IRA owner (under age 59 1/2) is receiving monthly distributions on the 30th of each month. The monthly distributions are intended to qualify for the exception to the 10% early distribution penalty under Code Section 72(t)(2)(A)(iv) affectionately known as "substantially equal periodic payments" or "SEPPs". IRA owner attains age 59 1/2 on June 15, 2003. In order to avoid modification of SEPPs under Code Section 72(t)(4), should the last distribution take place on May 30, 2003 or June 30, 2003? If you believe the answer is May 30, 2003, do you think there is the potential for the IRS to assess the recapture tax under Code Section 72(t)(4) on the basis of the fact that the SEPPs essentially terminated approximately two weeks before the IRA owner actually attained age 59 1/2?

If two weeks doesn't seem like a big deal, think about this issue in the context of annual distributions:

1.) IRA owner receives annual distributions each December 30th

2.) IRA owner attains age 59 1/2 on September 30, 2003

In order to avoid modification of the SEPPs, should the last distribution occur on December 30, 2002 or December 30, 2003?

Any insight would be greatly appreciated.

Does a collectively bargained plan (DC) get included with another defined contribution plan for Section 404 deductibility testing?

I have an owner that has been receiving RMD's for several years. Spouse is also participant, but died at age 69. Can owner begin taking RMD's from her account without moving her account into his or must he wait until she would have been 70.5?

I have never helped a client setup the accounting for a 457 plan and have been asked to do so. Since this is an unfunded arrangement the client has to keep the accounting on the company books. My initial thoughts are to show the 457 plan assets as an asset with an offset using "retirement plan liability"or something similar. As distributions are paid out they would be expensed. Am I missing anything here?

An ABC Company employee's spouse had his annual DCRA election reduced by his employer mid-year when his employer's plan failed the nondiscrimination test. Would the regs allow this to be considered a status change under ABC's plan, allowing the ABC employee to change her DCRA election mid-year? I'm thinking it would fall under the change in coverage rule, but have not seen this scenario in any of the guidelines.

Employee took a hardship withdrawal from his company's 401(k). The employer neglected to suspend deferrals. What is the procedure for fixing this problem? (i.e. return deferrals, etc.) Where would I find the citation to back up the answer. Thanks.

Small company currently has a SEP, but would like to have a 401k instead. They like the 3% safe harbor that would allow the 2 owners to defer maximum. Fiscal year end is 6/30 and they would like plan year to be the same.

Since they currently have a SEP (which they will terminate), is it too late for them to implement a S/H 401(k) for the 2003/2004 plan year? Would they run into the Notice problem since it is less than 30 days before the start of the plan year?

Thank you

Can someone tell me if DOL has ever defined what "furnish" means as related to the requirement to furnish an SPD to each participant.

Specifically, I am interested in any insight where an employer has alerted participants that an SPD exists in certain location of the office, but has never distributed indivdually to a participant. Can this example be viewed as "furnished?"

Appreciate any input.

When ERISA was passed into law in 1974, My company indicated in a letter that I was given three years credit for service prior to age 30 (plan required participating to be age 30 to join). I also was told that I was given $1 monthly annuity credit for each year of prior service. I was told I was fully vested at age 37, not age 40, which would have been case if ERISA was not enacted. If I terminated employment at age 37, I would have been entitled to 50% of my acculuative annuity at age 55 (early retirement). The company's payout starts at 50% for less than twenty years PARTICIPATING service, and goes up in increments until it's 61% based upon 25 or more years of PARTICIPATING service@age 55.

Question: Does the three year prior (prior to age 30) participating service ( age 27,28,29) count toward total years of participating servive, althoughactual years under THE PLAN is 21 years. Am I entitled to benefits based upon 21 years or 24 years

A plan sponsor signifies his agreement to a change in funding method by marking the appropriate box of item 7 on Schedule R of Form 5500. The instructions for Form 5500EZ do not list Sch. R among the allowable schedules to be attached. Does this mean that a separate statement is required from a sponsor filing Form 5500EZ?

I was talking to an ABC staffer today about the Senate Committee Markup that didn't make it into the Growth Act, and it's potential to resurface in a few bills due through in the July-August timeframe.

Based on what been said, it looks like the focus has narrowed to second elections, offshore trusts, withdrawals, Treasury opinion conformity, and "haircut" provisions, leaving the other HR 2 proposals, like "investment mirroring", off the drafting table.

Any informed opinions about the likelihood of finally seeing the ever threatened DCP legislation this summer?

