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  #271  
Old 06-22-2018, 04:03 PM
Woopsadaisy Woopsadaisy is offline
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Quote:
Originally Posted by Sophie12 View Post
For #25, consider this scenario: employer establishes a QRP covering 95% of actives by transferring 25% to a suspense account to be distributed over 7 years. So at the time of the termination all is well and good ("the employer has established a qualified replacement plan...") and the excise tax is 20%. What if the full amount in the suspense account isn't allocated within the 7 years and employer reverts the balance. In this scenario the excise tax is now 50% when all is said and done. The second part of the question ("The excise tax due...that must be reported on Form 5330...") gives no indication on timeframe so how can we be so sure that the total excise tax due is only $20k in all scenarios when we do not have a clear indication that the conditions required to reduce the excise tax from 50% to 20% have all been met?
First off, a tip of the cap to anyone who looked up the applicable code section as a part of studying for this exam and had the foresight to know that if a question came up on this exam where the words QRP were mentioned, that it would be unnecessary to have to do any of the usual math to determine if a plan is a QRP, that it is, in fact, inherent in the definition of a QRP per the code that it has already satisfied all of the "certain additional requirements". I cannot think of any real world application of this knowledge, but that is irrelevant. A theoretical question is certainly fair game. There have been no shortage of obscure T/F question on prior exams.

I will also say that the intent of the question writer is always relevant. There is always an intended answer, but also, there have been (plenty, a surprising amount, some - by all means, please use whatever adjective you desire here) dropped questions or multiple answer questions on the last 10+ year of EA-2 Segments(A,B,F,L) questions with some exceptions (e.g. 2014 EA-2(L)) and possibly this year. Whenever there is a dropped or multi-answer question, the solution seems to usually indicate the intended answer as well as a reason for allowing additional or all other answers. So I don't think there can be an argument that "It was the intent" of the question writer, therefore, there is no defect. The candidate is to use their knowledge of the Law as well as the plethora of exam conditions to come up with the answer. They are not obligated to attempt to read the intent of the mind of the exam writer.

For #25, had the sentence after "Consider the following statement:" included the words "for 2018" been included, then this would be a 100% true statement. Without those words, it is not a 100% true statement.

I wonder why 45 of the 64 responses on the "popular answer key" went with false. Perhaps many of them are b/c we are used to having to do the math to determine if it s a QRP(in the real world and in all prior exam questions that I see), but I do not know for sure. Again, was the intent of the question writer to ask for a 2018 year Form - probably, but also irrelevant.

Perhaps candidates get into trouble by reading too much into questions sometimes and not enough other times. Perhaps their particular industry influences how the candidates interpret things(Large Plan, Multi-ER, Small Plan, Micro-Plan) and it appears to also influence how question writers write questions - why else are their drops/multi-answers?

In the Micro-Plan market, there are a ton of 1 participant, two participant, three partner plans, etc... Here is a hypothetical real world example and an example of something that happens too frequently in the Micro-Plan market (Which is why the excise tax penalty of 50% exists[as a deterrent]: All names have been changed to protect the guilty. So the EA was Mr. Frankenstein and has a 1 person client. The client puts in the maximum tax deductible contribution every year. The trust has several years of double digit returns. The plan has reached or exceeded the IRS definition of permanence(7 years), Mr. Frankenstein has retired, the client wants to terminate - the new EA and analyst are trying to explain the repercussions of terminating - the client has blood pouring out of his ears/eyes etc. Solutions are exhausted(I can't hypothetically recall but either he has no wife to add to the business and no children) and he does not want the immediate 50% hit. He also does not want to sell his business or somehow I guess you can sell the actual pension plan itself(so overfunding inthe micro-pan market happens so frequently there are actually full-time companies that strictly purchase over-funded pension plans) for pennies on the dollar and it somehow becomes the purchasers issue, but in this case, basically, every year the client hypothetically calls, gets hypothetically pissed and hangs up. The EA didn't do anything illegal that I am aware of, just maybe hypothetically really bad communication to the client not to tell him to slow down on the contributions, but when you are a few years away from boat time, I suppose you can turn into an Enrolled Slactuary(In fact, I think that happens long before some get to 3 years from retirement).
Another option the client has is to terminate, roll a ridiculous amount of money into a replacement plan(so now it is a QRP) and pay the 20% now - but there is no way he is getting away without paying an additional very large penalty after 7 years - he cannot draw down the QRP enough, he will pay $XXXXXX after already having paid 20%. So there will be 2 IRS Form 5330's due. So what is the excise tax due?
Answer - That definitely depends on the year.
So, oversight on many of our parts not to have caught this trick by memorizing this definition, but oversight on the question writer's part for not asking for a 2018 Form.

