SSRRS

The Document appears to be saying that if the hours are reduced so drastically, to less than 40 hours monthly, then this would allow benefits to commence, if reached NRA. Meaning this would be the exception to the general rule that in service distributions are not allowed even if attained NRA.

Thank you very much CuseFan. As always your sharp and analytical mind is appreciated. I just want to be sure. I was clear in my question (I hope i was) The IRS confirms that a benefit accrual of 0.5% per year of participation or service is meaningful...thus...a traditional DB plan that has a benefit formula of 0.5% of average compensation times credited service has a “meaningful benefit”. This plan under audit has a benefit a formula of 3% of avg. comp per year of year of service limited to 10 years. Question: Does the fact that this plan's formula of 3% of avg comp per year of service, includes limited to 10 years ( 3 % per yr of service , limited to 10 years of service), possibly make the benefits not meanigful and testing would be needed...and only if the formula would be 3% per year of service, would it be automaticly meanigful benefits? Or even if the 3% per year of service includes , limited to 10 years of service, it is still meanigful benefits, since it is providing at least 0.5% per year of service? Thank you!

Hi Thank you, as usual, for all the insights. A traditional DB plan is being audited by the IRS. 1. It appears from the questions being asked on the IDR, that the one asking the questions is not well versed in traditional DB plans or in DB plans in general. As they ask ...that the FT shown in the val report on the maximum contribution page is 1,846,234 is different than the FT shown on the SB of $1,345,367. The answer is that the SB shows the FT for the minimum funding requirements, while the FT on the val report in the maximum contribution section of the val report is based on the 404(0) rates for the maximum allowable contribution. There is indeed, a section in the val report that shows the FT for the minimum funding and it properly matches the FT shown in the SB. 2. They ask to provide a demonstration of how the plan provides meaningful benefits required by 401(a)(26). In a memo for EP determinations on 7/17/2007 (and Paul Shultz?) The IRS confirms that a benefit accrual of 0.5% per year of participation or service is meaningful...thus...a traditional DB plan that has a benefit formula of 0.5% of average compensation times credited service has a “meaningful benefit”. This plan under audit has a benefit a formula of 3% of avg. comp per year of year of service limited to 10 years. Question: Since the formula is 3% per year of service shouldn't this mean that the plan provides meaningful benefits? 3. They ask how the plan satisfies the nondiscrimination in amount requirements of 401(a)(4). A DB plan that uses a safe harbor formula satisfies 401(a)(4). This pla uses a SH formula... As it is the same formula for all employees, calculated based on the same number of service, and does not exceed 100% of comp. It uses a uniform accrual formula..benefits accrued at a consistent rate for all.. ...3%per year of service. Question: Therefore based on this, doesn't this plan meet the 401(a)(4) non discrimination in amount by design, and does not need annual testing? Thank you very much for any insights on this.

Hi All, A DB Plan sponsored by a corporation has the following provisions: 1. No in service distributions allowed, even if attained NRA. 2. However, if working less than 40 hours a month, then if attained NRA, allowed to start taking benefits. What if the corp has two owners (50/50). One of the owners wants to cut back on his work schedule and salary etc and work less than 40 hours monthly. Can this owner, who has reached, NRA, start to take monthly benefits from the plan, since he works less than 40 hours monthly or does this 40 hour rulr not apply to owners? Thank you

Thsnk you to ALL the above for your guidance and insights that are always much appreciated...Just an update...thankfully a good resolution...the IRS sent (on their own) a standard extension approval ...seems that thankfully their error notice that popped up prior to filing the extension was an error on thier part..as you all stated...thank you!

Hi, Does anyone see anything wrong with a DB plan sponsored by an s corp, the owner needs cash to make the contribution so he will contribute from his personal brokerage account (and not from the corp account).? Thank you

Thank you very much, Calavera.

Thank you Calavera, always appreciate your knowledge. If his benefit hit 100 of comp 5 years ago, then besides that being his benefit as capped, are you saying that a BSD must be established from then,and therefore he is owed back payments from then? And if paying a lump sum now, would he receive in addition to his lump sum, the monthly befits for the past 5 years from the BCD? Thank you.

Thank you Cuse Fan, as always. So if his average comp was 23,000 and terminated in 2012, then based on the adjustments that you mention, his avg comp and his benfit can actually be increased higher than 23,000?

