masteff

My understanding is the code and regs set threshholds but the plan document can go beyond those unless the code and regs otherwise require (including but not limited to discrimination testing). Example: I had a plan that required hardship for withdrawals of company matching contributions; in audit, the Service only cared whether or not we complied w/ the plan provisions.

Google search term: irs rollover chart Best result: http://www.irs.gov/pub/irs-tege/rollover_chart.pdf It is potentially confusing because the same terminology about contributions and rollovers gets used for ESA's and 529's. And not so many years ago they were called Coverdell IRAs. IRS Publication 970 fails to discuss rollovers from qualifed plans and traditional IRAs to Coverdell ESA's because the option simply doesn't exist. http://www.irs.gov/pub/irs-pdf/p970.pdf

Do you know of any tax court cases or PLRs showing the Service has adopted this point of view? The concensus I'm aware of, and my google searching concurs, is that if the money is distributed at any time from the plan in which the QDRO occurred, then the distribution is exempted from the early withdrawal penalty; but if the money is moved out of that plan to any other plan or IRA, then it loses the QDRO exemption and subsequent w/drwls are subject to the penalty.

You need something that documents the expected costs such as estimates, contracts, and retail prices (like in a catalog or printed from a store's website). If your plan permits more than one withdrawal per year, you could process now based on available documents and then do another later as more estimates and invoices are gathered by the participant.

IRS Code Section 402©(4)(B). 402© as a whole is a requirement of 408A(e).

I was looking for weekend pet boarding and was instantly distracted by this place's 401-K-9. I thought it was cute anyway! http://www.campbowwowusa.com/pdfs/CBW%20In...9%20Program.pdf Of course back when I was in corporate benefits, we'd have politely smiled and sent them away (or at least to the corporate communications department, which handled discount programs). The only "voluntary program" that I ever got behind was educational seminars about 529 plans (which ultimately, from the company's point of view, is just another direct deposit election). (For anyone curious, 401(k)(9) proper says comp has the meaning given in 414(s) )

Tom, would the refund from the SARSEP count as a return of excess contributions from an overall tax year perspective? So even if putting the max into the 401(k) would technically be exceeding the limit, the refund would still count to reduce it?

Generally I'd agree w/ you but in this case, I presumed the meaning of "lifetime" from the Reg Section's title: "Distributions commencing during an employee's lifetime"... so I took it to mean "as opposed to after the ee's death". And "such as in the form of an annuity" in the 2nd sentence is illustrative of but not limited to.

With respect to COBRA: Code Sec 4980B(g)(1)(A) (emphasis added): "(A) In general The term “qualified beneficiary” means, with respect to a covered employee under a group health plan, any other individual who, on the day before the qualifying event for that employee, is a beneficiary under the plan— (i) as the spouse of the covered employee, or (ii) as the dependent child of the employee. Such term shall also include a child who is born to or placed for adoption with the covered employee during the period of continuation coverage under this section." Reg Sec 54.4980B-5 Q&A-1: "(b) In the case of a qualified beneficiary who is a child born to or placed for adoption with a covered employee during a period of COBRA continuation coverage, the child is generally entitled to elect immediately to have the same coverage that dependent children of active employees receive under the benefit packages under which the covered employee has coverage at the time of the birth or placement for adoption. Such a child would be entitled to elect coverage different from that elected by the covered employee during the next available open enrollment period under the plan. See Q&A-4 of this section." NOTE: I'm not sure how one applies this w/ respect to the loss of coverage, qualifying event and notice requirements. A newborn can also gain coverage if the mother elected COBRA coverage since the mother is permitted to add the newborn under Reg Sec 54.4980B-5 Q&A-5. A newborn w/ a father other than the employee could be covered but would not be a "qualified beneficiary" (per Reg Sec 54.4980B-3 Q&A-1(b) ). Edit: fixed typo, the reg sec starts w/ 54.4980B and not 51.4980B

No, because the distribution is made before the participant's required beginning date. See Reg 1.401(a)(9)-2 Q&A-4

I'm w/ Bird. I can't get past the word "acquire" which is used in both the 72(p) code and regs. I don't have my Black's Law Dictionary at work but I find it hard to see a definition of "acquire" that does not include the taking of some ownership or right of possession. As Bird said, it looks and smells more like a gift from the part to the sibling (and if it's over the gift limit, then subject to gift tax). If nothing else, you're lacking (or at least fail to mention) a formal element between the participant and the sibling that negotiates the right to reside in the house in exchange for the money being provided. But I'd talk to my ERISA atty first to see what they think would be sufficient to change this from "gift" to "acquired". Edit: and how do you determine a reasonable loan term if you don't know how long the participant has a right to reside in the house?

Cheapest way out might be offering to pay for any tax prep fees for the participant's amended return and any resulting under-/late-payment penalties and interest.

