I have a client, who has a non-spouse beneficiary who is also in the same 401k. The non-spouse beneficiary would like to rollover a portion of the decedent's account into an (Education Savings Account) ESA. Is this allowable? I cannot find anything on the IRS' website or in any regulatory briefs that talks about whether or not a 401k can be rolled over into an ESA.

Please provide the Code or Regulation where this is permitted or not permitted. Thanks

Suppose you have a brand new qualfiied plan effective 1-1-2011 (DB or DC, doesn't matter). The plan requires only 500 hours of service in the plan year to accrue a benefit (or to get an allocation). But the plan requires 1000 hours to get a year for vesting. Years before 1-1-2011 are excluded for vesting. Assume no other employer plan terminates within 5 years of 1-1-2011.

Suppose the 25% owner/HCE is now part-time, and has just turned 70 years old.

The plan has a 3-year cliff vesting schedule. Normal retirement is the later of 65 or the 5th anniversary of plan entry. Everyone employed as of 1-1-2011 is eligible 1-1-2011.

The NHCEs are all full time, but the HCE/owner wants to work these hours:

2011: 1500 hours

2012: 1100 hours

2013: 900 hours

2014: 950 hours

2015: 1100 hours

This allows the owner to accrue benefits (or get allocations) for all 5 years, but is not 100% vested at 3 years, but is 100% vested in their 5th year instead (that's NRD anyway).

Would the IRS think such a plan was intentionally designed to avoid the RMD rules for 2013 and 2014? To make it more worthwhile to consider, suppose it is a DB and the PVAB is $600,000 at the end of 2013 and goes up by about $200,000 in 2014. Could the IRS cause trouble for the plan sponsor and the HCE/owner? If so, what would they use for their basis?

Would you submit such a design for a D letter, and would that even protect them? Just theorizing/musing . . .

Somoene gets a QDRO of $100K. If they take $30K today, and $70K next year, are both payments exempt from the 10% penalty? Assume they do not rollover (of course). Someone is suggesting that the second distriubion is not exempt, but the code plainly says distibutions pursuant to a QDRO are exempt.

I know that SEP IRA's do not have to file 5500. Is there a cutoff regarding assets? If the the SEP has over $250,000 in assets would we then have to file a 5500 (similar to a dc plan with form EZ)?

May not be asking this correctly, but I will try. Because of the required amendment for age 62 in pension plans. Those defined benefit plans we have that have an age less than 62, we took the approach of many and that was to have an ERA of the age that we had been using and continuing to base the accrued benefit on that number as well as using it for funding.

With the DB restatements, our prototypes don't seem to cover the above. The master document uses the accrued benefit definition as ....to Normal retirement. That is now presenting us a problem for those plans we are restating with throwing it off the prototype.

How are others handling their docs?

The client's plan document provides that deferred vested participants will begin receiving their pensions on their normal retirement date, and no deferred starting dates are permitted by the plan. However, neither the client nor their TPA has any set procedure for notifying deferred vested participants that they're nearing their normal retirement date and should apply to start their benefits.

There are a number of DV participants in the plan who are between 65 and 85 and have never been contacted to start payment of their benefits. We are going to file a VCP application with regard to the over-70-1/2 participants, but I'm wondering whether the failure to notify the over-65 participants is also a failure that needs to be included in the VCP application? Is anyone familiar enough with plan administration to tell me what sort of process should have been followed with respect to these participants who were nearing/over age 65? For some reason, I'm having a difficult time finding any legally prescribed process.

Thanks in advance for any leads.

Situation: Plan YE = 6/30/11. Eligibility req = YOS. Entry Date - Single Entry 7/1. Participant was Terminated in 2002 and was 100% vested. Rehired on 11/15/10. Is she immediately eligible or does she need to re-meet eligibility requirements. Thanks in advance for your help.

I was looking for weekend pet boarding and was instantly distracted by this place's 401-K-9. I thought it was cute anyway!

http://www.campbowwowusa.com/pdfs/CBW%20In...9%20Program.pdf

Of course back when I was in corporate benefits, we'd have politely smiled and sent them away (or at least to the corporate communications department, which handled discount programs). The only "voluntary program" that I ever got behind was educational seminars about 529 plans (which ultimately, from the company's point of view, is just another direct deposit election).

(For anyone curious, 401(k)(9) proper says comp has the meaning given in 414(s) )

Is a required minimum distribution (RMD) from a traditional IRA permitted to be transferred to a personal Roth IRA? The IRS has a list of FAQs regarding RMDs and question 12 is "Can RMD amounts be rolled over into another tax-deferred account?" The answer is no. However, from my reading Roth IRAs are identified as a tax-exempt vehicle and not as a tax deferred account.

