What are the rules relating to withholding from distributions in such a Plan?

1)Is withholding mandatory?

2)Is it optional?

3)What is withheld? (e.g., it's generally 20% from a qualified plan)

ERISA Tech. Rel. 92-01 seems to indicate that if you meet the plan assets regulations (15-day requirement) the DOL will exempt you from the reporting requirements for POP-only cafeteria plans. Does anyone agree? Also, if this is the case, then do you still have to file with the IRS?

Does anyone know how I can obtain copies of certain Prohibited Transaction Exemptions? My research service only gives summary information on each, and cites the federal register that contains the PTE. How can I get the full detail of the exemptions on the web. I am looking for PTE 86-128 and PTCE 79-1. Any help is greatly appreciated.

What are the rules relating to withholding from distributions in such a Plan?

1)Is withholding mandatory?

2)Is it optional?

3)What is withheld? (e.g., it's generally 20% from a qualified plan)

Employee (and co-owner)has severe multiple sclerosis. He had medical coverage under a policy paid for by the corporation of which he was part owner. The union sent a letter indicating he could now be covered under the union policy, with cheaper rates. He called the plan administrator(union trustee)and told him he had MS. The plan administrator assured him there would be full coverage for his MS. Based on this representation the employee cancelled his existing policy and joined the union policy. He found out later that there is a $5,000/year limit on pre-existing conditions, which he was never informed about. He now owes over $40,000 in medical benefits. Does ERISA cover an misrepresentation such as this which induced him to get inferior coverage, or is this a straight state law misrepresentation claim?

Does anybody know off-hand - where is the model language to be used to draft a QDRO? Thank you

The government and courts have stepped up their investigations and audits of benefit plans to determine employee classification for tax and benefits plan purposes. I am researching this issue, and welcome input, first hand information, and other sources. Please contact me if you have, or need to know, such information.

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www.researchoncall.com

Are there any limitations to distributions for terminated participants of SIMPLE IRA or SIMPLE 401(k) plans?

Has anyone allowed an in-service distribtion of rollover contributions? Meaning, a current employee wants to take the money they rolled into our plan and roll that over into an IRA.

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I am seeking new information on current legal developments and personal experiences of professionals who deal "employee vs. independent contractor" issues in the workplace, particularly related to employee participation in benefit plaans. If you have information about other sources, questions, or just wish to share your own experience in this controversial area of "independent contractor or employee" status, benefit plans and participation, please let me know. Thanks very much.

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www.researchoncall.com

I have a case problem to present for this readership and am intersted in your opinions on its viability.

An IRA ower died before age 70 1/2 with a balance of $100,000. The sole beneficiary of this IRA is the son. This beneficiary is also executor of the decedent's estate and sole beneficiary of the estate.

The gross Federal Taxable Estate of the decedent is under $625000.

Usually the beneficiary would need to receive these funds in full before the end of the year in which the fifth anniverary of death occurs. As received it would be taxable income to the beneficiary for Federal purposes and taxable for the year in which received.

Under IRC section 2518(B) many IRA beneficiaries have successfully disclaimed interest in a decendent's IRA proceeds so long as four requirements are generally met:

1. Disclaimer is in writing

2. Disclaimer is within 9 months of the death of the IRA owner

3. no assets have been previously

received by the beneficiary

4. The beneficiary makes no attempt to influence or direct where the disclaimed funds will go.

In this case all of the above have been met.

The IRA Plan Document in force also has a default beneficiary designation to the estate of the deceased if no other beneficiary is designated by the origianl owner. No Plan language on discalimed interest exists however.

The son of the deceased would like to disclaim the IRA proceeds and let them pass into the estate of the deceased as he believes the IRA Plan so seems to default. As the estate's executor and MOST IMPORTANTLY the estate's sole beneficiary, he believes that the IRA proceeds will be then distributed to him through the estate settlement avoiding Federal Income Tax to him because of his disclaimer and also avoiding Federal Estate Taxation because of the total size of the estate.

This seems too good to be true? What's missing in this assumption? Will the IRS challenge this action or is it a legitimate assumption for this case?

Would appreciate your comments and especailly from any tax practitioners who understand estate taxation and IRA

Regulations.

Regards,

Dave Hammond

I would like to rollover my 401k from previous employer into a roth IRA. i am have been told that I must roll it into a traditional IRA and then convert it into a roth ira. Does this sound correct? Thank you.

I converted my mutual fund IRA to a roth IRA in May 1998. Since then the value of my fund is approximately $1000 lower. If I recharcterize and then convert again to a roth, can I report the lower conversion value on my 98 taxes? I realize I have lost the right to spread the tax payment out over 4 years. Thanks for your assistance.

I have a client who is an owner-participant in his own company's profit sharing plan. the company is an s-corp. if he unelects s-corp status, is he permitted to make a 'third party loan' from the assets in his account to his brother-in-law's company? if so, do the standard IRS loan rules apply to this type of loan? Can he set his own interest rate, say 7%? does anyone have this experience to pass on? any help is greatly appreciated.

I am trying to find out what common practice is in cases where long term disability plans provide for the offset of a participant's Social Security disabilitiy benefit. Does the offset include the attorney fee that the court awards directly to the attorney? Thanks for your help!!

I know you can report a 1998 Roth contribution on Form 8606, but it does not look like a requirement. If reporting you Roth contribution is not a requirement, how will the IRS keep track of basis? Thanks. Shane.

Check out the organizations at these websites: ifebp.org, aspa.org, and nipa.org.

Generally in order to receive a substantial raise an employee must quit and go elsewhere for employment. Then the company has to train and pay someone more than they were paying the original employee to come in and do their same caseload. Why do companies do this?

I am comfused by the definition of a "waiting period" for purposes of the enrollment date. If the Plan contains certain eligility requirements, other than the passage of time, when does the waiting period start? For example:

A welfare benefit plan provides health benefits which requires an employee to work at least 30 hours per week for 4 weeks before the employee is an employee eligible to enroll. After (1) meeting this eligiblity requirement and (2) preparing an enrollment form, the employee becomes a participant in the plan on the first day of the first month following completion of these two requirements. Lets assume that an employee starts employment on June 1, 1998 and works no more than 20 hours per week until January 11, 1999. On January 11, 1999 the employee begins working over thirty hours per week. On February 8, 1999, the employee completes 4 weeks of employment with at least 30 hours per week, and prepares an enrollment form for an effective date of participation of March 1, 1999. When does the enrollment date start under HIPAA? June 1, 1998, January 11, 1999 or February 8, 1999? I would think February 8, 1999 since that is the date he has met eligiblity and now is waiting for his participation to begin on March 1, 1999. June 1, 1998 doesn't seem to make sense. Nor does January 11, 1999 since the employee has not met eligiblity. If it is June 1, 1998, then part time ineligible employees who work more than 12 months would never have a preexisting condition exclusion apply to them, right?

Sponsor has two plans (prototype).

Employee who will soon be eligible to participate (non HCE) wants to opt out of the Plans (presumably in return for more salary).

1) Is this allowable?

2) If it is allowable, is the opt-out decision irrevocable?

3) If it is allowable, does the opt-out person count against the Sponsor in 410(B) testing?