masteff

John - I agree. The participant is a disqualified person with respect to at least one of the two accounts, if not both, so by 4975(f)(3), the rollover would result in a PT.

By virtue of 4975(f)(3) which says "(3) Sale or exchange; encumbered property A transfer or {sic - I think it should be "of"} real or personal property by a disqualified person to a plan shall be treated as a sale or exchange if the property is subject to a mortgage or similar lien which the plan assumes or if it is subject to a mortgage or similar lien which a disqualified person placed on the property within the 10-year period ending on the date of the transfer." So if we concede that person is a DP then by this special rule, it's a sale or exchange and is therefore a PT

Just to give something slightly more definitive... this page http://www.irs.gov/uac/Employer-Provided-Health-Coverage-Informational-Reporting-Requirements:-Questions-and-Answers which was last updated in May 2013 refers to this notice http://www.irs.gov/pub/irs-drop/n-12-09.pdf which affirms what GMK said.

I think a key difference between the John's scenario and the Supreme Court case is that in the case, the contribution was to satisfy the employer's funding obligation. http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=us&vol=508&invol=152 Since the proposed rollover is not "in satisfaction of a monetary obligation", then I'd argue it doesn't count as a "sale or exchange". And thus that particular PT is side stepped. http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics---Prohibited-Transactions http://www.irs.gov/irm/part4/irm_04-072-011.html Edit - sorry, was re-reading the case and 4975(f)(3) says it's treated as a "sale or exchange" if it's a transfer by a disqualified person. So then you're back to whether the individual is a disqualified person. I have a hard time accepting that the rollover is between the IRA and the QP and that the individual is not a part of the transfer. So I would say by virtue of 4975(f)(3) that it is a PT. But I'd defer to someone who can better define why the individual is not a DP in the scenario of a rollover from an IRA to a QP.

It's well discussed in prior threads on the topic of nonresident aliens (whether legal or illegal) that the plan generally doesn't care about citizenship if the person is eligible and has US-service-related compensation. In threads on the topic of terminated NRAs with improper SSNs, the general advice is the plan should hold the money until the person can present proper tax identification to take a distribution. The only difference here is the employee is not terminated but rather continuing in the plan. As Lou said, it's a data correction, no different than a misspelled name.

No. This is entirely a personal financial and tax decision. You might want to consult with a competent professional tax advisor who can help you assess your personal situation.

This IRS pub might be a starting place as you can formulate the follow up questions to ask about what they're really wanting. http://www.irs.gov/pub/irs-pdf/p969.pdf I suspect your primary confusion is the acronym... HRA is a valid one, but HSRA and HRSA aren't (or at least are not industry useage; who knows what terms some salesperson or inhouse consultant has tried to create).

Over the past dozen years, a number of cases have been filed for too conservative investments. It's not a topic I follow so I can't say exactly how successful those cases are. But I know they're filed and some are won. I do recall a decade or so ago there was a case w/ this exact investment scenario, invested entirely in treasuries, because it reminded me of a place I worked as a temp where the owner had done the same thing with a profit sharing plan. No idea how to research it further.

So are you saying the person is deceased and the executor has contacted you to make delivery of the bequest? If you're at that stage, then you should spend the money to consult w/ an ERISA attorney.

If he's really serious about doing this, I'd suggest he file for a private letter ruling. Considering the potential worst case scenarios (e.g., plan disqualification and excise taxes), it's worth the price to know if it's going to work or not. Or for the price of filing a PLR he could set up a special trust just to benefit his former employees. That way the money won't also go to benefit other plan participants who weren't his employees. Maybe give the trust a 20 year life and disburse to the employees at the earlier of 20 years or the employee attaining age X. He could contact a "community foundation" in his area and they might agree to administer it if he wanted to put some additional $ in and set it up as a charitable remainder trust (still funded by a bequest).

