When a minor child participates in a qualified plan and receives a distribution (it's rare, but it does happen), isn't Form 1099-R issued to the child (and not to the child's guardian or custodian)?

I can't find this issue addressed anywhere in the form's instructions or an IRS publication.

I'm confused on how to go about calculating the current economic benefit amount for his 1099. Hopefully someone can point me to a resource. We have one client this year that has an insurance policy with a face amount of $250,000. He is 53 years old. Now we are having this huge office discussion on what value he gets a 1099 for and it seems everyone has a different opinion.

I thought it was simply multiplying the table 2001 rate for a 53 year old which is $3.20 by 250, which would equal $800.

Someone else in my office brought up the fact that the first $50,000 face amount in a qualified plan is "free". So his calculation would be $3.20 times 200 = $640.

Now another person brought up the fact that she thinks you have to subtract the cash value of the policy from the face amount prior to calculating. I don't know what the cash value is at this time, but let's just say it is $20,000. So her calculation is $736. She says she has never heard about the first $50,000 of face amount being "free".

Now I am wondering if they are both right and the calculation is actualy 250 - 50 - 20 times 3.20 = $576.

I do recall at a flexible spending account seminar someone mentioning something about $50,000 of life insurance but I don't remember what exactly they were referrign to. Also the argument about the cash value of the policy having to be subtracted because he the client is being taxed on the pure insurance benefit seems to be a logical argument.

It all adds up to me being really confused and not sure where to go next to find out how much the client's 1099 should actually be. I'm considering calling the IRS and asking them. Any thoughts?

I have a death benefit that was payable to a trust. I'm doing a 1099 for the trust to show the amount received. Do I show on the 1099R box 2a that the entire amount is taxable?

Is there a limit on how many SMMs one plan may issue before updating the SPD? I read that the SPD must be updated once for every 5 SMMs issued. Is this correct?

Thanks,

Is this method still acceptable to disclose information to participants ?

Thanks.

My husbands company changed from Lincoln Financial 401K annuity to Hilliard Lyons 401K retirement plan.

During the Q&A sessin with the investment advisors from HL and all participants in the plan, I ask about possible cost of this kind of transfer. We were assured that no cost was involved.

We all signed the roll-over forms, and after everything was a done deal..... 3% surrender charge for everybody.

We are steamed!!!

Doesn't HL have the obligation to inform us about this? Inform themselfes before taking over and rolling over a retirement plan for a whole company?

During my first phone call they told me that, in their contact with LF they were told that our old plan existed long enough that no surrender charges were due. He told me to send in copies of my statement, they would check into this.

In their written answer to my letter, the investment advosor implies that I misunderstood their answer to my question during the initial Q&A. They meant that all transfer within their plan was free. They have no control over the other companys fee structure. No more mentioning of contacting LF beforehand. No it's all my misunderstanding and confusion...

I understand that they have no control over other companys, but ...

were THEY not obligated to inform us about any surrender charges BEFORE we all signed on with them?

were THEY not obligated to check with the old plan about fees?

were they not obligated to know about fees?

Who can I contact to lodge a formal complaint?

Any tips, hints, help... would be appreciated.

Thanks

Heike

I have a financial advisor who has a Canadian client... one man show. He wants to establish a Solo 401K plan. He (the client) earns $ here in the states from US companies. I told him that the Canadian client can establish a Solo ... he pays US taxes... why not? Please, any thoughts would be great.. and any rulings or other info would be greatly appreciated!

Can anyone provide any insight as to what "readily tradable" means with respect to the valuation of stock options at fair market value on the date of grant for Code Section 409A purposes? Thanks.

A client of mine wants to amend their DB plan to allow in-service distributions to participants who are working beyond the normal retirement age. (The CEO/5% owner, who is age 69 and still actively-employed, wants to start receiving his benefits and continue to work.)

Of course, the plan would be amended to allow any beyond-normal retirement age participant to elect to receive in-service distributions. However, my contact at the client company tells me that they considered amending the plan a few years ago to allow this, but that they were told that it would be discriminatory if only HCEs took advantage of it.

Question: Is this accurate? i.e., Could a non-discriminatory plan feature be deemed to be discriminatory merely because HCEs take advantage of the feature disproportionately more than non-HCEs who have access to the same feature?

