E as in ERISA

Under 457(f), the taxability is based on time of vesting not cash payments.

Is there any question of whether the contractor has satisfied its obligation to the government? Those employees who got cash at termination obviously didn't get $0.25 per hour of MEDICAL benefits. Does the contract allow that?

Historically a pension plan auditor wouldn't even be trained to look for individual issues on a 1040 -- the auditor would just be looking at the deduction for the pension plan.

See Section 402(f) and related regulations. If the distribution is eligible for rollover, you must provide the required tax notice at least 30 days before distribution (although they can waive the 30 days).

Does the plan exclude non-resident aliens? They would potentially be included in the "total employees" of the employer, but excluded on the line for "non-resident aliens."

No. The only impact is that it is not a STANDARDIZED plan. In other words, it's more like it adopted a non-standardized prototype and can't rely on the opinion letter for the prototype. It doesn't affect its qualification per se. But you probably also want to make sure you actually pass coverage, etc.

I believe that it is becoming more common for standardized prototypes to actually require all the members of the controlled group to actually sign on as adopting employers. This actually helps in some cases. For example, if a big company is buying a little company that has a standardized prototype, they don't have to worry about all the employees of the big company being participants in that plan as a result of the merger. They take advantage of the transition period for coverage. But its obviously more dangerous in other cases....

It may be semantics. He may just be saying that a standardized prototype may be used in a non-traditional way. But that doesn't mean that it has the "protection" that is generally afforded the plan -- and that is what you are really getting at. Ask him the question differently. Ask him if this plan has the protection of a standardized prototype when it only covers some entities in the controlled group. E.g., does the plan have the presumption of automatically satisfying coverage? Can the plan even rely on the opinion letter of the prototype -- or should it obtain its own determination letter?

What does your sub-transfer agreement say? Does it obligate you to provide this additional service for your current fee -- or could you charge additional fees for that service?

I've noticed that a lot of "asset sales" for tax purpose are actually the sale of an LLC interest. E.g., in some cases, the seller creates a new holding company. Then it converts the operating company with the assets into an LLC -- and checks the box to make it a "disregarded entity" (treated as a division) for corporate tax purposes. It then sells the interest in the LLC. But the tax people treat it as an "asset sale" since it was a "disregarded entity." You're normally supposed to treat the entity the same for all tax purposes. So one would assume we could apply the "asset sale" rules for benefit plan purposes (i.e., the plan and related liabilities would not transfer to the buyer). But what if the operating company was the party that signed the adoption agreement as sponsor? Can you really say that the sponsorship doesn't transfer to the buyer when it purchases the LLC? I don't think that this question has been answered. I advise that one take some of the precautions that you would in a stock sale -- i.e., make sure the sponsorship is legally transferred to the holding company prior to the time of the transaction. Make sure that there is no legal relationship that would carry the liability over.

I presume the full scope audits are done because the companies are filing 11-Ks? My understanding is that sometimes there is a preference by certain parties (I'm not always quite sure who is raising the issue -- but sometimes investment bankers, analysts, etc.) that all SEC filings of a company are done by Big 4 firms and possibly other national or regional firms. But that doesn't mean that it has to be the same firm.... In today's environment, might be a good idea to have a different firm doing the plan audit, so they're not afraid to put company stock through the full analysis for "related party transactions" and question whether there have any situations in which there may have been any influence by company executives on the plan participants to purchase company stock. But then again, are there any auditors who are actually reviewing related party transactions like they are supposed to?

There used to be "Larkspur" and "Judy Diamond" services. On Larkspur you could sort by a lot of different fields. I don't know the other services. I have never used the advanced freeerisa services, so I don't know if the sorting capabilities are what Larkspur's used to be. Here are the links: http://www.larkspurdata.com/dmdmpro1.htm http://www.judydiamond.com/about.html http://www.freeerisa.com/payERISA.asp You can also go to freeerisa.com for free, but it won't sort much.

Just remember that we have a common law system. Accordingly some think that the regulators interpretations are irrelevant; the law is whatever they think they can prove it is in a court of law.

I can't recall exactly how they did it. But I vaguely seem to recall it was sometimes done partly by piggybacking off existing benefit obligations. So if the company had previously committed itself to any death-related benefits for employees and was funding them on a pay as you go basis, then it might use that pre-existing obligation as a legal basis for claiming insurable interest and purchasing life insurance. That could apply to either current or retired employees. And in fact, it might be that in some states the insurable interest is only required at the time the policy is purchased? So if there is high turnover, the company can have insurance policies on employees who are no longer employed and aren't entitled to death benefits? The bottom line is that I think that there were some loopholes that hadn't been closed at the time the policies were being marketed.

