Sal Tripodi leading us all in

"HAPPY BIRTHDAY DEAR ERISA'

If a plan is subject to the J&S provisions and requires spousal consent, that consent must be witnessed by a notary or plan representative. Does it matter if the participant signs the form after the spouse and notary? I have always had an issue with this because I thought the participant had to make an election and the spouse then had to agree to that election and signed the form showing this agreement. But, now I am questioning this.

I've searched some prior threads, and some of them come close, but don't directly answer my question.

Suppose the IRA owner dies. Spouse is beneficiary, and their daughter is contingent beneficiary. Spouse does not want to roll the proceeds to her own IRA, as this will restrict her ability to withdraw funds without incurring a 10% penalty.

However, she wants to be able to change the contingent beneficiary listed in deceased husband's IRA. Say she gets remarried, for example - she wants funds to go to new husband - not the daughter.

Can she do this? While one part of me thinks that as long as the IRA is maintained in the husband's name, no one can alter a beneficiary designation, it also seems that as primary beneficiary, since she has the right to withdraw the funds at any time, she should be able to name anyone she wants.

Who controls - current bene or the husband's previous and recorded designations?

Thanks!

We have a client that sponsors a defined benefit plan. An employee of the client is entitled to an accrued benefit under the defined benefit plan. The employee has committed fraud against the client. The client is pursuing both criminal and civil action against the employee. Can the client deny the employee his accrued benefit from the plan?

Helping a client identify HCEs for ADP testing purposes and was under the impression that an HCE was either a 5% owner/family or made over the comp limit. Someone today mentioned that in an SCorp any owner was considered an HCE, no matter their percentage of ownership. I wasn't aware their were different definitions of HCE depending on the company structure. Does anyone know if this is accurate, thanks.

We are in the process of determining the liability and assets (4044 calc) for a DB plan spinoff in conjunction with a sale.

The potential buyer is getting cold feet because of the fact that the seller's pension plan is underfunded. The potential buyer claims that when it entered into a similar transaction with a different seller, the DOL said that there could not be any transfer of plan liabilities and spinoff of plan assets unless the plan was fully funded.

Our client (seller) thinks that the DOL issued this ruling in the case of the earlier transaction in the form of a news release or advisory opinion.

Since we are not the service provider for the potential buyer, we cannot request more information on that earlier situation.

Has anyone run accross this situation? Does anyone recall seeing a DOL release on spinoffs and situations where the DOL would not sanction a spinoff? Thanks.

Under 2004-55, an employer can design its cafeteria plan to have employees pay disability premiums pre-tax, with the option to the employee to pay after-tax (and thus receive tax-free disability payments), provided that the employee makes an IRREVOCABLE ELECTION PRIOR TO THE BEGINNING OF THE PLAN YEAR.

So, the way I interpret this, if an employer decides to offer the pre-tax default payment option, an employee is going to be stuck paying tax on his disability payments UNLESS he can predict that he will be disabled in the next plan year and makes a corresponding election change.

Am I right?

On our 2002-3 5500, we (well the tpa) marked that it is the final report, as for the next year, we are changing the plan sponsor, plan name and plan #, so it seems like it will be a different plan, so this would be the last year of this plan. But the EBSA wrote back saying it was inconsistent, since there were participants at the end of the year, and maybe we didn't mean to mark it as final report? So should it not be marked as final due to the changes for next year?

Thanks

Prior TPA company is upset with our new client, and has suggested that they will not delvier assets to us on the date that they previsouly communicated to us. When are they required to deliver assets?

Originally posted in general category, before I found the Roth IRA page...sorry for the double post...

Hello,

I did a search of these boards and found some information, but nothing that I considered definitive. My exact question is this:

If my Roth IRA (opened in 2000), is currently valued less than my contributions over the past four years, will there be a penalty if I withdraw from it or close it?

My understanding is that since all of my contributions were already taxed, they are not taxable. The thing I am not sure of is the penalty...does early withdrawal incure a penalty, even if it is only from my contributions?

There has been no rollover, conversion, dividends, etc....just my straight monthly contributions. And even if I close it, I am taking about a $1k loss compared to what I contributed.

I ask here because of conflicting information I am getting from my agent and my funds custodian.

