Lori Friedman

Kirk, You're correct when you say that the entire amount of the premium is income for a partner. I.R.C. Sec. 79 and its regulations, including the Table I uniform premium values, relate only to group-term insurance on an employee's life. The rules don't apply to partners.

KLAATU...there's a name I haven't heard in ages. "Calling occupants of interplanetary craft..."

$50,000 isn't the maximum life insurance benefit that can be provided to an employee. It's the amount of benefit that can be provided tax-free. The cost of coverage in excess of $50,000 is gross compensation to the employee. The taxable amount isn't the employer's actual premium cost, but an amount calculated using a uniform premium rate schedule. The authority is I.R.C. Sec. 79. For example, it's not unusual for an employer to provide group-term life insurance equal to 2X or 3X annual salary. That's ok, but if the benefit exceeds $50,000, the employee has to recognize some taxable compensation. Partners aren't employees, and they don't get nontaxable fringe benefits. If a partner is covered by his/her firm's group-term life insurance policy, the entire cost is treated as a guaranteed payment.

Andy, Do not...I repeat, do NOT, try to pretend you're too young to remember Billy Paul.

Janet, I thought the four food groups were sugar, caffeine, fat, and carbohydrates.

Elective surgery is medically necessary but done at the patient's convenience. This is in contrast to procedures that must be done immediately to save the patient's life or prevent physical damage. Elective surgeries are planned in advance and don't result from emergencies or sudden illnesses. I don't believe that the term "elective surgery" is ever used to describe a non-essential procedure done for purely cosmetic reasons.

Agreeing with Blinky and Bird. Sec. 414(v)(3) states that catch-up contributions are not "subject to any...applicable limitation contained in section...415©". Sec. 415© cuts annual additions at the lesser of $42,000 or 100% compensation, so neither ceiling should capture over-50 catch-up deferrals. TIAA-CREF clearly advises otherwise. I wonder how the company came up with its interpretation?

You're looking for I.R.C. Sec. 414(v)(3) -- catch-up contributions aren't subject to the 415 ceiling on annual additions to a defined contribution plan ($42,000 in 2005).

This one might be helpful, too: http://benefitslink.com/boards/index.php?s...=0entry100942

Ned Ryerson, why are you so quiet? Surely, you must have objections.

When you say "cosmetic", are you referring to a procedure to repair or reconstruct a physical anomoly?

Correct. There's no requirement that the contribution be made before the return is filed. The post-year "grace period" isn't truncated by the filing of the income tax return.

Just to clarify, nobody really "makes contributions to" a nongovernmental 457(b) plan. The arrangement isn't trusteed. Any deferred compensation amounts remain among the exempt organization employer's general assets.

IRA contributions -- the ones that are subject to the annual limitations -- must be made with cash. The authority is I.R.C. Sec. 408(a)(1). Rollovers to IRAs, however, can be made in-kind.

SWHT Andy, I'd love to join in this discussion, but I have to go get randomly tested for steroid use.

AndyH, I'm ROTFLOL.

Andy, this world's a better place because you're here. Please keep on doing all the things that you do. You're a very prolific contributor to vrious pension and benefit discussions. Your comments are always right on point and very helpful. Your "serious" posts outnumber your "light" posts by, I don't know, maybe 50 to 1? Please lighten up whenever you'd like. The grateful people among us do appreciate you.

PATA, I'm glad our comments were helpful. Heads up...the first 2005 exhibition game is this evening. So long, "Survivor", hello, Big Papi.

Fred, in a word, yes, for nongovernmental sponsors. There are very limited opportunities for pre-tax employee contributions to Sec. 401(a) plans (qualified plans). The plan must have a 401(k) provision, something that can't be offered by most qualified plans. A DBP can't have a 401(k) provision. It doesn't matter whether the employee contributions to a DBP are voluntary or mandatory, they're made on an after-tax basis.

Here's what my own experience has been: The IRS will waive the I.R.C. Sec. 4974 excise tax on a first-time failure. Things become more difficult if a taxpayer has multiple failures in different years. The IRS is likely to take the position that there's a lack of reasonable error. It's possible, but much more problematic, to get the excise tax waived over and over again.

There's a very recent discussion about the Aspen/Panel Publisher "answer books" at http://benefitslink.com/boards/index.php?s...=0entry111779

Qualified plan trusts are permitted to be shareholders in S corporations [i.R.C. Sec. 1361©(6)]. All types of income that pass through from an S corporation are taxable, however, including interest, dividends, and other items that would otherwise be excluded [i.R.C. Sec. 512(e)(1)]

mrjones, You might want to call a customer service representative at Aspen Publishers and ask if you can subscribe to just one on-line book.

I use that book, and other books in the Panel Publishing pension series, often and extensively. They provide very quick answers in straightforward language. But, I recommend subscribing to the on-line version rather than buying the hardbound books. The books become outdated rather quickly, are more cumbersome to search through, and are more expensive than the electronic copy.

Nope, Blinky's still in his fish bowl. You can see him in this photo.