A benefit is being paid from a group annuity contract at an insurance company. Because we only have a PO Box for the participant, but do have a valid SSN, they say it is not a 'Legal Address' and must withhold 30%.

I reviewed the only reg I could find on topic - 1.1441-1(b)(3)(iii)© and found no support for the 30% withholding.

I also looked at 3405(e)(13) (no regs found) and still found no support for the 30% withholding.

Also a search of RIA using 'legal address' did not turn up anything useful.

Does anyone have support for the insurance company, or are we stuck with......

"Because I said so"

Who is responsible for filing form 990T for a qualified plan? Is it the trustee/custodian (in this case they are the same) or is it the plan administrator? Also do you still need to file a 990T if there is a loss?

Hi all,

We have a participant that recently passed away. Beneficiary designation form indicates that part of account is to go to two relatives in BWI. Do we look to the tax treaty with UK? Can you give me a "quick and dirty" explanation of what I need to do to get the money out of the plan and to the benes? (If it wasn't hurricane season in what seems to be one of the worst seasons ever, I'd deliver the money myself!!)

Thanks,

Kathy

The most valuable benefit is generally calculated by converting the account balance into a J&50 annuity payable immediately using the plan's actuarial equivalent assumptions and then back to a life annuity using testing assumptions.

Does this methodology still apply IF a participant is beyond normal retirement age (testing age)?? Or can the most valuable just be determined using the plan's AE assumptions?

To get rid of a few illiquid nonstandard assets, we want to allow in-service withdrawals (age 59 1/2) and will open it up to all participants (not just self-directed), but we don't want it to be permanent (paternalistic to keep retirement savings intact) and don't want to have to grandfather the right for ever.

Can we just offer it during a certain pre-specified window and avoid grandfathering?? How long does the window have to be (one day is enough to get the nonstandard assets out, but one full year sounds less abusive)?? Does it matter if only HCEs end up using it, or will 401(a)(4) be ok as long as it is available to all??

Is there a right and wrong way to handle loan fees when they are charged directly to the participant? Most of the providers we work with who prepare amortization schedules for loans include the fee in the loan. Is it also OK to exclude the fee and amortize only the amount the participant receives in cash?

If a participant requests the maximum loan, has a vested account balance of $4000, and the fees, $100, are included in the loan amortization, the participant receives $2000 in cash and pays back $2100. His account balance is $4000 before loan, and $4000 after loan. Is the participant actually paying the fee in this case since he is putting it back in his account?

If the same loan were amortized for $2000 and $2100 were withdrawn from his account, his balance before the loan would be $4000, and after the loan it would be $3900. Is this OK? Assuming the loan is taken from his 401(k) account, does this violate the distribution rules for 401(k) by using the money to pay fees? No 1099-R is issued for this $100 withdrawal-is that OK?

I know you should always look to the document for what to do. Assume the document is a Corbel prototype which has not been amended to provide for individual participant fee payments, but there is an SMM that details to the participants the charges that will be assessed on them directly, including the loan fee of $100. This SMM was prepared based on Corbel's recommendation.

I keep changing my mind on this and would appreciate some input.

I am looking for a source where I can pull articles or any other information on the dangers of self-trusteeing a 401k plan. Can anyone help???

E/er maintains a PSP, MPPP and a 401(k)(safe harbor met by 3% nonelective contribution). There are investments within the MPPP and PSP which are locked in at favorable rates. E/er wants to get rid of the duplicative administrative costs with maintaining three plans. E/er is trustee of PSP and MPPP assets. 401(k) assets are participant directed. E/er would like to end up with just the 401(k) plan and thus be obligated for the safe harbor contribution (but still be able to contrubte more if possible), but keep all investments intact. Freezing the MPPP, i.e., amending to reduce contribution to 0% of compensation as well as not allowing any more participants in, will partially get it done. I am assuming a merger of the frozen MPPP into the 401(k) would be a possible next step regarding trying to consolidate the plans. Merger would allow for the investments to stay intact as well as consolidate everything. Only drawbacks would be tracking vesting and maintaining the separate distribution options once inside the 401(k) . Any others? Alternative would be to terminate the MPPP and distribute out to participants. Termination gets rid of the vesting issue (by requiring 100% vesting) as well as the maintenance of separate distribution options within the 401(k). I would assume the PSP could be merged into the 401(k) with no problems. Any suggestions as to the big picture alternatives? Thanks.

Assume the following fact pattern:

Single participant 401(k) Plan for 2003.

Participant is over age 50.

