I’m hoping someone can help me out on a kind of technical question. I’m looking for an explanation of Tax Code section 401(a)(9)(F). The section states that "... any amount paid to a child shall be treated as if it had been paid to the surviving spouse if such amount will become payable to the surviving spouse upon such child reaching majority(or other designated event permitted under regulation)."

I think the intent of this section is to allow a surviving spouse/beneficiary to treat an inherited IRA as his or her own, even though a dependent child is scheduled to receive payments from the IRA after the IRA owners death and up until the child reaches majority (age 18??).

However, I can't find any tax regulations that talk about this section, or any other information from other publications. The closest I came was a footnote in a 1993 BNA publication that said the IRS hadn’t "provided any such other events, or otherwise promulagated regulations that elaborate upon this statutory provision."

Any thoughts or citations would be appreciated.

What are the proper procedures (legally and for tax purposes) for handling annuity benefits paid to a deceased annuitant, should payments made after the annuitant's death be returned to the insurance company and then distributed to the proper beneficiary or should the insurance company make the next scheduled payment to the proper beneficiary?

We would like to put in a safe harbor plan effective January 1, 2000. We currently have a dollar-for-dollar match of 4%, we allow immediate vesting, and we have both an after-tax and before-tax component for saving. We were told by legal counsel that the IRS has not make it clear that you can have a safe harbor plan with after-tax employee contributions (with employer match against these contributions). Is it correct that we cannot implement a safe harbor plan due to our matching after-tax contributions (as well as before-tax contributions).

It is my understanding that the IRS position is that receipt of ubti (whether or not it is offset by a deduction for a plan contribution)by a tax-exempt organization subjects the entire reversion to the Section 4980 excise tax. Has anyone been successful in contesting this position? Thanks

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Per plan document the vesting schedule is figured on hire date years. If an employee is 40% vested and terminates employment 30 days prior to his anniversary date to become 60% vested does he lose this 20%. The plan document states that if a full vesting year is not accomplished you refer to the plan year which is calendar--this seems to me the employee is out of luck?? please comment

If I make a contribution to a Roth IRA, then later (prior to age 59.5) decide to withdraw some or all of the contribution, not touching the earnings, and without qualifying for any of the exceptions (first home, education, etc.), will I be charged the 10% penalty?

Since Section 1042 is not applicable to sales of S-Corp stock, is it otherwise possible for an S-Corp shareholder to sell shares to an ESOP on a tax-free basis? If so, what is the authority for this?

Employer plan provided for loans; 5 participants elected loans; loan documentation provided for payroll repayment; employer "forgot" to commence repayment until a period longer than the default period but not longer than 5 years. What is the proper correction and what forum (APRSC, VCR etc.) is proper? We would like to correct by reamorizing the loan over the remaining period, but do not want to pay income tax because the default did not occur as a result of "missed payments" on the participant's part, but as a result of an administrative error.

what is the proper correction for non-deductible contributions? I know you file an amended corp return, file 5330 and pay the 10% penalty. Do you need to distribute the excess? gains?

For tax and legal purposes what is the best way to treat distributions made to an annuitant after their death?

Should an IRA be included in a Joint Living Trust? What are the pros and cons. I can see where there is no need, if the beneficiary gets the proceeds in any event without probate, but how about when one of the grantors becomes incompetent? I've had advice both ways?

Our recordkeeper informs me that for Plan years beginning in 1999, we may exclude from testing employees who have less than a year of service or are under age 21 even if the Plan allows such employees to participate.

As a means of helping our ADP test, we are thinking of amending our Plan to allow employees to begin contributions to our 401(k) from date of hire (or after, say 3 months) in the hopes that more employees will begin contributing and keep contributing after completing a year of service. Currently, our Plan requires 1 year of service and 1,000 hours worked.

Does anyone have any thoughts on this topic or legal pitfalls we should be aware of?

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Company A is being acquired effective 10-1 and will terminate their 401(k) effective 9-30 which is their fiscal and plan year end. The plan allows for bonuses paid within 2-1/2 months after PYE to count as comp and eligible for deferral for the preceding PYE. If the employees elect to defer specific dollar amounts before the termination date(hence there would be a receivable...the bonus would not be paid until Nov.) can these deferrals be accomplished since the bonus is treated as comp for the period before termination? How about a declared P/S contribution as a receivable to be deposited after the proposed termination date? Anyone see how this can be done? Thanks!

I have a client who said the company would make a $50,000 contribution to its PS Plan. Benefit statements and 5500 C/R were prepared. Now, it's possible the company can't/won't come up with the money.

I don't know if the 1120 and/or 5500 have been filed yet. I'm fairly sure the benefit statements have been distributed.

Has the company irrevocably commited to the contribution?

is anyone aware of any data regarding how many plans have received 414(e) exemptions as church plans?

DB plan is giving one time choice to convert to either a more portable pension equity plan (PEP) or an "enhanced" DB plan that has better early retirement subsidies. What considerations for transaction to take place? (204(h) notice? nondiscrimination testing?) Any good references for a checklist?

Is it necessary to include the definition of Highly Compensated Employee in a 401(a) plan for LOCAL GOVERNMENT AGENCY since they are exempt from the provisions that use this definition?

Our group coverage currently enrolls 150 employees plus dependents.One of our employees wishes to add her 48 year old husband who is currently on Medicare from disability. He has NOT lost his Medicare. They want to add him to the company coverage so that he will have RX. Will our company coverage automatically become primary? Is there any way around this?

I have long believed that a business can sponsor both a qualified plan and a SEP-IRA, as long as the SEP-IRA is an IRS approved prototype and NOT the IRS Model SEP (5305-A). Still have to comply with 415 and 404 aggregating the two arrangements, but OK to have both. Any other opinions? If you disagree, can you give me a cite? Thanks.

Would you agree with the following testing scenario:

A profit sharing plan has multiple rates of allocation and is also integrated to the allowable extent under 401(l), using the taxable wage base. For 1998, let's say that group 1 employees with salary below the TWB get a 2.0% allocation, and those above the TWB get 4.0%. For group 2, those under get 4.0%, and those over get 8.0%. Further complicating things is that a non-414(s) definition of compensation is used for allocations.

The plan needs to pass the amounts test of (a)(4) using the general test. In order to pass testing, can this plan impute permitted disparity as provided under 1.401(a)(4)-2©, even though the plan already had actual permitted disparity in the basic formula?

The introduction part of 1.401(a)(4)-7 seems to say that it can be imputed, regardless of the underlying formula that led to the allocations you're working on.