masteff

This probably needs the plan's ERISA atty to be involved. What is meant by a "validation form"? Was something on the original BDF incomplete such that they had to request clarification? Or was it merely "here's what you told us, is it right?" Does the plan actually specify this procedure or is this some bureaucratic policy that someone made up? If the plan didn't fully reject the BDF but merely held it for validation, then federal case law may fall on the side of the named beneficiaries. For example: https://bulk.resource.org/courts.gov/c/F3/297/297.F3d.558.01-3143.html Of course, following BG's line of thought above, is the plan's default bene the same or different that what's on the form?

I agree about having an ERISA atty vet it, but meanwhile here's some brief reading that might help... http://www.sdraservices.com/2011/02/15/sit-nofit-and-bernie-madoff-part-1/ http://www.sdraservices.com/2011/02/23/sit-nofit-and-bernie-madoff-part-ii/ http://www.jeffnabers.com/2008/07/24/coinvesting-with-your-plan-partnering-with-disqualified-persons/ http://www.dol.gov/ebsa/programs/ori/advisory2000/2000-10a.htm The most important sentence (in my opinion) from that DOL opinion for your current scenario is: "Moreover, the fiduciary must not rely upon and cannot be otherwise dependent upon the participation of the IRA in order for the fiduciary (or persons in which the fiduciary has an interest) to undertake or to continue his or her share of the investment." A few search words you might try in combination with "prohibited transaction" and "dol advisory" are coinvest and simultaneous invest

This might shed some light: http://www.buckconsultants.com/portals/0/publications/fyi/2012/fyi-2012-0731a-DOL-Retreats-on-Brokerage-Window-Safe-Harbor.pdf It seems the "R" in the FAB you mention stands for "revised". (My google search terms were: dol concerns brokerage windows)

http://www.dol.gov/ebsa/publications/qdros.html http://benefitslink.com/boards/index.php?/topic/21995-18-month-disbursement-restrictionsegregation-period/ You need to read up more on QDRO procedures to determine at what point you should be enforcing the 18-month segregation period on the participant's account. A number of factors you need to consider. For example, have you received a draft copy for preapproval?

Might read EPCRS under 2.05 "Future Enhancements". In (3) they discuss some issues w/ Roth contributions that are under consideration. http://www.irs.gov/pub/irs-drop/rp-13-12.pdf

I'm not a lawyer, so no idea if the word "stipulated" has any special meaning whatsoever. Technically, it's a DRO until the plan administrator determines it to be qualified at which time it becomes a QDRO. You don't declare it qualified, someone else does after the judge signs it. Based on your post, the cover letter explains the sequence of events to come. See "Who determines whether an order is a QDRO?" here: http://www.dol.gov/ebsa/faqs/faq_qdro.html And it's rare that a DRO would have been filed prior to the completion of the divorce, which you said was just last month. This is very normal timing. As to the taxes... Generally speaking, under IRS code sections 412(p)(12) and 402(e)(1)(A) (i.e., Federal Law), the alternate payee is responsible for filing and paying the taxes eventually due on assets transferred by a QDRO. You can speak w/ your attorney about what, if any, options you have to make your ex-spouse reimburse any tax you have to pay when you take a distribution from the plan.

See question 15 on page 8 here: http://www.americanbar.org/content/dam/aba/migrated/2011_build/employee_benefits/2006_qa_irs.authcheckdam.pdf For anyone having trouble finding them to read: Rev Rul 72-275: http://www.charitableplanning.com/document/678257 Rev Rul 74-55: http://www.charitableplanning.com/document/676524 Rev Rul 74-56: http://www.charitableplanning.com/document/674376

No. http://benefitslink.com/boards/index.php?/topic/54072-sub-s-as-comp/

I googled "nqdc irs code" and found this link: http://www.irs.gov/Businesses/Corporations/Nonqualified-Deferred-Compensation-Audit-Techniques-Guide-(02-2005) Edited to fix the link

How many other officers do you have? Remember that: "The maximum number of employees who can be treated as officers for purposes of counting as key employees is 50, or, if lesser, the greater of 3, or 10% of the employees." http://www.irs.gov/irm/part4/irm_04-072-005.html You need to look at facts and circumstances. You ought to have a high level of certainty before changing from a prior methodology. Assume your predecessor was competent, not incompetent, so can you reach their same conclusion? Do the CFO and CIO have any corporate authority or are they merely high level managers with big titles? Reg. 1.416–1, T–13 (emphasis added) Q. For purposes of defining a key employee, who is an officer? A. Whether an individual is an officer shall be determined upon the basis of all the facts, including, for example, the source of his authority, the term for which elected or appointed, and the nature and extent of his duties. Generally, the term officer means an administrative executive who is in regular and continued service. The term officer implies continuity of service and excludes those employed for a special and single transaction. An employee who merely has the title of an officer but not the authority of an officer is not considered an officer for purposes of the key employee test. Similarly, an employee who does not have the title of an officer but has the authority of an officer is an officer for purposes of the key employee test. In the case of one or more employers treated as a single employer under sections 414(b), ©, or (m), whether or not an individual is an officer shall be determined based upon his responsibilities with respect to the employer or employers for which he is directly employed, and not with respect to the controlled group of corporations, employers under common control or affiliated service group. A partner of a partnership will not be treated as an officer for purposes of the key employee test merely because he owns a capital or profits interest in the partnership, exercises his voting rights as a partner, and may, for limited purposes, be authorized and does in fact act as an agent of the partnership.

