Schedule R, Line 8

[Guest khartford]

Our 5500 preparer is telling us the following:

Question 8 (amendment increasing value of benefits): Check INCREASE. This response is required for all plans that base benefits on compensation, where the 401(a)(17) compensation limits increase every year as published by the IRS.

Is that really true? The instructions to Line 8 say to check "increase" if an amendment was asdopted during the plan year that increased the value of benefits in any way. This includes an amendment providing for an increase in teh amount of benefits or rate of accrual, more generlous lump sum factors, COLAs, more rapid vesting, additional payment forms, or earlier eligiblity for some benefits.

While, I will concede that an automatic increase under 401(a)(17) is a cola, we didn't amend the plan this year to make that increase.

Thanks

[Blinky the 3-eyed Fish]

We haven't taken that interpretation (I doubt many people have), but I wouldn't say someone was wrong necessarily for doing so.

[Bird]

We agonize over a lot of minutiae, but that has never even been considered. It's not an amendment and I think I could argue that it is wrong to check the box for an increase (not that there would be any consequences).

[Guest khartford]

Thank you. This Message Board is very helpful.

[quinnfield]

At my firm, we do check increase for changes in the salary and dollar limits caused by CPI increases. This is from the 2007 instructions:

Part III – Amendments

Line 8.

• Check “No” if no amendments were adopted during this plan year that increased or decreased the value of benefits.

• Check “Increase” if an amendment was adopted during the plan year that increased the value of benefits in any way.

This includes an amendment providing for an increase in the amount of benefits or rate of accrual, more generous lump sum factors, COLAs, more rapid vesting, additional payment forms, and/or earlier eligibility for some benefits.

• Check “Decrease” if an amendment was adopted during the plan year that decreased the value of benefits in any way. This includes a decrease in future accruals, closure of the plan to new employees, and accruals being frozen for some or all participants.

• If applicable, check both “Increase” and “Decrease.”

I believe either way is acceptable to the DOL.