Here are some examples of questions from ths year's exam:

Question 16 - What is the "2018" Premium - thank you Q#16 writer - I see that you are asking for a 2018 year amount to be filled out on a 2018 form - did you ask it that way to be clear - it certainly is clear - thank you.

Question 17 - What is the "2018" Premium - are you guys/gals related - that is clear to me that you want some 2018 information - well done.

Question 22 - "2018", "2018" and wait for it "2018" three times in the data to the question. That is not redundant - that is clear - well done Sir/Ma'am!

Question 26 - "... prohibited transaction for 2018"- awesome!

#34 - thank you Sir/Ma'am for asking for specific date information!

#35 - thank you for clearly indicating you were looking for 2017 information - well done

#37 - did you want that information as of 12/31/18 - why yes you did - kudos.

#39 - great date work on both dates - most excellent - very clear.

#42 - when do you need that as of - oh - 12/31/18 - ok - I can do that - thanks for asking for the specific date!

#43 - I did not forget about you Q#43 - I see your 12/31/17 - thank you for your clarity!

PS - this might be a bit silly, but consider that every candidate has the intent of signing their answer sheet, so if you get 90 points on this exam, but didn't sign your answer sheet - don't worry, just tell them that you intended to sign it and afterall - paying attention to detail is largely overrated - I SAY GOOD DAY.
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  #272  
Old 06-22-2018, 04:19 PM
theojd theojd is offline
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Epic rant. And here I thought I was bitter after last year's sitting, lol.

Quote:
Originally Posted by Woopsadaisy View Post
First off, a tip of the cap to anyone who looked up the applicable code section as a part of studying for this exam and had the foresight to know that if a question came up on this exam where the words QRP were mentioned, that it would be unnecessary to have to do any of the usual math to determine if a plan is a QRP, that it is, in fact, inherent in the definition of a QRP per the code that it has already satisfied all of the "certain additional requirements". I cannot think of any real world application of this knowledge, but that is irrelevant. A theoretical question is certainly fair game. There have been no shortage of obscure T/F question on prior exams.

I will also say that the intent of the question writer is always relevant. There is always an intended answer, but also, there have been (plenty, a surprising amount, some - by all means, please use whatever adjective you desire here) dropped questions or multiple answer questions on the last 10+ year of EA-2 Segments(A,B,F,L) questions with some exceptions (e.g. 2014 EA-2(L)) and possibly this year. Whenever there is a dropped or multi-answer question, the solution seems to usually indicate the intended answer as well as a reason for allowing additional or all other answers. So I don't think there can be an argument that "It was the intent" of the question writer, therefore, there is no defect. The candidate is to use their knowledge of the Law as well as the plethora of exam conditions to come up with the answer. They are not obligated to attempt to read the intent of the mind of the exam writer.

For #25, had the sentence after "Consider the following statement:" included the words "for 2018" been included, then this would be a 100% true statement. Without those words, it is not a 100% true statement.

I wonder why 45 of the 64 responses on the "popular answer key" went with false. Perhaps many of them are b/c we are used to having to do the math to determine if it s a QRP(in the real world and in all prior exam questions that I see), but I do not know for sure. Again, was the intent of the question writer to ask for a 2018 year Form - probably, but also irrelevant.

