We are a TPA which requests client distributions directly from the mutual fund company, they wire the funds to our non-interest bearing checking account (strictly for distributions) in which we issue the checks and complete the 1099r entry. Our policy is to release the funds 7 - 10 days after the checking account receives the assets from the mutual fund company.

My question is what year is used for the 1099r issuance? If the funds are requested and distributed from the mutual fund company on 12/27/04 but we do not issue the check until 1/4/2005 is the distribution technically in the 2004 or the 2005 year?

The mutual fund company nor our firm is the Trustee of the assets. Any help would be greatly appreciated.

Recipient under age 59 1/2 is getting a monthly annuity. Distribution code 2 is being used in box 7 of 1099-R.

After receipient reaches 59 1/2, should the distribution code change from a 2 to a 7?

Thanks

Under the DOL regulations [sec. 2520.104b-10(d)(4)], we add the following SAR language when it's applicable:

...Of the total insurance premiums paid for the plan year ending (date), the premiums paid under such “experience-rated” contract(s) were ($ ) and the total of all benefit claims paid under the(se) experience-rated contract(s) during the plan year was ($ ).

I can't find any guidance about the definition of "total of all benefit claims paid". I'm guessing that this is the number found on Form 5500, Schedule A, Line 8b(1)?

Any thoughts?

Anyone who uses them have a suggestion for short plan yr issue:

if i want to not pro rate the 415 limit for the first, short plan yr- could i use 5(b) "Other" --for limitation year -and insert "calendar year ending on or within the plan year"?

thanks

3 companies have merged. The entities offer identical plans and thus have no problems merging the plans and operating under one document. The problem is that each entity would like to maintain current investment options/provider ( A couple of mutual fund programs and a group annuity.) Is there any problem with this other than having to offer all 3 providers to all participants? Can we limit participants to one provider and still have 404© protection?

Am I going crazy... I thought you could not contribute to a SEP and a QP in the same year. IRS Pub 560, page 7 says you can. Am I missing something?

IRS Publication 560

Company A buys the assets of Company B on 1/1/2004. Company B's 401k plan is merged with Company A's on the same date. Company A plan is a 9/30 plan year end and Company B is a calendar year plan.

In determining HCE's for the 9/30/2004 plan year end, shouldn't we be looking at the compensation from 10/1/2002 thru 9/30/2003 for the Company B employees, since that is the determination (lookback) year for the HCE determination in the Company A plan? If the client makes the calendar year election, wouldn't it apply to all employees in both A & B?

Understand on an IRA in the Bypass, RMD are distrubted to the Trust on the life expectancy of the oldest beneficiary.

Is the surviving spouse by definition going to be considered the oldest

beneficiary, or is there a way in framing the Bypass Trust language to only

use the children for determination of oldest?

If we use surviving spouse, and there life expectancy is 10 years and they only survive for six, I assume that the Trust has four more years to take distribution.

Is there any way the children at survivor's death can inherit the IRAs and

take distribution over their own life expectancy?

If an employee elects an individual HSA (debit card operated) and leaves the company with a $1200 balance... He goes to an employer who has no HSA, can he

1. Continue to put pre-tax contributions from his current employer into the HSA that is still being "administered" by his former employer?

2. If he chooses not to put any more money into the account, can he pay for his son's orthodontia expenses with his $1200 balance even though he originally elected the HSA for an individual?

We don't do HSA's... so I couldn't answer this question which came from a business associate. I told him I would put it on the "magic board"

Thanks in advance for replies...

I was provided with a "draft" copy of a DRO which indicates that the alternate payee is to receive a 1/2 of the account value as of a specific date but then they are also to receive 30% of each years contribution to the plan and applicable earnings.

Has anyone even seen a stipulation put on future contributions. What's to stop the individual from deferring or if the individual is quits or is laid off and contributions cease?

Can a garnish be put on future deposits that may or may not be made?

Any feedback would be appreciated.

