctor's office and I assumed that he was a new doctor. He's actually an ARNP. His comp was only around $14k and he worked less than 300 hours (something I did not notice yesterday when I was working on their calcs). So this might never be a problem, if he doens't work enough hours to actually get inot the plan!

EE hired 1/14/11, plan has a age 21 and 1 year elig, so he will get in 7/1/12 (semi-annual entry dates). Plan is cross tested P/S and the er does give allocations of P/S each year. I assume that the guy didn't want to give his age in fear of discrimination (I have seen a photo), but I can't see how we can get around NOT having his DOB or at least year of birth. Anyone know of anything out there that can protect the ER/Plan Sponsor so they can ask for this info for the plan?

I won't be able to terminate the plan that fast. They have assets in 2 places which I don't get the monthly or quarterly financials from, so the assets won't be liquidated until sometime in February, most likely. My thought about taking the RMD with the termination, while it is early, it's based on the 12/31/11 plan account asset for her. I am concerned that if I tell them she'll need to take it out of the IRA at a later date, it will never get done. She made a deposit of $1700 into this plan in April of 2007, told me in February of 2008 that it was meant for her IRA and has yet to move it! You see where I am going with this.... On the flip side, if I tell her the amount of the RMD she'll need to take by 4/1/13 and she doesn't do it, not my problem.....

I have a mom & pop plan that came in yesterday to tell us they are going to retire and close the business. "Pop" started receiving RMD in 2010. "Mom" will turn 70 1/2 next month. I do not anticipate having the plan terminated by 1/17/12 when she turns 70 1/2, so I am running with the assumption that she will need to take an RMD out of the 12/31/11 balance of her prortion of the assets and then the rest can be rolled over (or whatever she decides). Already planning on doing an RMD for "pop." If they had come to us a month ago and I had been able to terminate the plan and liquidate the assets before she turned 70 1/2, could she have avoided the RMD for 2012 (her first year)? they will complain about the 4 distributions and I wanted to make sure that terminating the plan was not a way she could avoid an RMD. Thanks for your thoughts!

Looks like he doesn't have a choice about paying it back. I have a feeling he might not have it anymore (and I have no clue if he even paid taxes on the distribution when he took it; I assume it went to a bank account versus an IRA, but the financial statement just says "wired funds disbursed"). He's still not old enough to take an in-service, but if we amend the plan effective the current plan year to allow for in-service w/d at a younger age (plan is PSP with MPP money also) than NRA, could he in theory take a 2nd distribution to pay back the first one with interest? My thought is that he would then get a 2nd 1099-R (either for 2011 or 2012, depending) for another $100k. I can just hear this guy telling us to terminate the plan, but that won't make the prohibited transaction go away. He needs to pay the money back or he jepordizes everyone's money (although most of it is his).......

Employer sponsors a profit sharing plan that has a PYE of 6/30. In February 2011 the owner took $100,000 (he's a participant) as an in-service distribution. The plan is valued annually and we saw the disbursement (which we finally rec'd confirmation of today) when we worked on the asset recon in early September. Owner was age 63 at the time of disbursement. Plan doc states that in-service W/D is allowed at NRA, which is 65. I am going with the assumption that he can't pay it back (the question from the broker this morning was "what if he can't pay it back?" so.....). The plan year has closed, so we can't amend to change the age for in-service w/d for the PY in which the distribuiton was done. So, what happens for the PYE 6/30/11 with this prohibited transaction? When reconcilng, log as a payable, even though it might not get paid back? If we amend the plan in the current year, does that help (since it "stops" the prohibited part of the transaction in the current year)? Ugh what a mess! Your thoughts are appreciated!

Hancock should have sent you some kind of notice when the additional dollars hit her account stating that they were going to pay her out within 5 days if they got no reponse from you. I had a similar issue with a plan (except she wasn't rehired). Term'd in Dec 2010, took her acct balance in january 2011 and needed a 2nd distribution of ER money in August. Hancock sent me a notice - thru their message center which sends me an email everyday. nine times out of ten the messages are for a plan that belongs to someone else in the office, but this one popped up and I let them know that it was ok to pay her out again, after the client checked with the former employee (since the form was actually stale - but Hancock didn't seem to care about that too much). In the OP's case, there probably was not enough time for Hancock to know that this person was back to being active unless they were told ahead or the day she was rehired. Chances are the deposit hit by the 9/15 deadline and the message was sent, not read and 2nd payment disbursed.

Just got the notice/announcement from TAG about 1/2 hour ago, and tom you were right on the money!