Any thoughts? If you can provide a particular tax code section that would be great.

Plan sponsor finally submitted "clean" data for 2008 adp testing. My assumption is that the adp test must be run without the use of testing the otherwise excludable employees separately.

I know that the otherwise excludable employees can be tested separately but can this testing method be applied after the 12 month correction period?

hello....

what is your opinion if someone is building their home, they own the property ( of course) the work is going to cost approx 30k and they have actual invoices for 10k, but have to have the 0ther 20k of services for the remainder of work.

how would you go about proving that.

also, does anyone have a hardship checklist that you can share

thanks so much!

An employee has a retirement plan in which he can make the maximum deferrals of $16,500. He also has another business and wants to set up a SIMPLE plan and deduct $11,500 for himself. Can a person do this or would he be limited to the $16,500 for 2011?

Somewhat unique situation for us where a 79 year old participant will have his lump sum benefit limited by the 415 salary limit, so we wanted to confirm our findings.

Male born 7/7/1931

Over 40 years of both Service and Participation.

AB of $12,699 payable as a 10 Year C&L at 12/1/2010.

AB at normal retirement date of 8/1/1996 (age 65) was $5,042 also payable as a 10 Year C&L.

Actuarial increases begin at 4/1 after attaining age 70-1/2 or 4/1/2003.

Plan Actuarial Equivalence is GAM83 and 7%.

High 3-Year Average Salary is $160,521.

Plan provides QPSA without charge.

Single Employer Plan that has about 400 participants.

Plan offers SLA at both Annuity Start Date and Normal Retirement.

We determined his annual 415 dollar limit to be $433,721 and his annual 415 compensation limit to be $160,521, both payable as Single Life Annuities. Based on that, his lump sum limited by IRC Section 415 would be about $1,075,350, which seemed slightly low. Do the above results seem reasonable?

Thanks in advance.

company issued deferral refunds in 2011 on their SEP and shut the SEP down and started a 401. If a participant (under 50) deferred $5000 into the SEP, received a SEP refund of $5122, which includes yield on the deferrals, how much can he defer into the newly established 401(k) for 2011 that has a short plan year of 9/1/11-7/31/12?

Thank you kindly

Hi. I'm a volunteer at a small Lutheran church.

We want to set up a 403b for our incoming Pastor and set it up where he contributes and we match some of what he contributes. We have preliminarily looked at the Vanguard 403b7 plan because we want to have this pretty straightforward and invested in a few mutual funds. We are going to reimburse him for the cost of enrolling him in the plans.

1. From what I understand, because we are a church, we are not subject to Erisa so we don't technically need a plan document. Would someone please find the right quotation in the IRS law as a reference so I can show the church board of directors?

2. We have a church secretary and an organist. I think at least the secretary works somewhere around 15-20 hours a week. Are we OK excluding them from the 403b? (again, any citation from IRS law appreciated). If we need a plan document, what kind of language do you suggest we use to exclude them?

3. If we don't need a plan document, I assume we need some sort of document laying out the terms of what he can contribute, what we will match, etc. Do any of you have a template to either share or can you point me to one? Alot of the 403b sample plans I've found online by doing a google search simply refer to public schools, not churches.

Thanks, statcat

We are merging a traditional frozen DB plan into a Cash Balance plan this year. My question is whether there is a 'best date' to do the merger.

Is a short year better than a full year?

Is there a real difference between 12/31/11 and 1/1/12? I cannot see doing an SB and 5500 for a 1 day (1 millisecond?) plan year.

I am leaning toward the 12/31, but am having dizzy spells over completing the SB.

Special note - we will still run the plans separately (A+B valuations are not good) and sum the vals to do the future SBs.

We have a balance forward, pooled account plan; an employee took a hardship distribution in April 2010; she then terminated employment in November 2010, when her termination distribution was processed the processor who prepared the paperwork; indicated to cashout her entire account balance, she forgot to minus out the hardship distribution that took place earlier in the year so she was over paid by $2000(the amount of the hardship). 2008-50 states that the overpayment plus interest must be repaid to the plan. My question is that if the terminated employee does not have the means to repay, we can push back on the sponsor to pay back the $2000 plus interest which will go into an unallocated account. It's safe harbor so he can use the $2000 towards the 2011 safe harbor which will be made sometime mid 2012. This same participant is due a safe harbor contribution for 2010, which must be funded by 9/15 (on extension). In speaking with co-workers; one feels that if she cannot pay back the $2000 she should not receive the 2010 SH contribution. Or make the 2010 safe harbor to the plan, but not pay her out and forfeit that. I don't think this is an option, the contribution still must be made to her and she is entitled to the additional distribution ?

