A non-spouse beneficiary inherits an IRA where the owner had begun minimum distributions. The beneficiary continues distributions as rapidly as the owner was taking them.

Question: Can the beneficiary name her own new beneficiary to inherit the IRA upon the beneficiary's death? Or do the proceeds automatically go to the beneficiary's estate?

It would seem that some designation should be able to be made (leaving it to her trust or to another individual) but in all my research I cannot find an answer to this.

Thanks for any help.

I would like to know if there is anything we can do to help our company. I'm a chairman on our ESOP Advisory committee - and we've got a major problem at the office. Our President is driving the company into the ground, the retired owner wants nothing to do with the company, and all of the good employees are leaving - which means new employees coming in, higher expenses for training, and lower productivity. Our costs have been raised to our clients 2 times in 7 months becuase of the salaries being paid to administration now - yet when it comes time for a raise for production level people - they say there is no money. Our President is sucking us dry and I can't seem to find anything we can do about it. SOMEONE HELP!!!

client wants to set up a Profit Sharing or Money Purchase Plan for business owner only, no other employees work or will ever work 1000 hours, therefore, would never join Plan. Is there any way to permit these "non-eligible" Employees to make 401(k) deferrals without running into the top heavy requirement? These Employees would never be vested in the top heavy contribution...and it seems there should be a way to avoid it?

Can anyone shed some light on how the adoption assistance Section 127 works under a cafeteria plan. Is it a reimbursement type benefit? Help!

Since my spouse and I are taking advantage of the 4-year averaging on our $100,000 IRA Roth conversion we are faced with reportable income that bumps us up near the 28% tax rate. I currently contribute the maximum allowable under my salary reduction agreement with my employer's 403(B) plan. We also both have self-employment income which is expected to boost us up into the 28% bracket during the 1999 - 2001 period that we can spread out our conversion tax liability

We have both set up SIMPLE IRA's to provide the opportunity to tax defer enough of our self employment income to get us back down to 15% for at least the 1999 - 2001 period.

We are considering the following strategy for the next several years:

1) Divert enough of my 403(B) salary reduction funds into our SIMPLE IRAs to reach the maximum allowable (max. of $6,000/yr, or 100% of net self employment income).

2) In Jan. 2002 transfer funds in our SIMPLE IRA's to regular IRA's (which is permitted 2 years after initially setting up a SIMPLE IRA) then convert to a Roth IRA. By 2002 we will have significantly reduced our reportable income (by $25,000/yr) since we have finished the 4-year spread from the first conversion. We would project that we could still report the income resulting from the 2nd Roth conversion and still stay within the 15% marginal tax rate for that year.

I would see this as a way to expose additional tax-deferred funds to the Roth advantages yet still pay taxes at the minimum 15% rate during this time period.

Any weaknesses in this strategy that I should consider before I alter my 403(B) salary reduction agreement with my employer?

In a plan that does not allow in-service withdrawals, a participant with a 1998 Required Minimum Distribution of $190 received a $2,000 distribution during 1998. The 1999 Required Minimum Distribution (based on the actual 12/31/98 account balance) was $750.00. The participant was paid $3,000 during 1999.

What are the consequences and correction for this?

Should the 1999 Required Minimum Distribution have been based on the 12/31/98 account balance increased by the amount of the excess payment in 1998 (increased by $2,000- $190)?

Is this a Prohibited Transaction requiring the employer to file a Form 5330?

Is the proper correction to have the participant repay the amount of the excess?

If the participant refuses to repay the excess, may the plan sponsor reduce the year 2000 Required Minimum Distribution amount by the amount of the prior year excesses?

Can APRSC be used or is there another IRS correction program that would be more appropriate?

It is unclear if the definition of includible compensation in IRC 403(B)(3)would allow a disabled employee to use the rate of compensation described in 415©(3)©. It seems that for 415 compensation the answer would be that the disabled employee may use a projected compensation assuming that he/she was still working, but for calculating the exclusion allowance in 403(B)(2)(A)the employee could only use W-4 increased by any deferrals. Is this true?

If the disabled employee could use the compensation rate for the exclusion allowance, it there any non-Code explaination available?

Under the final regs, spouses and dependents of covered employees must be given an indepenent election to continue benefits under COBRA. Is this true for medical reimbursement plans? My thoughts were that COBRA elections should be limited to the employee-participant (who could then submit claims on behalf of spouses and dependents).

The before tax benefits were not available to spouses and dependents, and I'm not sure what benefit would be available for the remainder of the plan year to spouses and dependents.

Any thoughts? Also, do participants in premium conversion plans need an additional notice beyond that provided by the underlying health insurance plans. Seems to be duplicative.

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I have a client who sponsors a SEP and now wants to add a new 10% Money Purchase Plan. The SEP came first, the company uses a 5305-SEP, which cannot be used once the MPPPlan goes in. I cannot locate a prototype SEP from any vendors or other providers. Can anyone help me find a non-model SEP document?

