Proof of Hi 3 yr avg

[ombskid]

Terminating plan is in an audit. Auditor wants proof of the hi 3 yr avg. Client and CPA say they don't have records that old (somewhere mid 90's). The years are before the plan effective.

Doesn't IRS have records going back that far?

[david rigby]

Consider:

- asking prior actuary(s) what records they have.

- doing a sample. Maybe get W-2 for half a dozen EEs?

Note, even if W-2 is not accurate because it may not reflect the plan's definition of comp, it still might help get close.

[My 2 cents]

Consider:

- asking prior actuary(s) what records they have.

- doing a sample. Maybe get W-2 for half a dozen EEs?

Note, even if W-2 is not accurate because it may not reflect the plan's definition of comp, it still might help get close.

Please note that the original post said that the high-3 years preceded the adoption of the plan. Assuming that such years can be taken into account, there was no actuary to back up the earnings for those years, unless those earnings were provided to the actuary when the plan was established.

Are the plan benefits so high that the earnings that the sponsor and CPA do have cannot justify them under Section 415? If so, how did the plan allow such large accruals without the earnings histories to show that they were acceptable?

It is very difficult to obtain information from the IRS (including, but not limited to, copies of prior favorable determination letters)

[FAPInJax]

Another option would be to ask for Social Security statement of earnings. The employee can obtain this directly from SS website.

[StaceyHelton]

But the free statement of earnings that can be obtained from the SS website will probably not help. The auditor may not accept it, as it will not include employer information. The detailed earnings report that does include earnings information is now a flat fee of $136 for non-certified, $192 for certified.

[My 2 cents]

But the free statement of earnings that can be obtained from the SS website will probably not help. The auditor may not accept it, as it will not include employer information. The detailed earnings report that does include earnings information is now a flat fee of $136 for non-certified, $192 for certified.

Does the Social Security statement of earnings report total earnings or are the reported earnings limited by the Social Security wage base? There was, of course, no distinction between Social Security and Medicare earnings back in the 1990s.

[StaceyHelton]

I'm not sure; my guess would be total earnings. The problem with the free report is that it is total annual earnings, not broken down by employer. The detailed report is broken down by employer *and* year, making it invaluable in correctly calculating pension benefits when records are missing.