can anyone provide a brief background on how this rule came to be, and the way it functions.

(PTEs 98-54 and 94-20)

Thanks

I'm converting a plan that has the following scenario:

An active/eligible participant had a QDRO in 2003, which resulted in a deduction of $35,000 from the account. The $35,000 was transferred into an alternate payee's account. The alternate payee then rolled the money into an IRA. Would this payment to the alternate payee and susequent transfer to the IRA be factored into the 2003 top heavy ratio? The plan year end is 12/31.

My understanding on defaulted loans and using the Code L on the 1099R is as follows:

If a person is still employed and has defaulted on a loan, a 1099R will be issued for the outstanding loan balance + accrued interest as a code 1L

If a person has terminated employment, wants to rollover his money to an IRA and has an outstanding loan, two 1099r's will be issued. One for the amount being rolled over Code G, One for the outstanding loan code 1L.

The L is to let the IRS know why taxes are not taken out of this distribution.

Am I correct?

Distributions are due very soon from a NQDCP as a result of a change in control. Dollar amounts are high for a few executives, who will receive their cash comp and restricted stock deferrals paid out in cash. Does an opportunity exist for the sponsor to buy annuities or do something similar that would extend the tax shelter? The deal isn't inked yet so there is still time to amend the plan document for any changes.

I am curious how other practitioners think the Prop 457 Regs (and the Service's apparent hostility, in last fall's hearings, to the "options in mutual funds" programs in tax-exempts) impact the viability of these type programs for tax-exempts?

In other words, what is the risk, and on a 1-10 scale (10 as most aggressive), how would you rate such a transaction for a tax-exempt client right now?

A deferred compensation plan is terminating due to acquisition of company.

The terms of the plan call for distribution upon change of control.

Are there options available, such as annuities, that would be better than cash and help these executives avoid an enourmous tax hit in one tax year?

Can someone answer the below question regarding RMD's?

A father works at a company in which he has no ownership, but his sons do, and they are greater than 5% owners. The father is 75 years of age and is still a full-time employee. Is he required to take a RMD payment or can he delay this payment till he terms? Was uncertain if the family attribution rules related to RMD payments.

I have read the many posts regarding the correct coding of 1099R in the case of a failed ADP where refunds are given.

I had been taught from the beginning of my pension training(over 8 years ago!) to code the refunds as code 8 even if the refunds were given prior to 2 1/2 months after the close of the plan year. The reasoning behind this was so that the HCE's affected would not have to go back and amend a tax return and it made sense to issue a 1099R in the year the refund was actually received. I was also taught that if a particular individual wanted to claim the refund as income in the year taxable they could do so without a 1099R, they would simply include that amount on their tax return. Code P was used if a failure was caught after the 2 1/2 months. This did not seem unreasonable to me since some clients fail to provide census data in a timely manner.

My problem is telling my clients they should hold off filing their tax return until after the ADP testing. Is it "illegal" to code 1099R's a code 8 even though the refund occurred within the first 2 1/2 months of the following year? I have convinced most of my clients to use prior year testing and most plans now pass, so this issue doesn't come up that often. I guess I'm just concerned that I've used code 8 incorrectly for several years. Which makes me wonder how accountants and tax preparers interpret code 8 and code P as no one has ever questioned this! Any advise would be most welcome. Thank you

Linda Michals

I have a 401(k) that began in Apr. 02. Prior to this, the company had an active 403(b) Plan. The ER was putting in a match for the 403(b) and has continued it in the 401(k). I believe that I have to aggregate plans for the 2002 ACP test but cannot find any referances to this situation. Any help would be appreciated.

"A gene that may have the power to halt ovarian cancer has been discovered by UK scientists. The gene, called OPCML, was found to be inactivated in 90 per cent of ovarian cancers examined by researchers. But when the fully activated gene was inserted into ovarian cancer cells in the lab, the growth of the tumour cells was stopped."

http://www.newscientist.com/news/news.jsp?...p?id=ns99993859

For most, this will be a basic question, but appreciate any comments. As we dabble more and more into cross-testing, we have the following take over case. Non top heavy cross-tested plan with 5 rate groups. Group 1, 2, 3, and 4 represents the 4 different partners. Group 5 represents all others. By the way the 4 partner groups define them with their actual names (thought that was a no no.). What the prior TPA did was to allocate a different % to each rate group. Example - 29k to #1, 18k to #2, 12k to #3 & #4 and 4% to all the rest. Assuming this passes, I thought the IRS does not allow this as it would be deamed as having 401(k) features. This plan is a 401(k) and all partners max out their deferral.

Any comments would be helpful...

Hello! I live in NYC and will be opening a Roth IRA with a mutual fund company in a few weeks.

I have read from numerous sources that qualified distributions on earnings are free of federal income taxes.

I would like to know if qualified distributions on earnings are also free of NY State and Local income taxes.

Please respond...Thank You

We have a situation whereby our plan year and fiscal year are both on a 52/53 week year. Therefore, the day of our years change. When we file our form 5500s, our fund managers certify the funds as of date X; however, our accountants have been dating our form as of date X-1, 2, 3 or 4. What problems does this pose?

Client wishes to cover premiums for beneficiaries of salaried employees.

Client does not wish to cover premiums for beneficiaries of hourly employees. Client does not even want to offer coverage to the beneficiaries of hourly employees :angry: .

Goes without saying that the plan is stinky, but is the plan legal?

I used to know the answer to this, but now I'm searching all over and can't find it anywhere... when doing the ADP test, do we need to include "eligibles who terminated during the plan year" too, or just actives?

Are Flexible Spending Arrangements still subject to the "use it or lose it" rules of Sec 125 ?

A few years ago, Congress proposed HR 63 and HR 167 which (if passed) would have allowed participants to cash-out (as taxable income) their unused FSA account balance (at the end of the plan year) .... or carryover their unused account balance to the next year.

What ever became of HR 63 and HR 167 ?

"If children are eligible for coverage under the policy, any age limitation for an unmarried child may not be less than 25." This is a TEXAS state mandated provision. We have an ERISA self-funded plan and I am not aware of any mandates of this nature. If someone could point me to the section of the code that outlines dependent/spouse coverage, it would be greatly appreciated.

With regards to the 10 year grant and exercise requirements for Incentive Stock Options, do the 10 years expire the day before the 10 year anniversary or do they expire the day of the 10 year anniversary? For example, if an ISO was granted to an individual on January 1, 2003, does the option period expire on December 31, 2012 or does it expire on January 1, 2013? Thanks.

With regards to the 10 year grant and exercise requirements for Incentive Stock Options, do the 10 years expire the day before the 10 year anniversary or do they expire the day of the 10 year anniversary? For example, if an ISO was granted to an individual on January 1, 2003, does the option period expire on December 31, 2012 or does it expire on January 1, 2013? Thanks.

Are they still required?