Is the only qualified owner of an IRA an individual personally? If the funds used to create an IRA or a Roth IRA came from a trust classified as a "grantor trust", would the trust be treated as the owner? I am aware this type of trust can be the beneficiary. This question is on the technical side of distinguishing the owner from the beneficiary.

An employer has a frozen money purchase plan. The employer starts a 401(k) plan and uses one trust for both the money purchase plan assets and the 401(k) plan assets. There is a section in the 401(k) plan covering how to treat frozen money purchase plan assets. If this section is used, are the plans merged automatically with no further action? Does there have to be a specific amendment to each plan document stating that the plans have been merged? Other than meeting the 414l requirements, what action is necessary to merge the plans?

We are trying to determine if two corporations are members of a controled group. Both corporations are owned by individual shareholders and by trusts. Some of the trust beneficiaries are the same as the individual shareholders of the corporations. How do you calculate the actuarial interest of the beneficiary in the trust in order to determine the interst attributed to that individual in order to determine if the companies are members of a controlled group? The individual shareholders are for the most part income beneficiaries in the trusts and the remaindermen are the adult children of these individuals.

My wife's open enrollment period is here. We live in the PA suburbs of Philadelphia. Has anyone heard anything about hospitals dropping Aetna PPO, QPOS or USHC coverage in the area (Norristown, Possible UPENN?). Several people have mentioned this to her, but I do not recall hearing this. I find it hard to believe given Aetna's (especially USHC's) pervasiveness in this area, but it causes me for concern. She has had them 3 years w/o problems and all other coverages are much more expensive with high deductibles, so she'd like not to change. But, if hospitals are going to stop coverage, then it's a no-brainer to switch. THANKS.

Is a retiring owner liable for the debts of an ESOP to which she has sold her stock?

I am investigating an ESOP Leveraged Buyout for the company I work for. Another executive told me a horror story about a company whose owner sold the company to an ESOP. Several years later the company went into bankruptcy. The bankruptcy court ruled that the seller was liable for the debt, and that his assets could be garnished to satisfy creditors. Is there anything to this? It sounds counter-intuitive to me, but I am not familiar with ERISA, etc.

Can Revenue Ruling 2000-27 be applied retroactively, for example to a sale of less than 85% of assets in 1999, so that the the seller can now make a distribution from its 401k) plan to the employees affected by that sale?

The Rev. Rul. provides that "with respect to any sale of less than substantially all the assets of a trade or business . . . occurring prior to September 1, 2000, the Internal Revenue Service will not treat the plan as failing to follow its provisions merely because the employer does not treat the termination of employment from the seller and the hiring by the buyer as a “separation from service” within the meaning of section 401(k)(2)(B) and therefore does not permit distributions from the plan to the terminated employees hired by the buyer."

I interpret this as saying that beginning 9/1/00, all sales of less than 85% of assets must be treated as a separation from service. Does this also mean that for a transaction prior to 9/1/00, the seller can choose whether or not to treat it as a separation from service?

Is anyone familiar with Documentary Stamp Tax on 401(k)plan loans? Any information is appreciated. Where can I find information?

Thank you

Are 403(B) plans subject to the Code's prohibited transaction rules?

Are 403(B) plans subject to top-heavy requirements?

A qualified Profit Sharing plan invests in a limited partnership (as a limited partner). The partnership issues the plan an annual Schedule K-1 (Form 1065). The K-1 shows ordinary income from trade or business to be $ XXXX.

My Question:

Does the Plan have to file an annual Form 990-T and report that ordinary income as taxable ?

(I can easily understand how a general partner would be subject to the 990-T tax in such a situation.... but I have a hard time seeing how a limited partner would be subject to the 990-T tax).

A broker/dealer client of ours has a 401(k)Plan covering it's own employees. All assets are in mutual funds and are part of an overall bundled service package arrangement. All recordkeeping and trustee fees are being waived.

Since there are no expenses, can the 12(B)(1) revenue be paid back to the broker/dealer? In essence, they are simply pocketing the money. If not, what other options do they have in regard to this revenue?

