katieinny

I sometimes have clients ask how low they can go for a Normal Retirement Age when they complete their adoption agreements. So far, the lowest we've gone is age 55. Has anyone seen an NRA lower than that?

You don't say whether you are talking about a qualified plan or an IRA. It sounds like you are talking about non-spousal beneficiaries. For an IRA, it's a simple matter of setting up accounts indicating both the beneficary's name and the deceased person's name -- John Smith as beneficiary of the Robert Smith IRA, using John's social security number. John can choose the investments and/or move the money around, as long as Robert's name as the original IRA holder always appears in the account title. The assets would move from Robert's account to the inherited account as a transfer, so that no taxable event occurs. Then John will be taxed on distributions from the inherited account. For a qualified plan, most likely a distribution will take place based on the what the plan says will happen when a participant dies. A non-spouse beneficiary cannot set up an IRA with QP money as outlined above, because that would essentially be a rollover.

Well, then...that's good enough for me!

Wayne: That's exactly what I was looking for. Are you a NYS teacher, or do you consult in this area?

An EE terminates service with ER A and goes to work for unrelated ER B. He wants to transfer the loan he had under ER A's plan to ER B's plan. ER B's plan does permit transfers prior to meeting the eligibility requirements and does permit loans. Since a loan is an asset of the plan, I'm thinking this could work. Am I missing anything?

Have there been any changes to the rules that allow permitted disparity in a SEP Plan? I have a CPA who thinks it can no longer be done, but I don't recall seeing anything that changes the rules.

ER had a plain old Profit Sharing plan up until 1/1/02 when it was amended to be a Safe Harbor 401(k). Several EEs in 2002 are rehires. Some of these EEs had met the 1 year/age 21 eligibility requirements, but had never entered the plan because they were not EEs on what would have been their entry dates. Some EEs were gone for a period longer than their period of employment. Is this a break in service? Do they have to meet the eligibility requirements again when they are rehired? Some of the EEs were gone for a period shorter than their period of employment. Since these EEs had previously met the eligibility requirements they are considered immediately eligible upon their rehire date. Do they enter the plan on the next entry date following their rehire date? (Remember that they had not entered the plan during their first period of employment.)

Yes, the teacher was already receiving benefits under the single life option when he died. I agree that the spouse is probably out of luck -- but in order to give her a credible answer, I want to show her something specific from the state.

I'm trying to get information about the New York State Teachers' Retirement Plan. I thought there might be a website, but I'm having trouble locating it if there is one. Specifically, I'm wondering if a spouse is entitled to any benefit upon the death of a teacher. The teacher chose a single life annuity option. An earlier question on Benefitslink indicates that no spousal consent was required to take the single life option. However, I don't want to point to a message board as my authority. I would like to get it straight from the horse's mouth, so to speak. Can anyone steer me in the right direction?

Tom: I'm trying to determine the EBR for participants in an age weighted safe harbor 401(k) plan. This is my maiden voyage, so I've been looking for examples similar to the one you've spelled out above. I'm having trouble with the line $5,000 * 1.085 ^ 22 = 30,090. I believe 1.085 is the factor used to represent the interest (8.5%). But what does the symbol "^" mean in order to get 30,090?

Yes, we (and they) understand that spousal consent is not required for distributions from this plan. Only for naming a beneficiary other than the spouse. Remember, many of these people come from different backgrounds and life experiences. Life expectancies in their native countries might be shorter -- and dying from something other than old age a more common occurrence. So when you tell them they can't name their children, brothers or sisters as their beneficiaries they get upset.

Our client is a small company that employees people of many nationalities. They are setting up a 401(k) plan, but spousal consent has become an issue. Several people left their spouses behind many years ago when they came to America. They were told that in order to name a beneficiary other than their spouses they must get the spouse's consent. These people have said they will refuse to participate in the plan if that is the case. In most cases, they have not had contact with their spouses in several years and probably could not locate them. In some cases, we're not sure if there was a legal marriage. Does anyone know if there's any relief from the spousal consent requirement under these extenuating circumstances?

BenefitsLawyer: I tried to get on the web site you mentioned -- snip.wedi.org, but couldn't get anything. Is there a typo?

Are you saying that the new employer is breaching his fiduciary responsibility by refusing to accept investments that the prior plan permitted?

Company A set up Plan A which permitted a great deal of investment flexibility. Company A was purchased by Company B and they would like to merge the Co. A plan into the Co. B plan. However, Co. B's plan does not permit as much investment flexibility. One person in Co. A's plan refuses to sell his off-the-wall investments. Can he be forced to do so?

I still think that 100% withholding of federal tax is a better way to go. That way the individual has a better chance of being found.

I'm talking about the requirement that a plan needs a fidelity bond covering at least 10% of the assets in case of fraud on the part of one of the plan's fiduciaries. I haven't found anything that exempts my non-profit client from that requirement, so I'm going to tell them they need to get the bond.

I lost you. What are you trying to tell me?

I understand that submitting prototype plans, either standardized or nonstandardized, for an IRS determination letter is no longer recommended or suggested. But is submitting still the recommended course of action for volume submitter plans?

I have a tax-exempt employer setting up a qualified plan. Does the fact that they are a non-profit organization exempt them from the fidelity bond requirement?

IRA holder names his son as the beneficiary under his IRA and dies after his RBD. Now it's an inherited IRA and the son elects to take distributions over his own life expectancy. The son names his wife as his beneficiary. He dies. His spouse thinks she can roll the IRA over to her own name, which can't be done unless I'm way off base. However, she does need to continue distributions. Does she continue to take them over her deceased husband's life expectancy? Does she take them over her own life expectancy? Does the 5 year rule come into play? Or none of the above.

Does anyone know if the IRS has issued any further guidance on how they want assets distributed for missing participants? I understand that the 3 main methods are 1) forfeit the balance (my client's document says that can be done for balances under $5,000.) 2) open an IRA (if you can find a bank to take it). 3) Send it to the govenment as 100% withholding. My client is leaning toward the 100% withholding option, but before I say go ahead, I'm wondering if there's been anything new issued within the past few months.

I've never prepared an SPD for a health plan, but I need to do one now. Does anyone know where I might locate a sample?

Thanks for all the input. I'm convinced that the discretionary match does not have to be tested as long as it doesn't exceed the limits, (whether or not it's called a safe harbor match) which is what I was trying to confirm.

A plan has a 3% fixed contribution under a Safe Harbor Plan, so no ADP test. The ER will also provide a discretionary match. I've been given conflicting information as to whether the discretionary match can be a Safe Harbor match to avoid the ACP test. Both are reliable sources. One says yes, the other says no. I need a tie-breaker.