Hi All, A DB participant terminated at age 60. Was entitled to his benefit at the plan's NRA of age 62. Did not get paid his benefit until age 74. Actuarial increases are bring given to reflect the benefit payments that were not made for the period of age 62 until age 74. Question: The increased a accrued benefit at age 74 is $2,950. The participant's average monthly comp was $1,964. Is this increase up to 2,950 that is greater than his avg comp allowed or is the increase capped at $1,964, his average monthly comp (as cannot increase the benefit past 100% of comp)? Thank you.

Hi, Two corps are a controlled group. Therfore, one DB plan can be opened that will cover both entities. Can the following be done instead? For easier record keeping, etc. Open a DB for each entity and cover each entity separately. The owners (Hcs) are not getting above the 415 as they are covered only in one plan and the employees of each entity are all properly included. Thank you.

Thank you as always CuseFan, David Rigby, and Calavera. I had given a "like" your responses when you had responded, however, I forgot to write this. It was a big help. Thank you

Hi, Thank you as always for all the insights. Can a Hard Frozen DB Plan, (that is owner only), take into account salaries that were taken during the current frozen years. Not to increase the benefits of course, as the plan is hard frozen. Rather, to increase the salary average. The owner is past retirement age and is receiving each year an actuarial increase on his A/B, since he is not taking benefits yet (although plan allows for in service distributions after NRA). However, the AB cannot be increased beyond 100% of average compensation. Therefore, if the salary average is allowed to be increased based on current salaries (even though plan is frozen), then the annual increase on the AB can keep going up until the new higher salary average. Thank you

For some reason, efast does not give an ack id for extensions? Just a Message that successfully filed. Not sure why.

RatherBeGolfing, thank you. It was filed with the efast system and not a 3rd party software. They gave me an option to press submit, and file it, with the error. After hitting submit, they said it t was successfully received.

Hi, Thank you as always for all the insights. The 5500 for a 6/30/2025 plan year end, is due by 1/31/26. This came out on Saturday. Therefore, the 5500 and the 5558 must be filed ON or prior to 2/2/26 (since 2/1 26 was a Sunday). We filed the 5558 on 2/2/26 ( today) with I file and got a validation error that stated " you have filed the form 5558 after the return's normal due date and may not be approved for an extension based on this form 5558 that was submited". I hope this is an error on their part and the extension will be approved? Thank you

Thank you C.B. , as always. I am just wondering is there a way to not have the "sample" show in the background of the SB?

Hi A Happy New Year to All. Is there anywhere on line that one can download a fillable pdf of a schedule SB? Thank you!

Thank you Effen. Your quick response saved me from starting to self doubt.

Thank you very much, Bri, for the clear answer

Hi All, Happy Holidays to All. A DB plan ret age is 62. Employee retirement date was march 2025 but did not receive his lump sum until Dec 2025. He was entitled to his lump sum since March 2025. What rate would you use to give interest on the lump sum from march 25 to Dec 25? Plan equivalence? Thank you

Thank you Effen and Bri. As always your knowledge is much appreciated. There were no missed MRCs shown on the 5500s that were filed. So wondering who told them that this is this case. Meaning, even if this is indeed the case, who informed them of this. However, they don't have a missed MRC. Unless not filing a couple of 5500s is considered a missed MRC?

Hi, A PBGC covered plan received the following email from the pbgc... This letter is to inform you that the Pension Benefit Guaranty Corporation (“PBGC”) was notified that a Reportable Event has happened. According to the information we have received, "A" Corporation (the “Plan Sponsor”) has failed to make the required minimum contributions 1. Who are they referring to when they say they were notified? Who could have notified them? 2. The minimum required contributions that they are refering to are the possible MRC that would be shown on the 5500 (that were not filed for a few years) or are they referring to the pbgc annual.premiums that have not been paid? Thank you as always for any insights.

Thank you Paul I. Yes, the original filing had an extension filed and the 5558 box was indeed checked on the original filing. Will they get confused if both the 5558 and the amended boxes are checked off? Or does it look like asking now for an extension with the amended filing (or does it imply that forgot to ck off the 5558 on the original filing and now fixing that)? Thank you!

Hi Thank you as always for all the valuable knowledge and input. Is there an issue, if amending a 5500 for the current year to have both the 5558 box and the amended box checked off, or don't confuse things and just ck off amended? Thank you.