The Bank that I work for is conducting a Tuition Reimursement survey and would like to know if any of you would share your policy with us.

Thank you,

For the purposes of determining who is a 5% owner, and thus required to begin taking required minimum distributions after age 70-1/2, are shares allocated through an employee stock ownership plan that have not been distributed from the plan count?

Subject company has some employees nearing age 70-1/2 who own shares outright and also have shares allocated to them within the ESOP. Do the shares still inside the plan have to be counted when determining if they are 5% owners?

Any code or regulation citations you can include would be appreciated.

For the purposes of determining who is a 5% owner, and thus required to begin taking required minimum distributions after age 70-1/2, are shares allocated through an employee stock ownership plan that have not been distributed from the plan count?

Subject company has some employees nearing age 70-1/2 who own shares outright and also have shares allocated to them within the ESOP. Do the shares still inside the plan have to be counted when determining if they are 5% owners?

Any code or regulation citations you can include would be appreciated.

For the purposes of determining who is a 5% owner, and thus required to begin taking required minimum distributions after age 70-1/2, are shares allocated through an employee stock ownership plan that have not been distributed from the plan count?

Subject company has some employees nearing age 70-1/2 who own shares outright and also have shares allocated to them within the ESOP. Do the shares still inside the plan have to be counted when determining if they are 5% owners?

Any code or regulation citations you can include would be appreciated.

The IRS has raised the User Fee for 5310 filings from $250 to $1,000, effective for filings postmarked February 2006. Interesting that a one-person plan will pay the same fee as a 10,000 life plan.

Given the sensitivity of small clients to costs, will be interesting to see how this increase in the user fee is received (one guess). I know we'll be busy getting whatever we can get out prior to the end of month deadline.

And I'm sure that more clients will opt out of the determination letter process and terminate without a letter.

We currently are working with a plan where ee's are eligible to make deferrals on the first day of the plan year after they have completed one year of service, but are not eligible to receive a profit sharing contribution until they have completed 18 months of service.

This plan is top heavy so in order for the owner to make deferrals, we know that he must make a min. contribution to the eligible NHCE's each year. Up to this point, all employees have been eligible for deferrals and profit sharing. But due to some turn over, now he will have younger ee's who will be eligible to make deferrals in 2006 but would not be eligible to receive a profit sharing contribution until 2007.

I believe that because they are eligible to make deferrals, then they would have to receive the 3% TH minimum. Is this correct?

Also, under the same scenario but the plan was not top heavy, would the ee's who are eligible to defer but not receive a profit sharing contribution be included when doing the 70% test or could each piece of the plan be tested separately to pass the 70% test.

Hope this make sense. Thanks

In a non-safe harbor plan with a discretionary match contribution is the employer required to provide advance notice to participants indicating what the match will be for the following year?

We are currently on the pre-EGTRRA document approval list for our volume plans with our current document provider. Our understanding is that we need to be on the list by January 31, 2006.

Do problems arise if we switch document providers after 1/31/2006 (i.e. is the approval list portable?).

Thanks much.

We have several defined contribution retirement plan clients using distribution forms prepared by a local attorney with a large ERISA practice. He has included a disclosure paragraph on the distribution forms for the new required Relative Value disclosures. There is a blank in the paragraph to enter the approximate monthly annuity payment should the participant choose the annuity option.

We have been unable to find an easy solution for the calcuation of those annuity values. One web site, www.immediateannuities.com only provides a calcuation if the participant is age 40 or over. This doesn't work in many cases.

Does anyone have a solution for getting estimated annuity payment amounts or other options for complying with the relative value regs?

Thanks.

In 2005, we started having our employees pay for a percentage of their health insurance premium. This is a Section 125 plan, and employees had option to either have it done pre-tax or after-tax. For those that selected pre-tax, iis it necessary to report this some how on their W-2. In the W-2 instructions for Box 12, Code W - is for Employer contributions to a Health Savings Account, which appears to be the closest, but ours isn't a Health Savings Account. Thanks.

An sole proprietor in the RE business made contributions to a SEP-IRA during 2005. SP might have had two common law employees. In December, 2005, the individual incorporated his business and also established a DBPP. Corp. is owned by a 414 irrevocable trust. Fiscal year of corp. is 10/31. Individual will have income between $900,000 and $1,000,000.

Does contribution to SEP-IRA affect ability to contribute to corp's DBPP?