For those of you who allow individual policies to be run through a Section 125 plan...

I know that the policy must be owned by/purchased by the plan participant. And in reading Harry Becker's comments from 1995 (awhile ago, I know), it sounds like a plan participant can purchase a policy for a dependent. But where to you draw the line, because couldn't one argue that they bought the disability policy,AD&D policy, etc. for their spouse? It seems like a slippery slope. How have any of you who work with these plans deal with this?

I have a case right now where an EE pays a "parental" fee for TEFRA in MN for insurance on his ausistic minor son. It is a form of Medicaid, and the parents must pay a fee each month for this insurance. I believe that this can be run through the IND account, esp. since Medicare premiums can) but I'm concerned about how to tighten the definition of ownership of a policy. Anyone else dealing with this?

:confused:

I know that after EGTRRA, after-tax contributions can be "rolled over" into a qualified plan (or IRA), etc. and that a distribution will not be considered an eligible rollover distribution if it includes after-tax amounts. However, has anyone thought about the effect of the withholding rules? Generally, eligible rollover distributions are subject to a mandatory 20% withholding requirement. Suppose that someone receives a distribution of eligible rollover amounts, including after tax amounts and does NOT effect a 401(a)(31) direct rollover. Does the employer now have to withhold 20% on the entire amount (including the after-tax amount). Presumably, the participant would just get a refund the next year with respect to any withholding on the after-tax amounts. But still, technically, the after-tax amount IS part of an eligible rollover distribution and 3405© couldn't be more clear as to the tax effects. I checked the legislative history and noticed that nothing is mentioned. Code section 402© itself impllies that there is a separate accounting for the amounts not included in gross income and those that are, but is this really enough for me to reach the conclusion that they intended that 3405© would not apply to after tax amounts? Does the last sentence of 31.3405©-1, Q&A-10 (B) ($5,000 death benefits) give me proof that the IRS is really saying that the 20% withholding occurs with respect to amounts not excludible from gross income? What about the fact that these regulations have not been amended for EGTRRA? Thanks for any help!

If DCAP plan fails nondiscrimination testing in 1999 and this is discovered in 2000, when should the HCEs be taxed on the DCAP benefit in 1999 or 2000?

A client is selling the stock of its wholly owned subsidiary to an unrelated buyer in an arms length transaction. They are both electing to make a 338(h) election under the IRC to deem the sale to be an asset sale for tax purposes. The wholly owned subsidiary contributes to a multi-employer pension plan. Will this transaction be treated as a stock sale or an asset sale for purposes of determining whether withdrawal liability is triggered as a result of the sale? Has any legal guidance been issued on this issue?

I have a client who has a 401(k) Plan and has merged and become a subsidiary of a church-related entity. As such, they have informed us that they will no longer be filing 5500's for the plan. I know very little about church plans but doesn't something have to be done to their 401(k) plan before it can be declared a church plan? Is so, what is the procedure? Thanks for any help you can give!

An employer wants to eliminate participant direction of investments, which is not a protected benefit. But, currently participants may take a distribution immediately upon termination. Can the plan be amended to change the distribution date to after the end of the plan year in which termination occurs, or is that going to violate 411(d)?

I know I've seen this somewhere, but just can't come up with the reference. Turned 50 in June, so this must be my first "senior moment."

Anyway, Joe X works for employers A and B. Can he defer 11k into each plan? Also, is there a separate $40,000 415 limit for each plan?

Thanks all. Maverick

Can QJSA be removed from a Profit Sharing plan during the restatement process. I believe optional forms of benefit, including QJSA can now be removed from a PS plan, but 90 day participant notice is required. Since the restatement is effective Jan 1, 2002 it seems like we have missed our window of opportunity. If that is correct, we would then have to amend the plan after the restatement in order to remove QJSA. Is this correct? We would obviously prefer to handle the change right in the restatement.

assume if a employee switch his job from where he is working, I notised there are three ways his can do for the 401K, as following:

1.

Leave the money : If your vested account balance is $5,000 or more and you're under the plan's normal retirement age, which is commonly age 65, you can leave your money where it is ?and taxes won't be due until you withdraw money from the account.

2.

Leave the money Roll the money into a new plan or IRA : You can roll over your 401(k) into a rollover IRA account or into your new employer's 401(k) plan. If you do a direct rollover ?have the money transferred directly into the new account ?you won't owe taxes until you withdraw money from the account.

