Account owner is a Individual who has inherited an IRA as a non-spouse beneficiary.

Ex spouse has been granted a poriton of the IRA pursuant to Divorce Decree.

Account owner and ex-spouse are requesting a transfer incident to divorce under 408(d)(6).

Possible?? If so, how is new account plated as the ex-spouse is not the true beneficiary.

I've been doing this since before ERISA (yes I'm that old) and this is the first time I've seen this.

Company X sponsors a Code Section 125 for its employees containing a medical FSA. X administers COBRA under the medical FSA by allowing all COBRA beneficiaries the right to continue coverage for the remainder of the plan year (a calendar year). X's cafeteria plan has adopted the 2 1/2 month grace period. Employee G participates in the X cafeteria plan and selects medical, dental and the medical FSA for 2006. Assume that G terminates employment on October 20, 2006 and elects COBRA continuation for all eligible coverages (viz, medical, dental and medical FSA). If G has a $800 balance at the end of 2006, can G utilize it on medical expenses incurred during the grace period beginning 1/1/2007 and ending 3/15/2007, even though G has no further medical FSA coverage under COBRA?

If you conclude that the answer is "yes" what is your support for that position?

Soon to be extinct company wants to terminate and pay out its 401(k) plan before the end of 2006. The plan has about $5,000 in forfeitures however that need re-allocated before doing so. Document calls for forfs to first pay down expenses (of which there will be about $1,000) and then re-allocate anything leftover (about $4,000).

The big problem though, is that no one has worked for the company since 2003. The owner has been there, but he's not taken any pay since 2003. On what basis would we re-allocate the forfeitures?

I have not seen the documet and will assume for now, that the plan calls for forfeitures to be re-allocated after 5 breaks in service. So perhaps the plan was correct in not re-allocating sooner. But would that mean that now, we have to go back and fully vest the folks whose non-vested balances created these forfeitures?

Under Section 4203(b) of ERISA, there is an exemption to complete withdrawal liability to an employer in the building and construction industry where the employer ceases to have an obligation to contribute to the multiemployer pension plan and does not continue or resume covered work in the relevant geographic area for 5 years. Let's say an employer ceases its obligation to contribute to the plan in year 1 and in year 2 the plan terminates in a mass withdrawal (say a withdrawal of substantially all the employers during the relevant 3-year period). Is the employer subject to any liability for the mass withdrawal? My thinking is that since there has not been an actual wtihdrawal by the employer (we are still waiting to see if the employer resumes covered work) there has been no "withdrawal" and there is nothing to reallocate any liability to. I do understand that the 5-year ban on covered work is reduced to 3 years, but I believe it is reduced to 3 years only if the reason of the employer's cessation of the obligation to contribute is due to the termination of the plan by mass withdrawal. Maybe the 5-year period is reduced to 3 years even if the emoployer's cessation of the obligation was not due to the mass withdrawal. Any thoughts would be greatly appeciated.

401(k) plan permits deferral of compensation.

"Compensation" is defined to include salary and bonuses.

Plan permits participants to defer salary, but not bonuses.

Plan realizes error and, in 2006, allows participants to defer bonuses. Out of 400 or so participants, only 15 chose to defer bonuses.

The error has gone on for more than 2 years so SCP in not available.

Does anyone have any ideas as to how to fix?

Is this employer on a 5-year cycle for the current RAP or a 6-year cycle for the current RAP? I feel like I am going in circles with RP 2005-16 and 2005-66 ....

X adopts an MP in 2002 and receives a favorable DL (using Form 5307) in 2003. X switches to a new MP that has filed for but not received an EGTRRA opinion letter (has the GUST one) in late 2005 but changes the AA to incorporate a matching contribution formula that does not fit within the pre-approved adoption agreement language. Sponsor of new MP thinks that this formula WILL fit within the pre-approved language of its new document, which is being reviewed by the IRS. X plans to adopt the new MP when available. X would be a Cycle D employer.

Based on 2005-16, X has neither adopted a type of plan not allowed on a pre-approved document nor has it adopted an IDP that is not based on a pre-approved document. It has adopted an MP that has been filed for an opinion letter for the current RAP, but has not received one. Does this mean we have an IDP plan with a 5-year cycle or do we qualify for staying on the current 6-year cycle?

The hope is to ultimately go back to a pre-approved plan, so I want to avoid having the plan switching to the 5-year cycle when the current RAP by becoming an an intended adopter before the end of the current cycle (whichever is the applicable cycle).

HELP!!!