Employee’s compensation = $16,000

Employee’s 401(k) contribution = $14,000

Employer’s profit sharing contribution = $4,000 (16,000 x 25%)

Total allocation for this employee = $18,000

Is this possible? The regs say you exclude the catch-up contribution for 415 purposes so it appears to be okay. Am I missing something?

Thank you in advance.

Is anyone aware of a SERP plan participant successfully asserting a cause of action as a result of a plan amendment where the only change was to the form of benefit? The plan currently provides for an actuarily adjusted, less 10%, lump-sum payment anytime after retirement. The plan administrator is considering amending the plan, as allowed under the plan provided the change does not adversely affect vested benefits, to remove that form of payment. Thoughts on the subject would be appreciated.

Since the HCE restricted benefit distribution calc uses the IRC 412(l)(7) rates - current liability rates, and I believe these rates were modified (temporarily) for certain funding purposes to use a Corporate Bond Idex rate, can we use these higher Coporate Bond Index rates for the restricted HCE distribution calcs under the (a)(4) regs ? Thanks for any opinions.

Assume an S Corp makes employer contributions to employee HSA accounts. Assume a 2% or more S Corp owner works for the company and receives wages. Can the company make and deduct an HSA contribution for him? Or does he need to make his own contribution individually? (There is no 125 plan. If there was, I realize that the owner could not participate in the 125 plan, and for 125 plan purposes is considered self-employed.)

I believe that the IRS Q&As on HSAs indicate that a "self employed" individual would make contributions for himself. Does the reference in the Q&As to "self-employed" also bring in the working 2% or more S Corp owner for this purpose?

I'm waiting for my copy of Who's the Employer so I'm hoping to get some help with this.

3 owners and 4 companies. Companies A, B and C are incorporated, Company D is Sole Proprietorship. Familial relationships are that Owner 2 is the mother of Owner 1 and Owner 3 is the adult son of Owner 1.

Company A

Owner 1 50%

Owner 2 50%

Company B

Owner 1 50%

Owner 3 50%

Comany C

Owner 2 50%

Owner 3 50%

Company D

Owner 1 100%

Owners 1's wife does not have any ownership in any of the companies. She is the Secretary/Treasurer of Companies A, B, and C. She is also an employee of those 3 companies.

If you attribute ownership to the spouse of Owner 1, you end up with a grid of Companies A and B with Owner 1 and his spouse each owning 50% of Companies A and B, which would give you that those 2 companies are a controlled group while Companies C and D are not. Is this the proper way to constructively attribute Owners 1's shares and are those shares then used to make the spouse an owner for purposes of determining that there is a controlled group?

Grid:

Shareholders A B Row Min

Owner 1 50% 50% 50%

Spouse 50% 50% 50%

Totals 100% 100% 100%

It doesn't seem right to me. A friend told the that it isn't right, but he didn't know she was a officer/employee of the companies. I'm not sure it matters.

Box 13 of the W2 indicates whether or not someone is participating in a retirement plan. From my understanding, if a 401(k) is the only plan offered and the employee is NOT participating but eligible, that box should still be checked. Correct?

if the doc uses the safe harbor definition of what is a hardship and the ee has flood damage (current example -- hurricane if in florida) to their home will this qualify? is there an exception for natural disasters?

It is my understanding that it is perfectly permissible for a participant's accrued benefit to decrease due to a decrease in the participant's compensation. Is this correct? I base this on the fact that under Code Section 411(d)(6), benefits are protected from reduction due to a plan amendment. There is nothing that prohibits a reduction due to simple operation of the plan (i.e. participant's compensation reducing). Is my understanding correct? Does anybody know of any IRS literature that explains this or any other literature anywhere (commentators, articles, etc.)? Any insight will be greatly appreciated.

Thank you!!

This is pretty much over my head, but in general, does the following sound OK?

An individual leaves a company and has $200,000 in his retirement account there. Now he wants to use this money to buy a separate business, but does not want to be taxed on taking the $200,000. So, he establishes a retirement plan for the new business (C-Corp), rolls the money into this new plan, and purchases shares of the new business with this rollover money. Somewhere along the line, I'm told a 501(a) tax exempt trust was established, that makes this whole scenario work (i.e. uses the rollover money to buy the new business with no tax consequence).

This is not something I am trying to design mind you. I was asked about this from someone who has come across it.

Does anyone have any samples on wording for issueing out SARs. Along with retirement plan SARs I will be sending Welfare, LTD and Travel Accident.

What has happened to Mike Preston? I have not seen any posts by him in months.

Has anything changed regarding whether we can use insurance rates to determine PS 58 costs for 2004?