masteff

Conventional mortgages are fully collateralized, similar to a plan loan, so it might give you some insight into a reasonable spread above prime. http://www.federalreserve.gov/releases/h15/data.htm

Maybe you can find this book to see what footnote #35 in section 15.02 under "Suits Against the Employer" is citing. http://books.google.com/books?id=uKIz649qCD4C&pg=PT312&lpg=PT312&dq=erisa+plan+disqualification&source=bl&ots=eQk1UsGbsV&sig=29LY54upBiJRsPZ4DL5UM5w8pfQ&hl=en&sa=X&ei=iJ7EUY4iscrQAZHOgNgM&ved=0CDMQ6AEwATgU "...the courts have held that such causes of action do not apply to violations under the qualification rules that are not reflected under Title I..."

Why not give the participant the $6,000 MRD, then they give you a check for $5000 to pay off the loan, afterwhich they rollover the balance? Same net effect and it avoids cutting corners.

An example of why it should be avoided for anyone who is not the listed beneficiary to know who was listed as a beneficiary. Now you're caught in the middle of a squabble.

This has been hashed around some before with people having opinions on just how far down the legal road it must have gone before it qualifies for hardship. A search on words like: eviction, foreclosure and prevent should find several related threads. My professional opinion is that the reg says "to prevent", thus a threat of legal action (foreclosure or eviction) must be a reasonable consequence of a current set of facts. We might quibble the word "imminent" but at the very least it means "an actual foreseeable, and not merely theoretical, result". Something must exist sufficiently for it to be preventable. Some have opined that the debtee must have filed legal action. Others, myself included, feel it's sufficient to have a demand letter that states (no matter how politely) a debt is past due and that failure to come current has the consequence of legal action. As to the orginal post, the property will be sold to cover the tax debt, the current owners will lose their right to occupy the property and the new owners will then have the right to evict. Thus, with adequate documentation, payment of past due property tax can prevent eviction.

While unintended as such, that's the punchline!

While the following IRS FAQ items is about non-rollover Roth, I see no reason why it would dramatically change by being rollover (see the part that I underlined): http://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-on-Designated-Roth-Accounts#25 Since I make designated Roth contributions from after-tax income, can I make tax-free withdrawals from my designated Roth account at any time? No, the same restrictions on withdrawals that apply to pre-tax elective contributions also apply to designated Roth contributions. If your plan permits distributions from accounts because of hardship, you may choose to receive a hardship distribution from your designated Roth account. The hardship distribution will consist of a pro-rata share of earnings and basis and the earnings portion will be included in gross income unless you have had the designated Roth account for 5 years and are either disabled or over age 59 ½.

You'd need to view the actual contract. Most of those are technically a "lease with option to purchase" with part of the monthly lease payment being applied toward the final purchase price. By virtue of it merely being an option to purchase, then it should not qualify for hardship.

You might try to dig up Rev Rul 69-24 and 69-25.

Or is this one of those things that since I'm not 55+ then you can take it from me, but if Mary is over 55, then you have to let her keep the option (so 4.5 years to age out the option entirely)?

I love the bit in their announcement about honoring existing opt-outs from marketing soliciations. As if they were being all goody-goody and not simply required to by various law.

I see 2 separate issues. One is determining the beneficiary and the other is whether that beneficiary can receive a QPSA. QPSA is in code section 417. My opinion is that the consensus is that when the QJSA and QPSA consent rules are involved, preexisting beneficiary designations naming alternate primary benes will become null and void at the moment of marriage. So now you have to go back to your plan and read for a certain nuance... a spouse beneficiary who does NOT get the QPSA. It might simply mean she's treated mostly like a nonspouse; she might have to wait until a later date to take distributions or she might not get certain forms of distribution; just have to read your plan to figure it out. The key is that the validity of the consent is not contingent on a year of marriage, rather it's the availability of the QPSA that requires the year. (But the fact it's a 403(b) makes me less than 100% certain on the whole thing. I did find that some 403s can be subject to QPSA, so then it seems those rules would follow thru in full.) Edit: is the plan definitely subject to ERISA? Then my answer stands http://benefitslink.com/boards/index.php?/topic/51441-spousal-consent/

