I recently took over an account for a client who was set up on a 72t payment schedule in March 2001. He called today & is in a financial bind, needs to take out a 30k lump sum. My understanding is that there will be a 10% early withdrawal penalty on all prior payments (totalling $85,000) plus interest on the penalties. He is not 59 1/2 so the 30k payment will also be subject to the penalty. Looking for info on how interest is calcualted & paid on the prior years penalties. Too bad the former rep didn't carve out a separate IRA for emergency withdrawals.....

Gary, do you have any experience with SEP's owning investment real-estate in under their account? I assume SEP's are still subject to 406(B).

Your thoughts would be appreciated

My understanding is that stop smoking programs are not an eligible medical expense under an FSA Plan. However, due to OTC, would this be considered eligible expenses? If anyone can direct me to a website that shows that this is or is not an eligible expenses that would be appreciated.

Thanks

Joe

Hi,

I'm neither a lawyer, an accountant, nor an actuary...so please excuse me if I mangle the terminology. I am 71 and my wife is 73 and we are considering opening a "solo-DB" plan for the next three to five years that I plan to continue working. One of my goals is to alleviate the tax impact of being forced to start receiving rather large MRD's this year. The value of the DB depends on the deductions I could receive. I have several questions after having 'lurked' on this board the last few days.

1)Is it true that an owner-only plan is considered to have no employees, so is not an ERISA plan and not covered by the PBGC? If so does that fact influence the answer to the next questions?

2) Can I base the defined benefit on the average of the 3 highest years Sch C earnings even though my earnings this year are considerably lower...and probably will continue to be?

3) Will the deductibility of the advertised large contributions be limited to my current Sch C earnings? I have seen statements to that effect, but others that extend the deductible limits to the "unfunded current liability" or to the "accrued liability". Would those likely be larger than my now reduced Sch C earnings, and which prevails.

Any help will be appreciated. Thanks.

A beneficiary under a profit sharing plan elected to receive distributions over her life expectancy. She has taken distributions over her life expectancy for several years, but now she want to distribute the remaining balance this year, instead of continuing the life expectancy payments. Can she? or is she mandated to continue distributions by taking no more than the minimum amount each year. Can the plan require that she distribute no more than the minimum amount

Reading examples of what constitutes UBIT makes my head spin. Can anyone opine whether ALL debt-financed property (within a qualified plan) that generates rental income constitues UBIT ? or is it somewhat dependent upon how the debt (loan) is structured ?

Plan Sponsor is a husband-wife corporation. In 2001, husband went on disability; wife closed all offices but kept the corporation alive to receive residual income and cover expenses. Both spouses began receiving SEPPs under 72(t).

In 2004, husband is 60; wife is 54. Divorce was finalized in 2003; QDRO effective 1/1/04, equalizing account balances in the plan. Wife now wants to increase her SEPP from 12,000/month to 17,000/month to handle increased monthly expenses for house payments, higher tax rates, etc.

The QDRO amount transferred was approx $600,000. If I apply the new calculation rules to the QDRO ONLY, I get an income stream of around $3500/month, which isn't quite enough, but might hit close enough to the mark for her to hold on until she's 59 1/2 (Nov. 2005).

My questions are:

1) Is it possible to simply transfer the income stream the husband was receiving from that portion of the QDRO to her so that I can use the higher amount calculated in 2001? (e.g., If he received $20000/month pre-QDRO and $5,000/month was attributable to her QDRO amount, could that $5,000 simply continue to her?)

2) If I can't do number 1, is it okay to calculate the payments on the QDRO without touching the payments she's currently receiving from her other balance? I really don't want to touch the way the other balance is calculated at all -- it works for her and would decrease under the new rules.

3) At what point can she stop worrying about this and just take whatever income she wants from the plan?

If it matters, NRD in the plan (a profit sharing plan) is age 55.

Thanks so much for any thoughts!

Can someone who has become a US citizen roll pre-tax money from an British pension fund (scheme) into an IRA or qualified retirement plan in the United States?

I'm quite weak on 401(k)s as I deal 95% w/ DB, so pls excuse my ignorance here.

If a plan sponsor fails to make timely deposits of employee deferrals, how is this corrected?

