E as in ERISA

Look at Q. 29 http://www.asppa.org/archive/gac/2000/dol_q&a.htm#5

How does this transaction benefit the employees? It sounds like they are still stuck with an interest in the employer so they are not getting entirely out of the risk immediately. Why can't they just buy the stock back slowly over a five-year period? (And the answer should include the statement that "it's in the best interest of the participants if....")

I agree with the majority here. I saw a really good article year ago in BNA portfolios or somewhere like that distinguishing between disability that is paid to the employee from a third party insurer versus disability paid by the employer. If it's paid by the employer, then I believe that it's generally treated the same as sick pay and other paid leave. Although the facts aren't 100% clear here, it sounds to me like the insurance policy may be fairly irrelevant here. That appears to be merely the employer's mechanism for funding the obligation to pay disability with the employer as the beneficiary of the policy? So the payment from the employer to the employee would be like any sick pay policy or paid leave policy where the employer pays an employee for time when no work was performed -- which generally fits within the definition of compensation as long as no termination has occurred (which is a distinguishing fact in a severance plan).

New guidance expected soon? http://www.benefitnews.com/retire/detail.cfm?id=7304

You might want to check with a lawyer in your state. If your parents die intestate (without a will), their assets might be split according to state law -- generally something like one-third to each child. You wouldn't want this asset to count against your third. I presume that it wouldn't -- because it is going to pass based on the beneficiary designation not through the court. But you want an estate lawyer in your state to tell you that, not an unidentified person on a message board whose credentials you don't know.

? But this is the opposite. The automatic rollover rules aren't broader in every respect. The mandatory distribution rules allow exclusion of rollovers, while the automatic distribution do not. So in that case they are broader. But the mandatory distribution rules don't have an exception for after tax amounts and the eligible rollover rules (which the automatic distribution rules are a part of) have an exception for after tax amounts. So in this case they should be narrower as JM says. I tend to agree with JM.

Clients seem to be distrustful of two many blanket "NOs." So for some crazy reason the answer that seems to work best is: "Sure they can pull out of the medical plan at any time during the year for any reason. But they can't pull out of the 125 plan without of the qualifying event. So they can continue to make the contributions without getting the coverage....And then lose the unused contributions." And that seems to end the discussion.

Do they file a 990-T along with that? An income tax return in addition to the information return?

403(b) catchup under 415 So can't you use the 415 limit plus the catchup?

Do they file a 990-T (an income tax return)? If so, some look to the filing deadline for that return as the relevant deadline for various purposes (the 15th day of the 11th month, if fully extended). How are you getting 4/15 as the deadline for a for-profit?

Well courts of law and legislative history also agree with the premise that distributions should be put on hold once an order has been received -- and or possibly even if one is coming in. See subsection III.D. of http://www.benefitslink.com/articles/qdro.txt

Can you use the process as the proof -- and use that to provide that the presumption that the check was mailed on the date that it normally would have according to that process? I thought that in Evidence they indicated that you can use the process for proof in court.

April Fools!

One other thought: If the loan provisions limit loans to certain events and this is not one of those events. Unlikely. But maybe there are not loans for college tuition because those are readily available. But the hardship provisions allow distributions for tuition.

The IRS issued a field directive quite a while ago (maybe 10 years ago?) indicating that employee classifications that are based on hours worked or other time (like part time) could be an impermissible service requirement. (You can't have a minimum service requirement that requires more than 1,000 hours in a year and those time/service related classifications could violate that). I don't remember if they specifically mentioned the temporary classification. But many do not exclude that category anymore for that reason. Sometimes those who are brought on as temporary might be working in a specific unskilled job category that could be used in lieu of the temporary category. Because then its not a service or time related exclusion. Or sometimes there is a safety provision that says if they've been there a year, then they will get in anyway.

What are the plan terms and what is the method by which "hardship" is determined? In most cases, the plan will either have the safe harbor provisions or include some reliance on the employee's representations as to the hardship. As noted above, the safe harbor rules state that the hardship cannot be "deemed" necessary if there are other distributions (e.g., loans) that would be available first. As also noted above, even if the plan is not safe harbor, the rule applies. Because the employer cannot rely on an employee's representation of the need if they know that there are other distributions (e.g., loans) available. If the plan is not safe harbor and does not rely on employee's representions, but rather does a full blown investigation into the employee's financial condition, then I suppose it may be possible to ignore the fact that a loan is available if the total facts demonstrate the need despite the availability of the loan. But I'm guessing that this employer is relying on representations of need? Now the new regulations do say that the employee doesn't have to take any counterproductive action...