I normally try to avoid telling someone to use the search feature, but given how easy this particular one is and the several good older threads on the topic... use the search feature for the word 'margin'. Just be careful about 401(k)s vs IRAs as they have some subtle but key differences. The first such thread you can find with search is the following and it has a link to an older thread with some indepth discussion: http://benefitslink.com/boards/index.php?/topic/51522-investing-with-margin/ Having glanced at a few of those older threads. While it might be legal if done properly, you're opening a can of worms and the best advice has already been given: don't do it. Just because someone is offering to take your money to help you do something, doesn't mean it's a good idea; it just means they're willing to take your money. Since you mention solo 401(k) plans, I'm going to presume that you're a plan owner and as such do not have intimate knowledge of such things as Department of Labor Prohibitted Transaction Exemptions. In which case, consider yourself warned this is not the deep end of the pool, this is the very very deep end of the pool and there are no life guards on duty.

This synopsis: http://www.americanbenefitscouncil.org/documents2013/rpsea_neal_113th-summary.pdf says "QDRO Expenses - Until 2003, it was DOL’s view that any expenses attendant to providing information to a beneficiary or making a QDRO determination must be allocated to the plan as a whole. However, in 2003, DOL reversed this longstanding position and allowed defined contribution plans to charge the participant and alternate payee for any QDRO-related expenses. The bill would require all types of plans to allocate QDRO-related expenses to the plan as a whole." It's in a section headed "Providing Equity in Divorce". Doesn't make sense. Unless we operate under the assumption that the DOL is always wrong. On the upside, I think some people will be very pleased to see: "The bill clarifies that safe harbor contributions must be nonforfeitable only at the time they are designated as safe harbor contributions, and therefore, forfeitures can fund safe harbor contributions."

1) Yes, because you still have an illiquid asset in the plan. 2) Do you think it's a problem if Joe sells out of ABC mutual fund today and next year it doubles in price? It was Joe's choice to sell the investment; just be sure Joe isn't strong armed into selling. You would need to have a proper method for valuing the asset for the date of any given transaction so that you have consistent results (aside from the price flucation of the real estate itself). Have you talked to the client about applying for a PTE to get the real estate out of the plan to either the company or interested individual(s). The DOL has approved such sales before; not sure what the key is in defining how fair market value should be determined. DOL Real Estate related PTE Listing (go down 3/4 to sales by plans of real property) http://www.dol.gov/ebsa/publications/exemption_procedures.html

Not to mention that it's a potential administrative nightmare because no payroll system will accomodate that (without custom programming), meaning lots of manual calculations.

In the mid-90's I worked one season testing income tax software, specifically state income tax software (despite generally have less forms, there are 40+ states, so it's lots of program to test). Which leads me to... Each state handles retirement income and in vs out of state differently. It gets very complicated very quickly. That said, where you withhold for can be entirely different from where they ultimately owe/pay tax. Your keyword right now is "resident". Unless MA has rules that you must withhold on nonresidents, then you likely do not need to withhold. If in doubt, withhold both and let the taxpayer sort it out when they file their income taxes. Since you know the person had MA source income for at least January thru March, then you would not be entirely out of line. But since the person has self-declared as a resident of NC, you must withhold there. However... Keep in mind that "mandatory" does not mean the person cannot sometimes elect out of it. Such as: http://www.dor.state.nc.us/downloads/NC-4P.pdf (edit: but read the form carefully, they don't allow to elect out of rollover eligible distributions)

IMO, the real question is whether the cow is already out of the barn. Is a forfeiture allocation considered an accrued benefit (or some such other technical term) such that the current one can't be cutback? What if they declare a profit share, only for NHCEs, equal to the HCEs forf alloc? The HCEs still get the forf alloc but it'd give the others the desired outcome.