3.

Cash out : If you elect to take your money out of the 401(k) and not roll it over into an IRA or another 401(k) plan ?you will owe all applicable taxes. You will also owe a 10 percent early withdrawal penalty unless you leave your company during the year you turn 55 or later.

but, what happen if he decides to leave the country and not working in US for the future instead of working at Taiwan (his hometown)?

As I know so far, there is no treaty for Taiwan.

p.s., he is an non-resident in the US but a resident for tax purpose due to the 183 days rule.

what are the ways (rules) he can do for his 401K?

How should he deal with money as tax shalter???

Please help ASAP

Thanks a lot :confused:

We administer FSA accounts and several participants live along the Canadian border. Are there any regs etc. which address the issue of the currency exchange rate? For example, one participant purchased their medications in Canada because their health insurance does not provide coverage for prescriptions. They submitted their "tag" for reimbursement and stated that the funds indicated were American funds. However, a call to the pharmacy indicated that the amount on the tag was in fact Canadian. Of course, this greatly reduced the amount of the reimbursement. So --- the question is --- how should this problem be addressed? Who should be responsible for calculating the exchange and what would be considered appropriate documentation for this?

Is there anything comparable to an annual statement that I may request from my prior employer's DB plan?

I'm looking for something to confirm that they know that I have benefit under the plan. Some years back, I requested (and received) the calculation of my lump sum and age-65 payouts.

Thank you.

BEFORE I TELL THE PLAN SPONSOR...IT IS MY UNDERSTANDING THAT SALARY DEF.'S MUST BE DEPOSITED WITHIN 15 BUSINESS DAYS OF THE SALARY DEF. THE CLIENT WAS 4-20 DAYS LATE FOR SIX STRAIGHT PERIODS. ALSO, ISN'T THE PENALTY 15% TIMES EACH EVENT, I.E. $20,000 X .15=$3,000 X6=$18,000?

THANKS FOR YOUR HELP!!!

Who is ultimately responsible when an employee uses the MSA credit card at an eating establishment for payment and the payment is accepted?

I am trying to locate copies of the PLR's regarding Sec. 105, with regard to HCE's and the discrimination testing. Specifically, I am looking for copies of PLR's 8336065, 8411050, 8411051, and 8432036.

If anyone has copies of these I would greatly appreciate if you could fax them to me. If not, can someone please advise me exactly where I need to send a request to receive copies directly from the IRS.

THANKS!!!

In a one participant plan 35,500 was contributed during the plan year that ends 12/31/01. $500 to set up the plan account, and then an additional 35,000 later during the year. Does exceeding 415 cause the 415 excess to be non-deductible for the employer's 12/31/01 taxable year?

I've read that catch-up contributions are available in the first plan year beginning after 12/31/01. Is this correct, and is it correct that a 1/31/02 plan year end ADP test cannot use the catch-up rules?

Given the recent instructions regarding the reporting of catch-up contributions on W-2s, do catch-up contribution amounts need to be determined before W-2s are issued? (Whereas currently, ADP test results have no impact on what is reported on a W-2).

Thanks.

Does anyone have a sample letter that they have been sending to their clients advising them of the document restatement issues? We are interested in sending some sort of comfort letter to our clients.

Thanks

I am amending a DC plan to actually liberalize benefits (decreasing eligibility requirements). Can someone discuss my notice requirements for this and minor amendments?

How are the following overcontributions in a SIMPLE IRA corrected

1. employee contributions for current tax year;

2. employer contributions for current tax year;

3. employee contributions for prior tax year; and

4. employer contributions for prior tax year?

Cites would be greatly appreciated.

beneficiary inherits a regular IRA. Deceased

owner was older than 70 1/2 and already taking,

(yearly recalulated) minimum distribution amounts.

assuming the beneficiary, is younger than 70 1/2,

what are the beneficiarys' options as far as

continung to take distibutions ?

may the beneficary, younger than 70 1/2, have

the inherited ira placed in his/her name,

and take distibutions based only on his/her

life expectency ?

Under what circumstances is the beneficary

required to take all of the ira distributions,

in a "short time period" ? 1 year ?

5 years ? etc. as opposed to lifetime of beneficary ?