EE took out 3K loan in 1999, never made any payments. The TPA was a payroll company. They never distributed the loan as a deemed distribution.

Do you go to the DOL's VFCP or IRS' VCP?

Assume that she borrowed 3k and was supposed to make weekly repayments totaling 1,000 per yr for 4 years. Also assume that the total outstanding loan balance as of today, using the original interest rate is 6k.

VFCP states that an acceptable restituition would be to restore the plan, participants, and beneficiaries to the condition they would have been in had the breach not occurred.

VCP will allow the plan sponsor to treat the loan as taxable in the year of correction, rather than when the violation of section 72(p) first occurred

Do you...

1. go to VFCP and give ee a 1099-R for 6K and have the er add 2k to ee's account, essentially making ee whole.

2. Go to VCP and giver her a 1099-R for 6K in 2006, rather than give her a 1099-R for the year in which the violation of section 72(p) first occurred?

3. Skip it all and just give ee a 1099-R for 6k and call it a day.

Thanks for the help.

I'm not a big fan of model QDROs, but we have a client who has been using them for years and wants to continue to use them. We've been asked to review. In the course of discussing their procedures, we just found out that they categorically deny any DRO that is not drafted in the form of their model, whether or not the DRO otherwise meets the statutory qualification requirements. Is this permissible? Is there any rule that a plan administrator must accept any DRO that meets all of the technical requirements...? It doesn't seem right that a plan can deny a DRO as not qualified just because it doesn't like the form in which the DRO is prepared.

Is tuition reimbursement (up to the $5,250) includable as taxable income to the receipiant?

(Sorry if this is a duplicate or in the wrong forum)

This question is similar to the previous post . . .

Here's my basic question: If a 401(k) plan provides that the fixed (2.5%) employer match is 100% vested, could the plan be amended to apply a graduated vesting schedule to future employer matching contributions? I know that such an amendment could apply to new participants, but what about current participants?

Here are the more complicated facts:

Current terms:

-fixed match (2.5%), 100% vested

-discretionary nonelective 2/20 vesting schedule

Proposed change:

-safe harbor match, 100% vested (note that the safe harbor match will be greater than the current fixed match amount)

-eliminate fixed 2.5% match

-add discretionary non-safe harbor match with 2/20 vesting

Thanks!

Can someone provide the IRC Section or Reg citing that provides passive (e.g., current year elections rollover to next year) FSA elections are prohibited? I read in IRS Publication 969 that "At the beginning of the plan year, you must designate how much you want to contribute." What I'm unable to locate is the citing where this cannot be a passive designation.

Thank you for your help.

IRA owner (age 92) dies in 2006 without distributing 2006 RMD. Primary beneficiary was spouse who dies in 2006 shortly after IRA owner dies. Two children were contingent beneficiaries of original IRA owner. IRA account not yet changed over to spouse/beneficiary before her death.

1.) I understand that there must be a RMD for 2006 using original IRA owner life expectancy, but who has to include as income deceased spouse/beneficiary or contingent beneficiaries?

2.) Is deceased spouse beneficiary ignored all together?

I have a small employer, who for the first time has consistently maitained 100+ enrollment at the beginning of the plan year in its welfare benefit plans (health, dental and life). Since the employer has offered these benefits for many years, is it necessary to locate the original plan effective date or can we use the date they first went over the threshold? I know I have seen a discussion or help on this before, but it has been awhile.....

All the prior DB RMDs I calculated were done using the account balance method. I have some questions about the annuity method. I'd like to keep this simple at the start and get more complex with follow-up questions (though it always seems impossible to keep these discussions simple).

Lets say....

An owner turns 70.5 in 2006, and must take his RMD by 4/1/07. He doesn't want to deal with monthly annoyances, so he wants his RMD to be taken annually. So, it's my understanding that he can calculate his vested monthly accrued benefit, multiply it by 12, and distribute this before 4/1/07.

Before getting into issues of being allowed to convert that accrued benefit into alternate forms,

Here's my first question: as of what date do I calculate the vested monthly accrued benefit? is it 4/1/07, 12/31/06, or 12/31/05?

This may have been addressed before, but I can't find anything in the forum....

I have a client who has had 100% immediate vesting for their employer match. They are moving into a new doc with me and would like to change their vesting from 100% to 50%, 75%, 100% over a 3 year period.

I realize that you cannot take away benefits from a participant after it's been communicated to them, but can the employer create a new source, "new employer match" where from 1/1/07 on, the new vesting schedule will be attached?

The employees who are already employed as of the new doc would be deemed 100% vested already and any new employees that they hire in 2007 would go on the new vesting schedule.

Is this allowable? I have read sec 1.411(a)-8 and I think it is.....any other regs out there relating to this?

Thanks!

We have a deceased participant in a 401(k) plan whose spouse is the primary beneficiary. The participant's account balance is approximately $500.00. The spouse refuses to sign the distribution election form from the investment provider (Great-West), so the investment provider will not distribute the funds until the form is signed by the beneficiary (per their legal department).

This has been an ongoing issue for almost five years.

Any suggestions on how to get the money out of the account, or is it even possible without the spouse's signature? Or do we have to wait until the plan terminates until a force-out will occur? Any other issues we need to look at here?

Any input would be greatly appreciated. Thanks!

I've looked at EPCRS and the instructions for DOL's on-line calculator. In each of the examples, it appears that they are illustrating the aggregate amount of late deferrals. In performing the actual calculations, wouldn't you have to determine each participants' late deferral amounts separately to determine their portion of lost earnings?

