For the last several years we have used a single mortality table (83GAM) for the ERISA valuation, PBGC premiums, current liability, and FAS87.

Now along comes RP-2000 that we must use for 2007 current liability, at a minimum. (Is there anything else we have to use it for?) We'll choose the two combined tables rather than worry about the annuitant/nonannuitant split.

It seems we could use these tables for the ERISA valuation, PBGC premiums, and FAS87 for 2007 also. But if we do that, is there anything in the new PPA that will require us to make to make yet another change for any of those purposes in 2008? Will we be required to start using the annuitant/nonannuitant split, for example?

My wife is starting a small business under an LLC structure. It is a single member LLC (she owns 100%). We do not expect the company to make alot of money in the first couple years but what it does make I would like to put away in a 401K like structure.

My income is sufficient for our living expenses and I already maximize my 401K (corporate employer) and Roth contributions. Does this prevent us from having a 401K like vehicle for my wife (or simple IRA for that matter)? How can I use the LLC business to optimize our combined tax deffered savings (can the LLC match her contributions).

Also please confirm that a married couple filing jointly can only invest $4K a year in a Roth (assuming income limitations are met)

Any advice would be appreciated, nothings more painful that the gov't taxing your retirement savings growth.

Many thanks

Neil

Health & Wealth: The Use of Tax Policy to Shift Responsibility to the Individual

http://docs.law.gwu.edu/stdg/cls/healthandwealth.htm

The Corporate & Business Law Society at The George Washington University Law School invites you to “Health & Wealth” on Friday, February 23, 2007. Hear panels of experts speak on IRA, HSA, and private account issues.

The Event is sponsored by the Corporate & Business Law Society and is FREE and OPEN TO THE PUBLIC. RSVPs are required.

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I bought a Non-qualified variable (flexible premium) deferred annuity years ago. My wife (now 58) was written down on the application as the owner and myself (now 63) the joint owner, and the account was set up that way. All of the contributions were made with after-tax money. The annuity income date is in year 2009, so the account is just earning tax-deferred interest right now. We simply thought of it as a joint account and didn't think about who's name is in the owner box and whose in the joint owner box, until... We made an withdraw last year to invest elsewhere, and now received a 1099-R form from the financial institution to my wife stating the withdraw is an early distribution (with a 10% penalty tax) because my wife is younger than 59 1/2.

Not wanting to make the same mistake and yet want to move money out of the annuity to invest elsewhere, we are considering the following steps. Is there danger in taking any of these steps? Are there implications I should be aware of?

1) Transfer owner name from a joint ownership to myself: We called the financial institution that manages the Annuity a few times about who is responsible for tax purpose on a joint annuity account, and got different responses each time we called. At first, it's the one written down as owner, not joint owner. Then it becomes the Annuitant. And last time we called, it becomes the younger of the two. We were told that transferring annuity between spouses is not a taxable event, so we plan to transfer the ownership from the joint owners to myself (the older) to avoid incurring any future penalty tax on our withdraws. Once owner is myself, I plan to withdraw the full-amount of the non-qualified annuity, and pay income tax on the interest earned.

2) Rollover the annuity to an IRA: We went to the local IRS office, and asked about rollovering to an IRA. The IRS advisor said we could roll the annuity (while still under joint ownership) to either my wife's or my IRA account. But, when we asked which kind of IRA account we could rollover the non-qualified annuity, the advisor said she doesn’t know and we can call IRS's 1800 number to find out about details. We did, but the person answering the call also doesn't know the answer, and has posted the question to some task team. Has anyone out there done this before? Can I rollover a non-qualified annuity to an IRA? Am I limited to certain kind(s) of IRA?

Thanks for reading my long posting.

For 2008, the new funding rules allow a company to contribute and deduct an amount that would leave the plan with assets that cover up to 150% of unfunded Current Liability. (Right?) There was some speculation that that provision would reach back to both 2006 and 2007 also.

Does it?

My company offers 401k plan through ebs. Does this automatically mean I can take out a loan against my vested money? Does my company benefits person do this or can i go directly through you. Previously I have asked the benefits person no longer there about loans and was told they did not provide them. Is this a decision an employer can make or I am offered this option as part of your ebs company plan?

Thanks

A one participant owner/emploee DB plan.

Plan in existance three years and owner has never made minimum funding payment.

Only plan assets are close to $500,000 of IRA rollover (prior to withdrawals).

Business owner makes numerous withdrawals of approximately $330,000 over two year period.

No proper loans taken.

The above appear to be all deemed distributions to the owner subject to income and early distribution penalty taxes (under 59 1/2).

The above also appear to be Prohibited Transactions, perhaps all charged to the corporation (or perhaps some charged to individual) and subject to excise taxes.

Assuming we are in agreement with the above (altenative opinions accepted):

It seems if owner terminates the plan he may be able to runa way from future funding deficiencies' excise taxes and just waive his benefits.

However, if the owner were to just terminate the plan and never pay back the loans/withdrawals, what happens to the PT excise taxes? Do they disappear once plan is terminated?

Let's keep in mind any possible leniency due to the fact that it is a one participant plan.

Thanks.

I am drafting a QDRO to conform to provisions of a settlement agreement which I did not draft. The Settlement agreement provides cryptically as follows "The wife shall be entitled to surviving spouse rights under this Plan."

The plan is a DB plan and the SPD has only cursory mention of QDROs. However, the QDRO Administrative Procedures and model forms provided by Hewitt state that in the event the AP is granted a separate interest under the QDRO and the Participant predeceases the AP that the AP's "benefit will be unaffected." In this instance, it my understanding that the AP is not in danger of receiving nothing in the event the Particpant dies before her.

This result seems to run counter to most of the DB plans I have seen. I would be interested to know what other folks' experience had been and what thoughts they might have about the impact this provision has on the provision of surviving spouse rights.

