SSRRS

Thank you. 1.Does this mean that you frown on a DB plan in general, investing in RE? 2. The main Focus of the original post, was as to the legality of a second large plan investment in RE. The sponsor would like to, but is hesitant if there are any IRS issues? Thank you in advance.

Thank you Paul I! I appreciate it. Just trying to understand the point about that it depends on the financial situation of the owner. If they are using plan assets to purchase this investment, why does his financial situation play a role? Thank you.

Hi, Thank you all as always. A owner only DB Plan (husband and wife), has about 4,500,000 in assets. Part of the assets is a condo worth 1.5 million (they rent it out). They would like to invest further in real estate and have the plan purchase another condo, worth aprox 2 million, however the seller is willing to agree to sell it for 1.8. Is it advisable to purchase another RE Investment? It is in the same area as the first condo, so that might play a role in lack of diversification? Thank you

Thank you! So we will write in the letter serial number.

Peter Gulia, your analytical and sharp knowledge is much appreciated, as always. I will look into the information for this particular case.

C.B. Zeller, thank you so much! Yes, i have a copy of Watson's publication. Great idea. Thanks!

The trust owns the s corp, however, the question is, does the fact that these 2 are the beneficiaries of the trust, deem them to be 5% owners and thus HCEs?

Trust owns s corp. The pres and sec of the s corp are the beneficiaries of the trust. Are they therefore considered owners of the s corp and therefore they ate HCEs irregardless of their salaries being only 100K? Thank you!

If forgot to answer the new compliance question number 12 re the preaproved document letter serial number..CAN it be written in ...as EZ are mailed and not scanned? Thank you

The extension applies now to ALL of Florida (all counties). See https://www.irs.gov/newsroom/irs-announces-tax-relief-for-victims-of-milton-various-deadlines-postponed-to-may-1-2025-in-all-of-florida

The extension applies now to ALL of Florida (all counties). See https://www.irs.gov/newsroom/irs-announces-tax-relief-for-victims-of-milton-various-deadlines-postponed-to-may-1-2025-in-all-of-florida

https://www.irs.gov/newsroom/irs-relief-now-available-to-hurricane-debby-victims-in-all-of-south-carolina-most-of-florida-and-north-carolina-part-of-georgia-various-deadlines-postponed-to-feb-3-2025

Thank you Paul I....The 5500- EZ were mailed, not efiled, and used the corporate EIN on the filing, as is required. The EIN is still in effect, just the bank will open the new checking account under the social of the plan sponsor (ie the owner and sole participant in the DB Plan). The bank is not changing the corporate EIN just using his social going forward on the account, as opposed to the EIN that was used until now on the account. The bank does not prepare the 5500EZ. He does not want to terminate the plan, rather the bank on their own is converting the account from a business account to a personal account. Would the bank listen if we csll them and state that they are not authorized to force a tax liability (distribution) and they must keep the account the way it was for the past 15 to 20 years? It seems a many banks do not want to deal with pension accounts anymore Thank you.

Thank you Lou and David. Is the bank allowed to do this? Meaning how can they just go ahead without permission from the client and "execute" this taxable distribution?

Hi All, Thank you for all the insights and valuable knowledge always. A DB Plan, owner only, had the assets held in a checking account for about 15 years. It was a checking account in the name of the plan..ie John Inc. DB Plan, and the corporate EIN. The bank now sent a letter that they are converting the account from busniess account to a personal account and in a separate email the bank states that the EIN will be taken off the account and the owner's Social Security number will be used on the new account. Question: Can this be deemed a taxable distribution ( even though it was does against his will), and is it a problem to keep the new account as is with the Social Security number, if the account is still labeled Defined Benefit Plan? Thank you.

Hi Thank you as always for the insights. We need to Efile a 2020 5500 for a DB PLAN with the DFVCP. The new rules say we must efile 2020, and prior years, using the 2023 forms. I noticed on line that however, for the SB the correct year form can be used and signed and attached as a pdf to the e-filing and to label it other attachment. Question. Does this mean that we only file the 23 5500 and the sb is only filed as a pdf attachment? OR IS the 23 SB filled out for the 20 year, and efiled along with the 5500sf. And then 2 sb attachments will be attached. One attachment being a pdf of the signed 23 sb(with the 2020 on it obviously) that is labeled mb sb actuary signature and then we must attach a pdf of the signed copy of the 2019 year sb labeled other attachment? Thank you.

