Randy Watson

Just read the rules....No, you don't drop out of coverage under 25, but yes if there are no non-owners with benefits under the plan. So if the plan had over 25 active participants (and was subject to Title IV) and the only remaining participant is the sole owner then the plan is no longer covered?

If a plan was subject to Title IV will it always be subject to Title IV even if it happens to meet one of the exceptions in Section 4021 in later years? For example, what if the number of active participants in a plan maintained by a professional service employer falls below 25?

Could a plan document require that a claim for benefits (after exhaustion of remedies) be filed in state court rather than federal court?

I meant the latter. Thanks!

If you have a failed conversion (Traditional IRA to Roth IRA), the amount of the failed conversion will be subject to income tax and excise tax. The excise tax is applied each year that the amount of the failed conversion remains in the Roth. If you are beyond the recharacterization deadline, how do you "stop the bleeding" with regard to the excise tax?

Can an employer continue to sponsor a health plan after all employees are terminated for the purpose of offering COBRA coverage?

So pay it out at least as rapidly as it was being paid out (assuming the plan doc doesn't require it to be paid out sooner)?

Assume a Participant does not have a designated beneficiary. If he dies prior to his required beginning date his entire interest must be distributed under the 5-year rule. What if he dies after his required beginning date? Does the 5 year rule apply there as well?

I'm doing a VCP submission for two plans sponsored by the same employer. Can I prepare one checklist and one Appendix D or do I have to prepare separate submissions?

Sole proprietor is the trustee of his own plan. Seems like he needs to treat the distribution as any other plan would with 20% withholding and a 1099-R. Anything special about withholding and reporting on distributions for sole proprietors?

Sal Tripodi's ERISA Outline refers to the use of liquidating trusts or partnerships to facilitate the distribution of illiquid assets when terminating a plan. Basically the plan distributes the illiquid assets to the trust or partnership, which in turn issues participation certificates to the participants. When the liquidating trust or partnership sells the assets it makes disbursements to the participants. Anyone ever attempt this sort of thing? What benefit would this have over making distributions "in-kind"?

What would be the basis for spinning benefits out of one plan to another? Do we need a reason?

An "irrevocable" rabbi trust is in place for a NQDC plan. What would be the ramifications of amending the trust to make it revocable? I don't believe that this would do anything to create a taxable event on the participants; if anything, it appears that there would be an even greater risk of forfeiture. I also don't see any 409A issues as there is no acceleration of distributions or suspension/termination of deferrals.

I think you've already identified the only solution. I'm wondering though, is the QJSA distribution process so burdensome as to prompt this or is there another objective? Eliminating QJSA and allowing for in-service distributions (of "rollovers") are the primary objectives. In your opinion, how do you think the IRS would react to this transfer to a new plan and subsequent plan termination? It seems pretty shady to me.

A 401(k) plan contains a transfer of money purchase accounts that came over through a plan merger a few years back. The money purchase dollars are tagged with a required QJSA distribution form. Is there anyway to "terminate" the money purchase accounts so that there is no longer a QJSA requirement? We'd like to treat those accounts as true rollover accounts. Any ideas other than transfering them to a new MPP and then terminating that plan?

Would that freeze result in full vesting of employer contributions? If so, would that change if the employer established a successor plan?

A plan is being terminated and payments are being accelerated under 1.409A-3(j)(4)(ix)©. That section generally prohibits payments within 12 months of the plan's termination, but requires all payments to be made within 24 months of the termination. Does the termination amendment need to spell out specific payment terms within that 12 month period? In other words, should the amendment say that payments to participants will be made in a lump sum on date "X" (for example)? Could we simply include a provision that mirrors that in the regs saying payments will be made no sooner than 12 months and no later than 24 months after termination and leave it up to the employer to decide how and when to make payments within that time period?

Is this really a ban on reverse split dollar agreements? You can't use PS 58, Table 2001 or the insurer's rates. Do you think that there is any rate you can use to appease the service?

I need to clear up some facts. The employer does pay a portion of the premiums...a specific dollar amount that represents the term cost coverage. The employee pays the rest. The employer is entitled to the death benefit and the employee's beneficiary is entitled to any excess. Is this a reverse split dollar? I thought I read that reverse split dollars were no longer permissible. HELP!

Apparently the IRS unit responsible for the audit is completely separate from the unit responsible for listed transactions. We have not heard from the listed transactions unit at this point. Right now we're just trying to get a handle on what the listed transactions unit is going to tell us when they do get involved.

The plan was audited. At this point we're trying to figure out liability with regard to the 6707A penalty.

A 412(i) plan filed a Form 8886 with the partnership's information return. Does one have to be filed with the individual's 1040 as well? The instructions say that an 8886 should be attached to "your income tax return or information return", but an IRS agent I spoke with suggested that it should be filed with both in order to avoid that nasty penalty. Doesn't make sense to me at all.

I'm trying to figure out how to categorize the following split dollar agreement. The employee owns the policy and pays the premiums, but assigns a portion of the death benefit to the employer and the rest will belong to the employee's beneficiary. The employee is also an owner of the company. Is this key man insurance? Is this a non-equity collateral assignment? Is it even a split dollar agreement if the employee owns the policy and pays the premiums? Please help!

They actually did that a while back. There are still a few left in the real estate. No way to force them out, eh? Has the DoL issued any guidance or made informal commentary on this?

A plan with about 20 participants is invested in real estate among other things. The value of the real estate is very low right now and will probably remain illiquid for some time. The owner, who is the trustee directing investments, feels badly about the value of the real estate and wants to push everyone out of the real estate investment into self directed 404© compliant accounts. The owner/HCE would be the only participant invested in the real estate. Seems like this would be discriminatory. Any thoughts?