I have a retiree who elected a 5-year Certain & Continous annuity option when he retired in late 1997. He was not married at the time he retired and he named his son the sole beneficiary for all benefits owed (pension & life.)

The retiree is now terminally ill and has called in to check the status of his benefits and has asked for a confirmation of his named beneficiaries. Typically we send beneficiary change forms along with the beneficiary confirmation because that is often the next request.

In the course of conversation with this employee, I discovered that he is now married. The change of beneficiary form I use for the pension plan includes the spousal consent section should the retiree not name his wife his beneficiary.

My question is this: Is the spousal waiver required now should the retiree choose to name someone else? Say a daughter? I think his intention is to name his wife, but the form I am using brought up the question.

Happy Holidays to all.

little help please . . .is a Rabbi Trust a DB or a DC type plan, and why?

I just received a question from a client who maintains a Profit Sharing Plan with the 401(k) Option. They wanted to know if an outstanding loan can be rolled over to another qualified plan along with the vested benefit once an employee is terminated.

My initial though was that it would depend on if the receiving plan accepts such a rollover. But the more that I think on it and look through this client's Individually Designed Plan Document and loan policy, I am thinking that thay would also have to amend their loan policy to accomplish this. So now I have really confused myself.

Has anyone come across a situation like this? Is there any specific loan guidance on something like this or do practicioners prepare amendments to get the desired results? Any thoughts that you may have would be greatly appreciated.

Employee never enrolled in employer's group health plan for economic reasons.

Employee experienced serious medical problems.

Employee applied for and eventually obtained catastrophic-only coverage from a state program available to otherwise uninsurable persons.

Employer paid for employee's premiums under the state coverage scheme.

Employee went on Family and Medical Leave.

Twelve-week maximum leave period expired, triggering COBRA obligation.

But, is there a COBRA obligation?

Even though there is no group health coverage, does employer's payment of premiums for individual policy create an expectation or entitlement to COBRA (presuming employer did not expressly state that it was not bound by COBRA in subsidizing the coverage while the individual was actively employed)?

Employee Bob participated 1971 to 1982 in a defined benefit pension plan that offered no death benefits. Bob has been a terminee with vested benefits, waiting until attainment of normal retirement age (to be attained in 2010) to commence payment of his benefit. Bob died in January 2002. Of course, the plan was amended for REA many years ago, but the plan terms under which Bob participated gave no survivor benefit.

Question: Is Bob's widow entitled to minimum survivor benefits under REA?

Thanks.

Can defined contribuiton plan documents provide that a layoff is a distributable event? Or does a layoff have to be considered a termination of employment for a laid off participant to receive a distribution?

Excerpt from 1.401-1 (B)(1)(ii):

(ii) A profit-sharing plan is a plan established and maintained by an employer to provide for the participation in his profits by his employees or their beneficiaries. The plan must provide a definite predetermined formula for allocating the contributions made to the plan among the participants and for distributing the funds accumulated under the plan after a fixed number of years, the attainment of a stated age, or upon the prior occurrence of some event such as layoff, illness, disability, retirement, death, or severance of employment.

What is the proper method of correction if a company fails to offer the election to qualifying participants? In some instances, the qualifying election period has already passed.

Has the IRS extended the EP Compliance Resolution System to SIMPLE IRA Plans, or provided any other guidance on correcting defects in such plans? I've been contacted by a small company that appears to have both design and operational defects extending back to 1999, involving both failure to contribute and excess contributions. Since these involve IRA accounts, it's not clear to me how an employer could correct excess contributions with employee cooperation. Also, if EPCRS applies, I'm not sure how one calculates appropriate returns for determining corrections for failure to contribute. Thanks for any direction or suggestions.

In light of the new EGTRRA portability rules, except to preserve favorable capital gains treatment for participants born before 1936, would you agree that there is no need for a conduit IRA? What purpose would it serve? Assuming you already had an IRA, if you were afraid that you wouldn't have a job or be covered by another plan within 60 days after the date of your distribution, wouldn't you just roll the amounts over to the IRA that you already had (even if it had amounts not attributable to rollovers from qualified plans) and then roll the amounts later to an eligible retirement plan?

Thanks.

Does the EP Compliance Resolusion System of Rev Proc 2001-17 apply, expressly or by extension, to design and operation problems for SIMPLE Plans?

Does line 7c include employees who have left the company and decide to leave their balances in the plan, such as in a 401(k) plan.

I am getting concerned that as more and more of these people do not opt to get paid or rollover, the participant count, which determines whether the plan is "small" or "large" and thereby also dictates whether an auditor's report will be needed, will cross the 100 level.

Part I of the schedule D......

I am somewhat confused how to correctly complete this section.

Example:

I have a client whose funds are parked w/ Penn Mutual Life Insurace who has funds in Fidelity Equity Income and Putnam Large cap.

