Bird

Yeah but the IRS response in the link provided above does not make that distinction. I for one am not going to allocate PS contributions in two steps just for TH purposes.

We did something similar and figured "screw-em." That is, we didn't line up each letter in the stupid little box. It doesn't appear that it will need to be scanned.

I have a plan where the participant named her spouse as (partial) beneficiary of plan benefits. The participant died (before her required beginning date). The spouse died a month or so later, before taking any benefits. Spousal benes can roll to an IRA, and in 2007 non-spousal beneficiaries can roll to an IRA. In this case, we'd love to be able to roll the benefits out somehow, but I don't see how it's possible...the spouse is the named bene for purposes of RMDs, but the estate is effectively the beneficiary for purposes of actually making the payments, and the estate can't do a rollover. Can anyone convince me of some way that we can get this money out of the plan in some kind of a rollover?

I think that's all you needed to say. I'm not sure if you have a right to know who the beneficiary is. It sounds like Delta and Fidelity are still passing the buck back and forth, and I think your attorney may have to be the one to pin them down. I wouldn't give up yet, but if there's another designation on file naming someone else, there's not much you can do about it without proof that it was superseded. If there's no designation on file, that may be a good thing, because the plan should have a default beneficiary which probably goes 1) spouse (not married so n/a), 2) children (none so n/a), 3) estate (it might name parents and/or siblings before estate).

408(a)(3): § 408 Individual retirement accounts. 408(a)(a) Pension Individual retirement account. For purposes of this section , the term “individual retirement account” means a trust created or organized in the United States for the exclusive benefit of an individual or his beneficiaries, but only if the written governing instrument creating the trust meets the following requirements: 408(a)(1)(1) Pension Except in the case of a rollover contribution described in subsection (d)(3) in section 402© , 403(a)(4) , 403(b)(8) , or 457(e)(16) , no contribution will be accepted unless it is in cash, and contributions will not be accepted for the taxable year on behalf of any individual in excess of the amount in effect for such taxable year under section 219(b)(1)(A) . 408(a)(2)(2) Pension The trustee is a bank (as defined in subsection (n) ) or such other person who demonstrates to the satisfaction of the Secretary that the manner in which such other person will administer the trust will be consistent with the requirements of this section . 408(a)(3)(3) Pension No part of the trust funds will be invested in life insurance contracts. The borrowed funds wind up as part of what is commonly known as the "side fund," i.e. non-insurance monies, and yes, that can be rolled over. Sorry but I don't know where to direct you for more reading.

Can't do it. There are creative ways to get a policy out of a plan and into the participant's hands with little or no taxable income to be shown - borrow against the policy while it's still in the plan, leaving only enough net cash value to equal the accumulated PS-58 costs, then distribute the policy. But you're left with a stripped-down policy that will likely need significant interest payments to keep it going.

I think the instructions are pointing out that the plan exists as long as it has assets, regardless of whether some documentation has terminated it. If you don't distribute assets in a timely manner, the consequence is that the plan is not really terminated and among other things, you have to keep the document up to date and file 5500s. It's possible that benefits or contributions could re-accrue as well, depending on how well or poorly the termination documentation was done. No, I've never been involved with this and hope not to.

Thanks. I re-read it and agree with you.

Form 5305-SEP says you can't use it if the employer is part of a controlled group. Not that you can't have a SEP, just that you can't use the IRS form. An investment company's adoption agreement has the definition of employer pasted below. Based on that language, it appears that if companies A and B are part of a controlled group, then either A or B could adopt the SEP and both can (must) participate in it. i.e if A adopts it, B doesn't have to do anything else to adopt the SEP other than make the contribution. All service with either company will count. So...if the owner started company A in 2002 (with no other employess), and then started company B in 2004 (with employees) he can adopt a SEP for company A with 3 year eligibility this year, and contribute from A and B for himself only, of course at the same percentage and subject to 415 limits. Any arguments against? Employer. Any corporation, partnership or proprietorship that adopts this SEP Plan, including any entity that succeeds the Employer and adopts this SEP Plan. For purposes of this SEP Plan, Employer shall also mean the Employer that adopts this SEP Plan and all members of a controlled group of corporations (as defined in Code §414(b)), all commonly controlled trades or businesses (as defined in Code §414©) and all affiliated service groups (as defined in Code §414(m)) of which the adopting Employer is a part. Employer shall also include any other entity required to be aggregated with the Employer pursuant to Code §414(o).

I don't know who/what you're responding to. If it's something I said please expand. I determined catchups by applying 415 but did not limit them under 415, I just limited deferrals to 100% of compensation. But 4275+15000=19275, more than 100% of compensation (17100). That exceeds 415, so we have to recharacterize the excess (19275-17100=2175) as a catchup, so the total catchup is 4275. I directly determined in earlier post that 100% of the catchup was a 415 excess, but I think you could look at it as 2100 being a 402(g) excess and 2175 being 415 excess. Still disagree?

She has to have earned income, no?