If a plan terminates and purchases annuities with an insurance company, what is a participant's recourse if he believes that his benefits are incorrectly calculated? Would the insurance co. be on the hook? Or is it too late by then? Any thoughts out there? Any citing? Thank you.

Gary.

Is there any reason why a 5500 could legally not be filed (long or short form), such as less than a certain # of employee or participants. Thanks.

The IFEBP recently held a forum for multiemployer and public sector coalitions and some of the discussion focused on myths and misperceptions about coalitions that keep some funds or employers from joining. Among the myths and misperceptions identified were the idea that funds or employers lose some autonomy in joining a coalition and the thought that coalitions are no different from PPOs. Has anyone been confronted with these or other misperceptions and how did you address them?

I am researching what helps to retain employees, ex. what should be in the benefits package. this is a high tech. company, new, will grow rapidly. there is alot of competion for the best employees. what have people found helps to keep them. thanks

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LMP

I am researching what benefits are wanted and will help to retain employees. this is a technology company. any suggestions would be greatly appreciated.

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LMP

Does the following idea work (or what's wrong with what I have in mind?)

Company X sponsors a DB plan for its one employee. Both the business and the plan are 12/31. 1999 minimum required contribution is $60,000 and maximum deductible is $80,000, similar to prior years.

The business owner would like a small deduction for 1999, around $25,000, and then return to his "usual" deductions (60-80K) in future years.

Let's assume that changing the plan formula, assumptions, funding method, etc. are not options.

I propose that he make a $25,000 contribution on or before 3/15/00, NOT go on corporate tax extension for 1999, and make the remaining $35,000 contribution between 3/16/00 and 7/31/00. With this approach, he will have made his required 1999 minimum contribution by 7/31/00 (and met minimum funding standards), but only $25,000 would be deductible for 1999 (since the other $35,000 was made after the corporate tax deadline).

I think that works for 1999.

But what about 2000?

Assuming the min/max for 2000 is again 60-80K, I would suggest him contributing $45,000 on or before 3/15/01, NOT going on tax extension for 2000, and contributing the remaining $15,000 between 3/16/01 and 7/31/01. In this case, the minimum funding requirement of $60,000 would be met for 2000 (the $45,000 contribution and the $15,000 contribution). $80,000 would be deductible for 2000 (the $35,000 contributed in early 2000 for 1999 but not deducted because it was contributed after 3/15/00, plus the $45,000 contributed before 3/15/01 for 2000).

The $15,000 contributed before 7/31/01 (which was used to meet the 2000 minimum funding requirement) would be deducted for 2001.

2001 and later years would be treated similarly.

Did I miss anything?

[several points. I recognize that the contribution timing is extremely critical and must be coordinated carefully with the tax filing deadline. That's OK because the client is very sophisticated.

Also, I don't think there is a 10% excise tax for any nondeductible contributions as long as these contributions are made in the same year as the deduction. For example, there is no excise tax on the $35,000 contribution made in early 2000 that is used for 1999 minimum funding and is deductible for 2000.

Finally, I recognize that starting in 2000, we might have to do two actuarial valuations each year because there are different asset values (one for 412 minimum and one for 404 maximum).]

Thanks.

would like to deduct

It has always been my understanding that a plan that contains a six months of service requirement for purposes of eligibility to participate could not also attach an hours of service requirement. For example, while it is ok to require six months of service, it is not ok to also require 500 hours of service. Where is this limitation specifically found (ie, regulations, revenue ruling, etc.)? I have found two resources that state you cannot do, but they give no citation. I have also found several prototype sponsors who seem to think attaching an hours requirement to a six months of service requirement is acceptable. Thanks in advance for any responses.

Section 4.04 of Rev. Proc. 95-51 addresses the takeover situation where the firm and enrolled actuary have changed & Rev. Proc. 98-10 adds Section 4.05 to address a change in software;if the enrolled actuary for a plan joins a new firm & gets the plan back, what now? written request for approval? also,is 4.05 intended for the situation where the EA and firm servicing the plan remain constant but the firm just decides, for example, to start using new software; and suppose the EA above who got the plan back is using new software but is unable to utilize the former firm's software? request for written approval?

A plan with age 21 and 1 year of service for making salary deferrals has a 2 year service requirement (and age 21) for profit sharing and matching contributions. No union employees in the picture.

When doing the (a)(4) test, am I correct in saying that I have to include all the employees with a year of service, even though they weren't eligible for a profit sharing contribution?

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No one responded on the other message board, so I thought I would try this board which seems to be more popular. Is anyone aware of rules analagous to the QSLOB rules for Code Sections 105 and 125?

Not everyone who is eligible to defer does. The plan sponsor is not going to make a discretionary profit sharing contribution but will make a match. Is the compensation of those who did not defer and will not share in the match (i.e they get no allocation) considered in computing the 15% of pay limit of 404(a)(3)(A)(I)? This considers beneficiaries of the plan, are eligible employees who do not defer and get no allocation a beneficiary under the plan for this purpose and if so, under what code section, etc?