Thanks - MichaelV

Once a plan has been terminated and the trust is closed, for what period of time is the TPA responsible for continuing to provide assistance regarding participant and plan sponsor inquiries.

Can an employer limit nonelective contributions to a 125 plan to (a) premiums for dependent care coverage or (B) 401(k) plan contributions? If so, what is the tax status of the k-plan contributions? How would this work?

A plan states that act equiv uses mortality based on the 71GAM table (unisex blend). It does not say what percent the unisex blend is based on the male table or the female table. What blend is reasonable to assume in this case? That is since it is not specified can one take the approach that it be a 50% male and 50% female? The Plan violates 401(a)(25)(definitely determinable benefits). So any suggestions as to the extent that the Plan's percentage blend could be challenged on that basis?

Gary

Do the final regulations impact the requirement to offer a deferred annuity on plan termination? We have a money purchase pension plan. Amended 1.411(d)-4, A-2(a)(3)(ii) seems to say that you can substitute cash payments for annuity contracts, provided the cash payments are identical to the annuity contract except for the source of the payment. What does this mean for a terminating plan?

Should I invest in a Roth IRA or put the money in an employer matched 401K plan? The match is on a percentage basis & the money is distributed to the plan & then among the participants. I am not sure whether I should branch out to a Roth IRA or keep the money in mutual funds through the 40lK.. any suggestions/advice would be appreciated. Thank you.

My husband recently signed up for 3 AFLAC supplemental insurance policies. At the time of signing up, he was given 24 hours in which to view a brochure and then decide. He was told at the time that if he signed up and then did not want it, he would have 30 days in which to cancel. We received the policies and quickly cancelled them. My husband contacted his payroll department and informed then to quit withholding the deductions. He was informed at that time that these were Section 125 benefits and he could not cancel. We later received a letter from AFLAC saying the same thing. My husband at no time was informed this would be a Section 125 benefit nor did he sign any form saying he wanted to participate. He fully believe he had the 30 day "free look" period on the policies. My question is, can an employer do this? Can an employer make an employee participate in a cafeteria plan without the employee's consent? Can he get out of this since he never consented to participate in the plan?

My power plant complex is to be sold. The acquiring company has a similar benefit plan to the selling corporation. Employees are said to be retained, so no break in employment happens, hence no severance package. But years of service with the seller's pension plan cease with the sale, no more accrual or COLA happens, and we get the annuity value from the seller's defined benefit plan when we retire 10-25 years down the road, coupled with a seperate pension from the years of service with the new employer. Assuming the same career path at the same power plant, we appear to be in for a screwing.

If I remained employed at the original company, my annuity is calculated at [30 yrs X 110,000 (est highest 5 yr income at end of service) X actuarial constant]. Now, the calculation will be [(15 yrs X 61,000 X actuary constant) + (15 yrs X 110,000 X the constant)]. For the same career, the math shows at least a 25% reduction in future benefit value - not factoring in inflation. The seller's pension plan assets are 40% overfunded, but all pension assets associated with the seller will be retained with the seller. No transfer of pension assets takes place. No retention package is offered by the buyer.

Given that we are hardly the first group of employees to find ourselves in this situation, how has this sort of issue played out in the Courts? Do we have any recourse or protection? Are there any legal cases that have resolved this question?

Retiree asked union pension plan to increase benefits for retirees in pay status (only). Reasoning: his medical costs have increased dramatically since retiring. He stated to the board members that it was legal for them to make this benefit increase without having to increase the current benefits for those still contributing to plan. I see discrimination in favor of a class of participants. He was not asking that all pension benefits be increased across the board, just those who are fully retired and receiving benefits.

The multiemployer audit guidelines address the need to confirm that funds have not been transfered to other union trust funds, i.e. health trust, etc. Anyone know anywhere else to look for information on this? I am familiar with single employer plans, but not multiemployer.

Attorney is a sole proprietor (calendar year taxpayer) who hired his first employee in 10/98. Employee was over 21 years of age when hired and has earned over $450 of compensation in each year for 1998 thru 2000. In what tax year must attorney begin contributions for employee?