Thanks

A plan holds real property as an investment. The sole participant in the plan improves the property with his own money. Assume that the participant does not benefit from the improvement in any way whatsover (other than from being a participant in the plan). Would the participant's improvement of the property be a prohibited transaction?

From what I hear, (thanks ABA Joint Committee), IRS guidance goes to press tomorrow.

How do you terminate a Govenmental 457(b)? and is this a distributable event?

Thanks for any info.

Years ago a multiemployer pension fund decided to allow the fund office employees participate in the db plan. None of these employees are highly compensated, nor are they members of the union. A new board would like to discontinue this practice for new hires.

What issues does this raise? Can the plan include some and exclude others? Does this cause any testing problems? I would to get a handle on the major issues that need to be examined before starting my research.

The Timeless Gift

By Harrison Kelly

Shopping for a Christmas gift can be the most nerve-wracking event of the year. Shopping for my wife can be a special challenge. Vacuum cleaners are too impersonal, football tickets are too impractical, and kitchen gadgets are downright impossible. I was at a loss, with Christmas fast approaching. In desperation, I asked my secretary, Sally, to help me pick out a present.

We walked side by side in a fast-paced walk, two blocks to the jewelry store. Working in the downtown business district had its advantages; being close to a lot of shopping places was one of them. However, there were disadvantages as well. On the way, our path crossed a couple of homeless men, huddled together by a vent from one of the nearby buildings.

I started to cross the street to avoid them, but traffic was too thick. Just before we approached, I switched sides with Sally to keep them from confronting her. They were surely going to beg for money, pretending to buy food, but any donation would surely end up as beer or wine.

As we got closer, I could see that one was probably in his mid-thirties and the other was a boy of school age - around thirteen or fourteen. Both were dressed shabbily, the older with a too-tight sport coat ripped at the sleeve, while the boy was without a coat at all, only a tattered shirt separating him from the blowing wind. A quarter or two and they'll leave us alone, I thought. "I'll handle this," I said with my best male bravado.

But Sally seemed undisturbed by the sight of the two beggars. In fact, she seemed comfortable in their presence. Before they asked, she offered.

"Is there anything I can do for you?" she directed her question to the two homeless men. I was in shock, waiting to pull Sally away from a dangerous situation, but she stood firm.

The two men looked at her with surprise until the older one spoke up. "Yes, ma'am. We do need something."

Here it comes - the hook, the gouge, I thought. The two panhandlers are looking for a handout, an easy mark. As I watched, I could tell the younger boy was shivering in the winter breeze, but what could I do?

"Could you tell us the time?" asked the older man. Sally glanced at her watch and replied, "Twelve-fifteen." He nodded his thanks and didn't say another word. We continued on our way to the jewelry store, and I had to ask Sally about the encounter.

"Why did you ask if you could help that man?"

"He was cold and in need, that's why," she replied in a matter-of-fact tone.

"But he's a bum. He could have tried to rob you or something."

"I take care of myself. But sometimes you have to take a chance on someone."

We arrived at the jewelry store, and Sally quickly found the perfect gift for my wife - a pair of diamond earrings. While she was there, she bought a man's watch, not an expensive one, but she was always thrifty. Probably a gift for her husband, I thought.

As we walked back to our building, the two vagabonds were still hovering around the sidewalk grate. Once again, I tried to come between Sally and the two, but she wouldn't let me. To my surprise, when we got next to them, she pulled the watch out of the bag and handed it to the older man.

"Here, I'm sure you know how to use it."

He was as shocked as I was. "Thank you, much obliged, ma'am," he said, trying the watch on his wrist. As we walked away, Sally had a gleam in her eyes, proud of what she had done.

"Why on Earth did you do that?"

Sally shrugged and said, "God has been so good to me, and I decided to do something good for him."

"But he didn't deserve it."

"Even the poor want something special, and besides, God's done things for me that I don't deserve - but He did them anyway."

"He's probably going to buy beer with that watch."

Sally just smiled at me and said, "Well, so what if he does? That's not my concern. I did something for good and that's all that matters. What he does with the watch is his challenge."

