Hey everyone I have some basic questions regarding the 412i and 419 af 6 plans.

412i

1. Make up of 412i plans can be: 100% whole life or 50% annuity and 50% whole life insurance? Can they be like 30%/70% or another combination?

2. what is the maximum yearly (monthly) benefit for a DB plan and for a 412i

3. what constitutes eligible employees 20ys old and worked for how long?

4. Must 100% of eligible employees be covered? Someone told me that you can get away with 40% covered i.e. if there was a husband and wife and three employees then just the husband and wife can be covered and nothing for employees(100% benefit for owners)

5. the structure of the annuity in the 412i Assumptions, i=3%, term is 5years and contribution is 150k per year to annuity

Say 150k flows into the annuity portion of the 412i in year one and assume a crediting of 3% Then at the end of year one the value of the annuity would be 154.5k minus surrender charges if they apply. At the end of five years then the annuity value would be 750k plus all the interest earned? If one wants to pentionize will that be a life or 20 year certain? If one wants to sell it for cash value then roll it into an ira how does that work? Is it converted to cash for its same value? Is it a 1035? What are the tax implications when reciving the dissbersments, its treated like income?

4 the whole life portion of the 412i

How does one figure the death benefit? Each cash value is different depending on the insurance company right? Loans can not be taken from the cash value, without taxation? If the owner dies during the term of the 412i plan does it pay to the estate or beneficiaries? Is the DB taxable as ordinary income because its qualified? At the end of the term (assuming 5 years) does one keep the whole life policy in force? If the owner keeps the policy in force does he keep paying the premiums and does that count as a taxable distribution (taking control of policy) If owner does not want to continue the whole life then how is it liquidated and what is the tax implications? Is that value rolled over with the annuity’s value into an IRA?Is one taxed on the gain (money put in minus gains?)

The 419s

Has anyone ever used Disability in a 419?

How do the debit cards work with the cash value of the 419

How do you get accesses to the cash value, with qualified expenses? Does this include drugs, hospital bills, LTC needs… what about health insurance? Someone told me that if a doctor recommends you to build a pool for health reasons then you can start taking loans from the Cash value. Are these loans tax free so long as the policy does not collapse?

Is it truly unlimited contribution limited by reasonable compensation and the underwriting of the insurance company?

Can you put long term care in these things?

Anyone have the phone number of people who build these?

Is it true you can build near complete discrimination between classes?

What are considered classes and what are not?

Thank you guys sooo much!

Feel free to call if you like

Saul

972.733.9987

saul@albominvestments.com

MPP Plan for professional medical corporation was last amended for TEFRA, DEFRA, & REA in 1985.

Accountant for corporation has discovered failure of owner to take required minimum distributions over a 5-year period.

Presuming that both the amendment failure and the RMD error can be corrected through VCP, are two separate VCP filings necessary or can both problems be corrected in a single VCP filing?

Hypothetical $50,000 of net earnings from SE for owner, and $25,000 comp for employee. Those two people comprise the entire eligible population. Plan doc grants NEC to HCE's.

Employee is easy 3% X $25,000 = $750

Owner?

.03 / 1.03 X $50,000 = $1,456.30

Is that right (e.g. we don't just multiply 3% X net earnings from SE - right?)?

Thanks for any help.

I've seen several references to proposed Treasury Regs. 1.125-2 Q7(b)(7) in several recent posts. It's not clear to me whether these regs are binding or not. If they are not currently, are they expected to be in the future? How should they be viewed in general? If they are not binding, are there consequences to not following them?

Can the service recepient accelerate vesting in connection with a plan termination and distribute the vested amounts prior to 12/31/05. Several of the commentaries suggest that this is possible, and I think I agree, but wanted to run my analysis through the message board to see if others agree.

Q/A 18© allows a plan to be amended on/before 12/31/05 to terminate the plan and distribute the deferred compensation. The section does not discuss vesting, but presumably, the ability to accelerate vesting to the date of the plan's termination, 12/31/05 is derived from Q/A 15(a) which allows a service recepient to accelerate vesting. Is this correct?

Thanks.

Seeking some input from TPA owners while I put my resume together.