It's complicated. so the 11 companies break out like this: Group #1 is Co A which "T" owns 100%, Co B and Co C which he owns 67% of each, but his mom owns the other 33%, so the attribution rules apply to him. Group #2 is Co D & Co E, which he owns 50% of each, "D" owns 47% and "J" owns 3%. Group #3 is Co F and Co G, which "T" owns 57%, "D" owns 10% and "M" owns 33%; Co H in which "T", "D", and "M" each own a third; and Co I where "T" owns 48%, "M" owns 48%, with 6 others sharing the remaining 4% (these others do not own anywhere else). Co I is a company that he wants to exclude from the plan prior to 10/1/11 - they have expanded from a plain P/S and added a 4019k) and match feature effective 10/1/11, their new fiscal plan year. Group #4 is Co J and Co K, which he wants excluded (he told us the employees of these companies were terminated effective 9/30/05, but this inaccuracy came out in the 2007 PY audit - let's not go there...). "T" owns 50% of these, "D" owns 10% and "G" owns 40% of each. the plan name is "Company A Profit Sharing Plan." Should the census data for companies I, J & K (the companies he wanted to be excluded/non-adopters) be given to us for the plan year ending 9/30/10 to be counted towards testing?

OK, I have a plan that we found out when they were audited earlier this year that the person we thought owned 100% of all 11 companies really doesn't (he does hold at least 33% ownership in each, mostly 50% or more). So he wants 3 of the 11 companies to be excluded from the plan. We are going to move him to Datair's non-standardized prototype, as this will accomidate his request. My actual question is shouldn't he be reporting the census for these three companies who are not participating in the plan? Shouldn't they be tested under 410(b)? In 20 years, I have a couple of weird ones, and this one is right up there....thanks for your thoughts.

I have a similar situation, but it is 11 companies with one common owner in all and if I figured it correctly, 4 seperate control groups. But as far as your attribution question, I would agree. Because 3 of these companies I mentioned are considered a control group because son owns Co A 100%, Co B 67% and Co C 67%, with mom owning the other 33% of B & C. Attribution rules hold for her to him, hence the control group (at least for these 3)

The plan doc states in the "distribuiton of excess deferrals" section that "...distribution of excess elective deferrals for a year shall be made first from the participant's pre-tax elective deferral account to the extent pre-tax elective deferrals were made for the year, unless the participant specifies otherwise." I am going to check with Datair just to make sure tho. Thanks!

I am working on a quarterly valuation for a client and two people are coming up with this error message. One person is a reservist, so his overage is part of the make-up for the 3 months he was on leave last year. I am good with him. It's the other person that is causing my query. She is 54 so is catch-up eligible. The plan offers traditional 401(k) and Roth 401(k). She has elected to defer into each. So far this year, she has deferred $11,264.10 into each source, taking her over the $22,500 limit by $528.20 (assuming that she did not make any deferrals for the 10/15 payroll). She'll need a correction - am I taking it out of each source equally? They added Roth in 2006, and I am going to assume (for now) that she has made Roth deferrals since then. edited to correct typo.

I always give the STN with the hardship dist. We have a hardship application, and it outlines the safe harbor reasons. I believe it also covers the 10% early w/d penalty, but I don't have it in front of me at the moment.

Tom you crack me up - great version of Elvis' song and very true! And yep, how did you know I had a spat with their support person? She made a snarky comment to me about reading their release notes (which I will explain in a minute) and apparently her boss saw the comment before I reported it, so she got double whammied. it's like that used car commercial (Car Max?) where the 2 prison escapees run back to jail because customer service really sucks everywhere they went! Apparently I can't read the release notes (says support). The CSV file is if I want to import the data into their pension reporter instead of keying the data. I had already keyed the data and thought I needed the file to get it into FIRE. The woman's snarky comment actually had to do with my complaint that their page 2s print one to a page. The notes don't tell you if you print the pages a certian way, they will print 10 to a page. So I did not need the stupid CSV file I learned to create (why isn't my data importing into this file?). On top of the fact the same support person told me on their message board that I should not be counting the "D" code people on lines 6 a & b (which if you read the directions to the form, sounds correct). Guess what I got today after posting 20 files to FIRE earlier this week? 7 BAD filings! Guess why? Because the head count didn't match! This is really the fault of the IRS, and not Datair (although I love pointing the finger at them since coming off of Relius, which I miss so much). Our tax dollars hard at work here! PS: Tom, my hairdresser back home loved the rendition you did of Harry Chapin's song a bit back at one of the annual ASPPAs. Her husband was Harry's bassist and still does shows with Harry's brother Steve.

Unfortunately, we use Datair and they have been zero help. They require a CSV file, which they don't supply and I can't seem to figure out how to creat one that I can use with the import feature. I was able to create a CSV file by typing the data fromt he paper SSA into the file I created, but their crappy release notes make it sound like you need to have a blank file that is set up and their data import will magicaly populate at the push of the "import" button. they are such garbage! i guess I am relageated to mannualy creating each file to import. We have a TCC so I am going to try the first one now.

i just tried creating page 1 with a plan that has two "A" and 1 "D." line 6a says 2 (they term'd in 2008), but I have 3 participant pages. no errors so I guess this is good to go.