Perhaps candidates get into trouble by reading too much into questions sometimes and not enough other times. Perhaps their particular industry influences how the candidates interpret things(Large Plan, Multi-ER, Small Plan, Micro-Plan) and it appears to also influence how question writers write questions - why else are their drops/multi-answers?

In the Micro-Plan market, there are a ton of 1 participant, two participant, three partner plans, etc... Here is a hypothetical real world example and an example of something that happens too frequently in the Micro-Plan market (Which is why the excise tax penalty of 50% exists[as a deterrent]: All names have been changed to protect the guilty. So the EA was Mr. Frankenstein and has a 1 person client. The client puts in the maximum tax deductible contribution every year. The trust has several years of double digit returns. The plan has reached or exceeded the IRS definition of permanence(7 years), Mr. Frankenstein has retired, the client wants to terminate - the new EA and analyst are trying to explain the repercussions of terminating - the client has blood pouring out of his ears/eyes etc. Solutions are exhausted(I can't hypothetically recall but either he has no wife to add to the business and no children) and he does not want the immediate 50% hit. He also does not want to sell his business or somehow I guess you can sell the actual pension plan itself(so overfunding inthe micro-pan market happens so frequently there are actually full-time companies that strictly purchase over-funded pension plans) for pennies on the dollar and it somehow becomes the purchasers issue, but in this case, basically, every year the client hypothetically calls, gets hypothetically pissed and hangs up. The EA didn't do anything illegal that I am aware of, just maybe hypothetically really bad communication to the client not to tell him to slow down on the contributions, but when you are a few years away from boat time, I suppose you can turn into an Enrolled Slactuary(In fact, I think that happens long before some get to 3 years from retirement).
Another option the client has is to terminate, roll a ridiculous amount of money into a replacement plan(so now it is a QRP) and pay the 20% now - but there is no way he is getting away without paying an additional very large penalty after 7 years - he cannot draw down the QRP enough, he will pay $XXXXXX after already having paid 20%. So there will be 2 IRS Form 5330's due. So what is the excise tax due?
Answer - That definitely depends on the year.
So, oversight on many of our parts not to have caught this trick by memorizing this definition, but oversight on the question writer's part for not asking for a 2018 Form.

Here are some examples of questions from ths year's exam:

Question 16 - What is the "2018" Premium - thank you Q#16 writer - I see that you are asking for a 2018 year amount to be filled out on a 2018 form - did you ask it that way to be clear - it certainly is clear - thank you.

Question 17 - What is the "2018" Premium - are you guys/gals related - that is clear to me that you want some 2018 information - well done.

Question 22 - "2018", "2018" and wait for it "2018" three times in the data to the question. That is not redundant - that is clear - well done Sir/Ma'am!

Question 26 - "... prohibited transaction for 2018"- awesome!

#34 - thank you Sir/Ma'am for asking for specific date information!

#35 - thank you for clearly indicating you were looking for 2017 information - well done

#37 - did you want that information as of 12/31/18 - why yes you did - kudos.

#39 - great date work on both dates - most excellent - very clear.

#42 - when do you need that as of - oh - 12/31/18 - ok - I can do that - thanks for asking for the specific date!

#43 - I did not forget about you Q#43 - I see your 12/31/17 - thank you for your clarity!

PS - this might be a bit silly, but consider that every candidate has the intent of signing their answer sheet, so if you get 90 points on this exam, but didn't sign your answer sheet - don't worry, just tell them that you intended to sign it and afterall - paying attention to detail is largely overrated - I SAY GOOD DAY.
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  #273  
Old 06-22-2018, 05:26 PM
Woopsadaisy Woopsadaisy is offline
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Gracias - I am probably looking at back-to-back cinco's on this garbage, so I want to make sure I gradually increase the bitterness over the next month.
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