masteff

Correction: substantially level amortization requirement. A subtle difference but one that has been taken to allow for a few but not many extra payments.

Not sure if it's an ERISA atty so much as a tax expert as, my understanding, is it's mostly a function of the relevant tax treaty between the two countries. I have the impression country-to-country rollovers not commonly allowed but have no knowledge specific to Ireland.

jpod (and zara) - another thought occured to me that might help explain... Expenses reimbursed by FSA, HSA and MSA distributions are not allowed by the IRC to be deducted because those accounts are primarily funded by pretax money (FSA contribs excluded from W-2 earnings and HSA and MSA deducted on Form 1040). You got your tax savings when you put the money into one of those special tax advantaged accounts so it would be double-dipping on tax savings if you also deduct a distribuition-related expense.

From Notice 2004-50 that Chaz mentioned above (emphasis added)... "Q-39. When must a distribution from an HSA be taken to pay or reimburse, on a tax-free basis, qualified medical expenses incurred in the current year? A-39. An account beneficiary may defer to later taxable years distributions from HSAs to pay or reimburse qualified medical expenses incurred in the current year as long as the expenses were incurred after the HSA was established. Similarly, a distribution from an HSA in the current year can be used to pay or reimburse expenses incurred in any prior year as long as the expenses were incurred after the HSA was established. Thus, there is no time limit on when the distribution must occur. However, to be excludable from the account beneficiary’s gross income, he or she must keep records sufficient to later show that the distributions were exclusively to pay or reimburse qualified medical expenses, that the qualified medical expenses have not been previously paid or reimbursed from another source and that the medical expenses have not been taken as an itemized deduction in any prior taxable year. See Notice 2004-2, Q&A 31 and also Notice 2004-25, for transition relief in calendar year 2004 for reimbursement of medical expenses incurred before opening an HSA." Based on the code section above, "taken as an itemized deduction" means the amount entered on Sch A Line 1, regardless of what amount ultimately flows to Form 1040.

223(f)(6) says: "(6) Coordination with medical expense deduction For purposes of determining the amount of the deduction under section 213, any payment or distribution out of a health savings account for qualified medical expenses shall not be treated as an expense paid for medical care." In short: an expense that has been used to take a distribution from an HSA cannot be used on 1040 Schedule A as a medical expense. If it cannot be included in 1040 Sch A Line 1 then it is entirely irrelevant what happens further down on that schedule (ie the 7.5% on Line 3). You can use an expense for an HSA distribution or for an itemized deduction, but not both. It's moot that it's from a prior year.

No. IRS Code Section 223(f)(6)

But it's an employer payroll tax issue, not a plan issue. From a professional ethics point of view, I'd say at the outside most to mention to the employer that they might need to review their payroll practice. You could refer them to IRS Publication 15, page 40, "Retirement and pension plans".

Are you misconstruing the words "is not taken into account"? It means "disregarded", not "disallowed". Furthermore, the relevant subparagraph says "under the ACP test"; so the concept only pertains to the ACP test. So your contributions must pass the ACP test while excluding anything that is disproportionate. (ii) Disproportionate matching contributions —(A) Matching contributions in excess of 100%. A matching contribution with respect to an elective deferral for an NHCE is not taken into account under the ACP test to the extent it exceeds the greatest of:

It is possible in a non-safe harbor plan to have a last day rule. Safe harbor plans are not allowed by Federal law and regulation to have that rule, although someone there may not understand that. Be sure to ask for a copy of the SPD (Summary Plan Description), this should contain their ERISA claims procedure. If they don't deposit the funds by the dates mentioned above, you should follow this claim procedure (including how to appeal your claim) to ensure your claim has the best legal footing and doesn't get thrown out for not following it.

I would speculate that would be items covered in Tom's document that can be found by searching for the words "exlude" and "disregard".

A question would be whether the ex wife is getting the $43K because a) she's entitled to 1/2 of the marital portion of his retirement account or b) they're using it as available funds to finance a division of property (for example, he's keeping the house so she's getting money). If the intention is a), then, in my opinion,it's 100% correct that she should be the one who has to pay the taxes (now or in the future) on her portion of the retirement account. She wants 1/2 of a tax-deferred asset without owing the deferred tax. If the intention is b), then the question is whether they allowed for the income tax effect in determining the $43K in the first place. For example, if she was supposed to get $35K but they added $8K for taxes, it would be double dipping if she makes him pay the tax now.

http://www.irs.gov/Individuals/Self-Employed/LLC-Filing-as-a-Corporation-or-Partnership Merely saying they elected to be taxed an S-corp doesn't mean they had a change in legal entity. When they became an S-corp, did they file a completely new business with the secretary of state (or other agency in your state that handles business registration)? Or did the LLC simply file a form 2553 electing to be treated as an S-corp? What do their forms 2553 and 8832 say? Getting an EIN is almost certainly a result of the S-corp election (a change in form of taxable entity); it is not conclusive proof of a change in legal entity.

http://www.irs.gov/uac/Subscribe-to-IRS-GuideWire "Note: Subscribers will not receive all IRS guidance, only guidance issue in advance of its publication in the Internal Revenue Bulletin; for a publication of all IRS guidance, see the Internal Revenue Bulletin."

