An IRA owner died at age 73 and he had been taking required distributions. Just after his death, his spouse beneficiary asked the custodian for a check for the remaining value of his IRA which was about $45,000.

She was hoping to "rollover" the check into an IRA in her name within 60 days. She is age 72. But now her new IRA custodian has told her that she cannot deposit the $45,000 as a tax-free "rollover" because she took a full distribution from her deceased husband's IRA and instead she should have left it there and then had the two custodians handle a "trustee to trustee transfer" of the $45,000 to avoid taxes.

Does the above sound correct? Is there a way for her to "rollover" the funds within 60 days to avoid having to declare the full amount as taxable income?

Thank you for any help you can provide!

Frank1971

Is there a safe harbor investment for money that a company puts aside to cover its future repurchase liabilities?

Thanks -

Is there such a thing as a "rolling" vesting schedule for a qualified plan that applies a 3 year cliff vesting schedule to each contribution made versus total years of service. eg.

2006 contribution is 100% vested after 3 years

2007 contribution is 100% vested after 3 years (one year later than the 2006 contribuiton)

At first I thought this was obvious, but the more I think about it the less I'm sure.

A C Corp is sponsoring a new leveraged ESOP Plan with a December year end plan. Payments are on an annual basis. The loan is taken out at the end of October -- 2 months before the end of the first plan year. This makes the first payment due during the second year.

How much of the interest from that first payment is allocated towards that first plan year?

Thanks

Christopher

I want to learn how to manually calculate a New Comparbility P/S formula.

Can anyone share with me a sample Excel Spreadsheet, or point me in the right direction as to how to go about a New Comparbility P/S formula.

Sincerely, AJM

I have a 401(k) plan who's sponsor has decided to outsource one of their departments. A number of their employees are being involuntarily terminated as a result. We have looked at the partial plan termination issue and have determined that it will not be a partial plan term.

The sponsor would like to 100% vest these participants anyway. The plan currently has a 6 year schedule. I want to be sure that there are no problems with amending the plan for just this group of participants. We will need to determine is this would be benefiting a non-descriminatory group but is there anything else I am missing? They are on a PPD prototype document if that helps.

Any and all input appreciated.

In order to satisfy the "good reason" safe harbors for purposes of separation pay, the service provider must terminate within a predetermined limited period of time after the safe harbor condition arises. The preamble says this is a one year period and the final regs refer to two years. The regs would control in this situation, but perhaps this is a technicality that will be corrected soon. One year seems to make more sense considering the required 90 day notice period and 30 day cure period. Anyone hear anything about this discrepency yet?

Upon payment (lump sum) of NQDC to an executive, a calculated portion goes to x-wife of the executive. Is there any way where x-wife's portion can be paid directly to her and taxable to her? Currently it is anticipated that the entire payment comes to the executive. Thank you.

Exec position is eliminated and the ee is to be given severance payments for a 1 year period. Exec is allowed to continue on health insurance. I don't question that part since the health ins. carrier can create a new class of eligible participants.

What I am uncomfortable with is that the exec is being allowed to do 2 things thru the Sec. 125 Plan -

1. pay for the health insurance on a pre-tax basis

2. make pre-tax contributions to the FSA (medical reimbursement) plan

I am reading the plan docs (POP and FSA) and see that "employees" are eligible to participate and "employee" is defined as an individual whose customary employment is at least 24 hours per week. I tend to read things literally, so I would say that a terminated person is not eligible since they are not working 24 hours per week. On the other hand, neither is someone who is on a paid LOA. Another point of view that has been expressed is that as long as the individual is receiving severance pay they are an employee.

Can anyone point me to regs. that would prove/disprove my theory that this exec should not have been allowed to continue Sec. 125 participation ?

Thanks

I have an eligible participant who made salary deferrals in 2006 and was terminated in 2006 with less than 500 hours. My question is should this person be included in the 2006 ADP test?

Same situation, but the participant did not make any deferrals in 2006. Should they be included in the 2006 ADP test.

What are the factors in determining if they should be included?

Thank you, AJM

Can anyone point me in the direction of something that says that if a loan is considered a deemed distribution but is due to termination of the plan, then the 10% penalty does or does not apply?

Thanks in advance,

Crystal

Can a 401(k) Plan - one life plan (only employee) invest 100% in real estate?

My vanilla world of equities and mutual funds restrict my knowledge at times!!!

Thanks

Has anyone ever heard of a plan that is able to condition the form of distribution based on the terminated employee's willingness to sign a non-compete clause with the employer? This plan states if you sign a non-compete clause you can have a lump-sum payout, but if you don't sign it, you have to take an annuity payment only.

Seems to me to be violating the contingent benefit rule, but the plan claims to have a determination letter on it.

A doctor client in California maintains a medical practice ("Company A") that employs several common-law employees that are covered under a 401(k) plan maintained by Company A. The doctor's wife owns 100% of the stock in Company B, that is engaged in the real estate business. There is no business relationship between Company A and Company B. Additionally, the husband is not involved in Company B, not is the wife involved in Company A. Company B proposes to establish a defined benefit pension plan thay will cover only the wife, Company B's sole employee. Under 1563(e)(6), we are taking the position that the stock in Company B is excluded from the attribution rules and there is no controlled group present.

I understand that Mr. Watson's book states that in a community property state, there would be attribution. Is anyone aware of any cases or PLRs on point?

Thanks. Ed

I have occassionally used the DOL EFast info number (866 463-3278) to check on a client or takeover client past filings - like did they actually file.

On a new takeover the sole proprietor files a 5500 EZ. Is the EZ filing supposed to be on that system? I notice that FreeErisa does not have EZ filings at all.

does a Form 5500 have to be filed with the EBSA for all qualified plans?

What are any thoughts about a plan sponsor's obligation to re-run ADP tests if they find out that they were done incorrectly?

Situation: Employer A and Employer B (members of a controlled group) both adopt Plan X. ADP test was performed separately for each Employer. Both tests pass.

Do we need to go back to perform the tests together?

What if this has been going on for 4 years?

What if this has been going on for 10 years?

Do we have to go all the way back? Is there a statute of limitations?

Thanks for any feedback.

I have a 401(k) client with the assets, around $1,000,000, invested with a national mutual fund company. The participants have investment choice and the plan complies with 404©. An insurance agent is trying to convince the plan sponsor that about 1/2 of the plan assets should be liquidated and individual annuity contracts purchased for the plan participants.

1) I recall that the DOL has expressed concern about individual annuity contracts in qualified plans. Is my recollection correct?

2) Does purchase of the annuities take the plan out of 404© compliance?

Any thoughts are welcome. Thanks.

Members are participating in an LLC-sponsored 401(k) plan. what are the members contributions if there are no income allocations? IRC Section 401©(2)(A) defines "earnings" as "net earnings from employment." If no income allocations is there no contribution for that year?

Any help would be appreciated.

At last year's EA meeting, I asked an IRS representative why it took the IRS over 20 years to address the "participant v employee" compensation issue under IRC Section 415. The reply: "We had other priorities and didn't get around to it." I'm thinking, in that time, a lot more difficult challenges have been faced and there have been seminal breakthroughs in medicine, technology, communications, and warfare. Plus, we somehow got our daughter out of high school.

The final IRS 415 regulations take up some 210 pages depending upon the font and point size. What's going on here? Did we really need them to "get around to" this?

Perhaps, the IRS should revert to its erstwhile name, Internal Revenue Bureau.