So...

PART I

a. name of Mtia, [PSA etc.....: Fidelity Eq Income?

b. Sponsor: Penn Mutual

c. EIN: Penn Mutuals EIN - 000

d. entity code: P

does the above seem correct or should it be:

b: Fidelity

c: Fidelity's ein for the Equity income fund - XXX extension that corresponds with fidelity's classification

THanks

I am very confused about something. Does 415(n) allow me to use any funds at all to purchase service credit? For example, can I have a rollover to a DB plan and then use these funds to purchase service credit? When I read the conference report to EGTRRA, it intimates that only after-tax contributions could have been used in the past. Now it permits plan-to-plan transfers from 403(B) or 457 amounts. I am inclined to take a very conservative position and state that rollovers from an IRA or another qualified plan may NOT be used to purchase service credit. Of course, these amounts can be rolled over into the plan (but, of course, why would anyone in their right mind do that if it is a DB plan?), but just not used to purchase credit.

Does anyone agree with me? Disagree?

Thanks!

Is the following scenario ok?

Plan Yr 4/1/01 - 3/31/02:

4/1/02 - 12/31/02 $10,500 Def (Did not defer in 1st qtr of 2002)

1/1/02 - 3/31/02 $11,000 Def

Plan Yr 4/1/02 - 3/31/03:

4/1/02 - 12/31/02 $1,000 Catch-up

1/1/03 - 3/31/03 $12,000 Def

$ 2,000 Catch-up

----------

$14,000 Total

Does not defer from 4/1/03 to 12/31/03.

Buyer is interested in purchasing, in a stock sale, Company that is owned 100% by an S Corp ESOP. The Stock purchase agreement provides for the establishment of an escrow account to cover any pending or potential claims of the Company. The escrow account will be funded with a portion of the proceeds from the sale of the stock. After two years, any remaining money in the escrow account will be distributed.

Are there any fiduciary issues that we should be concerned about with respect to this escrow account?

Suppose an employee visits an optometrist late in December, is examined, and orders new contact lenses paying a $225 deposit. The FSA plan's year is CY-based (i.e., Jan through Dec). The employee subsequently receives the lenses in February and pays the remaining $200. Referencing IRS Code, the plan specifies that an expense is "incurred" on the date when the underlying services giving rise to the medical expense are performed and not on the date that the services are billed and or paid. Using this logic, any subsequent purchase of lenses in CY 02 not precipitated by an exam would likewise be the result of the CY 01 underlying service and not a qualified expense. However, if the statutory or case law stipulates that an expense in "incurred" when the item or good is provided, would the entire $425 or just the $200 be categorized as a qualified expense for CY 02?

Thanks

From what I can tell, JCWAA changed the RPA CL range from 90%-105% to 90%-120% for 2 years for DRC calculations, RPA minimum FFL calculations, and determination whether late quarterlies are required.

I currently have no plans that require DRCs, so I don't know exactly how they work (and hopefully will continue not to need to know). The RPA minimum change seems straightforward enough - when I do a 1/1/02 valuation I can use 120% of the weighted average to determine my minimum FFL. My question is regarding late quarterlies.

For plan years beginning in 2002, the determination whether quarterlies are required is based on the 2001 funded CL %. 412(m)(7)(A) seems to say I can recalculate my CL % for 2001 to determine if quarterlies are required for 2002. If I do this, how do I complete the 2001 Schedule B? What would I enter for RPA CL and RPA CL interest rate?

Is anyone aware of a voluntary LTD tax-free benefit option available under new Private Letter Rulings and Treasury regulations?

Does anybody have any practical experience with this? Here's what I'm wondering:

In the "old days" when the 5500's were filed with the IRS, the IRS was pretty good about waiving the 25.00 per day penalty for late filing. And out of the many, many plans that have filed late with the IRS that I've seen, I have NEVER seen one where the DOL imposed their penalties, even if the IRS imposed the penalty.

Now that these are being filed with DOL, does anybody have a feeling as to how reasonable the DOL will be about waiving their penalties? Since they will obviously now know directly if filed late, this is a real concern - do you opt for DFVC up-front, which is still expensive, or do you take your chances on penalties being waived? (And of course, the EZ filers aren't eligible for DFVC, so they will have to pray for reasonableness anyway) I also realize that under IRS Notice 2002-23, the IRS automatically waives the 25.00 per day if you are eligible for, and satisfy, the DFVC requirements.

Anybody have "contacts" at the DOL to have garnered a feeling as to the mood on this? All discussion appreciated!

if a partner in an LLC wishes to purchase life insurance through his plan, it looks like the premiums are not deductible to the LLC. It may be, however, only the PS58 costs that are not deductible. For example, if the premium is $6,000 and the PS58 cost is $200, the employer could deduct $5,800. True?

Also, can a trust be the beneficiary of such a policy?