Reasonable accomodation is under the Americans with Disabilities Act (ADA) not the Family Medical Leave Act (FMLA). FMLA does have a related feature which has to do with intermitent absence from work due to an on-going condition. ADA applies if your employer has 15 or more employees. Your initial recourse is to contact the EEOC. http://www.eeoc.gov/laws/types/disability.cfm Use the link at the top-right of that page to find and contact your local EEOC field office at your earliest opportunity.

I'm sure there are other orgins to it but my experience it's about adverse selection and death bed marriages. True story -- When I worked at a large corporation, w/in the Benefits Dept, we'd refer to certain plan amendments by name of the executive who was the cause of that amendment. The amendment which removed the one year marriage requirement was named for an executive dying of cancer who married his girlfriend. The amendment plus their near death bed marriage gave her a lifetime income where no legal right existed before.

Remember that your original calc of earnings is no longer correct. You originally stated that $6K should have been at least $9K. But we now know that $3K of the $6K was earnings. Which means you got $3K earnings on $3K contributions. By all means look their calc over carefully, but be sure you reset the numbers you use in your own comparison calc. EDIT: Also keep in mind the timing of the contributions. The market didn't collapse until September/October of 2008 and the worst wasn't until early 2009. While you would have received some of the contributions at the low point, presumably, some of them were at much higher price levels.

From her article: "Moreover, the level of monthly benefits at 70 appears appropriate given the increased deductions for Medicare premiums, the greater taxation of benefits, the declining importance of the spouses’ benefit, and the diminished sources of other retirement income." Wow, "appears appropriate" is such a subjective declaration. What appears "appropriate" to me is that more money is better than less money. And that list of "givens" is quite the qualifying statement. Not to mention that it essentially cuts off one of the legs of the so-called "three legged stool" of retirement income. Social Security is not intended to be a sole source of income. That it is the sole source of income for some people is not a failing of the Social Security program but of an economy driven by immediate gratification and inadequate financial education.

Phrases like "consulted with the IRS" and "in accordance with the direction by the IRS" are indicators that your company submitted a correction plan to the IRS using the Employee Plans Compliance Resolution System (EPCRS). The earnings calculations under EPCRS are not intended to indentically replicate the performance you might have had. It is intended to be fair and equitable to the majority of participants. If your individual portfolio performed better than the EPCRS method provides, you won't be credited with additional earnings; but on the flip side, if your individual portfolio performed worse than the EPCRS method provides, you won't be penalized with lesser earnings.

IRS Form 5329, instructions for line 2, exception # 04: "Distributions due to death". Note that this exception, unlike some of the others on page 3 does not specify "qualified retirement plan" or "IRA" as it applies to both. (It's worth making a note of this form and exception as she may well have to file that form and claim that exception in future years; sometimes it's easier to file 5329 than to argue w/ investment firms over 1099-R coding.) My opinion is the IRA should be titled as an inherited IRA until she reaches age 60+ at which time she could elect to treat it as her own and thus delay minimum distributions by two years when she reaches 70 1/2. Failure to title it as an inherited IRA is likely to cause problems. The brokerage firm is likely to insist she can make it her own, she needs to be firm and insist it be an inherited account. Not that Fidelity is always right but here's what they had to say on it... https://www.fidelity.com/viewpoints/surviving-spouse-IRA "If you find yourself in this situation, you can take withdrawals penalty free, even if you’re under 59½, if you instead transfer the assets to an Inherited IRA, also known as an IRA beneficiary distribution account."

Ooh, to the mother as the executrix... good call.

Yes, I agree w/ all of jpod's post in this thread. And see the edit I added a couple minutes ago to my post above (I was trying to avoid double posting so added it there before seeing the newest post above).

