To whom is the loan offset taxable? Deceased participant's estate or the beneficiary? And why can't I find any sites at all!

http://benefitslink.com/boards/index.php?/topic/51842-deceased-participant-questions/

I found this thread, but there was nothing conclusive... How could this not be well documented??

I saw on a spreadsheet recently that you can rollover a SIMPLE IRA account into a qualified plan ( 401K , profit sharing, etc ) after the SIMPLE account has been in existence for two years. Is this correct ? Is it new ?

Thank you.

The plan uses W-2 Wages for its definition of compensation.

It excludes, however, bonuses.

The employer also pays leave cash outs for unused vacation.

My inclination is that these are a form of bonus and thus also excluded, but can see the opposite argument.

I can find no authority either way.

Federal Income Tax Withholding.

If you receive, rather than roll over, the distribution, you may elect whether to have federal income tax withholding apply to your death benefit distribution. If you do not wish to have any income taxes withheld on your distribution, or you wish to have an amount other than 10% withheld, you will need to sign and date IRS Form W-4P, checking the box opposite line 1. The Plan Administrator will provide you with Form W-4P. If you do not return the Form W-4P to the Plan Administrator prior to the distribution, the Plan Administrator will treat the failure to return the form as an affirmative election to have 10% withholding apply.

Special tax treatment if the deceased participant was born before 1936.

If your distribution is a "lump-sum distribution," and the deceased participant was born before 1936, you may elect special tax treatment. A lump-sum distribution is payment of your entire death benefit (including any nontaxable portion of your distribution) under the Plan (and certain similar plans maintained by the Employer) made within one calendar year.

Ten-year averaging

. If you receive a lump-sum distribution and the deceased participant was born before 1936, you can make a one-time election to figure the tax on the lump-sum distribution under "10-year averaging" using 1986 tax rates. Ten-year averaging often reduces the tax you owe.

The participant wad born in 1929, was receiving RMDs, and was not a participant in the plan until 1987. This IRS language doesn't specify that participant had to be a participant prior to 1986 though... What are your thought's on the non-spouse benficiary being able to use the 10 year averaging?

We're in the midst of helping an Employer make a correction to his Safe Harbor Plan for 2012 (he failed to make the required 3% Safe Harbor Contribution that year). He's making the corrective contribution this year. Will he be able to deduct the contribution this year?

We're in the midst of helping an Employer make a correction to his Safe Harbor Plan for 2012 (he failed to make the required 3% Safe Harbor Contribution that year). He's making the corrective contribution this year. Will he be able to deduct the contribution this year?

An employer's cafeteria plan and underlying benefit plans excludes same sex spouses. In June 2014, the employer amends the plan to make same sex spouses eligible for benefits. Can the employer permit employees (who married their same sex spouses in 2013 or earlier) change their elections mid-year to add their same sex spouses to the plan? If so, under what provision of the proposed cafeteria plan regulations?

It seems intuitive that these election changes should be permitted but I am not finding anything in the regulations to support this intuition. Does anyone have any thoughts?

There is an ESOP that contains pre-1986 stock so the rules in effect prior to 1986 Tax Reform Act regarding diversificaiton still apply to that stock. If the employer does a stock split with respect to the pre-1986 stock, are the pre-1986 rules applicable after the stock split or would the sotck issued as a result of the stock split be subject now to the post-1986 rules?

Suppose a defined benefit plan was hard-frozen several years ago. As no key employees are currently benefitting under the plan, it should be clear that no new service accrues for the top-heavy minimum benefit.

1. If the top-heavy percentage was below 60% when the plan was frozen, is there any reason to be concerned as to what it would be as of any subsequent date?

2. If the top-heavy percentage was above 60% when the plan was frozen, is there any reason to be concerned as to what it would be as of any subsequent date?

3. If the top-heavy percentage was above 60% when the plan was frozen and, if remeasured, would remain above 60%, would it be necessary to adjust the top-heavy minimum benefit (with respect to top-heavy years of service prior to the freeze) on account of compensation increases after the year of the accrual freeze?

I remember when conduit IRAs only could be rolled into another plan, and so an IRA created with a QDRO rollover could not again be rolled into a qualified plan. At least I think I remember that.

Now we have inherited IRA accounts and all kinds of new stuff. So my primary question is if there is a list of IRAs and where can the be rolled over (into) what?

That would answer the question if a QDRO IRA can be rolled into another qualified plan.

If that is so, then just maybe if both spouses work for the same company, can the spousal alternate payee roll the QDRO distribution directly into their account in the same plan?

Thanks to those who find the answer.