I wonder if they're drifting into a breach of fiduciary prudence. I guess the real question is just how illiquid is the investment? Is it truly unsellable or just devalued? Two entirely different things. I know of no land, short of a SuperFund site, that won't sell at some price. My one or two ideas are likely to cost more to setup and administer than the real estate is worth... such as putting it in an LP and distributing the LP shares in-kind. Or if the executive suite is so in love with the real estate, go in for a PLR to let the company buy it from the plan on the grounds of providing liquity to participants. They need to weigh the costs of 1) risk of being sued for fiduciary breach by maintaining an investment they know to be bad, 2) filing for a PLR and 3) cutting their losses and selling at the current market rate. And this thread needs to be tagged so when other people come asking about putting real estate in plans, we can point them to this as a case study in why it's a bad idea. I do believe that illiquidity is one of the potential problems about which people are commonly warned.

This seems to give appropriate citations for you to reach a conclusion: http://www.massmutual.com/efiles/ltc/pdfs/ltc1419.pdf

Depending on the specific numbers, you may be able to remortize under 1.72(p)-1 Q&A-20(a)(2) "Loans that repay a prior loan and have a later repayment date". Note that first you determine if both loans are within the max loan limit (counting both the replaced and replacement loans as simultaneously outstanding) before you have to determine if the original loan would have been paid off w/in its original permissible term. In simple terms, if (hypothetically) your plan allowed more than one loan, could the participant take a loan right now that is more than the current loan? If so, then you can probably reamortize under Q&A-20(a)(2) Recent discussion here: http://benefitslink.com/boards/index.php?/topic/53667-participant-loan-corrections-epcrs/

And of course, like always, check your plan document since it could create an obligation not otherwise in the code and regs.

1.403(b)-6(e)(2) directs us to 1.408-8. Which lead us to 1.408-8 Q&A-10 Q-10. Is any reporting required by the trustee, custodian, or issuer of an IRA with respect to the minimum amount that is required to be distributed from that IRA? A-10. Yes, the trustee, custodian, or issuer of an IRA is required to report information with respect to the minimum amount required to be distributed from the IRA for each calendar year to individuals or entities, at the time, and in the manner, prescribed by the Commissioner in revenue rulings, notices, and other guidance published in the Internal Revenue Bulletin (see § 601.601(d)(2)(ii)(b) of this chapter) as well as the applicable Federal tax forms and accompanying instructions. which leads us to the Form 5498 instructions with leads us to IRS Notice 2002-27 "However, no reporting is required at this time with respect to required minimum distributions from section 403(b) contracts." So unless you can find anything that supercedes 2002-27 (I honestly didn't look beyond the notices listed in the 5498 instructions), then you have no reporting obligation.

So which is it? A rollover or a transfer. Toward what BG5150 said, see "Transfers" on page 6 here: http://www.irs.gov/pub/irs-pdf/i1099r.pdf

I looked closer at the examples. Q&A-20 example 1, paragraph ii illustrates the (a)(2) rule I was talking about. In their scenario, the replaced plus replacement loans combined violate the loan limit but I could easily make up numbers that work. You'll have to apply your actual scenario to see where you fall out. It's only if you violate the limit that you need to calc whether the 1st loan gets paid off w/in its longest permissible term (which they cover in example 1 paragraph iii). Unfortunately you indicated the available $10K would pay down (implying it would not pay off) the old loan, so you might be out of luck. Two other thoughts... 1) Q&A-19 is a problem for you. You have to get additional security for a subsequent loan when a loan is in default. You really need the Service to bless your ideal scenario in your VCP. 2) If your position on the VCP is adminstrative error, then focus on the end result since the Service has the ability to bless something that stretches a rule. But that begs the question of what to do in the meantime... personally, I'd calc the payment(s) in my ideal scenario (2nd loan to pay down the 1st and reamortize 1st under original term) and have the participant start paying that (treating currently them as payments on a defaulted loan). If the Service ultimately refuses, then the participant has merely built basis; but if they accept, then you're right on track. And here are the proposed and final Q&A-20 regs w/ preamble (they don't add great insight): http://benefitslink.com/src/taxregs/72p-proposed-2000.html http://benefitslink.com/src/taxregs/72p-final-2002.html