Bob the Swimmer

Warning, some large asset managers are already sending out letters on RMDs that reference the pre-CARES Act rules for 2020.

Thanks Larry, good list--in the mid-80's, we had a lawyer at a prestigious firm that recommended all his clients hold their retirement plan assets in Krugerrands-- he would have passed away by now, but I can't believe it worked out well for his clients now 35 years later.

What about the 80-120 rule--see below--if it's the first year, I thought you could still use the small plan rule, if they have never gone above 120 participants. www.5500audit.com › 80_120_Rule This ruling allows plans with between 80 and 120 participants, as of the 1st day of the plan year, to file the Form 5500 in the same category ("large plan" or "small plan") as indicated on the prior year Form 5500 filing. The number of participants dictates whether you have a large or small plan.

This (see below) is from the SunGard (now Relius) 457 manual from about 10 years ago--I would have leaned to yes based on the plan language you cite, but would want to know how long the participation requirements are for plan 2--if 6 months or less, why not wait ? a. Requirements. The affected 457 plans must satisfy the following requirements to engage in a transfer: (i) the transferor plan must provide for transfers; (ii) the transferee plan must provide for the receipt of transfers; and (iii) the affected participant must have an amount deferred immediately after the transfer at least equal in amount to the amount the participant had in the transferring plan. Depending on the context, additional requirement also may apply.

AGREE with all--the smaller the plan, the fewer the HCEs and the more accurate the census, the easier this is to do. Ten, fifteen years ago or longer before SH, we used to psych out the results for smaller plans so they'd know what the outcome would be. But with a larger plan, depends on the available data, agility and skill of the TPA.

It would be helpful also if the writer included the definition of Valuation Date from the plan document or AA.

Should be a good idea--- We always have said a rabbi trust if properly structured can protect the participants generally from a change of heart or a change of control by the employer, but not Chapter 11.

My experience with hundreds of IQPA filings by a very large accounting firm and working with DOL on their processes in the past is that it should not necessarily trigger an audit just by the act of becoming subject to the IQPA audit unless there are some underlying problems in the return itself.

AUSTIN--- I think if I were the participant, I'd want a rabbi trust to protect my account balance against change of heart or change of control by the employer because a new employer could try to renege on the agreement to pay out. Others may feel differently. BOB

I'd also add to the list: EPCRS for RMDs missed in prior years under 401(a)(9) and the corresponding 50% excise tax.

I agree with Larry 200%--I have my own LLC for each business and I get 1099's for the consulting business and file Schedule Cs for the sole proprietorship. One plan is so much easier and it would not normally become a MEP (unless some serious mishandling) as that is way far afield from the reality. Hope that helps.

I agree even though over a long period of time, the earnings tax-deferred end up being a big percentage of the total account balance-- Still, this is only for those with too much salary income in their opinion. Since there is no RMD rule I'm aware of for 457(f) plans, you could technically stretch out a large payment over time--but the sponsor bankruptcy risk is more than most would want to bear.

I hear you kgr12 but then there is no protection for the participant from a change of heart or change of control (but not Ch. 11).

I agree with Luke and Larry--- I've terminated plans for 40 years and usually in the 80s and 90s we got this done well within the 1 year even with IRS approval---now it's much different. The key to me is a paper trail of reasonable good faith steps to get it done in a timely manner that is well-documented.

AUSTIN--- 92-64 says "03. The trustee of the trust must be an independent third party that may be granted corporate trustee powers under state law, such as a bank trust department or other similar party." I've never heard or seen (from talking with Cate Fernandez when this was written) that anyone can be trustee of their own account. My understanding is that this derives somewhat from the English common law of Trusts--where an individual can not witness his own will or trust creation. I would not for my clients have them be trustee of their own rabbi trust.

When I raised the concern about late filing responses from IRS in the past year to several speakers at the ALI-CLE October conference, one of the conference co-chairs said they received a response back in one month. Must be the same IRS employee---to Larry's point, probably gone by now.

We have been calling the 125 plan a simple vehicle or a conduit for many years now. Especially since the 5500 guidance on it came out many years ago from DOL.

Carol said the same thing at the ALI-CLE conference where she spoke on Friday of last week right before the Nationals first home game.

Agreed with all, I'd get their acknowledgement first and begin a dialogue with them before submitting any changes. We're all experiencing much longer time frames and waits, but calling and reaching out is still the best way to find out, even though it also takes time.

Vanguard EE Fraud---10-17-19--DOJ.docx We had a case here involving a Vanguard former employee that is somewhat similar and somewhat scary. See attached.

BILL-- Thanks for the mention--will be at clients next week--- Say hello to Brian Graff if he is there--he was in our study group in DC in the early 90's. Good man. Thanks---BOB JONES

Some local jurisdictions may apply a local tax. So it is hard to say with complete assurance.

We have language for arbitration that we use in our employment agreements, some annual incentive agreements, and LTIP documents. My email is rjones5335@aol.com if you are interested.

Thanks to all--this is a weird application of 1563 that I had not seen in 44 years of consulting. And Larry, no one ever said the Code made sense---I'm attributed as a stock holder via an option that I probably will never exercise. On the other hand, the option agreement here inserted is very sparse (I work in this area of LTIPs consulting with public and private Compensation Committees) and there are a number of issues that are not addressed for the optionee. So caveat emptor as always.

The IRS people that speak at various conferences (for example, EPCRS people) have provided their email addresses in the past as part of programs like ALI-CLE and others. Not sure if they are still dong that.