We arrived back at our building and went into our separate offices. I wondered about the encounter, and I thought about the two men. Surely they were at the pawnshop, getting ready for a hot time at Sally's expense.

The next day, I was going to lunch alone at a hamburger stand outside our building. As I walked down the street, I noticed the same two men that Sally and I had encountered. They were both still hovering around the heater vent. The older man recognized me and said, "Excuse me, sir. Could you give me the time?"

Aha! I had caught him. Sally's watch was nowhere to be found. Exactly what I thought.

"Where is the watch my secretary gave you yesterday?" I asked, hoping to stir his heart.

He hung his head down and admitted his guilt. "Sir, I'm sorry but I had to do something." It was then I noticed the new parka around the shoulders of his young companion. "Wouldn't you do something for one of your own?"

Speechless, I handed him a quarter and continued on my way. As I walked, I started thinking about the incident. He had sold the watch all right, but he bought a coat, not beer, with the money. Sally's act of kindness did have meaning. So did her words: The challenge was answered.

As I arrived at the hamburger stand, I suddenly lost my appetite. I turned around and headed back to the office. The two men were still by the grate. I tapped the older man on the shoulder and he looked up at me, obviously freezing. I took my long, gray overcoat off and draped it over his shoulders without saying a word. As I walked away, I knew that my own challenge had been met. The few steps back to my office made my teeth chatter. But, you know...it was one of the warmest trips I have ever made in my life.

I seem to remember IRS commenting on the following situation but can not find the response. The comment was generally that IF there are NO active participants the deduction of the difference between the present value of benefits and the assets is NOT reasonable. Therefore, I will ask the learned members of this forum what they think.

We will make the first case 'simple'. This is a one man plan where the participant reached normal retirement age (sometime prior to the valuation date). The valuation is performed at the beginning the plan year.

Valuation 1/1/2005

Is it legal to value the participant's actuarial increased benefit and develop a contribution equal to the difference between the present value of this benefit and the assets at 1/1/2005??

Can this method be maintained when the participant does not retire but continues working and a new valuation is prepared at 1/1/2006?

Is the answer any different IF there is more than 1 participant (all inactive)??

Thanks for any and all responses.

Plan is covering school bus drivers. They are paid for 38 weeks and not paid during the summer. Plan sponsor would like to limit loan repayments through payroll deduction. Does anyone have a suggest as to how to setup loan repayments for these employees?

Thanks

My wife enrolled in a 403(b) with her employer on 17Nov04 with the agreement to have all of her last 3 checks of the year deducted and contibuted to the TSA.

No deductions where made from the 27Nov04 or the 11Dec04 check.

The deduction calculated by the custodian's representative for was too high (there was not enough money left after normal deductions) so the employer took nothing out.

The Custodial agent and the payroll supervisor say that nothing can be done to correct the situation. The agreed total figure was in the area of ~$7500 and this failure will force us to re-characterize some investments.

The IRS said that I should tell the agent and the employer that a correction can be and should be made via rev. procedure 2003-44 and done as soon as possible.

I did mention the procedure but do not believe that anything will be done and that we will loose the benefit entitled to us.

My Question is, "Is there anything we can do to get the Custodian or the Employer to become enthusiastic about making a timely correction?"

I have a defined benefit plan that permits lump sums as a distribution option. The plan will be terminating shortly. Since a lump sum is not normally available until the participant terminates employment, can we offer actively employed participants the choice of receiving an annuity contract from the insurance company (which would have a lump sum option upon termination from employment) or a direct rollover to the company's 401(k) plan (which would allow a lump sum upon termination from employment)? OR, does the fact that a lump sum is an option under the plan mean that we must offer a lump sum upon plan termination, even though participants selecting annuities won't be payable under the contract until normal (or early) retirement date?

I'll shorten a prior posting.

Does anyone see a problem with a TPA reimbursing participants for prepaid fees?

The proposed reimbursement is due to a client's decision to use the investment company's system for administering loans. Our practice has been to charge all expected maintenance fees at time of loan issue.