In Notice 2009-68, the IRS says "It is expected that the IRS will publish a Spanish translation of these safe harbor explanations." But I find no evidence that they ever did. You could try calling some of the larger firms like Fidelity and TIAACREF and ask for a copy of theirs.

And, as the IRS notes in this link which discusses top heavy and key employees: "Review the top-heavy rules and definitions found in your plan document." http://www.irs.gov/Retirement-Plans/401(k)-Plan-Fix-It-Guide---The-plan-was-top-heavy-and-required-minimum-contributions-were-not-made-to-the-plan. (It also says as others have commented above: "It’s important to note the distinction between key employees, who count for top-heavy purposes, and highly compensated employees, who count for the ADP and ACP tests, but not the top-heavy tests.")

http://www.irs.gov/irm/part4/irm_04-072-008.html "4.72.8.1.2 (09-01-2006) Formality of Valuation 1.Whether a formal valuation is required will depend on the transactions that occur with the plan and the form of the plan. •For example, the valuation in a single participant plan, a self-directed account, or frozen plan can be less formal in a year in which the plan or self-directed account receives no contribution and makes no distribution or change in investment. 2.The reasonableness of the method for valuing plan assets is based on the surrounding facts and circumstances. Except for certain employer securities held by an ESOP, there is no absolute requirement the annual valuation be based on an independent appraisal. On the other hand, it may be reasonable for an agent to request an appraisal for hard-to-value assets under certain circumstances, such as when distributions are made to plan participants."

Do they have a prohibitted transaction issue if a plan distribution is used by a plan participant to become the plan sponsor? Especially if a plan fiduciary has to amend the plan and said fiduciary will directly benefit from the transaction?

I will assume that you had previously established an HSA and received contributions (you can't get a deposit if you don't have an account). Generally speaking, under IRS Reg 54.4980G-4, since you were an employee on the first of the month, then I'm unsure why you wouldn't be eligible for a contribution for that month. You really should talk to the person who administers employee benefits at your former employer. It may simply be a software error (ie they terminated you in the payroll system and it skipped your HSA contribution).

From Notice 2007-07: "Q-18. How is the required minimum distribution with respect to a nonspouse beneficiary determined if the employee dies on or after his or her required beginning date? A-18. If an employee dies on or after his or her required beginning date, within the meaning of § 401(a)(9)©, for the year of the employee’s death, the required minimum distribution not eligible for rollover is the same as the amount that would have applied if the employee were still alive and elected the direct rollover. For the year after the year of the employee’s death and subsequent years, see Q&A-5 of § 1.401(a)(9)-5 to determine the applicable distribution period to use in calculating the required minimum distribution. As in the case of death before the employee’s required beginning date, the amount not eligible for rollover includes all undistributed required minimum distributions for the year in which the direct rollover occurs and any prior year, including years before the employee’s death." What this means is... the plan administrator cannot let you rollover the MRD amount and since the rollover has to be done via a direct rollover, the plan administrator is responsible for making the determination of what is the MRD and what is the rollover. They should issue the checks and code the 1099-Rs accordingly. As to the specific question of "can aftertax money satisfy your MRD?" The answer is yes, an MRD can be satisfied with aftertax money.

You'll really want to consult your plan to find out how they administer it. One argument is that an MRD is based on a life expectancy and therefore is an annuity. As a consequence, after-tax money is distributed porportionately to other monies (if 10% of your account is aftertax money then 10% of your distribution is aftertax). Keep in mind that the aftertax money is then divided between nontaxable contribuitons and taxable earnings. The alternate is that it's not and therefore, if the plan provides for it, all your aftertax money can come out first.

I agree. Make a note for the file that personnel have been instructed re: the acceptance (or non-acceptance) of rollovers.

Might review the instructions for 1099-R, especially the part about corrective distributions. Arguably, the plan made a self correction under EPCRS.

The following thread might be helpful, particularly the large post towards the end: http://benefitslink.com/boards/index.php?/topic/42558-match-of-more-than-100/ Keep in mind that the disproportionate match rule was added to prevent abusive bottom-up corrections.

The other factor you have to consider is what your plan document says. You plan may very well say that.

You have it backward. Automatic rollover applies to $1000 - $5000. http://www.irs.gov/pub/irs-drop/n-05-05.pdf

Is it Notice 2001-56? http://benefitslink.com/src/irs/notice2001-56.html

http://www.irs.gov/Retirement-Plans/Retirement-Plan-FAQs-Regarding-Contributions---S-Corporation

I'd already started to look the code cites before BG's answer above that I agree with, so here it is... 72(p) says in part: "one-half of the present value of the nonforfeitable accrued benefit of the employee under the plan" 411(a)(7) (which defines "accrued benefit") says in part: "in the case of a plan which is not a defined benefit plan, the balance of the employee’s account"