I have a client who recently passed away. He had an IRA that list a Trust as the sole beneficiary. The beneficiary said they were told that they could leave the money in the IRA and take the distributions over the life expenctency of the oldest beneficiary OF THE TRUST. I thought if a Trust is listed as the sole beneficiary, the asset must be paid out immediately to the Trust and the Trust document would determine the payout. Obviously, if the benficiaries could keep the money in the IRA there would be some major tax savings.

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Is an annual 5500 needed for a 403(B)(7) program of church employer? The employer is putting in 5% of pay for a couple of officers of an organization, one of whom is using a 403(B)(7) custodial account rather than a 403(B)(1) insurance company annuity contract, and I'm sure the arrangement is a "church plan" as defined in ERISA.

I think no 5500 is required, even though some of the money is going into a custodial account -- the 1998 Form 5500 instructions say "Do not file a return/report for an employee benefit plan that is any of the following ... A church plan not electing coverage under Code section 410(d)."

But the Tax Management Portfolio (388-4th) author (Tax Deferred Annuities--Section 403(B)) says church (and governmental) sponsors must make the filings "if funded through tax-deferred custodial accounts," citing a provision in a Treasury reg under Code section 6058(a) (the 5500 statute). The reg specifically includes 403(B)(7) custodial accounts in the definition of "funded plan of deferred compensation," for purposes of the reg's requirement that each funded plan of deferred compensation file an annual information report with the IRS. (Treas. Reg. 301.6058-1.)

But the reg goes on to enable the IRS Commissioner to relieve, in his disretion, an employer from filing information on the forms prescribed by section 6058(a). This seems to be the basis for the Form 5500 instructions' language specifically excluding governmental and church plans from filing, whatever the kind of plan being sponsored (but with a specific exception to the exception in the instructions for "statutory fringe benefit plans" such as cafeteria plans).

[This message has been edited by Dave Baker (edited 09-23-1999).]

I have a client who will be terminating their Profit Sharing Plan and we will be setting up a SIMPLE IRA plan. Can the employees rollover over their account balances into their SIMPLE IRA account or must they set-up a regular IRA outside the SIMPLE plan? Thank you!

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We primarily use standarized prototype docs that have been issued an opinion letter (dated 6/1/90)by the IRS. When completing the 5500 (Q 22a) we answer yes that it qualifies under code 401(a). We use the date of our opinion letter for 22(B) as we have no determination letter. We have been told by a pension atty we should leave 22 b & c blank because we have only the opinion letter. I feel the form would reject without a response. Anyone have any ideas here?

What specifically is considered a protected benefit?

Plan A is merging into Plan B, which has more stringent eligibility (protected), but Plan A employees are also concerned about losing the loan provision and having a much lower deferral max, among other differences

Before the merger actually takes place, we want to be sure that as many potential litigation or hr-relations issues are addressed.

Is there anything else besides protected benefits that we should be looking out for?

We have just been informed by our record keeper that a distribution check has been outstanding for 18 months!

What should I do?

Sure I'm going to reissue but am I liable legally to give earnings on that amount?

If an 80 year old owner of a company starts a retirement plan in 1998, he presumably would have to receive a MRD for the 1998 year. However, his account balance under the plan as of 12/31/97 would be zero which means he doesn't have to take a distribution for the 1998 tax year.

If his 12/31/98 account balance is greater than zero, he would have to take a MRD for the 1999 tax year, but when is his required beginning date, 12/31/99 or 4/1/00? I didn't see this addressed in the 401(a)(9) regs, but maybe I missed it.........

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Has anyone established a Pre-Tax parking benefit under the Taxpyaer Relief Act reimubursing employees for parking lots not owned or operated by the company or company affiliated leasing company? I need info. Thanks.

IRC code section 409(h)(2) in part states: "In the case of an employer whose charter or bylaws restrict the ownership of substantially all outstanding employer securities to employees or to a trust described in section 401(a), a plan which otherwise meets the requirements of this subsection or section 4975(e)(7) shall not be considered to have failed to meet the requirements of this subsection..."

Can the ESOP restrict stock ownership to only current employees? Client wants to transfer stock ownership of terminated participants to the accounts of current employees accounts.

The part of 409(h)(2) that bothers me is that ownership can be restricted to employees or 401(a) trust. Stock allocated to a terminated employees account is in the trust until distribution. Does the employer stock have to remain in the account of a terminated participant until distribution?

Does anyone see any problem with a plan document provision that gives all plan participants the following 2 options: 1) take your distribution within 12 months of termination of employment, or 2) wait until normal retirement? Could a provision like this be considered prohibited coercion for participants with balances over $5,000 to take immediate distributions?

A participant in a qualified plan died and their beneficiary is a foreign national (Mexico). How do we report this distribution on the Form 1099? Does it make a difference that the beneficiary isn't a citizen of the United States?

Can someone please tell me what is involved when gathering FAS 106 data?

Two 401(k) plans (Plan A and Plan B)are being merged effective November 1, 1999. Both plans have a calendar year plan year. Further, each plan contains a different definition of compensation (for purposes of testing and benefits). Effective November 1, 1999, both plans will use Plan A's definition of compensation. Is this OK? What implications does this have on elective deferrals, 401(k) and (m) testing, etc.? Obviously, it would be easier to have the merger effective on January 1, 2000, but that is not an option. Any help would be greatly appreciated.

I left a job this spring where I had some assets in a 401(k). I put the assets into a roll-over IRA after I left and within the required window. This was approximately 5-1-99.

What I would like to know is:

1. Now that I have opened a Roth (8-1) and contributed my $2,000 for 1999, when can I convert the rollover IRA to a Roth? For some reason, I think I have to wait 12 months...is this correct?

2. When I do 1., will I be able to combine the coverted Roth and the Roth account I opened in August? There is no particular need to combine them, just simplification of record-keeping, etc.

I am aware that I may need to pay taxes on the conversion from the Rollover to the Roth, but that is a relatively small price to pay and it won't be a concern in this case.

Guacamole

Does anyone know who assisted IBM with converting their DB Plan into the cash-balance arrangement? Was it a big consulting house (Towers, Wyatt, etc.), accounting firm, etc.

Are there any recent trends in the presentation of information in employee benefits manuals to make them more reader friendly? Would be interested in tips -- what works, what doesn't.

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Susan

Know of any? If so, maybe we should work up a list of them in the BenefitsLink "library" -- http://www.benefitsattorney.com/links/Bene...d_Associations/

A US citizen and employee of a US company is currently working at the company's location in England. He will stay there for several years. Apparently, he is not able to contribute to the company's 401(k) plan while employed in England. Is this an permissible exclusion? If so, any ideas on what he can do for retirement savings?

I'm new to ESOPs.

A client recently paid off ESOP loan, and now has a new document combining ESOP and money purchase plan.

At the ESOP session of the 1994 ASPA annual conference R. Grant Williams has in his written material: "An ESOP that includes a money pruchase plan in conjunction with a stock bonus plan may have a combined deductible limit of 25% of payroll. (Two separate plans are necessary for a 25% limit if no credit carry overs are used.)"

Does this mean that a money purchase - ESOP combination is considered 2 plans? Two 5500s?

Also, can the money purchase part purchase employer stock from the ESOP part of the plan?

A profit dharing plan establishes 3 categories of employees, Category A, who are INELIGIBLE for the plan, and Categories B and C.

The plan is Top Heavy.

Do Top Heavy minimum contributions need to be provided for employees of Category A?

Variation on this question.

A defined benefit plan excludes employees of Category A. The plan is Top Heavy. Does the plan need to provide Top Heavy minimum accruals for employees of category A?

Thanks