When a US citizen moves to a foreign country and earns wages there, can he contribute to a Roth IRA?

I have a takeover DB plan that provides 55% of average pay for shareholders and NHCEs and $1 per year of participation for non shareholder HCEs. Therefore I surmise that the $1 benefit was for the purpose of providing a meaningful benefit to meet the minimum participation rules, when needed. And, in fact, I have for participants for 2004 only 1 HCE shareholder and 1 HCE non shareholder and no NHCEs. Both participants must have meaningful benefits, in order for the plan to meet the minimum participation rules. Per the plan, I would give 55% of pay to the shareholder and $1 per year of participation to the non shareholder HCE.

A prior IRS Alert Guideline said that 0.5% X average pay X year of participation would be a minimum meaningful benefit. This guideline refers to "nonshareholders" needing this minimum. However, I am wondering if, since the person not getting a "meaningful benefit" is an HCE, I am okay with the plan as is. Obviously whoever set up the plan thought it was okay, so I thought I would ask around a bit, before I make waves.

I would like to get some opinions on a survivor's ability to disclaim monthly survivor benefits after he has already accepted a couple of months of benefits.

Our state statute says, "a disclaimer of an interest in property is barred if the disclaimant accepts the interest sought to be disclaimed." This would seem to say that a survivor who accepts a monthly benefit may not change his mind and disclaim future monthly benefits. However, I am wondering if the future monthly benefits should be treated as separate interests in property. Such a reading would seem to further the intent of the statute, which is to not force property on someone if he doesn't want to accept it.

Thanks in advance.

I would like to get some opinions on a survivor's ability to disclaim monthly survivor benefits after he has already accepted a couple of months of benefits.

Our state statute says, "a disclaimer of an interest in property is barred if the disclaimant accepts the interest sought to be disclaimed." This would seem to say that a survivor who accepts a monthly benefit may not change his mind and disclaim future monthly benefits. However, I am wondering if the future monthly benefits should be treated as separate interests in property. Such a reading would seem to further the intent of the statute, which is to not force property on someone if he doesn't want to accept it.

Thanks in advance.

I would like to get some opinions on a survivor's ability to disclaim monthly survivor benefits after he has already accepted a couple of months of benefits.

Our state statute says, "a disclaimer of an interest in property is barred if the disclaimant accepts the interest sought to be disclaimed." This would seem to say that a survivor who accepts a monthly benefit may not change his mind and disclaim future monthly benefits. However, I am wondering if the future monthly benefits should be treated as separate interests in property. Such a reading would seem to further the intent of the statute, which is to not force property on someone if he doesn't want to accept it.

Thanks in advance.

Does anyone know if the Department of Labor has audited or taken enforcement action in connection with the treatment of demutualization proceeds issued with respect to a terminated contributory defined benefit plan?

A client previously sponsored a contributory defined benefit plan. The defined benefit plan was properly terminated and benefit liabilities fully funded in 1985. At the time of the defined benefit plan's termination, it was converted into a 401(k) plan.

More than fifteen years later the client received demutualization proceeds in connection with the group annuity contract that funded the plan. I am familiar with the Groom opinion letter (2001-02A) and the Bianchi opinion letter (2003-05A), as well as any other guidance that is even remotely close to the issue.

Although my client's defined benefit plan was contributory, I think the key to the Bianchi letter was that the plan was properly terminated and all obligations and claims satisfied. Subsequent demutualization proceeds are not plan assets even if the terminated plan was a contributory plan.

Conversations with the DOL have been unproductive. No one seems to know what the answer is.

I'm just wondering if anyone has been audited out there and what position the DOL has taken on audit with respect to this issue?

Thanks.

Off to the EA Meeting. Tally ho!

An employer wants to merge their MP into their existing 401(k). In reviewing the document provisions I have the following questions regarding whether certain benefits of the MP plan need to be made available in the 401(k):

1) The MP was effective pre-SBJA and allows active employees over 70.5 to elect to begin receiving their RMD's prior to retiring. The 401(K) is effective post-SBJA and doesn't allow active participants to begin receiving their RMD's until they retire. After the two plans are merged must the participants who were receiving their RMD payments under the MP plan still have this benefit available to them?

2) The MP plan offers lump sum, installment payments & QJSA. The 401(k) offers lump sum and installments and for the post-merged plan the client wants to eliminate installment payments. In reading through 1.411(d)-4 it appears that in-service distributions are protected but installments are not so long as a lump sum option is available. After amending the plan, do the participants who are already receiving installment payments continue to do so or because installments will be eliminated should new distribution paperwork be sent to them?

Thank you

I am reviewing a company manual for a construction company. They have an employee classification called "temporary worker", which is defined as "an employee hired with a short-term expectancy of employment (such as an employee hired for the summer)". I'm not finding an official definition for a "temporary worker."