I have worked at the same company for 6 years now. Before here, I worked at a pension firm in another state for 5 years. Little did I know that the TPA firm I worked for did everything wrong. I was fresh out of school and had no idea how wrong we were doing everything. (didnt know till I got here...where we do everything right).

The city I am applying to is in the same city as the old TPA I worked for. I think that the old TPA probably has a pretty bad reputation. Can I leave it off my resume?

would you look at my resume and wonder...where was she before her current job? I don't want it to look suspicious.

thanks for any input!

A plan participant dies....for discussion sake he had already satisfied all of the necessary requirements to elect 10-year averaging treatment.

The beneficiary is a family trust, not the spouse (which I think was mistake number 1).

10-year averaging does not turn out to be a worthwhile election for the trust. However, my question is whether the ability to use 10-year averaging election flows down to the spouse since she is the beneficiary of the family trust?

My preliminary reseach sugggests that answer is no and that 10-year averaging only passes down from a trust to a beneficiary in instances of a grantor trust.

If anyone else has some insight, I thank you in advance.

Mark.

I believe the SEC has stated that corporate pension plans can benchmark from Moody's Aa bond yields in setting discount rates under FAS 87. The Moody’s Aa rate was 6.01% as of 12/31/2003. I think the rate was 5.84% as of 11/30/2004. Does anyone know when or where the 12/31/2004 Aa rate will be published? I do have sites for the Aaa and Ba rates, but not the Aa.

Thanks.

Prior plan document (non-standard prototype) preserved the old matching vesting schedule of 5 year cliff for pre-2002 money. This provision was never added in the new document restatement (volume submitter).

I'd like to do an amendment retroactive to 1/1/02 and submit to the IRS since such change will remove reliance on the volume submitter opinion letter.

Any thoughts?

Participant took out a 15 yr. loan for a primary residance from a former company retirement plan. When he left that company, he paid off his loan balance by taking out a short term loan (at 18% interest). His plan was to then take out another loan from his current employer plan to pay off the short term loan and resume his "mortgage" payments.

Any suggestions? Any thoughts on whether the tracing rules would help?

How are practitioners/administrators handling DCAP enrollment for 2005, given the new definition of dependent under IRC Sec. 152, and in particular the earnings cap imposed on "qualifying relatives"?

There is legislation pending to remove the earnings cap for purposes of a dependent care reimbursement arrangement, but it will not likely become law until later this year (2005).

Just wondering if people are taking the conservative approach and imposing the earnings cap for purposes of enrollment, or are counting on fix-it legislation to remove the cap sometime later this year.

May have missed prior threads on this, but how are you all planning to deal with the automatic rollover provision..... amend cashout threshhold down to $1,000.00 or keep it at $5,000.00 and deal with getting the IRA's in place....??? Thanks.

ESOP terminated two years ago. Stock "distributed". Participants put stock back to company. Participants received partial payment and notes. Most participants rolled proceeds and notes over to IRAs. Balance on notes was paid a year later by a new company that purchased the former ESOP company. ERISA and state securities litigation about the purchase price of the stock from participants. Settlement reached with additional proceeds from sale to be made. Payment will come from a former party in interest. The ESOP and trust no longer exist.

There are about 5 PLRs that address the situation where the settlement payment comes directly from the defendant and not through a plan. The IRS has ruled consistently that these payments cannot be rolled over. But, if they come from a plan they may be rolled over.

Payment has not yet been made. I wonder if anyone has any experience with or information about "reviving" or "reinstating" a plan for the sole purpose of receiving settlement and making payment to participants. Per Massachusetts Mutual Life Insurance Co. v. Russell 473 U.S. 134 (1985), amounts recovered under the general fiduciary liability provision are not payable to a participant personally, even in the case of a civil action brought by a participant, because such recovery must be on behalf of the plan.

How about payment for attorneys' fees? Does anyone have experience with allocating settlement between a plan and individuals where, as here, there were both plan fiduciary claims and individual state securities law claims. Could parts of the gross settlement be allocated to each claim where the securities claim portion would pay most, if not all, of the attorneys' fee?