Thanks in advance for any help,

bill

Hello,

I did a search of these boards and found some information, but nothing that I considered definitive. My exact question is this:

If my Roth IRA (opened in 2000), is currently valued less than my contributions over the past four years, will there be a penalty if I withdraw from it or close it?

My understanding is that since all of my contributions were already taxed, they are not taxable. The thing I am not sure of is the penalty...does early withdrawal incure a penalty, even if it is only from my contributions?

There has been no rollover, conversion, dividends, etc....just my straight monthly contributions. And even if I close it, I am taking about a $1k loss compared to what I contributed.

I ask here because of conflicting information I am getting from my agent and my funds custodian.

Thanks in advance for any help,

bill

If you have more than one IRA, it is my understanding you lump them all together to come up with your total but you only have to take your the distribution from one IRA account.

I have a plan whereby within the exlcudable group for ADP testing, an HCE falls into that category (owners son with less than a year of service & little compensation). I am being told that for testing purposes the plan can choose to either keep him in the excludable group or bring him in with the otherwise non-excludable group. Which I understand, but when you bring him in, don't you also have to bring in all the other NHCEs that would have been excludable? I am being told you can choose to bring in the HCE and leave all the NHCE exludables out. I didn't think you could pick and choose between the excludables. Can someone shed some light on this please...thanks!

I am taking over valuation services from another actuary. The funding method is an immediate gain method. The plan has accrued liabilities greater than assets. The prior actuary was bringing forward a negative unfunded resulting in a negative expected unfunded, and calculating the gain/loss by comparing this to the actual negative unfunded. I can see from this history this has been so for at least the past two years. This year the actual and expected both continue to be less than zero. I can match the prior actuary's key results to within 5%. Can I continue this exact funding method? The equation of balance works with the negative unfunded. The plan has a huge Credit Balance so if I set up an experience base to make the equation of balance work (to a zero as opposed to a negative unfunded) there will be a large amortization charge (but not so large there will be a full funding credit.)

A participant withdrew her child from her day care provider because the provider was allegedly harming the child. She stopped her DCAP election until she found another caregiver. Can she re-enroll in the DCAP program & if so how does this scenario work with change in elections? Thanks!

California employer wants to allow employees to "donate" unused paid time off/vacation pay to fellow employees who experience a catastrophic event (death, illness) for which they are financially ill prepared. Donated hours are converted to cash if the donee employee's immediate need is cash rather than time away from work. Here is the California employer's dilemma:

1) to avoid donating employees' experiencing constructive receipt for federal income tax purposes, the employer must impose a "substantial restriction or limitation" at the time accrued, unused hours are donated to the program. On the assumption that a 25% "haircut" is a "substantial" restriction or limitation, many plans therefore discount the hours by 25% at the time of donation.

2) under California labor law (see Labor Code Sec. 227.3), forfeitures of accrued, unused vacation time are prohibited. The "haircut" is by its very nature a forfeiture.

Are any California benefits or tax practitioners aware of a way to accommodate these conflicting tenets? I would appreciate any and all comments.

Do you think you can take over a DB plan from a previous firm and terminate the plan in the same year? Section 6.01(5) of Rev. Proc. 2000-40 seems to not allow it, but that doesn't make a whole lot of sense to me as to why. Thoughts?

1. When it comes to retirement plan, deferred compensation, and employee benefits issues, what I do know is greatly exceeded by what I don't know.

2. Every day, I learn something new and valuable at this message board.

3. I'm extremely grateful for all the knowledge and information that people are willing to share.

Here are the Facts:

DB Plan underfunded. Miminum funding amount $400,000. Total Eligible Salary $1,000,000.

If I only have DB plan, total $400,000 can be deducted due to minimum funding.

Question:

1) If I install 401(k) plan with only deferrals can I still deduct the $400,000? Or am I limited to the 25% of comp rule due to DB/DC combo?

2) If I add Match to 401(k) plan and the ER match total is $100,000. Is my Deduction limited to $250,000 or the minimum funding amount of $400,000? I do understand that the $100,000 would not be deductable.

Any thoughts

Would all members of the group (adopting ERS) need to sign a certificate of intent to adopt for GUST or can it be signed by the Main sponsor only?