Thank you in advance for your thougths.

I have posted this elsewhere but have not been able to get a response...

Is there any issue with bonding or fiduciary liability for the following procedure:

Whenever a participant retires and begins monthly payments from a certain db pension plan, the first check is sent from the bank to a retirement (non-actuary) consultant, who then sends that check directly to the participant, with a letter indicating that all future checks will come directly from the bank.

Should that consultant be bonded?

I have posted this elsewhere but have not been able to get any response. I'm not sure how to figure this on out....

Is there a violation in submitting trade requests for a client to a Bank that holds a plan's assets?

Here is an example of our procedure:

Each payroll period, the company calculates the total 401(k) deferrals based on participant rates of deferral. They then write a check for the full amount to the Bank. The bank deposits the check and notifies us, the recordkeepers, that the check was deposited and sends us a listing of each participant's 401(k) amounts. We run the numbers through our recordkeeping system, which allocates the amounts based on each participant's investment elections. Our system then gives us the total amount that needs to be bought into each of the investment funds. We then send over a spreadsheet which lists the account number, cusip, fund, and dollar amount, and whether to Buy or Sell (for distributions) a certain amount.

Do we need some kind of license or certification to be sending that information?

Is there more information I should be providing to explain our procedure?

Can a participant elect to contribute 3% of his regular paycheck, but then elect to contribute 100% of his bonus into the SIMPLE IRA (as long as he doesn't exceed the limit)? I've seen that often in 401(k) plans, but wondered if there's a reason it couldn't be done in a SIMPLE IRA.

Non profit ps plan with over 100 participants filed 2004 5500 without audit. 45 day correction notice was received but they couldn't get the audit done - one firm dropped out and another couldn't do it timely. It is being worked on now. They received a Notice of Intent to Assess a Penalty - a rather large one.

Does anyone have experioence with writing a Statement of Reasonable Cause? In the old days, there was language that almost always worked with IRS in similar situations.

Any input would be appreciated.

Now that the IRS has opened up the submission program, it occurs to me that I haven't seen anything on the DB LRM's. I checked their website and couldn't find anything - did they get published and I missed, it, and if not, anyone have any info on a tentative timeframe for when they will be published?

409A (statute and regs) says that if you fail to meet 409A, amounts deferred under a nonqualified plan FOR ALL TAXABLE YEARS are currently includible in gross income to the extent not subject to a substantial risk of forfeiture and not previously included in gross income.

The regs also provide that unless the plan is materially modified after 10-3-04, 409A applies only to amounts deferred on and after 1-1-05.

Suppose someone established a nonqualified plan in 2000 to which they made substantial annual deferrals. Suppose further that the person never paid attention to the changes brough about by 409A and continued to make deferrals under the noncompliant plan during '05 and '06.

The deferrals during '05 and '06 are definitely subject to 409A. However, if the plan was never modified, are the pre-'05 deferrals grandfathered (i.e., protected from 409A)? The language "FOR ALL TAXABLE YEARS" (above) suggests that all deferrals under the plan are subject to 409A.

Can anyone confirm that I have this right? Is there any way to salvage the pre-'05 deferrals?

question deleted

A defined contribution plan provides a participant with the right to take a distribution upon attainment of age 65 (but not before, even if their employment terminates prior to age 65). Can the plan sponsor amend the plan so that distribution is available prior to age 65 upon termination of employment only if the distributee waives his/her right to sue the plan for anything (including an ERISA or ADEA violation)?

I found some guidance in the 411 regs that says a distribution prior to the mandatory commencement date (since voluntary) may be subject to restrictions so long as the restrictions are objective.

Our firm has encountered an employer who is reimbursing their employees the cost of the premium amounts for them to be covered on their spouses employer's plan.

This has definitely caused an uproar in our small business community as the employees are now terminating their coverage to jump on their spouses insurance to be reimbursed by their employers.

This seems unfair, but I am sure it is legal. My question is what would be the draw back for this employer? And, wouldn't the employee's then have to report that as income/wages and be placed on the employee's W2's?

Any helpful information would be greatly appreciated.

Thank you,

Existing PS plan was sole plan for plan year ended 6/30/06. It then changed it's plan year for a short plan year 7/1/06 - 12/31/06 to match a change in the company's fiscal year. A new DB Plan was then adopted for 12/31/06 with an effective date of 1/1/06. Since both DB and PS plan have the same plan year end I believe I can permissively aggregate them. However, can I only use compensation and contributions from 7/1/06-12/31/06 for the DC side given the short plan year end ? Thanks for any thoughts/opinions.

I came across two cases this week that I thought were disturbing in that the plan sponsor used the 401k (to its detriment) to increase the profitability or marketing or the plan sponsor itself.

the plan sponsor negotiated with a bank for its commercial lending and/banking needs. Within a period of time, the plan sponsor was solicited by the ERISA services department of the bank and the plan sponsor promptly moved the plan to the bank's 401k offerring (ironically the plan was already serviced by a competing bank). Obviously, there were many 401k vendors that could have offerred superior services and fee schedules. We performed a benchmarking for the client that clearly showed the Bank would be wildly over compensated if the client went ahead with the conversion (soft money and explicit fees totalled over $1500 per head and growing). The bank was using loaded A shares, R shares, etc, when "I" shares were clearly available at a steep reduction in cost. Our report was ignored and the client is proceeding. Is the pan sponsor self dealing? Is this a violation of the exclusive benefit rule or some other provision of ERISA?

Can anyone provide some insight on whether or not there are restrictions on terminating a 401(k) plan after the purchase agreement has been signed. The purchase agreement did not identify that the buying company was going to terminate the plan. Can anyone provide some info. on 401(k) distribution restrictions?