The accrued benefit of a participant is $6,000. The participant names two beneficiaries and dies. Can the amount payable to each beneficiary, $3,000, be automatically cashed out?

I understand that I can withdraw money from a Roth IRA for college expenses. I just want to clarify a couple things. Does the person using the $$ for college expenses have to be me or can I use it for one of my kids? Also, is this a penalty free withdrawl or do I have to pay the 10% of earnings fee (I'll be under 59 1/2 when I do the withdrawl)?

ASPPA lists The Pension Answer Book by Stephen J. Krass as recommended (not required) reading for its Pension Administrator courses, which are pat of its QKA designation. At $200 per copy, thought I'd see what others think of the book before buying. Any opinions?

My mother unfortunately failed to received certain survivor benefits due her after the death of her husband. After we noticed this "oversight" the employer made a lump-sum payment to her of about $70,000. According to the IRS we can account for this using the special rules for 10-year averaging (she qualifies). However this would result in a tax due of about $9,000, whereas if she had received the survivor benefits payments on a timely bases (monthly) she would have had no tax liability (i.e., her income would fall below the minimum). Somehow this does not seem reasonable. Is there any provision in which we could "recast" her income into prior years due to "reasonable error?"

- Andy

My mother unfortunately has failed to received certain survivor benefits due her after the death of her husband. After we noticed this "oversight" the employer made a lump-sum payment to her of about $70,000. According to the IRS we can account for this using the special rules for 10-year averaging (she qualifies). However this would result in a tax due of about $9,000, whereas if she had received the survivor benefits payments on a timely bases (monthly) she would have had no tax liability (i.e., her income would fall below the minimum). Somehow this does not seem reasonable. Is there any provision in which we could "recast" her income into prior years due to "reasonable error?"

- Andy

Can you still make a prior year contribution to a Roth IRA until April 15, 2005, if you file your tax return before the April 15th deadline?

On Dec. 28, 2004, having previously taken my 2004 MRD, I did a direct trustee-to-trustee rollover from my Keogh account at a bank to a rollover IRA at an investment firm, which at the time had only a small prior balance.

The Keogh now shows a 12/31/04 balance of zero.

However the investment house did not receive the funds and credit them till the first week of Jan, 2005. Therefore the IRA also only shows a very small 12/31/04 balance, which does not reflect the larger amount transferred in.

How do I calculate the 2005 MRD due from this IRA? Do I add the transferred amount back to the bank Keogh, or do I take a MRD from the IRA as if the total had in fact been present on 12/31/04?

Thanks for your help.

I am reviewing calculations for an acquaintance who is employed by a school district. This school district's DB plan allows the participant to purchase additional benefit service for military service that happened PRIOR to his employment by the district. When I told him to check it out, I assumed that the cost of the additional accruals would be in line with the value of those additional benefits, or even that he would get a break because of his service to the country.

He just got the "bid", and we were both surprised by the results. I calculated a value at 65 of the additional benefit of approximately $40,000, and a value today of that deferred benefit of approximately $16,000. The cost that they are quoting him is over $75,000.

So my question is whether anyone has experience with a situation like this, and if so do these numbers seem reasonable?

RCK

During the GUST restatment process we included a "default" $5,000 cash out level

for our prototype plans. The corbel ammendment package allows the document sponsor to 1.) keep the $5,000 threshold andprocess automatic IRA rollovers, reduce or eliminate the provision. Only one may be chosen at the prototpye sponsor level. Our initial impression was to keep the $5000 threshold as our sponsor level amendment but we are begining to think that this will require us to be proactive with our clients on this issue and do more "unpaid" work. What are others thinking in relation to adminstrative complexity?

Plan starts in 2004 and first valuation date is 12/31/2004. A contribution was made to the plan during 2004. Normally, you would subtract the "advance" contribution plus interest at the val rate from the year-end market value. But in the first year of a new plan, should you do this or simply set the AVA to $0? If you subtract the contribution, what do you do if you get a negative number?

Ex.