The DOL regulations describe what must be in the SMM: http://www.dol.gov/ebsa/regs/fedreg/final/2004021591.htm They must also get the 402(f) notice with the additional information about automatic rollovers: http://www4.law.cornell.edu/uscode/26/402.html There are examples of both on Corbel's web site. No annual notice requirement.

In some cases, there is not a strict legal answer. It is more just a question of who is going to enforce the rule and what evidence are they going to review. In this case, I think that the party that would most likely catch the failure to pay the 10% penalty is an IRS plan examiner. The focus of the IRS' review is generally the plan records -- plan sponsor and participant records and trust records. I'm assuming that those would reflect the correct post-March 15 date? And I assume that there would not be a copy of the check to the participant in the plan's records? (Is it going to be cut from the employer's checking account? In many cases, the amount would be debited from the plan's account and the check would be cut from the bank or trust company's account but I doubt that they'd be a party to this.) Is it likely that the only way that the IRS would see the check is if the IRS raised a question of the 10% penalty and the client responded by producing the check from their account that was backdated to pre-March 15. If that were true, I doubt that the backdated check is going to help the client at that point. It is going to make the auditor doubt the client's honesty and the audit will take on a different tone. Hence, Kurt's comments.... If the facts were different and the plan's trust was debited prior to March 15 but the check was actually dated after March 15, then I doubt that the IRS would look for the check unless it was a significant amount. If they did look at the check, then it might depend how late after March 15 it was actually issued, etc. If those facts are bad (large check issued a long time after March 15), then your client would have problems in that case too.

Participant has $1,010 account balance. Participant accounts are charged $20 for distributions. Is that a cashout or automatic rollover?

For participants whose use of computers is "integral" to their job, the electronic delivery rules are pretty easy. For others, you have to comply with the notice and consent rules. Those rules potentially require that the person consent in a way that "demonstrates" that they can receive the information in the electronic form that will be used. I've never quite understood how the person is expected to "demonstrate" that they can receive the info in a Word or pdf format.... I presume that it has to be more than just an e-mail consent? If you can't meet the requirements, paper is required. And as noted above, participants can always request paper too. http://www.benefitslink.com/erisaregs/fina...cdisclosure.pdf

Remind everyone that what the IRS will normally see on audit is the plan records -- which I presume include the real date of distribution -- and not a copy of the check... And I like WDIK's answer a lot....

I think that most are providing the product to clients just because they have to -- as opposed to "embracing" it. The intent of the rule is good. To keep people from having retirement money cashed out. But from a practical standpoint I don't think that the automatic rollover solution is the answer. For all those who actually just wanted the cash, there is now more work to be done on their part and the administrators to get that cash to them. For those who will get automatically rolled over -- because they care so little that they will just let their employer move their money to an IRA provider that they know nothing about, it seems that there is a reasonably significant likelihood that they will get separated from the money over the long run. They will move a couple of times. Their address won't get updated when they move from their parents' house to the friends' house, etc. A lot of the accounts will get escheated. In five or ten years, John Doe in Anytown USA might remember that he worked at ABC Co in Anytown this year and that he had some retirement money there. He is less likely to remember that his plan was at Fidelity or another large national provider in a different state than his employer -- even less likely to remember that the money got moved to an IRA of Fidelity or that other provider. The HR people at ABC have no responsibility to help him find that money beyond the notices that he gets this year. He might be more likely to get some of the money if it stays in the plan -- even if he gets charged an annual fee for the account as a terminated participant.

Schedule P is not required. Its a filing for the exempt trust with the primary purpose for filers being to run the statute of limitations on the trust. So that should you get audited they can theoretically only go back three years. Any years for which there is no Schedule P they can potentially audit forever. So does it matter?

Income taxes if it is a regular IRA.

This is a 401(k) plan and the participant was eligible but not actually contributing during the first part of the year, then terminated during 2003 without a balance, and then was re-hired in Feb 2004?