Under section 1.401(a)(9)-4, Q & A 4, the designated beneficiary must be a beneficiary on the date of the death of the employee and remain a beneficiary as of September 30th of the calendar year immediately following the calendar year of the employee’s death. I take that as saying that if the primary beneficiary isn't alive on 9/30 of the following year, then the contingents become the primaries. 1) You're overlooking subparagraph © of that Q&A-4. 2) That Q&A has to do with the specially defined term "designated beneficiary". It is possible under Q&A-3 of that same section to have no "designated beneficiary". A "designated beneficiary" is defined for purposes of 401(a)(9) (see Code 401(a)(9)(E)), not for purposes of plan inheritance. 3) As asked above, what does the plan say? If it doesn't provide for a delay after death in determining the beneficiary (such as no later than Sept of the following year or at the time the beneficiary's interest is moved to a separate account or distributed), then I don't see how you could delay. Edit: Just noticed that (c ) of that Q&A-4 says in part "without regard to the identity of the successor beneficiary who is entitled to distributions as the beneficiary of the deceased beneficiary". Which clearly indicates the Service did not intend that determination of the heir/beneficiary is delayed with the determination of the "designated beneficary".

At the very least, research the rules of intestate succession in your state. You can get an overview here: http://www.nolo.com/legal-encyclopedia/intestate-succession You might be able to find other free legal resources in your area that would save you the expense but provide trustworthy info. I would start by asking the mother if the participant has a living father (ie the other parent), siblings (half or whole), children or grandchildren (as mention in a recent forum thread, you might review the obituary for clues as well). Then I would take those facts to a local attorney and pay for 1/2 hour of time to be told how your state's intestate succession rules apply. Also ask about small estate affidavit. Then require the appropriate person(s) to complete the affidavit if applicable and distribute. Your risk is $100 to an attorney vs $800 to another heir. Edit: Example of why intestate succession matters: if I died in Oklahoma where I live, my mother would get everything. but if I moved to Missouri and died, my mother and my brother would split equally.

I suggest you consult an attorney in your state and determine if your state allows for an "affidavit of small estate". EDIT: FYI - the authority given to the mother by the POA died with the participant

Having held the designations of CEBS and SPHR in the past, I'll just weigh in that this is an employment law issue rather than a benefits law issue. You indicate this was not a workers comp issue. You might double check ADA (but I would start with the presumption that it entirely fails the definition of a protected disability). If nothing else, this is a BFOQ with no room for reasonable accomodation. It would be worth paying an employment lawyer for an hour for advice before doing what I would do which is require the employee get a review from a second doctor, perhaps an occupational injury specialist. If you do request she get a second opinion, review ADA for rules on keeping medical records separate from the employee's general personnel file.

Is it a questionable pattern? Yes. Is it abusive? IMO, no unless the Service gives us better guidance on what that means. Abuse to me would be multiple employees who all come in w/ letters from the same dentist requiring prepayment for root canals, or an employee submitting the same paperwork over and over with the date blotted out or questionably altered. The problem w/ the few solutions that come to my mind is those would punish people with truly legitimate recurring hardships, such as a parent putting a child thru college or a medical patient with ongoing expenses.

1) the 2 year minimum threshhold comes from Rev Rul 71-295 http://www.charitableplanning.com/document/666344 (ran across it last week answering another question) Not sure where the 5 years of participation service originates but I know of a plan that has a similar 2 years seasoned / 5 years participation service combination. 2) Rev Rul 1980-276 says in part: "The attainment of a stated age in a profit-sharing plan is merely one of several events that may be designated as fixing the time for making distributions from the plan. In view of the definition of normal retirement age found in section 411(a)(8) of the Code, and in the absence of any statutory prohibition or limitation, a profit-sharing plan may specify any age for distribution of benefits and, also, any age for normal retirement if it is less than the later of age 65 or the completion of 10 years of participation." So you could have any age. Note that 1.401(b)(1)(ii) uses the word "or". So in my opinion, you could eliminate the attained age requirement entirely. The plan I mentioned above did not have an age requirement, just the 2 years seasoned /5 years participation service part of it. But [disclaimer] consult an ERISA atty who can review the actual language of your plan. Edit: found it! the 5 year participation rule comes from Rev Rul 1968-24 http://www.charitableplanning.com/document/676509

Actually, I'm measurably more comfortable at 15% than I was with a 50/50 split.