1/1/04 contribution = $10,000

12/31/04 market value = $10,500

Valuation interest rate = 6%

What is the 12/31/04 Actuarial Value of Assets?

What if the 12/31/04 Market Value is $11,000?

Participant’s balance is $20,000

Participant receive loan of $10,000 on the last 30 days.

Balance in account is now $20,000, with loan balance of $10,000 included in the $20,000 balance.

Participant now wants an in-service withdrawal of $10,000, leaving only $10,000 loan in account.

Is this permissible?

Thanks very much

Can someone tell me what plan provisions are required in a dc plan as far as new comparability plans go? For example, is it necessary to include an explanation of the gateway test etc....? This does not seem necessary to me. I believe that we can essentially state that allocations will be made to the various classes of participants and that 401(a)(4) will be satisifed through cross testing. Someone please help.

We received a QDRO that specifies that the alternate payee may elect to commence her benefits under the plan as of the earliest retirement age at which the plan participant would be eligible to commence benefits.

The QDRO section of the plan document states that "earliest retirement age" shall have the meaning under 414(p).

The participant is 45 years old and still employed. Our interpretation of 414(p) is that the earliest retirement age in this case is upon the participant attaining age 50, unles he terminates employment before then.

Anyone have any guidance on the timing of this distribution?

Health benefits will be provided by the parent under its self-insured plan. Can we offer different benefits to the employees of the subsidiary than the employees of the parent?

Has there ever been any guidance (formal or informal) from the IRS on what it means to be employed on the "last day" of the plan year?

EXAMPLES:

Employee terminates employment on 12/30/2004. Plan sponsor is closed on 12/31 since New Years Day falls on a Saturday. Is employee considered to be employed on the last day of the PYE 12/31/2004?

Employee's last day of work is on Friday, July 29th. Plan sponsor is closed on Saturdays & Sundays. Is employee considered to be employed on the last day of the PYE 7/31/2005?

Employee's last day of work is on Wednesday, 2/23/2005 and is paid two weeks of vacation pay on his last day of work. Is employee considered to be employed on the last day of the PYE 2/28/2005?

Should the plan document address this issue?

If the plan document does not define the term "employed on the last day of the plan year", what guidance is there?

What are you doing in situations like this?

Thanks for all feedback, opinions, conjectures, etc...

Is income required in order to make a contribution to a ROTH IRA?

A new employer started business on July 15, 2003 and began a 401(k) plan effective for 2003. No deferrals were made the first year. For 2004 calendar year plan, there is one HCE (the 100% owner). He deferred $13,000 out of a $60,000 salary, no employer contributions.

Here's the fun part.

The disaggregation rules say that all of the HCEs can be tested with the non-excludable NHCEs (current year testing on this plan) If we take this rule at face value, in theory, the single HCE ends up in a test by himself and gets an automatic pass even though he is also an excludable employee (remember nobody has a hire date prior to 7/15/03).

If this works, new employers who start a 401(k) right away would get a free pass for the first year, maybe even the second year of the plan. I can't believe this works.

When I started to peer review this plan and saw what the administrator had done, I thought "no way", but then after thinking about it, I am not sure that it doesn't work. I sure don't want to pass on it without some feed back from the experts though.

Thanks!

Is it possible to transfer management of your Roth IRA to a Holding Company or LLC?

IOW, what restrictions are placed on where the funds can go?

Are there any allowable secure or confidential ways of keeping the IRA?

Many thanks in advance for your advice.

When a C corp converts to an S corp, what amendments to the ESOP must be made? I can think of the following:

1. Eliminate ability of participants to demand distribution of stock

2. Eliminate ability to use dividends on allocated shares to make loan payments

3. 409(p) nonallocation rules

Anything else?

An employer has a self-insured health plan, and funds payment to the insurance carrier on a checks cashed basis.

The carrier is now telling the employer that any uncashed checks (even though the employer did not fund these) are now the employer's responsibility to report to the state due to the unclaimed property laws.

Is this required by the employer?