Participant, John, dies before reaching age 70.5. Spouse, Mary, is beneficiary. Spouse wants account to stay in 401(k), but wants DOB changed in plan. Told spouse be happy to re-name account "Mary FBO John SMith" but will stay John's DOB.

Advisor suggests that Mary is new "owner" and funds can stay inside John's plan, and should change to HER DOB because she can take RMDs based on when SHE attains age 70.5.

Told Advisor I believe that is only if Mary transfers to IRA or Qualified Plan where she is participant...and that if $ stays in plan, Mary must take RMD based on John's DOB.

No "owner" of account inside plan except the trust...he was participant, she is beneficiary...she remains beneficiary.."account owner" rules pertaining to non qualified plan assets, etc..

Which is correct? (Advisor is very smart cookie and making me second guess myself!)

***

A 401(k) plan is being merged into another 401(k) plan due to a merger and acquisition. A 75 yr old NHCE participant is being told by the TPA that his RMD cannot be transferred. Our position is that he doesn't have an RMD because he hasn't retired. The entire account balance should transfer. His RMDs won't start until he retires from the new company, assuming their plan also allows him to hold off until he retires. Am I missing something?

I know the PFEA lump sum rate has been extended by the PPA. But upon restatement of a DB plan, effective 1/1/07, what good faith language would you use -- the PFEA (5.5% fixed) or the PPA ("not less than the greatest of . . ." )? Thanks for the anticipated input.

In what situations would purely voluntary periodic (e.g., biennial) phyical examinations paid for by the employer be taxable to the employee (please include citations)?

I have found myself in a situation where I probably need an Erisa savy attorney but would like to give an account of facts and to welcome any thoughts by other members.

My brother joined a private utilities company in the 1960's and joined their stock option retirement plan in which he purchased stock and was matched at 50% from his employer. I was named as contingent beneficiary along with my mother who was named as primary beneficiary. My mother passed leaving me as the only named benificiary of the plan.

My brother was married in the 1970's but never changed the benificiary designation listed on the original form. After he retired in eary 1990's the plan remained intact and wasn't dissolved, cashed out or terminated.

I never wanted or even thought of interfering with her rights as a surviving spouse when my brother died in the late 90's. But then when his wife passed a few years later the administrator of the estate says this plan is to be treated as part of the estate and passed to her heirs which reside in europe. The plan states the account remains intact as long as there is a balance. I have all the original forms which are properly signed dated and witnessed but with the amount of time that has gone by most of the people on the form have passed.

I have gained the help of some local attorneys to write letters for me but their letters have been met with a rabid response and I don't feel their expertise is in this field although I have known for a long time

but feel I need someone whose expertise is related to the situation.

Please be kind as I am up in years but have trid to be as accurate as possible.

All,

in box 12 - W of the 1040 form, it asks for the employer's contribution to your HSA. I entered the amount my employer contributed, but then I noticed that the employer reported the sum of both his contributions plus mine.

I asked about it and they said they will keep it like that, because it is complex and that is the best of their understanding.

From reading many IRS forms, I think it should only be what it says: Employer's contributions. My employer says that it shouldn't make a difference since those are informational boxes only, but when I enter different amounts in Turbo Tax, the amount of my refund is different.

Have you noticed this issue with other users?

thanks,

--jcastro

Under a 401(k) plan with no age or service requirements for eligibility, once an employee is hired is that individual automatically considered a participant, or would that person need to make a salary reduction election to become a participant?

The answer seems like it would be the former. I'm just reading over some of the requirements for a qualified CODA and wanted to make sure I wasn't excluding anyone from possible QNEC's.

Thanks again guys.

The client recognizes the service with a predecessor employer. An employee worked 10 years for the predecessor employer, then left for 7 years and is now hired by the new company. Is he a participant on the date of hire or does he need to meet eligibility requirements?

When we asked the client if the employee was a participant with the predecessor employer, the answer was no (I need to get more info as to why he was not a participant, maybe he never worked 1000h)

Any cites would be really appreciated.

Thank you,

I'm looking at what to me is a new animal and would appreciate any comments.

It seems to be described as a "variable annuity plan" where the accrued benefit appears to be increased or decreased with actual investment experience. The plan expresses benefits as annuity benefits and offers an optional lump sum (converted using 417(e) rules).