Maybe this question is more clear. For the 2019 and 2020 years it seems that the recommended form to use is the 2023 5500 and we are supposed to enter the 2019 dates on the 2023 formh. Question...if we file the 2019 using a 2022 form (and not on the 23 form) would this be accepted? Thank you.

Hi, Thank you all as always for the insights and help. It's one of those days. Need to file a DB 5500 and schedule SB for 19, 20, 21 , and 22 with the DFVCP. 1.Since it is now 2024, the 2022 can be filed on a 2022 5500. Correct? 2. However, the 2021, 20, and 19 must be filed with using a 2023 form and inputting the plan year on the 2023 form..as 1/1/ 2021 thru 12/31/2021 and the same for 20 and 19? 2. How is the schedule SB e-filed for 19, 20, and 2021? As an attachment only? 3. And what about the attachments that are ussaly attached with the e filing of the SB (assumptions, provisions, etc.)? Thank you.

Hi, Thank you all, as always, for all the insights. Now that the Secure Act allows for a DB Plan to provide for in-service distributions starting at 59.5, is a DB Plan now allowed to adopt an NRA of 60? Or is 62 still the lowest safe harbor NRA for a DB Plan? Thank you.

Cathyw thank you again for pointing this out. This is a much needed relief for many plans, and that would work for almost all plans. The third requirement of "there was not a substantial increase in coverage or benefits for the 5-year period preceding the freeze"...seems to be the one hurdle to get over, although it appears that this refers to a 50% change in the average benefits and not a change due to additional benefit accruals for a another year of service.

Thank you Bri. As always, your vast knowledge is much appreciated. Thank you for pointing out regarding the issue of the 11g amendment favoring only HCEs (adding only the 2 sons of the owner to the plan). Since the plan is frozen and therefore 410(b) does not apply, would this help to allow for the amendment to add only the two sons, so that 40% ie 401(a)26 is properly covered?

Hi All, I am aware that this topic has been discussed before a few times, however, I'm hoping to get some clarity on a particular aspect that I've posted before but has not been addressed. A owner only, husband and wife, frozen DB Plan has been able to cover 40% of all eligible, by just including the owner and his wife (5 total eligible and 40% is 2). After 3 years, they now have to cover an additional 2 employees to cover 40%. There are 2 sons on the census that can be brought into the plan, as the additional 2. The aspect of bringing them into the plan and giving them a benefit of .005 of comp and a 11g amendment, has been discussed before. However, (1) does this mean that the plan is unfrozen, and ALL must be given this .005 benefit accrual or just for the 2 employees that are being added to the plan now? (2) Is this .005 of comp benefit accrual given to them going forward each year or just for the year in which they are added (as plan is still frozen going forward)? Thank you in advance for any insights on this.

Thank you ALL. Your informative insights and knowledge is much appreciated.

Thank you Effen. As always, your analytical mind is much appreciated. However, I think your case is more complicated than the one that I am trying to describe. I think I was not fully clear when I posted. The case is that an owner only DB plan, thr owner (participant) wants to take the max loan allowable of $50,000. The problem is that if he sells some of the pension shares so that he can have the 50,000 cash avaliable to borrow, the plan will incurr a loss, since the market is down. To avoid incurring this loss, instead of withdrawing the loan from the existing plan assets, can he take the 2023 DB contribution (50,000) that he is about to deposit into the plan account, and instead of depositing it in the DB Brokerage account, and then taking it back out as a loan, can he just make out the 50,000 contribution check payable to himself (as if it was first contributed then loaned to himself). He will of course have a loan amortization schedule, loan application, and promissory note to the plan, that will serve as the trail for this contribution/loan. Is this allowable, or must he first actually deposit the 2023 contribution to the plan account? Thank you.

Hi Owner wants to contribute 50k and borrow 50k from DB. Instead of actually makings the contribution and then taking it out as a participant loan, can he just put the 50k into his account with a memo that there was a contribution and then taken out as a loan? Thank you, as always, for any insights.