If nothing else, salary reductions are subject to the annual "use it or lose it" rule, so 125 would be the wrong way to fund beyond the end of the current year. Although you could probably set up a VEBA but I only know enough on those to be dangerous to all parties involved. I think they're half way down the wrong road. IRS Pub 15-B, page 7, Cobra premiums are excludable from income whether the company pays them directly or reimburses the former employee for premiums paid. While Cobra is generally shorter than 24 months, I believe it's safe to extrapolate the Service's postion to 24 months; they're no less former employees in month #24 than they were in month #18. http://www.thompson.com/public/headlines.jsp?id=46 And I'm a little confused because what you quoted first mentions continuation coverage, so is the deduction from the lump sum for that continuation coverage or for some other coverage? If it's for the contination coverage, see immediately above. If for something else, then I'm confused on for what. Side thought: if it's an insured plan, the insurer might not permit more than mandatory Cobra, so months beyond that might get messy.

Page 2 here agrees there is no new penalty for this: http://www.sibson.com/uploads/171cc0fb56ae8cfe8f882721c98bd153.pdf

It appears that state law may require it in some places. Looking at the following BDF, they cite community property laws in several states as requiring it. http://www.wellsfargoadvantagefunds.com/pdf/forms/desig_bene.pdf (But that's as far as I researched it so it's a far from complete answer. You'd need to research further if you have a specific question in a specific state.)

You appear to have read Reg 1.402A-1 Q&A's 4, 5, and 9. I'd say Q&A-9 is the closest to affirming that any and all rollovers can be put into the same bucket. I'd even go so far as to say both rollover and non-rollover designated Roth monies could be put in a single bucket if your plan didn't distinguish between them (e.g., same vs different distribution rules for rollovers, possible issues in determining hardship eligible money). Since you correctly identified that per 1.402A-1 Q&A-4(b) the 5-year clock is based upon the earliest of all designated Roth monies rolled in (or those in the receiving plan if it predates the rollovers), I see no reason to keep each rollover separate. More specifically, we never tracked rollovers separately prior to this and I see nothing unique about them being designated Roth rollovers that would necessitate such now. EGTRRA did add the ability to rollover aftertax money, so off the top of my head you'd potentially have 3 rollover buckets: regular, aftertax, roth. I too would love to hear if anyone has pratical experience that suggests otherwise?

See this recent thread: http://benefitslink.com/boards/index.php?/topic/53667-participant-loan-corrections-epcrs/

While I don't know an example offhand of what might be material in the plan that's not also in the SPD, it is incorrect to say an SMM is only needed if the SPD changes. If I can't convince you with the code I cited above, perhaps the DOL and US Senate will persude you... The DOL website says: "The Summary of Material Modification (SMM) apprises participants and beneficiaries of changes to the plan or to the information required to be in the SPD." http://www.dol.gov/ebsa/publications/fiduciaryresponsibility.html This Congressional Research Service document on page 8 says: "Under Section 104(b)(1), a plan administrator must provide a summary of any material modification (SMM) in the terms of the plan as well as any change in information required to be included in the SPD." http://www.aging.senate.gov/crs/pension7.pdf

29 USC § 1022 (ERISA 102) says in part "A summary of any material modification in the terms of the plan and any change in the information required under subsection (b) of this section shall be written in a manner calculated to be understood by the average plan participant and shall be furnished in accordance with section 1024 (b)(1) of this title." You made a change in the terms of the plan. So then the question is whether it's a material modification; arguably, elimination of true-up is material.

Earnings on $771 is a pittance. I'd add earnings just so you can argue that you were within the spirit of EPCRS' correction principles should it get questioned later.

I respectfully disagree... She can only defer the first year's MRD to 4/1 of the following year IF she doesn't take any distribution during the current year. Since she took a distribution, then per Reg 1.402(c )-2 Q&A-7, it counts towards her MRD requirement to the extent it "has not been satisfied" (also, the cite I provided above says the distributing plan doesn't care that the distribution was rolled over). So, it's appropriate to issue 2 1099's AND strongly advisable to currently send the participant (not the IRA custodian) a letter explaining the ineligible portion and inform her that she needs to take a corrective distribution from the IRA.

Notice 2005-05 which discusses automatic rollovers provides sufficient crossreferences for you to find the exact provisions. http://www.irs.gov/pub/irs-drop/n-05-05.pdf

It depends on what coverage was purchased. You'd need to see the fidelity bond to read what it covers.

From the reg I cited above: "In addition, if the amount rolled over is received in a different calendar year from the calendar year in which it is distributed, the amount rolled over is deemed to have been received by the receiving plan in the calendar year in which it was distributed." Basically, you can't avoid an MRD by having your rollover be "in transit" on December 31st. Just imagine if you took a distribution on 12/30 every year and deposited it on 1/1 two days later... in theory you'd have a zero balance on 12/31 and never take an MRD. So the Reg closes that loophole.