Some lawyers will write opinions stating that the employer has an insurable interest in most of its employees under applicable state law. I don't know that case law has made that an impossible conclusion yet.

I'm assuming that what she signed up for was a medical spending account? So she should look for any reimbursable items that she may have paid for during the last half of the year? E.g., medical deductibles or co-pays, dental deductibles or co-pays, eyeglasses, etc. More importantly, see if the plan is going to reimburse 2003 over-the-counter drugs and similar items -- since the IRS issued that ruling in September or so making them reimbursable by a cafeteria plan. The plan may have a filing deadline of March or so, so don't delay.

To pax' note: There may be a significant distinction between one's probate estate and one's taxable estate. The asset doesn't have to be legally held by one's probate estate in order to be included in one's taxable estate.

I'd be cautious about parsing the transaction like that. In the fact situation described, there is a clear linkage between the earning of the points and the contribution. If the check is not used to make the contribution, the person won't earn the points. I'm not saying the law is clear on this. But I'd say it's grey. And when a potential PT is involved, I'd err on the side of assuming you can't do it. ERISA Section 406(b)(3) says that a fiduciary shall not "receive any consideration for his own personal account from any particy dealing with such plan in connection with a transaction involving the assets of the plan." I understand that what you're saying is that at the time the transaction occurs, the dollars are not plan assets. But I would think that the check would have to clear before you're actually entitled to the points? And aren't the dollars plan assets at that time? I'd want the transactions to be much more discrete before I'd be comfortable that this was okay. At the very minimum, I'd want the deposit of the check earning points to be a separate transaction from the deposit of the contribution. I'd want the latter to be clean. There should be no "challenge" in completing the transaction from a plan standpoint -- no risk that extra services will be incurred for which the plan might be charged.

Not from a dollar standpoint. But personal benefits are the ones most likely to be considered "egregious" when large dollar amounts are involved.

I agree with FundeK. I would start with the assumption that you shouldn't do it.

If premiums are paid by the individual on an AFTER tax basis, then the disability benefits may be tax free. Since the size of the benefits is potentially much higher than the cost of the premiums, most companies structure the premiums to be paid by the employees on an after tax basis (outside the cafeteria plan).

One of the advantages of both the Roth and 457 is the tax free buildup in the account -- which a taxable account doesn't have. If your tax bracket doesn't change much from when you're working to when you retire (e.g., 15% tax bracket for both), then there is generally not a lot of difference between the Roth and 457. E.g., assume you have $5,000 discretionary income. You can put $4,250 per year into the Roth (after paying taxes), invest at 6% (???), have $120,000 at age 65 and take out $10,500 per year for 20 years. Alternatively, you can put the $5,000 into the 457 (no taxes going in), invest at 6%, have $140,000 at age 65, take out $12,300 per year but pay $1,800 in taxes (net the same $10,500). You can't do that with a taxable account -- because both the "contributions" and earnings will be taxable as you go. E.g., you can put $4,250 per year in the account (after paying taxes). But right from the start your investment income will be taxed. So your net earnings rate will only be about 5%. Using the same scenario, you'd only have about $9,600 per month at retirement. The actual results depend on how you're investing, etc. (e.g., appreciating assets vs. income producing assets, etc.) You should do an analysis of your own specific situation.

I think that if expenditure is incurred primarily for a medical reason, you can generally deduct (or get reimbursed for) the entire cost with the main exceptions being as follows -- - Capital improvements. If you make an improvement to the home, etc. that also increases the value of the home, then you must reduce the deduction for the increase in value to the home. Certain improvements like wheelchair ramps, etc. are generally assumed NOT to increase the value. It is mainly items like whirlpools, etc. that have to be reduced. - Personal use items. If you buy a more expensive version of an item that is generally used by the public for non-medical reason, then you can only deduct the additional cost (the example given is the additional cost of Braille books for blind people). (P.S. In response to the comment on the use of wheelchairs -- the distinction between use of electric versus manual wheelchairs is generally not convenience -- but rather depends on the person's use of both their legs and arms. A manual wheelchair is generally prescribed when the impairment affects only the lower body. Use of the manual wheelchair helps build arm muscles and helps to maintain the upper body strength. That is critical in independent living -- so they can move themselves from the wheelchair to the bed, car, shower, etc. An electric wheelchair would only be indicated where the upper body is also affected by the impairment.)

I would argue "No" because in order to be part of the finance charge the fee has to be imposed by the creditor and has to be a condition of loan.

(877) 829-5500 ?