Hi I recently received a $100,000 life insurance payment when my dad died. We used about 10,000 to pay off some bills. We would like to save some for emergency money and I would like to invest some.

I am 35 and my husband is 40. We have two kkids 12 & 6. I figure I will have collage costs in 6 & 12 years to worry about. We would like some of this money to be able to be used for collage, but we are also looking at retiring between 55-60. My husband has a 401k with 46,000 and mine is 3000 since I only started saving in mine recently (I realize this was a big mistake to wait now). Our house will be paid off in 13 1/2 years. We really want to start thinking and moving toward being able to retire. There is also the possiblity that I may get some money from the sale of my dad's property, but since I am not the executor of his estate (his two brothers are) and I have no idea what the will said I don't know if there will be anything left after paying his debts or if I would even get it. I am his only child. I make $46.000 a year and he makes about $52,000 a year plus between $5000-10,000 a year from his Air National Guard job (sometimes a lot of this is non-taxable when he goes on hazardous duty trips). He will have a retirement from the military & his government job. I will have a retirment from my company as long as there are no layoffs within the next 17 years. My husband currently has 10% of his income put in his 401, and I have 7%.

I really want to start investing this life insurance before it somehow gets spent over the next few years a little at a time. It seems to be too easy to get caught up in the "we have lots of extra money" spending. I want to pull a halt and get our savings in order before too much gets wasted.

Is an Roth IRA a good place to start? Since this money is tax free to us (since it is life insurance), it seems this is a good place to put this money so that we will not have to pay taxes on the interest in the future. It also seems like a good idea because we could take the contributions (not the earnings) out at any time if there is an emergency need for it.

Also where do I start. I looked at my personal bank (where the money is in a moneymarket) and at Fidelity (where my 401K is at). Where are the least expensive places to start a Roth IRA? How do I know I am chosing no-load mutal fund. Is it best to split my investments equally between a large cap, small cap and an international fund? I think I read about this strategy on the armchair millionare site.

Thanks in advance. I feel so lost as to what to do with this money.

An employee was hired 4/8/2002 and was laid of 12/3/2002 having worked more than 1000 hours. The service req is one yr of service with qtrly entry dates. While the employee was laid off his unit was activated and he was sent to Iraq. The employee returned to work on 5/14/2004 when he came back from military duty.

I think his date of plan entry is 7/1/2003 and should receive a ps contribution for 2003 based on his theoretical wages for 7/1/2003 to 12/31/2003.

Any thoughts?

We have a large client with several thousand employees that has discovered

401(k) contributions have not been deducted from overtime for several years. Potentially 1000's of affected ees over a multi-year period. The document clearly states that overtime is included in the compensation defintion for deferrals. Any ideas?

Thanks

What do you do when loan repayments are withheld and submitted to the trust for a participant loan that has been previously satisfied ?

We have a situation in which the Trustee/recordkeeper is cutting a check (possibly several checks) directly from the Trust to the participant for the amount of the loan overpayment. No reporting is done on this distribution from the Trust. The client would prefer to continue this practice.

I am concerned that once the $ is in the trust it is considered plan assets and can not be distributed for any reason, other than the standard 401(k) reasons (termination, 59.5,etc.) The issue could be corrected in payroll before $ is sent to the Trust but that means more payroll manipulation and possibly more errors.

How do your cleints correct this problem ? I have seen the overpayments applied to the account as "loan interest" but I think this is also an issue because the participant pays more interest than was disclosed in the truth in lending disclosure.

Can this $ be distributed from the trust ?

Participant has approx. 4 MIL in PSP. Particpant also owns real estate (low basis) worth approx. 4 MIL. Participant plans to take a distribution of entire 4 MIL in same year that participant plans to donate the 4 MIL of real estate to charity. Participant believes it will be a wash; however, I think the charitable deduction rules may allow for up to 50% of AGI deduction (will need to verify). Anybody see any issues with this? Alternative Minimum Tax issues? Assuming the distribution is per a distributable event under the plan document I don't think the PSP is impacted at all.

We have a participant that was in the FSA. She terminated her employment but still has money available in her FSA. If she elects the FSA under COBRA, are those funds available to her? Also does she still have to make a contribution to her FSA under COBRA? Or can she just spend down the funds? Any advice would be great!! Thanks

Employer has an arrangement whereby it reimburses employees for a portion of their group health plan insurance deductible ($400 of $500 for individual and $800 of $1000 for family) once its met. This arrangement is not treated as an ERISA plan, its paid from general assets, there is no plan doc, no filing, it is separate from any other plan, it is not taxed as income, it's "just a leettle something they do for their employees..." Is this a health reimbursement plan? I think its an ERISA arrangement but what type? There is no account--the funds are just paid from gen assets if the employee meets the deductible and submits proof to the company.

ANY thoughts appreciated.

When new employees start on the job (a factory), the employer obtains a medical history from the employee, including questions such as present medicines being taken by the employee, recent surgeries, allergies, etc. The employer also maintains a group health plan.