ESOP terminated two years ago. Stock "distributed". Participants put stock back to company. Participants received partial payment and notes. Most participants rolled proceeds and notes over to IRAs. Balance on notes was paid a year later by a new company that purchased the former ESOP company. ERISA and state securities litigation about the purchase price of the stock from participants. Settlement reached with additional proceeds from sale to be made. Payment will come from a former party in interest. The ESOP and trust no longer exist.

There are about 5 PLRs that address the situation where the settlement payment comes directly from the defendant and not through a plan. The IRS has ruled consistently that these payments cannot be rolled over. But, if they come from a plan they may be rolled over.

Payment has not yet been made. I wonder if anyone has any experience with or information about "reviving" or "reinstating" a plan for the sole purpose of receiving settlement and making payment to participants. Per Massachusetts Mutual Life Insurance Co. v. Russell 473 U.S. 134 (1985), amounts recovered under the general fiduciary liability provision are not payable to a participant personally, even in the case of a civil action brought by a participant, because such recovery must be on behalf of the plan.

How about payment for attorneys' fees? Does anyone have experience with allocating settlement between a plan and individuals where, as here, there were both plan fiduciary claims and individual state securities law claims. Could parts of the gross settlement be allocated to each claim where the securities claim portion would pay most, if not all, of the attorneys' fee?

I have a 401(k) plan that began 12/1/04. Trustees decided to change plan year to calendar year so now I have a short plan year from 12/1/04 - 12/31/04. Since there have been no deferrals made yet, is it necessary to file a 5500? There are no assets as of 12/31/04.

I wanted to see how others are handling the adjudication of expenses with the debit card & the frequency of verification (daily, monthly, weekly?). We are looking to change our procedures and was curios to how others handle it. Any input would be great!! Thanks

Just got notice from Relius that the 2005 Government Forms is available for download (corresponding to 2004 forms). Haven't yet gotten product key so can't install. Question is whether anyone has taken a look at the 2004 Schedule B yet to determine whether or not we need to show the OBRA '87 Current Liability information anymore, or did this disappear as it basically has no bearing on any of our work (with a few limited exceptions).

Oops, just answered my own question. 2004 Schedule B no longer has reference as far as I can see to the OBRA '87 CL.

2004 Schedule B

I work for a local government and was told we have a 401(a) DC plan. I spoke with someone else who said that 401(a) is very broad and that the plan must be called something else under the 401(a) umbrella. Has anyone ever heard of this? Also which box of my W-2 should the amount I have contributed be in I have heard it should be in box 12 & I have heard it should be in box 14. Does anyone know which box?

Happy New Years eve, everyone. Anyone have any financial resolutions they wish to share, general or specific to Roth's?

My financial New Year's resolutions:

1. Contribute $14,000 to my 403(b), via renewing my salary deductions to max out contribs.

2. Contribute $4,000 to Roth IRA, using $154 biweekly contributions.

3. Of money left over after contributing to 403(b) and Roth IRA, save at least half of it.

4. I keep track of my finances using GnuCash in a double-entry fashion; right now, the accounting equation isn't balancing out, so I must have made a mistake at some point. Thus, my modest goal is to correct this discrepancy.

The Motley Fool has a nice set of Retirement Resolutions.

Company is part of a corporation and our defined benefit plan allows for early retirement at age 55 but if you are a blue collar worker (non-union) then you suffer a 6% penalty per year of early retirement while the white collar workers only suffer a 3% penalty per year so the difference of course could be a loss of 60% for the laborers while only 30 for the white collar which by the way are mostly paid hourly also and should not pass the test for being exempt employee. Also, my company, which was a publisher and printer with a bindery started downsizing 2 years ago, now most of the people who lost their jobs of course were blue collar, some being there 40 years and they are still too young to take their retirement at 65 so they lose a lot of money. I do not understand how a company can discriminate like this, also, I have been a white collar worker there for the past 3 years only because I was hurt in an accident (broken back) and could no longer do my job as a laborer. I have worked there 18 years and they split my pension. I am totally vested in the blue collar pension but am only 30% in the white collar pension. How, in the world can a company justify that just because I moved to an office to work at the same place. Many of the people that lost their jobs are in their late 40's, 50's. and have worked there since high school, many are disabled from all of the heavy labor they have done over the years. Shouldn't a defined benefit plan have the same penalty rule for all?