A foreign company wants to establish a US QRP for it's employees. Is there any circumstances under which this is allowed. I looked at the definition of Wages, and the Definition of Employer under IRC 3401, but I am still not sure.

If my employer normally only pays $400 towards health benefits per employee and they all receive a memo. However, another employee had an agreement no in writing that the employer will pay full cost of family coverage, does this leave room open for another employee to ask for more money from the company to contribute towards their health benefits.

Is the any regulations that states if you do for one employee that you need to do the same of another employee at the same level?

Please let me know where I can find more informaiton.

Thank you

We have a client that owns 3 different entities and he wants to set up a sect 125 plan to allow pre-tax premiums for the employees of all 3. Does he need a seperate plan for each entity? Or can this be under 1 plan?

Thanks for any help.

New ERISA 101(m), as added by PPA, is generally effective for plan years beginning after 2006. but has a transition rule that is confusing me. The transition rule provides that, if notice would otherwise be required before the 90th day after enactment of PPA, then the notice need not be provided before the 90th day.

For a calendar year plan, does the transition rule override the general effective date and require notice to be given by 12/2/2006?

Note: I also posted this message on the ESOP board.

Do anyone know the status of the IRS issuing a new category of preparer in order to allow unenrolled preparers to be listed on the Form 2848?

Are there any participant notice requirements for a plan spin off not involving a termination (other than IRS Form 5310-A). I have a situation where a company is spinning off a division and a portion of the plan assets of the original company's plan are going to a newly established plan to be maintained by the spun off division.

A plan has a participant in RMD status, and that participant received a distribution in early 2006. This would take care of his distribution requirement for 2006. He has now requested another distribution.

The plan provides for lump sum distributions only - no annuities or installments.

Can he receive another payment from his account now? This wouldn't count as his 2007 RMD - so I don't know if he can just request distributions at any time. His new request would still leave him with an account balance.

Thank you.

Is anyone aware as to whether the delayed distribution rules of 409A apply to key employees of a publicly-traded company's wholly-owned subsidiary--if such subsidiary is non-publicly traded.

I have a Roth IRA that I started in 1998 with a financial institution and 2 years ago I moved it to another financial institution. I am looking at the option of cashing in part of it to pay off a high rate equity loan. Will I have to pay pentilities and taxes on what I withdraw?

We're about to implement a new 401k Plan with an 11/01 effective date for 401k and Match. To eliminate proration issues, we made the Plan effective 01/01/06. Now we're faced with an odd question. In testing ADP/ACP, do we use compensation from 01/01 to 12/31 or 11/01 to 12/31. It will have a significant impact on whether we select current or prior year testing.

If we go prior year and use the whole year compensation, we won't get a favorable result for the 2007 Plan year. If we go current year and use whole year compensation, we won't get a favorable result for the 2006 PY. Hadn't envisioned this problem initially, but need to deal with it prior to 11/01. Thanks.

I find that payments, to beat the extra 72(t) tax, must begin after separation from service.

I have a partnership that will be disolving. So there is separation but the sponsor will go away so the plan needs to go away also.

One partner wants to start a distribution stream. If he sets up a plan as a Sole Prop and rolls his account to that plan, I think he loses the "separation" qualifier.

(He has non-standard assets so he doesn't want to go to an IRA.)

Any ideas on how this can be accomplished?

Thanks -

I am reviewing the work of another firm. I am unable to contact them for clarification and the client does not know a reason.

A son of an owner is included as an HCE. That is fine. The plan has a Match based on 1000 hours worked/last day. The son worked 705 hours and was active at the end of the year. He did not receive a match because he had no 401(k). However, he was included in testing as eligible/benefiting. No other active with greater than 500 hours was marked eligible. Is this simply a mistake? Or perhaps he is eligible, for lack of thinking of any other possibility, due to family attribution?

Thank you.

Typically I understand that the plan adminsitrator picks the TPA, but that sometimes is bundled with the investment funds. Shouldn't trustees be the ones ultimately signing off on the investment fund arrangement or am I overthinking things?

The specific question is who needs to actually sign off on a change in the investment arrangement, the plan administrator or trustees?

The document has pretty "typical" language about trustees being responsible for investments.

We terminated a 2-person DB plan and filed a Form 5310 with the IRS in September. (The plan is not subject to Title IV.) On the termination date, the plan was not overfunded. However, distributions won't be made until the IRS issues the determination letter. What happens if, by that time, the plan has become overfunded? Can we avoid a reversion (and excise tax) by distributing increased benefits to participants? The plan provides that, in the event of termination, excess funds can be allocated pro-rata among participants.