The information is kept in a sealed envelope in the employee's personnel file, to be used only if needed in an emergency (e.g. the employee is unconscious on the factory floor and the first responders need to know about medical conditions or if he's allergic to anything).

Two questions -- First, would the medical history information fit under the PHI employment records exception?

Second, if the medical history would not meet the exception and must be protected as PHI, am I correct that disclosure to first responders or other medical providers would fit under the treatment exception to nondisclosure of PHI?

The employer could of course stop collecting the medical histories and require that information be obtained from providers or the health plan, but having the information on site could be important in a life-threatening situation.

Thanks in advance for any thoughts.

Can the beneficiary (spouse) waive the QPSA after the death of the participant (Before RBD)? If so, how long does the spouse have to waive?

If a plan subject to Davis Bacon Prevailing wage contributions fails 404a testing, how can the 10% excise tax on nondeductible contributions be applicable if the employer is not taking a corporate deduction for the contributions? I have spoken with several experts in this area and would appreciate feedback and comments.

Thanks!

This question may be way off.....

If forfeitures are not utilized to reduce matching contributions in the year the forfeiture occured as required by the Plan document, can the Defined Contribution Plan become disqualified? If so, can anyone point me to the literature that may explain this?

Thanks for the help!

Distribution is made from a key employee's account to his spouse (not a participant in the plan) pursuant to a QDRO. Is that distribution counted for the key employee for the 1 year period for adding back in distributions?

A participant terminates 12/31/01 and the plan eventually terminates 12/31/03. He was 20% vested upon termination and his vested benefit was only worth a few hundred dollars. He didn't respond to attempts to pay him out (in hindsight it appears the client may have had a bad address), so he was cashed out. However, the check came back for a bad address and he was never paid out. The plan termination came and he is suddenly 100% vested.

Does anyone know of a precedent in this situation that would allow for the client to argue he still should only be paid his 20% vested amount?

Divorce decree states W gets 50% of H's profit sharing upon retirement from, or termination of employment from plan. H's company is acquired by another company in 2004 thereby "terminating" his employment under the plan.

The marital share for calculating the 50% of pension is from 1987 to 1999 (they divorced in 1999).

What issues if a QDRO is now drafted asking for 50% of profit sharing plan as of 1999 plus any losses or gains since then?

Are there any special rules reguarding a military call up? For example, an employee is contributing dep care money every pay. He is called up and has an excess amount in his account that will not be used due to his change in status. I realize that this may be a loss for him given the risk factor of the Flex Spending Accounts, but just wondering if there are other alternatives.

MissChele

I administer a DB plan that is being audited by the IRS. The agent is asking for information as to when the sponsor last had financial activity reflected on their 1120. He seems to be headed toward taking the position that if the sponsor is financially inactive, it is not a bonafide sponsor.

Now I know this to be untrue. However, does anyone have any suggestions as to how I can get this agent to see the light? In a loving and gentle way, of course. I can't justify spending the client's money to defend this point that should, I think, be a no brainer.

P.S. There were no contributions made or deductions taken during the period under audit.

A prospective client is telling us their ERISA counsel advised them to "undo" the deferrals for key employees, so that top heavy minimums would not be required. I've told the plan sponsor there are very limited circumstances for money to revert back to an employer. In my opinion, this is a mistake in law, not a mistake in fact, and the deferrals should have stayed in the plan, provided the plan document did not specifically exclude them from deferring. I have not however, had a lot of guidance to back me up. Anyone have anything more specific?

Here is a goofy question:

Once in a while, I get appointed as a Trustee of an orphan plan. The DOL is usually very involved in these plans.

As part of a settlelement with the DOL, the old ("bad") Trustee has agreed to forfeit his a/c balance and have it shared with the other particpants. This is occurring in conjunction with a plan termination.

Question: Is this forfeiture/re-allocation treated as a "taxable distribution" to the old Trustee, subject to 1099 reporting?

Why it is a distribution:

- this is really several transactions wrapped up in one, and it alleviates the need for him to take a taxable payout from the plan and to then reimburse the plan from it.

Why it is not:

- it is not really a "distribution"

- the money is already being taxed when it is distributed to the others.

Any ideas??

Thank you in advance!!

Typically with a FIFO requirement on the ADP refund calculation on a 12/31 PYE plan, the participant with the refund would have to add that into his tax return he is currently preparing for the tax year in which the deferrals took place.

However, when the plan has a 6/30 PYE and the FIFO refund goes back to the prior tax year, does that participant really have to amend that prior year return or is the refund taxable in the current year?

I seem to remember the IRS providing some guidance on these circumstances but don't have a reference to look up.

I have a medical practice that consists of 6 docs and 43 staff. They started having financial problems this year and four docs quit. Two part-time employees (who were participants) quit this month since they were given an ultimatum of going full-time or quitting. I heard today that 1/2 of the staff will be laid off in November.

I'm aware this would result in a partial plan termination, but what about the two part-time employees who quit in August? Would they become 100% vested due to the partial termination?

Thanks.