Is there an MRD in the following situation:

A new DB plan is established for 03/04 with PYE 01/31/04. The valuation date is EOY and is 01/31/04. The principal is 75 in 2004.

Under the 401(a)(9) regs, for computing the MRD, the account balance (PVAB in this case) to use is the balance @ the valuation date in the year preceeding the year of distribution.

The year of distribution is 2004 and the year preceeding is 2003 but there was no valuation in 2003!

Thanks.

Has anybody seen anything from the IRS (or otherwise) providing guidelines for what constitutes a significant cost increase? A certain percentage? Or a minimum dollar amount? Any direction / guidance is greatly appreciated.

Plan is a Safe Harbor 401(k).

Employer makes the Safe Harbor match contribution.

The only conts to the plan are deferrrals and Safe Harbor match contribution.

Client wants to know if top heavy is satisfied by the Safe Harbor match contribution?

Is an additional contribution necessary for those participants who do not contribute and, therefore, do not receive the match contribution?

Any help is greatly appreciated.

How is a party in interest defined? I have a prospect, the company has an investment committee to decide what to trade. The owner of the company and his son are members of the investment committee. The plan is invested in a mutual fund where another son of the owner is the "fund manager" --- does this make the son that is the "fund manager" a party in interest?

The rules changed few years back to allow you to disregard the rollover balance in a plan when deciding if balance was less than $5,000.

The new automatic rollover cap is $5,000. Can someone confirm my understanding that if person has 3,000 in current company funds and 3,000 in funds rolled from previous employer a mandatory distribution can not be made.

Guess my problem is that the "safe harbor" applies to only distributions of 5,000 or less.

It is my understanding per the most recent HSA guidance, employers who are offering HSA + HDHP to active employees do not have to offer an HSA account to COBRA participants.

However, I read that if an employer is offering an HSA and is contributing to an enrolled employees' HSA account, the employer has to also fund COBRA participants account. Employer is also allowing employees to contribute to their HSA via pre-tax payroll deductions.

Does anyone out there have any info on this subject?

Thank you.

One of our participants passed away on 9/10. His wife works at the same employer & also has an Flexible Spending account. She recently received a bill from the hospital for her husband. Can she submit this claim through his FSA? Or should it be processed under her? There is still an available balance in her husband's FSA account. This is the first time I have encountered this, so I am not sure how to handle it. Any input would be great.

Thanks!

In a cross-tested, bells and whistles 401(k) plan for a law firm, 1 participant had about $5,000 too much deposited in her account for the profit sharing contribution for the PYE 1/31/04. The company partially pre-funds the contribution and inadvertently overfunded for her. I advised the employer that they should withdraw the excess contribution on the basis that errors should be corrected when discovered. The participant, however, would like to have the money remain in her account as a credit toward the contribution for the PYE 1/31/05. The participant was a new employee in PYE 1/31/04 and was not highly compensated; she will be highly compensated, however, for PYE 1/31/05. I believe that the company deducted the excess contribution in their FYE 1/31/04, but I'm not positive about that. If it affects the answer, I can find out.

I'd appreciate any opinions on how this should properly be handled. The participant is looking for regulations that require the excess amount to be refunded.

Can an employer charge an employee more premium (pre-tax) if the employee's spouse has access to other health care coverage (through their employer, for example) and the spouse chooses NOT to enroll in their employers health plan? I have seen this practice before, where one employer will require an employee's spouse drop p/u other coverage if it is available, however, I am concerned about the excess premium and discrimination as to 'access'.....

A daughter inherits her mother's IRA. She was notified by the investment company that she had 60 days to request a rollover, etc. She was not aware that if she didn't respond, she would be paid out as a lump sum distribution. She would the opportunity to have the money redeposited and a rollover check issued to her instead.

What's the distribution timeline for IRAs? 5 years? Deceased life expectancy?

Can someone clear things up for me?

Scenario: Participant's loan fell behind in payments, and is past the cure period. Loan has not been "deemed" on the recordkeeping system. The participant would like to payoff the loan, without paying it back as an after tax payment. The employer does not want the participant to face the tax consequences, so asks that the pre tax loan payment be accepted. In most cases like this that I encounter, the employer made an error and stopped the payments too early, or stopped payments in the middle of the loan.

What is the risk in accepting a loan payoff (pre-tax) for a loan that should have been deemed? I realize that it is an operational failure, but what position do you think the IRS/DOL would take? They do want participant's balances to remain pre-tax don't they? Especially if it is the fault of the employer?