My understanding is that there must be deposits made that include interest, plus 5330 and the 15% excise tax must be filed. Assuming that the interest calculation is correct, is there anything else to do?

The multiemployer health plan offers a discounted cobra rate to participants that suffer a loss in coverage due to a reduction in the hours of their employment. This discounted rate is offered for the first six months and then the rate is billed at the full rate of 102% of the fund's costs. The fund has been presented with the situation where a participant has suffered a loss in coverage due to a reduction of hours and has declined cobra coverage. The participant's beneficiary, however, has elected the cobra coverage. The fund does not want to have to offer the beneficiary the discounted rate. Is the fund required to offer the beneficiary the same rate as the participant in this situation or can the fund charge the full rate of 102%?

Thanks.

Trustees of Multiemployer plan have been approached to allow in two additional employers, both of which have a significant underfunded liability on their existing plans. Would the addition of these employers to the plan (which currently has a funding surplus) implicate fiduciary liability of the trustees of the multiemployer plan?

An employer sponsors a single-employer 401(k). Some of the participants in the plan recently went union. We are now being asked to transfer the union participants accounts form the single-employer 401(k) plan to the multiemployer DC plan. The union sponsors the multiemployer plan.

Is this transfer possible? If so, what is the best way to accomplish this task?

Thanks!!

The transitional rule of 410(b)(6)© refers to certain acquisitions or dispositions of a trade or business. Would the formation (as opposed to an acquistion) of new business be included in that classification??? Thanks.

Does a bottom up qmac have to be made to participants who have terminated, or can it be made to the lowest paid employees who are still employed?

If I aggregate a DB and DC plan for 410(b) & 401(a)(4) testing, what benefits, rights and features must be common to both plans ? I believe distribution options would need to be the same (e.g., lump sum, J&S) but would vesting schedules have to be the same ? any other categories I need to be concerned about ? Thanks for any thoughts.

I'm a relative newbie to this message board, and I'm always impressed by everyone's knowledge and the very advanced level of discussion.

What's your background? Are you a TPA or actuary? Or, do you work in some other field that crosses over with the issues discussed here?

I'd like to pose a question to the 403(b) plan practitioners:

When 403(b) plan deferrals are matched to a 401(a) qualified plan, what are the mechanics of the ACP test?

There's clear, substantial authority concerning ACP testing of matching contributions made to a 403(b) plan (i.e. when the plan receives both the employee salary reductions and the employer match). But, I haven't found an answer for 403(b) plans and QPs that work in tandem. Do you treat the matching contributions as if they'd been made to the 403(b) plan (rather than to the QP) and perform the test accordingly?

If you have a Profit Sharing/401(k) plan with an annuity requirement, and a participant would like to use his account balance to purchase an annuity,how do you code the 1099-R showing the funds are being distributed from the retirement plan? Or do you even need to issue a 1099-R?

Daughter is hourly employee at a large (100 plus employees) sec 501©(3) exempt private foundation in Calif. Daughter injured in car crash, is temporarily disabled and is receiving Calif state disability benefits. Employer is making up difference between disability benefits and regular pay and is charging against her accrued sick leave. The makeup pay is equivalent to about 4 hours of pay per day, but she is being charged a full day against her sick leave.

Daughter's question to me - can they do that? My response - first we have to detremine whether foundation ee h&w benefits subject to ERISA or state law.

My question to you - is an exempt private foundation subject to ERISA? If so, is a sick pay plan required to have a plan document? And should the disability supplemental pay plan have a plan document?

Employee handbook contains vague statement about sick pay and nothing re disability makeup.

Employer is somewhat defensive when daughter tries to get info as to what defines her entitlements (and they admit this is the first time they have dealt with this type of situation). Will appreciate any comments.

Having a tough time trying to figure out if my thinking is correct.

If a cross-tested PS plan is established 9/1/04 with a short first plan year ending 12/31/2204, I realize I will need to prorate the compensation limit to $68,333.

If the plan will be top heavy for the first plan year, can I give Non-Key EES 3% of compensation from 9/1/04-12/31/04 or do I have to use full year pay to meet the top heavy reqs. HCEs will only get 9% of $68,333 or $6,150 so I think this will meet the gateway minimum as long as the top heavy contribution based on short year pay is correct.

Any guidance would be greatly appreciated.

Thanks