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Found 9 results

  1. The freezing of a defined benefit plan perforce seems to affect the tallying of accrual service, and perhaps also the reckoning of the remuneration of which the accrued benefit serves as a function. Perhaps conversely, freezing the plan might not affect the reckoning of the high three year remuneration streak for § 415(b) deliberations. Please provide helpful guidance on this situation. Also, the reckoning of years of service and/or years of participation might remain unaffected. If guidance has resolved this situation, please provide in a reply.
  2. My divorce was final 5/2017. I was married 24 years. My former spouse has worked as a police officer for 30 years. The QDRO to divide my former spouse's defined benefit retirement plan was completed about a year later. QDRO was then approved by the Plan Administrator, sent to the court and the actuarial firm that manages the Plan approved the QDRO and sent me the paperwork this past August to begin distribution of my portion. After reviewing the paperwork, I called the attorney who prepared the QDRO to inquire about the valuation date as I had understood it was to be the date of our divorce but instead the valuation date on the official paperwork was written as 7/2019. The attorney then called me back and proceeded to say that she had conferred with the Plan Administrator who then told her that the QDRO was drafted incorrectly as a Separate Interest (with Survivorship) rather than a Shared Interest. Furthermore, I was told that I would not be able to commence benefits until my former spouse retires (he has reached retirement age) and that the Shared Interest will not allow for Survivorship. This is a real turnabout and greatly affects the equitable division of our monetary assets in the Divorce Agreement. I have since retained an attorney and we are 4 months into a very slow process. My question is simply when does a QDRO become "set in stone?" At what point can one be assured that it is approved and settled without the worry that at some point in time there may be redress of it? Also, does anyone here have experience with a situation like this where the Plan Administrator approved a Separate Interest QDRO "by mistake?" I appreciate any feedback and advice. Many thanks.
  3. Looking for guidance to convert 412e3 plan into Cash balance plan. Am a single owner S-corp 44 years with 2 years into 412(e)3 plan with Whole life and Annuities. Life insurance was not required personally and seems foolish now to got sold into policy by the CPA. (should have been a red flag that CPA is the sales agent). I was not even mentioned about the CB plan option that looks more attractive with conservative investment strategies and flexibility compared to 412e3. Can the 412e3 converted into Cash balance plan instead of Termination? Any references for good companies with this kind of experience will be appreciated. Goal is to fund the pension plan in 10-12 years instead of stretching for 20 years.
  4. I've got a plan with a participant over the dollar limit late in life - this participant wants a lump sum benefit. i don't generally deal with anything other than compensation limit issues, but advanced age (late retirement increase) and generous plan features (subsidized lump sum) are the culprit here - the basic plan is not intended to be generous enough to create limit issues. My question is, if the participant in question is something like 69 and 6 months, is there any guidance on what is acceptable for non-integer ages in terms of calculating the increased (post-65) dollar limit. E.g., if the age 69 calculated limit is $3.2MM and the age 70 calculated limit is $3.4MM (for a lump sum payment form): 1) Is interpolation appropriate/allowed/required? 2) if so, is anything reasonable OK (pro rata in this case vs. a direct calculation at actual age yields a tiny difference. let's say for the sake of discussion that one would be 3.3MM and the other might be $3,301,000) Sensitivity is heightened since the payment form is a lump sum and the participant's separation of employment is far from amicable. (the plan document only has boilerplate language, so method isn't specified, and there is no precedent set administratively because this is the first participant in a very large plan who has ever tripped the dollar limit). No pre-termination issues with lump sum size, the plan is far too large for that.
  5. Anyone have experience requesting a "minor" modification of a VCP compliance statement? The only example in IRS guidance of a "minor" modification is a compliance statement that listed 200 affected participants; however, after recalculating the failure affected 225 participants. In our situation, the applicant got an IRS compliance statement approving a retroactive amendment adding back in a provision missing from a 2015 restatement. The compliance statement was issued over 150 days ago. The applicant recently discovered an inconsistency between the retroactive amendment and the plan's historic administration, and believes additional clarifying language (no more than a phrase or two) should have been added to the retroactive amendment to achieve the intent of the VCP filing and conform the plan document to the plan's historic and ongoing administration. At bottom, we think the fix of the document could have been better, but this is a document issue only; the plan's always been operated as it should have been. Has anyone had success requesting a "minor" modification of a VCP compliance statement under similar circumstances?
  6. We have a defined benefit plan with only one employee in the corporation. We would like to terminate the defined benefit plan and roll the assets into an IRA. However, the assets are shares of a corporation in another country. Also real estate in the US. Our intention is to use an IRA custodian like PENSCO that can handle real estate in the portfolio. I know that we have to get the shares of this foreign corporation appraised for purposes of rolling the defined benefit plan into the IRA, but I don't know who it is that I should hire to assess the value of the foreign corporation. Any ideas?
  7. My client has found several participants who were previously considered “lost”. Each of these participants is well past age 70 ½ and each has not taken an RMD. In accordance with the terms of the plan, some of these lost participants’ benefits were forfeited. My client has asked whether this defined benefit plan must pay these newly found participants a benefit that is actuarially adjusted for the period beyond age 70 ½. In some cases the initial benefit was around $100/mo and now with the actuarial adjustments, the benefit will be a lump sum of over $500,000 (the plan is terminating). In some situations the participant is dead, and the surviving spouse or beneficiaries will receive the benefit. In each case, the participant was searched for and determined “lost” when the participant reached age 70 ½. The client's actuary is suggesting that the benefit should only be adjusted to age 70 ½. Has anyone else encountered a similar situation? It is my understanding that the participant must receive 100% of the actuarially adjusted benefit to the current date (not age 70 ½).
  8. An IRA Owner would like to direct investment into a newly forming privately held US Business, whereby he would have an equity interest of less than 10% (probably less than 5%). It should be noted the IRA Owner would be a member of the advisory board as a recognized professional with immeasurable experience and knowledge as it relates the product the company is developing and will ultimately be marketing. Would this be a Prohibited Transaction? If the IRA Owner is not a member of the advisory board would the answer change? Would being a member of the advisory board raise self dealing issues? The business is developing and ultimately will market an implantable prosthetic. Would this trigger Unrelated Business Income issues? The company is expected to be quite successful and the IRA Owner would like the investment growth to occur in his tax deferred IRA rather than his personal asset portfolio for tax reasons. Could this person who has a non-Title I DBP make the same investment using the DBP assets? The issue of liquidity is understood. The need for annual valuation of the privately held investment for plan valuation purposes is also recognized. Thank you
  9. For a self employed defined benefit pension plan, what limitations are there on treating pension contributions as an expense (either on Schedule C Line 19 or on Line Form 1040 Line 28) when Schedule C earnings are negative?
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