Jakyasar

As Lou S said, how long has this been going on? If for a while, no one noticed that the withdrawals were not made when the plan's annual asset reconciliation was done? Also, for the J&S 50%, was beneficiary's date of birth was provided? As others said, possibly no lump sum option?

On the 5500, definitely would not have a break, almost there/done, why complicate it? Billing is up to the TPA discussion with the client. Besides, since the DB plan was terminated in 2020, you still have to do schedule SB anyway so 98% of the work had to be done in the first place. I will let other chime in on the IRS's position. I do not take the position that assets were $0 as of 12/31/2020 as there will be a January statement showing account balance, backdating or not, it is there past 12/31/2020, this is my take. Better play safe now than sorry later.

Hi Ken Excluding prior service for vesting is always a given as long as no prior plan that was terminated within 5 years of 1/1/2020. Up to the sponsor to decide whether to exclude or not. 0% vesting depends on the partial termination issues too. This is something already known in 2021 when you design a plan for 2020 in 2021 thus may affect some of the decisions.

Hi mming I always take the position that if not cashed by end of year, too bad, it is next year's distribution. On risk tolerance, possibly will get many different answers. Mine is none. When you get a statement as of the end of the year, you will see the assets, not a cashed/cancelled check. If want to pay at the last minute, electronic transfer is the way to go. Bird, I have seen checks cut in December, accounts debited and checks "cashed" in early January. I do have mixed feelings about this but when the investments showed the balance deducted in December, I went along with it, only once and many years ago. Not sure what the outcome would have been if audited by IRS. Never did it with any PBGC termination though, always the date cashed, so much easier/cleaner to deal with. FWIW

No, not all employees. The plan document should have some provisions to add for waiving eligibility, like all employees employed on a certain date or work 83.33 hours per month. Must be very careful though on the options and if you want some out of box provisions, always ask the vendor and/or an attorney if they are kosher.

Hello to all This might be a rhetorical/stupid question but have been thinking about it. Let's assume, the plan year=corporate year aka calendar year 2020. SECURE Act now allows pension plans to be set up after corporate fiscal year end and prior to the due date of the 2020 tax return. Let's assume 9/15/2021 is the extended due date. A candidate approaches for a new plan in July 2021 for a new plan effective 2020. Profit sharing combined with cash balance - no can do on the 401k for 2020. I get a census for 2020 and also thru July 2021. I notice that some eligible employees on the 2020 census are no longer there as of July 2021 i.e. terminated sometime during 2021. With this knowledge, I do not see a problem designing the 2020 plan in July 2021 with the events taken place in 2021. This way, I can anticipate any issues for 2021 and take that into consideration for the 2020 design/testing, done in advance. What do you think? Thank you.

I had clients who were successful real estate agents and their valuation of the real estate was nowhere near what I googled so respectfully bad idea not to get an independent third party appraisal. I did question their appraisal and had them reevaluate and obtain an independent appraisal but that is me. FWIW.

Always used an official third party appraisal and never accepted anything else. This is especially important for db plans as any incorrect valuation may result in under contributions or over deductions.

Hi I agree with you and Bill on the 5500, without question. My comment was for the recalculation of the lump sum for the db accrued benefit.

I had a situation where the broker adjusted the 12/31 balance so that the distribution was coded as deducted from the account but the participant did not cash the check until March following the year end. Bird, what would you do in this situation? Just curious.

in addition, if not cashed timely, the amount may also change due to 417e assumptions, got to be careful on how long the participant holds on to the check.

This particular plan document provides interest credit annually and at end of year so any date before end of year will not reflect any interest credit. Good point though.

Agreed and thank you

Hi Participant was paid out (force out) her balance a few weeks ago (terminated in 2018 - never provided the completed distribution election forms). The balance was less than $500 and had 100% vested safe harbor and 50% vested profit sharing portions. 50% of the forfeited profit sharing account was transferred to "forfeiture account". Plan's limit is $1000 for involuntary payout. Now sponsor decided to terminate the plan, effective 12/31/2020. Resolution states, "the accounts of the participants will be 100% as of the plan termination date". It is signed today. Language from the document "in event of termination of the plan, the account balance of each affected participant will be nonforfeitable" Do I need to go back and vest the participant 100%? Thank you

Technically all amendments/restatements have to be in place by the termination date. However, under the cycle 3, based on my understanding, restatement date can only go back to the beginning of the plan year in which the restatement is executed. Again, different vendors may have different opinions. If your plan is a calendar year plan, can go to 1/1/2020, depends on what provisions you want the restatement to cover.

To all Wishing you all happy holidays and a healthy New Year. This board has been a wealth of information with many different contributors sharing their knowledge and experiences. Thank you all

Agree to include TNC if 1000+ hours accrued. Adjusting liability EIR is interesting as the liability is calculated on the date 110% is applied. Thank you for your input.

Regarding point 1, depending on which document provider you ask. Some might say must do and some might say not required as long as all good faith amendments are in place by the official termination date. If no amendment was available at the time of termination, it needed to be adopted anyway. They have claimers on the good faith amendments not being approved by the IRS so sometimes recommend to file a determination on termination. I have had these conversations with different vendors and got different responses in the past. Just my 2 cents FWIW.

Hojo, that is another way using 430 assumptions. Thank you

Hi Andy Thank you for your input though never heard of 404 assumptions to be used. Always used 436 or 417e3. Still not too clear what to do on cash balance situation. Thank you

Good morning all I was asked to perform a 110% test for a cash balance plan and see if an HCE is eligible for lump sum. I was told the client is eager to pay the lump sum. I have done this many times for a defined benefit plan and never needed for a cash balance plan. As I am not 100% sure, would one of the 2 methods be acceptable? 1- simply use the account balance (no 415 issue) as of distribution date (adjusted for interest credit if required) and compare to the assets as of the same date, or; 2- determine the AB's as of distribution date and convert them to lump sum using?? PVAB would be based on plan actuarial assumptions, 430 assumptions, 417e assumptions?? Any other methods that are acceptable that I am not thinking of? Also, do you provide the client the method to choose as sometimes one method would allow lumpsum where another would not? I remember this discussion sometime ago and some well known actuaries had no issue to let the client decide between 430 and 417e options (it was for a defined benefit plan), as long as the ramifications were well explained and disclosed to the client. Thank you all and have a great weekend.

Hi all I was asked the following (hopefully asking correctly): Owner of corporation got 20k salary in PPP monies and 50k salary from corporation thus 70k w-2 for 2020. Wants ps deduction for 2020. Which amount can the corporation contribute and deduct for? 50k or 70k? Thank you

Hi, any takers? Thank you

Hi Having a discussion and curious about the following for a 2021 RMD: Plan year changed during 2020. 9/30/2020 AB 2000/monthly 12/31/20 AB 3000/monthly - short plan year from 10/1/20 to 12/31/20 What is the AB used for 2021 RMD? Another scenario 9/30/2020 AB 2000/monthly but 20% vested at 400/month 12/31/20 AB 3000/monthly - short plan year from 10/1/20 to 12/31/20 but 40% at 1200/month What is the AB used for 2021 RMD? Thank you

Very interesting and educational, thank you Have a great weekend.