Beneficiary died and left the account to 3 individual beneficiaries. They did not separate the accounts by December 31 of the year of her death. However, they want to give one beneficiary all his money now. Do you know if its permissible to divide the account into separate subaccounts so that the one can be paid out but the other two can roll the accounts or deal with their interests according to their own desires. I think they can do it but they just have to use the oldest life expectancy. the final regulations dont allow for this but there are some letter rulings and such.

10 years ago corporation institutes special post-retirement paid health insurance benefit for key executives (who are also 2%+ shareholders), pursuant to which these key execs would continue to receive company-paid health insurance for term of years after retirement - it was intended that the benefit be excludable from income.

At the time retiree health plan was implemented, corporation was a C corp. Two years ago corporation converted to S corp. and health insurance benefit to 2% shareholders became taxable.

Here's the question - upon retirement, key execs' stock is redeemed, so that at time receive retiree health benefit, they will not own any stock in the corporation, so does benefit revert to being excludable from income as typical retired employee health insurance benefit?

I have a client whose 401(k) Plan uses the "facts & circumstances" general approach to defining the conditions which qualify as "financial needs" for hardship distribution purposes. The Plan document does not delineate the conditions, but merely states that the employer shall adopt a written policy setting forth same.

This is my first encounter with the "F&C" approach to hardships and was wondering - other than the usual IRS "safe-harbors" - for those of you whose Plan or clients' plans use this approach, what other types of "financial needs" are being used?

Thanks for any and all input.

Has anybody dealt with lump sum payments when the AFTAP falls between 60% and 80%? I believe the proposed regs require the Plan to allow the participant to take 50% as a lump sum and elect another optional form of payment for the remaining 50%. Additionally, the participant could elect to defer commencement and receive a lump sum for the full benefit once the restrictions are lifted.

Another option, that is allowed but not required, is the Plan can pay 50% as a lump sum now and allow the participant to defer commencement on the remaining 50% to a point where the restrictions are no longer in place, correct? Are plan sponsors allowing this option?

A sole-prop has a requirement minimum contribution greater than their earned income for 2008. So part of the contribution is currently non-deductible.

Just a theoretical question: What would happen if they never have future earned income and never get a chance to take the deduction on the whole 2008 contribution?

For example, for 2008 the sole-prop has a $150K required contribution and can only deduct $100K. In 2009, the sole-prop’s source of income dries-up and they don’t anticipate any future income. So in 2009, the sole-prop elects to terminate the plan and rollover their entire benefit to an IRA.

What happens to the $50K non-deductible amount? Can it be rolled over? If they elect a taxable distribution is it subject to tax?

Any thoughts are appreciated.

I'm trying to understand what distribution options are available in a 457f plan. Does the balance get paid as a lump sum, or can the payments be spread out over a period of time? If the payments can be spread out, what is reportable as taxable income? I assume that it is just the amount received in the tax year, but I have seen a couple sources that imply that the entire account balance would be taxable.

Any insight would be appreciated. Thank you.

I am trying to find an ERISA attorney in or close to Shirley NY for a client of mine. This is to handle a beneficiary related matter for a QP.

Any recommendations/suggestions?

Thanks

what is the rule with regard to providing prospectuses to the participants that are defaulted into the default investment. i am thinking you need to furnish the prospectus after the fact just like with 404©. can anyone tell me what they are doing?

Are active employees over the age of 65 required to continue paying taxes on LTD benefits? Our employer pays for the premius; however, the employee pays the taxes on the premium. Once an employee reaches age 65 and is now eligible for social security benefits, do they continue to pay taxes on LTD premiums through payroll deductions?

Does an employer have the option to reduce or eliminate 403(b) matching contributions for employees with active participation in the employer DB plan while continuing to provide full 403(b) matching contributions for all other employees who do not meet the eligibility requirements for the employer DB plan?

A plan sponsor implements a 412i plan for himself (the owner and only participant).

The plan formula is a 100% of avg comp annuity at NRA.

He is to pay 50% life premium and 50% annuity premium as level premiums until NRA.

Say the policies guaranteed values result in a life annuity at NRA of 50k per year based on the life insurance annuity conversion rates.

Of course the owner will actually take a lump sum at NRA.

So while the policies can support a life annuity of 50k from the insurance rates, it would actually be worth a life annuity based on lump sum conversion rates of say 60k (the 415 limit).

Now the owner only received compensation of 40k in this the plan's first year.

So in effect the policy provides a projected pension (50k) that is greater than what the plan provides (40k) based on the comp of 40k.

Now in subsequent years the owner takes higher compensation and after three plan years he has an average comp of 75k.

So now his projected plan formula benefit is 75k, the insurance policy guarantee rates benefit is 50k and the 415 lump sum based on guaranteed values is 60k.