We recently received updates to the IRS rulings regarding debit cards and in the updates it's boldly stated that the IRS has not in the original nor the latest updates approved a "use the card to purchase now and chase later" approach to claims substantiation at merchants without health-care related Merchant Category Codes.

Typically, most debit card vendors allow an employee to use the card at certain merchants without health-care related merchant category codes, on the assumption that such a practice is OK if after-the-fact substantiation by employees is requested by an administrator.

However, if the merchant has a health-care related merchant catergory code, this practice is permitted but subject to some conditions.

My question is, how are other administrators handling this ? Do you feel it is OK to allow this process even though the IRS has not permitted it or are you restricting the card usage to only those merchant with health care related merchant category codes ?

I am talking to a prospect that currently has a tiered match of 25¢ on the $1 to 4% and a $1 / $1 match from 4-6%. I seems like in my studies a few years ago, I remember something about a test on how much the matches can increase over prior levels, and it seems like this wouldn't pass. (Each time I search anywhere like CCH, I get that SH Enhanced Matching formulas cannot allow for a tiered match that increases at all, but this plan is not a SH. I also see discussions of matches being tiered based on things such as years of service and how you'd have to test them for Benefits Rights & Features, but again this plan doesn't do this.) I've looked through the Pension Answer Book, 401(k) Answer Book, Coverage & Non-Discrimination Answer Book and others, but am only finding discussions of the above.

Anyway, I've found on a few sites that increasing tiered matches aren't allowed in Prototype plans (at least Standardized), but with no references. I also e-mailed someone at Corbel and he said that he seems to remember the same type of rule but can't find it either, but also said that you cannot use their prototype to do it.

So, my question is: Am I losing my mind and there never was such a rule? If there was, is it now gone? If there is and it is still in effect, where would I find it??

husband/wife owners in same plan divorced and qdro issued. husband's amount transferred to wifes account balance. No 1099R issued, correct? Thanks.

Linda

We have a section 125 flexible spending plan for health and dependant care.

we also give employees the choice to receive cash instead of the medical benefit. should this amount they receive be taxable?

A client with a DB plan is interested in adding a Age plus Service based PS plan. Deductibility isn't an issue. My concern is regarding non-discrimination. The DB plan is a standardized prototype plan. Can the plans be tested separately for non-discrim?? I'm fairly sure they can, but the one thing i come back to is the average benefits test. Would the DB benefits need to be included when performing the ABT on the PS plan??? Thanks.

My only brother died unexpected recently.

He was divorced three times and didn't have any children.

He would often tell me I was his only survivor and ask my SS to be sure he had it correct.

He would often get into a discussion on dieing and I could not listen. This death has been extremely hard.

I am the only family he has. I am married and have one daughter but that is the extent of our family.

He worked for one of the airlines that is in bankruptcy.

They had recently taken all there compay match back because it was matched with company stock.

He has worked for them almost 25 years.

I was given a list of numbers to call for his benefits and the life insurance has already been sent to me.

The Fidelity told me to send a death certificate when I received one,and the first one had incorrect information on it his birth day was wrong. It took another few weeks to get a new death certificate.

I live in a different state so I have applied to be his administrator and that should take effect the first of Nov.

Well I called Fidelity when I got the death certificate to see if there was anything else to sent and the woman I talked to said the beneficary had already been notified.

I questioned her and she said my SS number was not down and she didn't see my name.

I ask how they could notify a beneficary without a death certificate.

Anyway I called the company he worked for and talked to benefits and they could not tell me anything except to call fedility back and talk to a supervisor.

When I made the second call that same day. the man would not tell me anything except where to send the death certificate. He did at one point tell me the account would be set up under my SS.

I sent the death certificate reg mail and waited and the other day I called and still the person I get on the phone says they don't see my name or SS.

I called back and ask for a supervisor and they would only say that it would be a while before everything was worked out.

They would not tell me that I was the beneficary. My brother was always telling me that I was and how he wanted to be buried.

Now I don't know what to think. I am going to be the administrator and he has been divorced for over three years and he wanted to be sure the ex wife didn't get any of his benefits.

The last call the supervisor at Fedility said I would be getting a letter but on previous calls they said only the beneficary would be getting a letter.

But then I was told that the beneficary had been notified.

So every call I am told something different.

I am concerned and don't know where to go for help.

I never expected my brother to die like this and with the loss of him and trying to handle things I am so stressed.

Why would different people at Fidelity tell me so many stories.

The first person that told me the beneficary was notifed there was not even a death certificate because they had just corrected the mistake and the second one was at the court for me to open up the administration.

Please help.

SAndy

Upon the assumption I would be using pre-tax money to finance a SIMPLE IRA, I contributed for the 2 (there are only 2) employees in my company. My accountant later decided not to use this as a contribution making our contibutions post-tax contributions. As I understand it, if I was to withdraw the money, I would have to pay a 10% penalty. Is there anyway I can avoid the 10% withdrawl penalty or paying tax a second time when I choose to withdraw it in years to come?

Our pension plan gives credit for earnings up to a certain limit. Any earnings above that limit are not credited to the participant even thogh the employer is contributing on all earnings. Is this proper?

I have had the QDRO prepared and now the ex wants a change. I am military, not yet retired, and she will receive a percentage of my retirement pay. No arguement there. She wants survivor benefits.

I have remarried.

The ex has remarried. She is under 55 yo.

The divorce decree does not specify survivor benefits.

My thought was once I remarried, any survivor benefits, if I chose them, would be to my surviving spouse. Secondly, because it was not specified in the divorce decree she is not entitled.

Is she entitled to SB?

Thanks