IRA owner creates a revocable trust and names the revocable trust as beneficiary of his IRA. IRA owner dies. Surviving spouse is sole trustee of the trust-beneficiary. Through an apparent misunderstanding, she ends up signing distribution forms requesting $600K be transferred to a non-retirement account established for the trust even though she intended to have the original IRA transferred to inherited IRAs established for the benefit of the trust-beneficiary (in order to minimize the required minimum distributions). Distribution request is processed by the IRA custodian. The following year, she receives a 1099-R and her CPA discovers the discrepancy. IRA custodian is unwilling to reverse the distribution because the trustee signed a distribution form.

Any suggestions on how to reduce or eliminate the income tax liability? I suggested exploring the possibility of rolling over the distribution proceeds into the spouse's own IRA by requesting a hardship exception to the 60-day rollover. It is my understanding that if the surviving spouse is the sole beneficiary and sole trustee of the trust-beneficiary, she may be able to "look through" the trust for purposes of rolling over the death distribution into her own IRA (assuming she gets the hardship exception to the 60-day rollover from the IRS). If you have any ideas or suggestions, please let me know

Ok, experts, I need either an opinion, or to be pointed in the direction of official guidence.

We are a TPA about to do a mid-year take over of a 125 plan that had been administered up until now in-house. The person doing the admin. was not as knowledgable as she could have been, and has now been fired. It is a calendar year plan, and we will begin on 7/1. My question is this: Can we have an open enrollment meeting to allow any qualifying employees who had not signed up before ( perhaps because it was not explained to them very well) to have the opportunity to do so now? We are not intending to allow any current participants to *opt-out* due to the administrative change or make any changes of election.

Thanks much!

A client who is an HCE and member of a company that we recently assumed the responsibility for administering their 401(k) plan wants to discontinue participating in that plan and roll those funds into a plan for his unincorporated single proprietorship. This company solely consists of the HCE and his wife. The net income consists of rental income received from affiliated companies on which the HCE owns the property - approximately $50,000, as well as consulting income charged for management of the properties of approximately $60,000 which is paid by the sponsor of the plan that the HCE wants to quit participating in. I understand that an unincorporated business may use 401(k) plans as a benefit program and calculations are more involved since the HCE's income would be reduced by his wife's. However, are there any ramifications of establishing a plan for this Schedule C company due to the fact that the HCE is a member of the other company? If additional information needs to be obtained please let me know.

Where an ESOP is sponsored by a company that is the member of a controlled group (CG), is there any rule that would prohibit the ESOP from investing in, and allocating to participants, the stock of more than one of the CG members at the same time? In other words, must the ESOP pick the stock of the company within the CG in which it will invest, and which it will allocate, and then stick with that stock exclusively?

Thanks.

We are TPA's for the section 125 plans. A client of ours just found out that their vision insurance company went out of business in the early part of this year. They're searching for a new vision plan now but her question is - do they only offer the new plan to the employees that were participating in the old one or does she have to offer it to all employees? Would this be considered open enrollment for a current benefit or open enrollment for a new plan? They have a calendar plan year for their section 125.

some of the topics here are a bit out of date. Anyone know if there are plans to update them?

http://www.soa.org/library/stats/seb.htm

I am doing some research into the gray area of the use (or non-use) of control premiums in valuing ESOPs that hold a majority of the stock in the company.

The argument for not using a control premium seems to come down to the fact that the ESOP is made up of individual participants and each participant holds a minority interest in the company, therefore the stock is valued on a minority interest. But, on the other hand, if an ESOP owns a controlling interest in a company, especially cases of 90% or 100% ownership, then the ESOP has control and it makes sense that the stock should be valued on a control basis.

I’m looking to see how other professionals deal with this situation. If an ESOP owns 100% do you require that it be valued on a control basis? I know there are a variety of case specific facts that play into the outcome. But, generally, what is your view of this situation?

TIA

We have a deferred compensation plan in our church that was set up by the ruling body of the church. We receive $2000 each year directly placed in our 403B. But, until we are vested, the contributions are pro-rated...i.e., $750 in the 403B the first year, $1,250 in the church's escrow account until 8 years of service had been completed, the following year it was raised to $1,000 in our 403B, $1,000 in the church escrow, and last year $1,250 to the 403B and $750 to escrow. In 2 years, we will have 8 years of service. But, the clincher, the church has decided that they can't afford a pastor, so we have been terminated, effective the end of the summer. The deferred compensation is paid in July. They don't want to pay this years, because we will be terminated the next month. We also "lose" the escrow amount because we won't make the 8 years of service. Can they do this? Any insight would be appreciated. Thanks.

Can there be a Last Day rule for Safe Harbor match or non-elective contribution?