SSRRS

Thank you very much CuseFan and BG5150.

Hi, A DB Plan rolled the excess assets into a qualified replacement plan. Some one mentioned allocating the excess each year dollar for dollar. For example, if an employee's salary was 58,000 then you can allocate 58,000 of the excess for that year. Is this correct? Thank you.

Thank you BG5150 and Lou S. It seems that if this LLC (WITH 2 partners) was formed as an S Corp then it must file an EZ. However, if this LLC was formed as a C Corp, then it would file an SF.

Thank you. The only two participants are the two partners (LLC). Does this make them an EZ FILER, as owners or partners file EZ. Yes, for corps, only if it is an S Corp would it be considered a partnership for EZ purposes. However, this is an LLC? Thank you.

Hi An LLC Has a DB Plan with only the two owners in the plan. The LLC is taxed as a corporation (and not as a partnership). Do they file an EZ or an SF? Thank you

Hi, Hopefully all will be safe and well. The PBGC has shut down their site until 9PM 12/22. How can they close down during this period, when filings need to be done prior to 1/3? Thank you for any help with this.

Hojo so 401(a)(26) and 410(b) although they allow for inclusion of only 40% and 70%, (in proportion to the HCEs that are participating) however, it is to complicated to be used on a consistent basis?

Thank you.

Bird, thank you as always. I am going back to this to hopefully gain some more clarity. You seem to frown on this annual exhibit method to exclude employees. 1. If a sponsor wants to include only the minimum requirement of 40% of all eligible employees [401 (a)(26)] and 70% of NHCEs [410(b)], how would you recommend this be done (aside from excluding certain job classes) ? Thank you very much for any insights. ......

Thank you Mike. As always, you are right to the point. Is there any reason that the PBGC is making things unpleasant? Clients get very upset when they receive these notices and it's a waste of time etc.

Thank you. The clients that received late payment invoices, was their a mention of disaster relief on their forms that were filed?

Thank you, C.B. Zeller.

Hi, I hope all is well with everyone. The PBGC has been sending non filing notices for plans that were due 10/15/2021, even though these plans are entitled to the January 2022 IDA extension. Clients are getting upset. Any thoughts, insights, or advice would be much appreciated. Thank you !

JM thank you. Your insight and time as always is appreciated. As an aside, the term wear-away is an actual term. The below is from the Cornell law school site: (4) Fresh-start formulas - (i) Formula without wear-away. An employee's accrued benefit under the plan is equal to the sum of - (A) The employee's frozen accrued benefit; and (B) The employee's accrued benefit determined under the formula applicable to benefit accruals in the current plan year (current formula) as applied to the employee's years of service after the fresh-start date. (ii) Formula with wear-away. An employee's accrued benefit under the plan is equal to the greater of - (A) The employee's frozen accrued benefit; or (B) The employee's accrued benefit determined under the current formula as applied to the employee's total years of service (before and after the fresh-start date) taken into account under the current formula.

Correct.

Yes, that is indeed what we are doing. Thank you very much. Also, do we have to spell out what the actual formula was prior to the fresh start date?

Hi, A DB plan had a benefit formula of 6% per yr of participation for the first year of the plan. Now for the second year (take over for second year ) we want to use 3% for each year of participation (of course with 204(h) notice). However, we want the accrual for this second year to be 3% of comp for this year of participation, without reducing the current accrual due to the benefits earned for the first year. Meaning the total benefit at the end of the second year will be the 6% of comp accrual for the first year plus the 3% of comp accrual for the second year equals the total accrued benefit earned for the first two years. Based on this, would the following be an appropriate language for the plan document as the plan benefit formula. For 12/31/2021 year 6% of avearge comp and for 12/31/2022 and going forward 3% of avg comp, WITHOUT WEARAWAY. Thank you for any insights on this.

Thank you very much

chc93, thank you very much. You indeed clarified things and this is sort of what I was pondering and just about to ask about. As you stated perfectly, there is no beneficiary at all anymore, since the participant and his survivor both have passed away. Therefore all the plan assets are now the excess assets (as opposed to the usual overfunding in which the excess assets are the assets that are above the participant's PVAB). -- Based upon your insights would the following be correct? 1. If the company is in the owners estate, will the estate then be the one to pay the 50% excise tax on the entire plan assets? 2. If the company was dissolved (before the owner passed away) , would the assets revert to the estate in place of reverting to the company (since there is no company for the assets to revert to)? Thank you very much.

One Participant, owner only plan. The owner was taking annual distributions and passed away. He had elected a Joint and Survivor benefit and his spouse passed away years ago, and therefore there is no beneficiary to continue taking his annual distributions. The Plan is heavily overfunded. What happens to the plan now. 1. Does the overfunding revert to the estate and the estate will owe the excise tax for he overfunding? 2. Can the estate sell the plan to an underfunded plan (as is done at times to avoid an excise tax on the overfunding)? Thank you very much.

Hi, An owner only DB Plan (one participant the owner) elected a 100% Joint & Survivor (spouse) annuity and stared taking benefits (RMD). After 11 year of taking benefits, his spouse passed away. 1. He cannot change his election, even though his survivor passed away since he already started taking benefits. Correct? 2. The plan is very overfunded , what will happen in the event of the passing of the participant since he cannot change his election of the survivor? Will the assets revert to the estate and the estate will owe the excise tax for the overfunding reversion. 3. Can the estate sell the overfunded plan to an underfunded plan to avoid the excise tax? Thank you very much for any insights on this.

Thank you very much.

Hi, EZ filer (owner only plan) received a compliance notice that forms 5500EZ for the periods after 12/31/16 were not received by the IRS. The notice stated that if the forms had indeed been previously filed, then if you provide copies of these filings and they are signed, then the IRS will update their records. The client send in copies of the previously filed forms for the plan years December 31, 2017-2019, back in December 2020. Now almost a year later the client received three separate late filing penalty notices for 2017-2018, and 2019. In addition, then 2017 and 2018 penalty being charged is 150k and 187k. This is well above the 15,000 max for these years. It appears that the IRS Input these copies of the previously filed forms as first being filed in December 2020 and that is why they are sending these late filing penalties. Any advice, would be greatly appreciated. Thank you.

I apologize , the notice is a CP283 notice for late filing of form 5500. However, as i wrote above it is for the 2017 year end filing and that was capped at 15,000 per this notice. So why are they charging 150,000. Also, the form was filed timely. I did hear that OGDEN (where they recive the 5500EZ filings) was still closed at October 15, 2020. Are they processing the 2019 fotms now and saying that they are late? On the other hand the notice says this is fire the 12/31/2017 year end. Thank you very much.