I recently reviewed Notice 2013-74 and it states:

"the following contributions (and earnings thereon) may now be rolled over to a designated Roth account in the same plan, without regard to whether the amounts satisfy the conditions for distribution: elective deferrals in [section] 401(k) plans and [section] 403(b) plans; matching contributions and nonelective contributions, including qualified matching contributions and qualified nonelective contributions described in [section] 1.401(k)-6; and annual deferrals made to governmental [section] 457(b) plans. (The Federal government's Thrift Savings Plan is treated as a [section] 401(k) plan for this purpose.)"

My question is if contributions from the plan's rollover account are also eligible for an in-plan Roth rollover and if the above is intended as an exhaustive list? Or, if any/all vested amounts in a 401(k) are eligible for an in-plan Roth Rollover?

Thanks

Technically these types of IRAs are ERISA plans. But, what provisions of ERISA are they subject to?

They are not subject to most of the reporting and disclosure requirements (summary plan descriptions are required but no annual reports such as 5500s); they are not subject to the funding provisions; and they are not subject to the participation and vesting provisions.

Does anyone have experience applying the alternative method of determining specified employees - specifically, if we determine our specified employees as all employees who are at a certain position level or above, do we have to constantly monitor employees to determine if they are at or above that level, or are we still able to rely on the approach permitted under the regs where we determine our specified employees once per year and update that list each April 1st.?

It's not clear in the regs, but my reading of the regs and the preamble is that we are not permitted to rely on that annual determination process (i.e., we can't look on the separation from service date to our specified employee list prepared as of the prior April 1st and if he is not on the list then he is not a specified employee), and instead we need to know at the time a person separates from service whether or not he or she is at or above that specified level that we determined would reasonably capture all specified employees. That is, there is no list if we use the alternative approach, and specified employee status is determined by whether you meet the objective standard as of your separation from service date.

NON safe harbor 401(k) Plan. Document says match is discretionary; however, match is limited to deferrals up to 6%. Additional limit of 4% of comp applies. Document further states that limits are applied based on the plan year (i.e. "true up" applies).

Employer stopped their match mid year. Would this negate the "true up"?

If I look at match rates for the plan year, they are not "uniform". However this would make sense if someone terminated employment before the match was stopped. (i.e. they received a match of 100% up to deferrals of 3% of pay). Others who continued to defer would not receive the same rate.

Does it matter that the match percentages are not uniform as long as the ACP test passes?

I am sooo confused!

Looking at a proposal for a CB/PS combo with life insurance. Owner gets 70% of pay in CB, employees get 2%. Maximum insured death benefit provided in the CB.

Is there a way to modify this to satisfy both the incidental death benefit rules and the Benefits Rights and Features requirement with the insurance this skewed?

Is there a way for an employer to provide health insurance for non-employee members of the Board of Directors?

My initial off-the-cuff thoughts are the following obstacles:

- it will be a taxable benefit to non-employees

- can the employer's plan be amended to include non-employees? if not, could a separate plan be created for the directors? if it is a separate plan, would the plan pass nondiscrimination testing?

- would a carrier even insure for this?

- if the employer self-insures and its a separate plan, the group would be so small it could be prohibitively expensive

I am wondering if anyone else has come across this.

Thanks.

The subject line is really the question. The employee has signed a letter of confession stating that she stole money from the company. The theft did not involve the plan assets in any way. this is a small 6 life 401k plan. I do not think that the ER can encumber or in any other way get to her 401k assets regardless of the theft.

Not sure how much was stolen, but he is pretty sure she does not have nearly enough money outside of the plan to repay so he is looking at the 401k to get some of his money back.

I wasn't sure where to put this, so I chose the DB forum.

I would like to start on the path to become an Enrolled Actuary.

On of the steps is to pass the exams.

The EA-1 is only given once a year and encompasses financial math and some life contingencies.

Credit for the test can also be obtained by passing grades on the SoA FM/2 and MLC exams.

I was thinking of taking the 2 SoA exams for a couple reasons:

1. They are given half a dozen times a year.

2. It breaks down the material into two exams instead of one big one.

However, it looks like the syllabus for FM (at least) is more expansive than the financial math needed for EA-1 (derivative markets is a big slice of the exam). I haven't looked at the MLC vs EA-1 topics yet.

So if I take the two exams, I will be studying more material than I need.

Any thoughts?

Small 401(k) Plan is sponsored by an LLP and has 7 participants. One of the 7 terminated October 2013 but has not returned his benefit elections until now. The employer informed us today that they are being acquired by another firm who does not have a plan and does not want a plan.

This will be an asset purchase so the LLP will remain. The two partners will remain but the 4 employees will terminate employment with the LLP. So clearly the 4 employees will be 100% vested as this would be considered a partial plan termination. What about the one employee who terminated in October 2013 long before this happened? Would he need to be made 100% vested even if the plan will be on-going and will not terminate until next year?

Thanks