In the company in question "temporary workers" are not eligible for company benefits, even though some stay 7-8 months, then become "regular" employees in the same or a different capacity. Regular employees become eligible for benefits after 90 days.

Is this ok?

Say a plan sponsor cannot meet their funding requirement for a plan year that just ended.

My understanding is that 412©(8) allows for a retroactive amendment to the beginning of a plan year made within 2 1/2 months after the close of such plan year.

It also seems that 412©(8)(B) allows for an amendment that can in effect freeze the accrued benefit as of the beginning of such plan year, thus meeting the criteria of "does not reduce the accrued benefit of any participant determined as of the beginning of the plan year to which the amendment applies"

However, 412©(8)© seems to contradict (B) where it says "does not reduce the accrued benefit of any participant determined as of the time of adoption", since the adoption occurs AFTER the close of the plan year as compared to (B) above which refers to the BEGINNING of the plan year.

If, for example the plan is frozen as of the beginning of the plan year, it seems that a notice need not be filed with the Secretary. It seems that a notice s/b filed if the accrued benefit is reduced even lower than what the accrued benefit was as of the beginning of the plan year.

So for eg. if the AB were 1,000 as of the beginning of the plan year, it would be ok to freeze it at that time and amount, but it would require filing with the Secretary if the accrued benefit were reduced below $1,000.

I intentially make an aggressive interpretation.

Are there other interpretations? Any that have been supported with practical experience?

Thanks.

can anyone envision a plan design that incorporates a standard vesting schedule with normal retirment age as 65/5 and an additional provision that says all participants are vested at age 60 upon termination?

Looking for direction - Law firm with 115 employees. Would like to implement a cafeteria style program where employees are given x-amount of $ to spend on their various plans. Group currently offers stand-alone POS for medical, PPO dental, VSP vision, AFLAC.

Questions:

1. For a group this size wouldn't we need to include an HMO for the med and DHMO for dent and any other buy-up programs to maximumize cost savings and benefits offering?

2. Wouldn't plan need to require employees to pick core ploans (i.e., med, dent, Vis) with left over $ to spend on voluntary lines or for FSA?

Any other thoughts???

The EGTRRA tax credit of up to $500 for the first 3 years of plan operation......Does anyone know exactly where (eg what line) this is reported at on the company's tax return? In this specific case, its a sole prop.

Thanks

Now that the new rules are upon us, I'm curious about what financial institutions are accepting these accounts. We amended our prototype at the sponsor level to drop the force out limit to $1,000 to avoid the problem but have received questions from clients who would like to take advantage of the rules to clear out amounts between $1,000 and $5,000 for lost participants.

I have a client that offers loans and hardships in the 401k.

The plan sponsor has an employee with a $6k balance all employee deferral money (no Match).

He is requesting $4k as a hardship.

Doesn't the employee have to take the 50% loan of $3k and then take a hardship for $1k?

Or is there something we are missing that they can directly go to the hardship provision since there is not enough money for a loan?

Thanks for any advice...

Jim

One of our clients sponsoring a final average pay DB pension plan currently has a straightforward definition of pay for benefit accrual purposes. It's simply annual base compensation actually paid. Overtime & bonuses are excluded.

Senior management wants to change this comp definition to include one type of bonus. Of course this particular bonus type is only paid to certain key contributors across the company. By and large these are all HCEs.

On the surface, this would seem to create a discriminatory alternative pay definition. [under §414(s) rules I think.] I'm interested in any reactions as to whether my worries are legit. And I welcome any creative thinking for how to make this work.

Many thanks,

Cole

When paying a benefit to a guardian of an incapacitated adult, should the check be made payable to the incapacitated adult or to the guardian for the exclusive benefit of the incapacitated adult.

I was thinking we could pay to the participant directly and then the guardian could take control of the check with his guardianship papers, but another lawyer I talked to said we should make the check payable to the guardian for the benefit of the participant. So, any input you can provide would be greatly appreciated.

When paying a benefit to a guardian of an incapacitated adult, should the check be made payable to the incapacitated adult or to the guardian for the exclusive benefit of the incapacitated adult.

I was thinking we could pay to the participant directly and then the guardian could take control of the check with his guardianship papers, but another lawyer I talked to said we should make the check payable to the guardian for the benefit of the participant. So, any input you can provide would be greatly appreciated.

Have a potential client (not currently using our retirement services) who has MPPP and would like to amend it into a safe harbor 401(k) plan. Has a 12/31 YE with a 10% contribution to those with 1,000 hours of service. What advice can I give him to make sure he stays in compliance? If he does want to transfer the plan to us, what steps do I need to do to make sure we amend it properly?

A client has asked about a "461 plan" as an alternative to a 457 plan. Anyone heard of this? Know anything about it?