I have a client who says although a employee is eligible to be in the plan has opted not to. Her husband says since she has not put any money into the plan box 13 on the W-2 should NOT be checked. The employer says they have to check the box. What is the answer to this question concerning active employee. The cpa husband says this will interfere with his IRA contributions?

HELP!

Lisa

IRA beneficiary (age 58) is taking substantially equal periodic payments. Is it possible for the beneficiary to request a non-trusteed rollover of some of the funds in his account without affecting the tax benefits of the SEPP? In other words, IRA beneficiary wants to structure this as a short-term loan, where he will roll the funds back into the IRA within the 60-day time limit. Is there an argument that, provided he gets the money back into the same or another IRA within 60 days, this isn't a "distribution" and that the SEPP isn't affected?

Would you consider a failure to make ADP refunds by the regulated date a significant or insignificant failure under EPCRS? This is for one single year and not multiple years but it is outside of the prescribed two year period for significant errors under SCP.

Our firm would like to provide tuition assistance to one of our employees. He is currently in an MBA program, and we are willing to reimburse his tuition up to $5,250/year:

1. Do we need a formal tuition reimbursement policy/procedure?

2. Can we just accomodate this one individual or do we have to offer this benefit to all employees? Can we discriminate based on what or where an individual is studying? For example, none of our other staff is in an MBA program.

Thanks in advance for any insight...

My DB plan was frozen years ago. The plan sponsor (G) decided they wanted to sell a major chunk of the company to raise cash. But the buyer (B) didn't want the pension liability on his books. So agreement was reached that B would remain an Employer under the plan but G would be too and G would fund the plan and B would have no liability.

Fast forward to September of this year when B decides they want to withdraw as an Employer/sponsor as allowed specifically under the plan and passes a corporate resolution and informs G that they are withdrawing from the plan.

I worked for G and continue to work for B.

I no longer work as an Employee of the Employer under the plan due to the withdrawal of B. I have achieved the age when early distributions are allowed and have the required combination of age and service. No dispute.

I applied for distribution. G said no.

Under the new rule of "Separation from Employment" (as opposed to the "same desk" rule), may I be treated for purposes of eligibility for distribution the same as if I worked for a third company (whose employees under the same eligibility criteria are entitled to receive distributions without dispute)?

In an article, I read that the definition of when distributions can be made is now "when the common law employment relationship with the "employer maintaining the plan" has been severed." Nothing about me having to be the one to sever the relationship as in this case my company B did it when it withdrew from the plan.

Needless to say, company G resists this notion citing vague IRS regulations though without any specifics.

Advice? References?

An active participant was born on 10/15/16 and is now asking to begin receiving his minimum required distributions. Is it correct that he was grandfathered out of receiving MRD’s and therefore his benefit would simply be calculated starting now? I have a feeling there is more to this that I’m not aware of. The benefit formula is FAE(5) within the past 120 months. There is no late retirement adjustment in the plan.

A plan has the following eligibility requirement:

500 hours in a six month period. Entry date is 1/1.

A participant is hired on 8/22/04 and worked 550 hours by 12/31/04. Entry date should be 1/1/05, correct? A takeover plan I have either missed this or their system missed it because the participant has been flagged as eligible 1/1/06!

I have a client whose executives typically enter into consulting arrangements after retiring from the company in order to provide additional services. The company has a non-grandfathered deferred compensation plan. Because of the consulting arrangements and the amount of service and compensation that is often associated with these arrangements, we have been struggling through understanding the Separation from Service/Termination of Employment guidance provided in the proposed 409A regs (specifically Prop. Reg. § 1.409A-1(h)(1)). My question has to do with the 20% and 50% tests. I am reading these as meaning that the services provided AFTER the purported termination of employment must, on an ANNUALIZED basis meet the thresholds. However, given the meager amount of guidance available and the lack of an example, would really appreciate someone else's thoughts on my reading of this provision.

Under the new IRS plan document determination letter process, does a newly established customized Plan still file (if they elect to exercise their option to file) for a DL with the IRS at the time the Plan is adopted (within the customary deadlines), or do they wait until the year that correlates to the last digit of their EIN?

Having studied IRC 409A and the regulations under it, it appears to me that any plan that permits setting aside funds (including funds of the employer and/or of the employee) for use at a future time is deferred compensation with the need of complying with the requirements of 409A.

A welfare benefit plan typically sets aside funds for welfare purposes, such as: medical reimbursements, death benefits, education reimbursements, disability benefits, etc. However, a great number of so-called "419 plans" or "419(e) plans" provide a mechanism whereby an employer, by dropping out of a multiple-employer or by terminating a single-employer plan, can trigger a cash distribution.

IMHO, such a cash distribution would fall under IRC 409A. A plan that permits such distribution must comply with 409A by 12-31-05 or be subject to the penalties provided thereunder. If I had a client that participated in a WBP or "419" plan, I would make sure that no cash distributions were possible (with the exception of medical payments or reimbursements) or get my client out of the plan by 12-31-05.

Does anyone know if a QDRO can be drafted for child support arrearages? I have only seen QDRO's drafted for splitting of assets.

I'm curious to see if anyone takes what I perceive as the more aggressive stance on this...

