RayJJohnsonJr

This is been a problem for a long time and I haven't asked this question in a while: What is the easiest way to find old terminated employees to try and pay them out? Thank you.

Thanks everyone for great posts. Combined, they put this situation in the proper perspective. As fo me, I'm leaving the 2 very old Plans using 'ER ID as is. New Plans get Trust Tax ID's.

My concern was the same as ESOP Guy. 1099 reportable income resulting from invested Plan Assets being applied to the business Tax ID looks like taxable income to the business. Somehow, it's never been an issue though. So I think I'll leave it as is. Go figure.

When installing a new plan, I have always obtained a new tax ID for The Plan Trust. I'm taking over an existing plan and it appears the employer tax ID and the plan tax ID are the same number. Has anyone one else seen this?

Thanks for that point, Bird. I'll post what the attorney has to say.

I'm looking at it this way: If the ex doesn't get the policy (one way or another), the ex has a claim against the Estate for failing to meet it's obligation clearly spelled out in a binding Divorce Decree. So, I have written the attorney for the estate and pointed out that the Estate is the sole Plan Beneficiary, therefore ownership of the Policy must be transferred to The Estate. I included the Ins. Co. form to change the policy's ownership to the Estate. I pointed out to the attorney that the Estate could then transfer the ownership to the ex, so as not to run afoul of the Divorce Decree. I think the attorney will go ballistic, but that doesn't change the fact that I'm right. The Plan Beneficiary says "Estate." If the Estate doesn't give the Policy to the ex, the Estate will lose a slam-dunk lawsuit. The Estate could even pay punitive damages for intentionally failing to perform. I'm waiting for a reply. Bird, you helped a great deal with the definitive question, who is the Plan Beneficiary?

The Plan beneficiary is the participant's estate. The divorce decree says: "{The} Profit Sharing Plan shall name {the ex} as the beneficial owner of The GR Policy so that, in the event that {The Participant} predeceases {the ex}, {the ex} shall become the owner of The GR Policy." However, the Plan Beneficiary designation was never changed from "Estate" Which gives me an idea: Make them distribute the Policy to the estate (let the estate pay the income tax). Then the estate gives the policy to the ex. I'm pretty sure the ex would avoid any taxation under "Transfer for Value" rules on the taxation of life insurance. Thx again, Bird. Your questions are right on point.

If you're as old as I am, you can remember when IRA's could buy life insurance policies. But for reason's unknow, that was illegalized during the Carter administration. Thx, EBP

Yes, it is odd. It is the divorce decree that specified the policy would go to the ex. I argued against that methodology at the time, but the lawyers did want they wanted to do, as usual. I understand the problem with the ex paying the premium, there's no way to substantiate that. But I don't know what the ramifications are. Maybe the ex could start a small business, put in a qual Plan, roll the policy into The Plan, avoid the income tax. Thanks, Bird.

The sole participant of the PS Plan passed away and all Plan assets have been distributed except for one. The Plan held a survivorship (2nd to die) life insurance policy insuring the sole Participant and Spouse (who as of 2012 became ex-spouse). The policy was to be transferred to the ex-spouse (who is still a Trustee of The Pan) at the participants death. Upon transfer the ex-spouse would owe income tax on the cash value of the policy. That cash value is approximately $200,000. The ex-spouse doesn't want to, or can't pay the income tax and proposes an alternative: 1. Leave the policy in the Plan Trust so the ex pays no income tax. 2 The ex pays the annual premiums each year to keep the policy in effect. The ex desires to keep the the policy because, besides being a life insurance policy, it also pays Long-Term-Care benefits of up to $17,000 per month for life. Can the Plan Trust remain in existence. Can the ex pay the premiums. The ex is still a Trustee of The Plan because the couple remained on good terms as friends following their divorce. I had a case not dissimilar a while ago. A client had a a piece of investment real estate in his Plan for many years. After death, it was determined that plot of land was toxic because a paint factory once operated there. No one would buy it because the cost of environmental clean-up far exceeded the value of the land. The land could not even be transferred to a new owner under environmental law unless it was cleaned up. I actually don't know the end of that story but I know the Plan Trust sat there a long time.

Thanks again!

Thank you, C. B. Zeller. Much appreciated.

A CPA asks me, If I have a small business with a DB Plan, 3 owners, no employees. Can they file 5500EZ? Thank you, Rene

How is the maximum Defined Benefit calculated for older NRA's like ages NRA 70 or NRA 85? Thank you, Rene

Thanks Bri and Bill. I think I see on the efast how to do it. Thanks again.