Thanks

I've read a couple of articles that say plans MUST be amended by March 25, 2005, for the automatic rollover rules. I know plans must operate in compliance, but is there any definite word from the IRS that a written amendment is required?

It seems logical that since this is part of EGTRRA, it might fall into the staggered restatement system that is proposed.

Thanks.

We have a self-insured health plan. We currently do not charge employees for coverage, not even family coverage. We would like to encourage employees to not elect family coverage. Instead of giving those employees with family coverage money in lieu of coverage, we would like to make 401(k) contributions on their behalf as an incentive to not elect family coverage. For some reason, this just does not seem right to me. Would this violate some sort of discrimination requirements? The idea is to not offer individuals with single coverage anything. We would give individuals an opportunity once per year to elect to receive a 401(k) contribution in lieu of family coverage. It is my understanding that this would have to be done through a cafeteria plan to avoid constructive receipt issues.

If it is acceptable, our 401(k) plan has a vesting schedule for employer contributions, would this also be subject to the vesting schedule? It doesn't seem like it should be?

If anybody can guide me to any authority, articles, etc., I would greatly appreciate it.

Is an insurance company, for a general account based contract (i.e., not a separate account), required to automatically provide information for the contract to be used on the Schedule A or does the information only need to be provided upon request? Statutory language (ERISA 103(a)(2)) and DOL 5500 instructions, etc. seem to indicate that it must be done automatically. But, DOL reg. 2520.103-5 seems to indicate that it only has to be provided upon request of the plan administrator. This language in the rules has been around for many years. Which approach is correct?

I owned PSI stock in my IRA. The company went bankrupt, a class action suit was filed, and I received a check for around $100 from the settlement. There is a 1099-DIV included that says it was a non-taxable distribution. However, since this amounts to a witdrawal from the IRA, should I report this as income on my tax return? Where does it get reported so that it does not confuse the IRS computers? Or is it non-taxable? I am over 59.5 so there is no penalty.

Dick

Hi, I will make this quick.

an employee has been required by the doctor to go from 5 day work weeks to 3 day work weeks because of health issues.

the employee emails her supervisor and explains some details of her condition and how she can manage her position working 3 days a week.

The supervisor forwards the email to his "girlfriend" that works at a completely different company and just puts in the forward "FYI".

Can this be ok to do?

Thanks

saaben

Get one of these: http://www.irs.gov/pub/irs-pdf/p590.pdf

1-800-TAX-FORM.

See page 58.

A participant is receiving a distribution under a SERP upon termination of employment. The distribution will be in a lump sum. The wages will be reported on a Form W-2 - At what rate should taxes be withheld? The individual's regular tax rate or can the participant specify what rate he or she wants. Thoughts?

I have a 401(k) from a previous employer (a little over $31,000) that I would like to roll over to a Roth IRA. If I understand correctly, I'll need to roll the 401(k) to a traditional IRA, then roll that to a Roth IRA and take the tax hit.

Can someone confirm this for me?

Also, can I roll a portion of the traditional IRA (say 50%) in 2004 and the rest in 2005 to reduce this year's tax hit?

Also, I would like to know where to invest this money. I'm looking for the most aggressive investment for my Roth IRA that I can find. My goal is to earn as much as possible in the Roth IRA, since I won't be paying taxes on the gains. Also, I can be a little less aggressive in my 401(k) with my current employer to balance my risk. And, since I'm 31 1/2, I have 28 years to go to reach the magical age of 59 1/2!

Any suggestions would be appreciated.

Thank you!

I'm an estate planner advising a client in connection with her closely held business. Acutally business now owned by her four sons. She is the sole employee and wants business to adopt medical expense reimbursement plan. It's tax motivated, the business deducts the expense, not included in employee income. For individuals medical expense deductions are subject to numerous limitations. And reimbursement plan will reimburse for expenses that typical health plans will not cover (OTC drugs etc.)

Anyway, even though there is only one employee is this an employee benefit plan covered by ERISA? if yes what requirements does ERISA impose? Need to give client an SPD? Filings with the DOL? I'm out of my element a little here and want to make sure I'm not missing something big.

One other thing, the employee isn't contributing to the plan. I put the COBRA provisions in about extended coverage etc. is it ok if employee doenst pay any premiums during the extended periods?