Suppose a plan has been in existance since 2003 with 401k and match provisions, but has never made a match contribution. Begining with 2005 or 2006, the employer would like to make a match contribution.

Would anyone take the stance that the first year they make the match contribution triggers the assumed 3% prior year NHC ACP or is the plan required to switch to current year testing if the employer wants the HCE's to get any match the first year? Of course, that puts them on the minimum 5 year route for current year testing.

Thanks,

Steve

A participant who is subject to RMD requirement rolled over his total QP distribution to an IRA and then took his QP and IRA RMDs from the IRA.

What is the likely penalty? 50% of QP RMD? Inclusion of the QP RMD in income (along with the full IRA distribution)? 6% of the QP RMD as an excess IRA contribution? No harm, no foul?

I think 6% is the answer, and that this could be cured by a withdrawal from the IRA of the QP RMD, plus earnings, before 4/15 of next year. It would seem then that the full IRA withdrawal would be taxable this year, but only the earnings on the “excess contribution” would be taxable on the corrective distribution.

Any thoughts on this would be appreciated.

Hi all,

I was wondering if anyone could direct me to a reputable ERISA law degree curriculum that was offered online - I'm interested more in the general benefits side and not the practicing side. I found a college based in Chicago with an LLM (?) program in Employee Benefits but I don't believe they offer online courses.

Thanks!!!

Vicki

I am 31 years old and quickly realizing that I need to start saving for retirement. I checked 5 books out of the public library and have come to a few conclusions.

1) I want to open a Roth IRA

2) I want to invest my money initially in an index fund

3) Fees are the enemy

After looking over reviews of online discount brokerages I have decided that I would like to invest with either Vanguard or E*trade. I like Vanguard because of the low fees and commissions and choices, especially on index funds. What I do not like are the $10/year they will charge until I have $5000 in my IRA and $10000 in an index fund. I like e*trade because of the lower still comission on some index funds, the lack of maitenance fees, and the ease of having money market accounts and checking accounts all at one stop. I not like the lack of choices, especially with respect to index funds (only 4 no transaction fee options!).

I was wondering if anyone could give me a pointer that would lean me one way or the other. I'm the kind of person that needs to research everything beforehand, but I feel that I need to start investing now.

Thanks in advance.

Peregrino

PS - One bonus question. If I pay a transaction fee to buy shares in an index fund, do I have to pay that fee _every time_ I purchase more shares?

Not my idea and I suspect this is a strange question but what if somebody wants to modify discounted stock options subject to 409A in order to comply with the new 409A requirements rather than convert them to fair market value options. I assume that in order to modify you would have to make exercise mandatory either on a fixed schedule or one of the various 409A distribution / payment events (e.g., change of control, termination of employment, death or disability).

In order to comply with 409A, would not the exercise have to be mandatory upon the stated payment event? If so, what happens from a tax standpoint if the option is underwater at the time of the stated event and the optionee does not exercise. How would the IRS assess taxes and penalties in that event?

Also, can you grant new discounted stock options given 409A? Obviously, I assume any discounted options would need to be subject to the specified distribution events as discussed above but would there also be a 409A issue in terms of the "deferral election"--i.e., if you received the grant of a discounted stock option would you automatically violate 409A if the grant was made without a "deferral election" the year prior to the option grant.

Thanks for any thoughts or guidance on these issues. I cannot imagine wanting to use discounted options in the current environment but have a client that wants to know exactly how this plays out and have not seen anything discussing these issues.

I'm wondering if 1.401(a)(9)-6, Q&A 12 applies in this scenario. A DC plan uses a variable annuity contract and is considered an individual account plan that is annuitized. The contract provides for a stepped-up death benefit where a designated beneficiary will receive the greater of:

1. the participant's vested account balance

2. the participant's remaining principal (contributions - distributions)

3. the maximum anniversary value (anniversary value for each anniversary of the deceased participant's birthday prior to the participant attaining a specified age)

It appears that the contract is guaranteeing that there will be no loss of remaining principal. Has the benefit already accrued or is making up for a loss an additional accrual, thus Q&A 12 applies.

Thanks!

Received a request for reimbursement for Bayer Aspirin, Bengay Heat Patch and a Heating Pad. All of these were on the receipt from a Walgreen's. The receipt had a "F" in front of each item with a note that these were approved OTC expenses for a flexible spending account. I can understand the aspirin and heat patch but not sure about the heating pad. Any comments? Also, is there a definitive list provided by the IRS on what otc items are approved?

Wisln

Our TPA has been asked to takeover a client from another firm that clearly is having major service issues. The most significant concern is that the (prospective) client cannot locate a copy of their 401(k) plan documents and the current TPA has not provided a copy after repeated requests. The plan has been in existence since the late ‘90s. We have advised the client to hire an attorney if necessary to get the document from the current TPA, but there is a concern that the TPA may not have a copy to provide. The client wants to make things right. Can anyone advise as to the proper way to handle this issue (VCP, etc.)?

This is one of those "I know there's something out there, but can't find it" issues. Can a self-insured medical plan cover a retired member of the board of directors (assume he/she was never an employee)? Seems it should be OK, assuming the plan meets the non-discrimination rules, but I just can't find anything addressing this issue, so far.

Thanks.