Instead of increasing premiums to address the increase in projected benefit the owner maintains the same premiuim level.

The thought being that if he terminates the plan at say NRA and the insurance values are not high enough to cover the 75k annuity he simply pays out benefits to the extent funded (ignore 436 for this discussion).

And if the values increase greater than the minimum guarantee, he has some space to avoid a surplus or at least the srplus would not be as substantial.

Now what would one suggest in terms of remedying th is situation? That is, to safeguard against an inevitable IRS audit.

Thank you.

I have a SIMPLE IRA in place for my employees. Under the Military Leave Policy it only speaks to 401k plans in terms of making up contributions. I am assuming that a SIMPLE IRA should be treated the same and returning employees can make up contributions just like if I had a 401K plan?????

Thanks

Wife named husband as beneficiary of her retirement account.

Wife died. Plan is insisting that estate is the beneficiary of her account and not her husband. They say:

Client elected to receive lump-sum payment of her benefits, beginning one day after her retirement date

She dies after completing and submitting the request to the plan, which had a annuity start date that came about for a date after she died.

The plan was notified of her death before they issued the check. Still, they issued it in her name, FBO her IRA.

Spouse returns the check to the plan, asking for it to be issued to him. They refuse and issue it to her estate. They claim that her estate and hot him, is her beneficiary.

They claimed she elected a Lump-sum sum optional form of benefit, with no beneficiary benefit. Her spouse consented to the annuity waiver, thus allowing the lump sum. However, they are claiming that her estate (and not her spouse) is her beneficiary because:

------- For beneficiary, they define as someone named by the participant to receive survivor benefits, who much qualify on the annuity starting date.

------- She died after her annuity starting date, therefore no benefit is due to her named beneficiary.

Can there legally be such a provision in a plan?

~~~~~~~~~~~~~~

Using different name to protect client.

Has anything change recently in determining an assumption for the expected rate of return on assets?

Thanks

We are still working on our EGTRRA restatements. We started them earlier this yr and plan to have them all done and signed by the end of 2009.

I was just curious to find out if we were the only one's still working on them, I feel like a lot people that I've spoken to had them done last year ....or are almost done.

I was just curious what most people normally see with regard to DB QDRO's. Let's say a participant was married before joining a DB plan. He has X years of participation at date of dissolution. He has Y years left until he reaches the plan's normal retirement age. It's a final average pay plan, meaning his ultimate retirement benefit is based on his highest Z year average compensation.

I had always seen the alternate payee's benefit based on the average compensation and years of participation at the time of dissolution with no consideration of future increases in compensation or additional years of service.

However, I ran accross a situation recently where that wasn't the case. Instead the DRO accounted for any increases in compensation and the ultimate annuity paid to the alternate payee would increase correspondingly.

I don't work with many QDRO's so I was curious what others have seen?

Do the new extensive reporting requirements come into play with the 2009 5500? I am thinking yes, for both ERISA and non ERISA plans.

I understand that generally a participant of retirement age in a pension plan who switches to part time work, and even works <501 hours must still formally terminate employment before receiving benefits. Howbout a participant who terminates and then comes back to work in one of the following scenarios:

1. Already receiving benefits - if working under 501 or 1000 hours, must the participant always stop receiving benefits, even if participant is not accruing new benefits?

2. Not receiving benefits - participant has come back to work and is working under 501 or 1000 hours, can participant start receiving benefits?

What if plan is frozen and the company is under a new employer?

We received a benefit commencement request from a plan participant for a rollover from DB plan to an IRA. The participant (husband) included a copy of a Separation Agreement from 1999 which indicated that the wife is entitled to Majuskas share of the pension. However, the benefit commencement application (from 2009) included a signed & notarized spousal consent from wife irrevocably consenting to husband's 100% rollover election.

What are the Plan's obligations with respect to payout to participant? Do the terms of the separation agreement necessitate a hold on benefits? Or does the 2009 spousal consent and acknowledgement take precedent over the terms of the 10 year old separation agreement? Any input is appreciated. Thanks.

Our DB plan allows a lump-sum payout and does not prohibit rehire after retirement. Several of our retirement-age employees have recently expressed interest in retiring simply so they could collect their lump-sum distribution and then be rehired immediately. They don't wish to retire -- they just want the cash now.

I understand we would put the plan at risk for disqualification if there is not a complete separation from employment; therefore, we are looking at establishing criteria for rehire eligibility (e.g., 6-month wait) and are looking for information, guidance and reference material on designing/implementing rehire/retire criteria. We have discussed this with our DB consultant who suggested amending the plan to include criteria to dissuade false retirement. The only information I can find relates to retirees receiving annuity payments, not lump sum payments. I would like to get a feel for what other companies have done.

Thank you.