SSRRS

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.

DB Plan, owner only, and EZ Filer. Recived a IRS notice 238, that for PYE 12/31/2017, penalty of 150k. He has filed all timely. Even more perplexing is that the notice states clearly that for plans up to 12 31 19 the max. penalty is 15,000 and for forms due after 12/2019 max penalty is 150,000. Since this notice is for the 2017(due prior to 12/2019) year why are they charging above the 15,000 maximum.penalty? 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.

I hear. Thank you.

Hi Just to clarify the original post. I hope all are well. If a pension plan in the covered area that received an extension for ida until Jan 2022, is in middle of an IRS audit and the agent had sent a request for information and documents that was required to be responded to by 9/5/21. Would the plan now have until January 2022 to respond to the agent that is handing the audit? Thank you.

Thank you. I just want to point out that this is a traditional DB, not a CB Plan.

Thank you. If the sponsor (company) signed the document and agreed to this provision, of having a yearly exhibit, would they still have to sign the exhibit each year-meaning signed each year prior to anyone working 1,000 hours, prior to accrual of accrual of benefits, or it is not necessary ? Thank you very much

Thank you very much. If it's drafted before anyone accrues a benefit for the year, ie prior to working 1,000 hours (by March, or early April)? Also, if the sponsor (company) signed the document and agreed to this provision, of having a yearly exhibit, would they still have to sign each year? Thank you.

Thank you very much.

Thank you. Can you please clarify?

Hi, In a DB Plan Document (the plan uses a Safe Harbor benefit formula), in the eligibility section, are the following provisions: "(1) Eligible Employees. For purposes of Section 2.1(b), all Employees are Eligible Employees except for the following ineligible classes of Employees: (A) Union Employees; (B) Non-Resident Alien Employees; and (C) Employees not listed on Exhibit A." For each plan year the Exhibit A is updated to list the employees that are eligible and all employees that are not listed are ineligible . The plan covers, each year, enough employees to cover 410(b) and 401 (a)(26) each year. A new Exhibit is created for each plan year , and the document contains the yearly Exhibits. Are there any potential issues with this method? Thank you very much for your insights.

metsfan026, your question is addressed towards the end of the following post

Hi I hope all are well. If a pension plan in the covered area, is under IRS audit and the IDR response due date falls between Sept 1,21 etc...would the plan now have an extension until.Jan to respond to the agents questions etc.? Thank you for any help with this.

In addition to Profit Sharing contributions being extended, it appears that a DB plan that has a zero minimum required contribution and a maximum of 126,658, can make a contribution up to the 126K maxium by January. As the maximum is based on 404.

Metsfan026 posted this in the 401K Plan Section in regard to contributions being extended beyond September 15th: I just want to make sure I'm reading all of this correctly. Under the Hurricane Ida Relief it says: The IRS also gives affected taxpayers until January 3, 2022 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2018-58, 2018-50 IRB 990 (Dec. 10, 2018), that are due to be performed on or after September 1, 2021, and before January 3, 2022, are postponed through January 3, 2022. As part of Treas. Reg. § 301.7508A-1(c)(1) it says: (c) Acts for which a period may be disregarded—(1) Acts performed by taxpayers. Paragraph (b) of this section applies to the following acts performed by affected taxpayers (as defined in paragraph (d)(1) of this section)— (iii) Making contributions to a qualified retirement plan (within the meaning of section 4974(c)) under section 219(f)(3), 404(a)(6), 404(h)(1)(B), or 404(m)(2); making distributions under section 408(d)(4); recharacterizing contributions under section 408A(d)(6); or making a rollover under section 402(c), 403(a)(4), 403(b)(8), or 408(d)(3); Paragraph (b) discusses the delayed deadline. So does this mean contributions due by 9/15 are delayed to January 3? Thanks in advance everyone!

Metsfan026 posted this on the 401K Section in regard to contributions being extended beyond September 15th. I just want to make sure I'm reading all of this correctly. Under the Hurricane Ida Relief it says: The IRS also gives affected taxpayers until January 3, 2022 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2018-58, 2018-50 IRB 990 (Dec. 10, 2018), that are due to be performed on or after September 1, 2021, and before January 3, 2022, are postponed through January 3, 2022. As part of Treas. Reg. § 301.7508A-1(c)(1) it says: (c) Acts for which a period may be disregarded—(1) Acts performed by taxpayers. Paragraph (b) of this section applies to the following acts performed by affected taxpayers (as defined in paragraph (d)(1) of this section)— (iii) Making contributions to a qualified retirement plan (within the meaning of section 4974(c)) under section 219(f)(3), 404(a)(6), 404(h)(1)(B), or 404(m)(2); making distributions under section 408(d)(4); recharacterizing contributions under section 408A(d)(6); or making a rollover under section 402(c), 403(a)(4), 403(b)(8), or 408(d)(3); Paragraph (b) discusses the delayed deadline. So does this mean contributions due by 9/15 are delayed to January 3? Thanks in advance everyone! Quote

Thank you. However, this is a Profit Sharing Plan, and the only options offered are Lump Sums or partial lump sums.

C.B. thank you so much!