I believe that benefit statements are currently required upon request. PPA says that after 2006, benefit statements are required quarterly for self-directed plans and annually for other DC plans. PPA permits vesting info to be provided annually, and it can just be a description of how to do the calculation. This and other exceptions are described in PPA...IMO anyone potentially affected by this MUST read the relevant section of PPA (508) and not just rely on summaries. Here's one link to PPA: HR 4 ASPPA link I haven't heard from investment companies about whether they will or will not attempt to provide the supplemental info; I don't expect them to because in many cases they're just using "regular" brokerage accounts that happen to be part of a plan. We really don't know at this point whether brokerage statements, issued monthly or quarterly, plus a supplemental statement covering the blah blah that no one cares about, will satisfy the statement requirement. We don't know when the statements must be delivered. (Consider that annual statements, when prepared in conjunction with a tax return on an accrued basis, might not be prepared until 9 1/2 months after the end of the year.) We don't know...a lot. And don't hold your breath for DOL guidance. For now, I think we're going to assume that the brokerage statements themselves satisfy the basic "statement" part of the requirement and will issue some kind of supplemental statement covering the rest of the nonsense. It's one of those things for which there will be "widespread noncompliance" and probably not enforced very carefully. It seems to be a back-burner issue for the DOL but if they don't care I wish they would come out and say so.

I don't think deferrals can exceed earned income, even if catchups are available. A W-2 employee can't contribute more than 100% of pay, and I don't believe a Sch C taxpayer can either. (Although total contributions can exceed 100% of pay.) Here we have 21,375-4,275 PS = 17,100 net earned income after PS contribution. So the max (total) deferral is 17,100. Applying 415 (100% of pay) to the deferral contribution, before catchups, we're left with 12,825 (17,100-4,275). But we haven't used up all of the earned income, and catchups allow us to do that, to the tune of 4,275 (17,100-12,825). $12,825 - 401(k) deferrals $4,275 - catchup deferrals $4,275 - employer contribution $21,375 - total In this case 415 is the limit that defines the catchups, not 402(g).

I believe it is the date received. I think the mail date = filed date logic applies to IRS mailings because the PO and the IRS are both "the government" and that logic doesn't help here. I wouldn't be overly concerned about it; just get it out asap.

We work primarily on small plans and have a fair number using individual brokerage accounts. We have (had?) a decent system for handling them; we accumulate the monthly statements and reconcile them throughout the year, and just do an annual val on a balance forward basis, even though the accounts themselves are self-directed with the ability to trade daily. First, there is no way we're doing quarterly vals, at least not without tripling (or more) our fees, and I doubt that's an option. I doubt the investment companies will add any of the necessary verbage. I'm expecting/hoping that we'll be able to issue some kind of supplemental notice to go out around the same time as the brokerage statements that will cover the useless nonsense that is required. I'm not quite sure how the quarterly notice requirements will square with monthly statements but I'm hoping that something reasonable will develop. DOL is definitely aware of the issue.

I don't doubt that there are p/r companies requiring this, but it's unnecessary at best. Catchups are determined by exceeding some limit, not by a participant's election (!). The most common limit to be exceeded is, I would guess, the 402(g) limit, and I CAN imagine a p/r company wanting an election because they don't know anything about plans, but I can't imagine any GOOD reason why a participant would have to make an election to make contributions over that limit if they are catch-up eligible.

I seem to recall someone or other opining that since the PS contribution has to be mentioned in the SH notice, you're somehow locked in to the formula. I don't think so; I think you can change it, subject to the usual hours/last day rules.

I've always thought that an amendment that uses pre-approved language could still rely on the VS letter. It appears that you are simply replacing one set of permitted text with another such set (or sets) which to my way of thinking is ok. Having said that, it's always recommended to submit a 5310.

If he combined his skills would he be a pubic inspector?

Sorry. The first systematic distribution would be due then in 2006 as you first said; no change to anything else.

IF DOD is in 2006, the first systematic RMD isn't due until 12/31/07. (The later of the year following the year of death or the year the participant would have attained age 70 1/2.) Without thinking about it too much, I think the spouse could take all in 2006 and roll it all over to an IRA, since there's no 2006 RMD. Actually, it appears that she could wait up to 5 years and do the same thing, as you suggest - I don't see anything prohibiting this, even if it postpones the distribution beyond the participant's age 70 1/2.

He would be eligible, IMO. I don't think this is all that complicated. He takes his RMD in cash; that's a separate issue and isn't even relevant to the discussion. He requests a distribution in the form of a direct rollover to an IRA and then does the charitable thing from the IRA. The only issue is - does the plan permit in-service distributions, and if so can they be partial?

Yes. The problem is in this part of the quote from Dan: The word "after" should be "before." As Tom noted, that was essentially a one-year break on the new, more detailed notice requirements that were supposed to be effective for the 2006 plan year notices, as per the final regs.

I don't think there's any guidance beyond the final 401(k)/(m) regs from late 2004. And no more expected, that I know of...relief from providing all the details was requested but the IRS has made it clear that we have to comply with what it says in the regs.

Sandy- As I see it, you need to focus on one thing: What does the last beneficiary designation say? The hard part is figuring out who has it. It's not clear from your post where you're getting stuck; you say that Delta gave you numbers for his benefits - who was the 401(k) contact, Fidelity? And they're saying they don't have it? Then go back to Delta and tell them Fidelity says they don't have it. To be honest, the Summary Plan Description is not going to tell you all that much...it's just a general description of the plan. The one thing that's in there that might help is that it will list the Plan Administrator. That's the person or company that is responsible for maintaining such records and that's ultimately where you have to go to get answers. Good luck.