Thanks

This came up in the news section today. The article says it applies to plan related filings like the 8955-SSA and 5300. We've been sending most things certified from our office, so our receipt is not postmarked. I guess it's time to change our mailing procedures.

http://www.gpo.gov/fdsys/pkg/FR-2011-08-23.../2011-21416.pdf

301.7502-1(e)(2) Exceptions to actual delivery—(i)Registered and certified mail. In the case of a document (but not a payment) sent by registered or certified mail, proof that the document was properly registered or that a postmarked certified mail sender’s receipt was properly issued and that the envelope was properly addressed to the agency, officer, or

office constitutes prima facie evidence that the document was delivered to the agency, officer, or office. Other than

direct proof of actual delivery, proof of proper use of registered or certified mail, and proof of proper use of a duly designated PDS as provided for by paragraph (e)(2)(ii) of this section, are the exclusive means to establish prima

facie evidence of delivery of a document to the agency, officer, or office with which the document is required to be

filed. No other evidence of a postmark or of mailing will be prima facie evidence of delivery or raise a presumption that the document was delivered.

(ii) Equivalents of registered and certified mail. Under section 7502(f)(3), the Secretary may extend the prima facie evidence of delivery rule of section 7502©(1)(A) to a service of a designated PDS, which is substantially equivalent

to United States registered or certified mail. Thus, the Commissioner may, in guidance published in the Internal

Revenue Bulletin (see § 601.601(d)(2)(ii)(b) of this chapter), prescribe procedures and additional rules to designate a service of a PDS for purposes of demonstrating prima facie evidence of delivery of a document pursuant to section 7502©.

This came up in the news section today. The article says it applies to plan related filings like the 8955-SSA and 5300. We've been sending most things certified from our office, so our receipt is not postmarked. I guess it's time to change our mailing procedures.

http://www.gpo.gov/fdsys/pkg/FR-2011-08-23.../2011-21416.pdf

301.7502-1(e)(2) Exceptions to actual delivery—(i)Registered and certified mail. In the case of a document (but not a payment) sent by registered or certified mail, proof that the document was properly registered or that a postmarked certified mail sender’s receipt was properly issued and that the envelope was properly addressed to the agency, officer, or

office constitutes prima facie evidence that the document was delivered to the agency, officer, or office. Other than

direct proof of actual delivery, proof of proper use of registered or certified mail, and proof of proper use of a duly designated PDS as provided for by paragraph (e)(2)(ii) of this section, are the exclusive means to establish prima

facie evidence of delivery of a document to the agency, officer, or office with which the document is required to be

filed. No other evidence of a postmark or of mailing will be prima facie evidence of delivery or raise a presumption that the document was delivered.

(ii) Equivalents of registered and certified mail. Under section 7502(f)(3), the Secretary may extend the prima facie evidence of delivery rule of section 7502©(1)(A) to a service of a designated PDS, which is substantially equivalent

to United States registered or certified mail. Thus, the Commissioner may, in guidance published in the Internal

Revenue Bulletin (see § 601.601(d)(2)(ii)(b) of this chapter), prescribe procedures and additional rules to designate a service of a PDS for purposes of demonstrating prima facie evidence of delivery of a document pursuant to section 7502©.

We have a balance forward, pooled account plan; an employee took a hardship distribution in April 2010; she then terminated employment in November 2010, when her termination distribution was processed the processor who prepared the paperwork; indicated to cashout her entire account balance, she forgot to minus out the hardship distribution that took place earlier in the year so she was over paid by $2000(the amount of the hardship). 2008-50 states that the overpayment plus interest must be repaid to the plan. My question is that if the terminated employee does not have the means to repay, we can push back on the sponsor to pay back the $2000 plus interest which will go into an unallocated account. It's safe harbor so he can use the $2000 towards the 2011 safe harbor which will be made sometime mid 2012. This same participant is due a safe harbor contribution for 2010, which must be funded by 9/15 (on extension). In speaking with co-workers; one feels that if she cannot pay back the $2000 she should not receive the 2010 SH contribution. Or make the 2010 safe harbor to the plan, but not pay her out and forfeit that. I don't think this is an option, the contribution still must be made to her and she is entitled to the additional distribution ?

Thanks!