It appears to me that this does not meet the definition of a "Statutory Hybrid Plan" of Notice 2007-6 since it does still appear to be annuity based. The accrued benefit each year is a fraction of the 415 dollar limit. There are no references to compensation. (Take that, FASB).

What is the legal status of a DB plan that adjusts accrued benefits for actual investment experience but does not meet the conditions of Notice 2007-6? Other comments?

I have a parent C corp that incorporated a subsidiary in Delaware. The sub is physically located in Canada, employs Canadians and all work is performed in Canada. The parent wants the Canadian EE to participate in the US ESOP.

1) Is it possible to integrate foreign EE into a US ESOP (especially Canadian EE who have Canadian-mandated pension plans); and

2) If yes, is there a resource out there that walks you through how one integrates the foreign EE (e.g., 415 limits, conversion from Candian dollars to USD)?

Does anyone have any suggestions?

We have a SH 401k plan. Several terminated participants need small contributions for the 3% SH nonelective. Some in our office suggest having the Employer make this contribution as a payment directly to the employee rather than deposit into the trust then make the distribution. The reason they are giving is that we can avoid having to open an account at the investment company (platform type investment at Hartford/Nationwide/American Funds, etc). This makes me nervous but I need to provide "some really good reasons" not to do this. Can you lead me to specific cites for this either way?

I wasn't sure where to place this question, but am hoping there are some payroll experts out there.

Company has 2 payrolls per month, on the 15th and the 30th.

Employee begins works on the 12th of the month, so is only working for 4 days in the first payroll cycle.

Employee earns $1000 each payroll period.

Company calculates compensation as working 4 out of 15 days so pays 4/15 of $1,000 or $266.70.

Employee feels they worked 4 out of 10 days so pay should be 4/10 if $1,000 or $400.

Which of these scenarios sounds correct?

Thank you very much!

I have a person who is a highly compensated employee and failed

the discrimination testing for 2005. He received a 2006-R for this.

The 2006 1099-R has gross and taxable amounts of $1,934.39. The code is

P (excess contributions plus earnings/excess deferrals taxable in 2005.

I was told by the company's controller that this amount is reportable is and taxable in 2006.

However, I thought that if the distribution was made before 3/15/06, it gets

reported on a 2006 1099-R but is taxable in 2005. Isn't that the meaning of Code P?

So the only thing I could thing of is that the distribution was made after

3/15/2006, plan year is calander year, and the distribution is taxable in 2006,

despite the code P showing up in Box 7.

So I guess my main concern is the Code P, referring to 2005. If it's taxable in

2006, shouldn't box 7 be blank? Would the IRS be looking for this on 2005's return.

Can some explain if I am on the right track for this?

Thanks

David

Can an employer charge an early retiree more than the actual premium that is charged by the insurance company for coverage? For example, employer offers early retirees (age 55-64) access to the same medical plans offered to active employees as long as the retiree pays the full cost for coverage. However, the employer is charging the retiree not 100% of the premium charged by the insurance company, but is adding on say 25-75% above the premium amount. So if the insurance company charges $500/month for coverage, the employer is billing the employee say $750 and putting the difference in their own general assets.

Is this legal?

Following Gary's post below is it possible to start off a SEP plan with 0 or 1 year eligibility and then amend it to 3 years later.

How about the same idea with SIMPLE IRA plans ? Can you amend from immediate eligibility to the 2 year/$5,000 requirement ?

I have a top heavy 3% safe harbor plan for a medical group. I am getting 2 different answers on using comp while a participant ( for people who enter the plan on 7/1 )

I thought that if there are no other profit sharing contributions or forfeitures allocated that the 3% then only has to be paid on CWP.

Any clarification would help ! Thanks !

Let's say Mongo Company wants to offer a safe harbor 401(k) plan to its employees. Mongo is actually made up of 3 different companies.

Mongo wants to offer Companies A and B a safe harbor w/4% match. But they want to offer Company C the 3% nonelective safe harbor design. Company C is significantly smaller in headcount than A&B.

Is it possible to offer different safe harbor designs within a control group?

I've heard the IRS requires or did require IRA investments to be diversified, but I can find no guidance. Does anybody know of any?

If an ongoing plan currently offers a lump sum as an optional form for a terminating or retiring employee, does that same plan have to be amended again before "plan termination" to be able to provide lump sums for current active and vested terminated employees at "plan termination" ??