I can't give you tax advice but here are some thoughts to point you in direction of a solution: Even if it's not a taxable distribution, it still has to be shown correctly on your tax return. If done wrong, the IRS will likely presume that the entire distribution is taxable. In your 2009 tax return, you need to look at line 15 of your form 1040 (or line 11 of 1040A) and at forms 8606 and 5329. 1040 Instructions: http://www.irs.gov/pub/irs-prior/i1040--2009.pdf 8606 Form: http://www.irs.gov/pub/irs-prior/f8606--2009.pdf 8606 Instructions: http://www.irs.gov/pub/irs-prior/i8606--2009.pdf 5329 Form: http://www.irs.gov/pub/irs-prior/f5329--2009.pdf 5329 Instructions: http://www.irs.gov/pub/irs-prior/i5329--2009.pdf Since you're under 59 1/2, depending on your personal circumstances, you may be subject to regular tax on any earnings and to 10% early withdrawal penalty. You might want to review IRS Publication 590 (see page 64 "Are Distributions Taxable?") http://www.irs.gov/pub/irs-prior/p590--2009.pdf The IRS has local Taxpayer Assistance Centers, although sometimes the lines can be a bit long. http://www.irs.gov/localcontacts/index.html

See 1099-R instructions, page 11, "Failure to provide TIN". http://www.irs.gov/pub/irs-pdf/i1099r.pdf You should also review IRS Form W-8BEN to determine if you need to w/hold 30% on a payment to a foreign person.

Nothing like a good needle in the haystack hunt.... It may have to do w/ recent amendment to the Fed's Regulation Z on comp to loan originators. http://www.federalreserve.gov/bankinforeg/regzcg.htm "The rule also prohibits any person from paying compensation to a loan originator for a particular transaction if the consumer pays the loan originator's compensation directly." If that is what's happening, then what the original poster heard seems offbase... I don't get from "no other comp on a particular transaction" to "cannot participate". But I could be missing some serious nuance of the change. And banks may be making serious changes to their loan originator comp plans which may have other ramifications from the bank's point of view. Edit: also found this: http://jholzknecht.wordpress.com/2011/08/1...ensation-rules/

What part of the form being in the employee's desk constitutes being filed w/ the plan admin? How do you if the participant hadn't simply changed his mind prior to filing it and failed to destroy that form? Is a deceased participant capable of filing a document w/ the plan admin? This is the exact scenario for why the plan has that language: to prevent competing claims based on unfiled bene forms. Do not go against your plan document just because it's a sad story of who will or will not get benefits. The participant had a duty to properly file that form and you can't perform that duty for him now. If anyone questions it, then you copy that page of the plan text, use a yellow highlighter to mark the "on file" clause and tell them "sorry". You might use this opportunity to review your bene form and instructions and make sure they specify that a designation isn't valid until it's been filed. I think we used the phrase "received and accepted on the proper form" (which probably came from the plan doc). EDIT: divorce and remarriage might be the scenario where I'd second guess what I just wrote. In which case you invoke the spousal waiver requirement and use the plan default which is typically the current spouse.

At least a few years ago, if you were past due and called to request such a letter, they would generate it. I'd imagine there's a difference since it's being specifically requested by the borrower. Most mortgage cos will even fax it same day.

I've noted before on medical that some providers require payment in full at time of service... well, if you need urgent treatment, you don't have time to request a hardship so you do what you have to and then go back to the plan to get the hardship (w/in a timely manner). And when the plan processes the hardship, it's based on the medical expense itself. For tuition it's trickier because that element of urgency is usually missing from taking the other funding. The subjective part might come in based on the type of loan. If it's a standard student loan, then I'd say no and stop there. I might grant minor leeway if the loan covers a period in which the student is currently attending (thinking especially of post-secondary trade programs that typically have you complete a loan app along w/ lots of other papers during the enrollment process), but I don't have anything valid to hang my hat on there other than the service hasn't been fully delivered so the loan, for lack of a better word, is transitional. Is there anything about the loan that clearly indicates it was short term in nature and taken as a stop-gap until they could get other funding (ie, the term is a year or less, it's from a family member and they can produce a document showing they agreed it was short term, etc)? Because as ETK notes, you have actual knowledge of other resources (reg (d)(3)(iv)©) so you need to show reason to disregard/exclude those resources. (Going briefly back to medical, in thinking about it, the urgency of the treatment is akin a state of duress.) My next question to the participant is whether the student is still attending because the reg allows for hardship "for up to the next 12 months"... so while you might not be able to go backwards, you can help going forwards. Edit: glanced back at the reg and the relevant line is: "By borrowing from commercial sources on reasonable commercial terms in an amount sufficient to satisfy the need." You have three elements there you can try to attack: 1) commercial source, 2) reasonable commercial terms, and 3) sufficient to satisfy the need.

How was the orginal rollover processed? Direct or in-direct? If it was a direct rollover (under 401(a)(31)), then the 60-day rule (under 402©(3)(A)) doesn't apply. In that case, the participant either needs to make the IRA company consult w/ its own legal department or needs to find a different IRA company. The following PLR reaffirms that a direct rollover is not subject to the 60-day rule: http://www.irs.gov/pub/irs-wd/1005057.pdf

See my post above. You must have something to document that foreclosure is otherwise inevitable. Typically this is a demand letter of some type from the current mortgage company. The participant may need to call the mortgage company to request a letter, if for example one hasn't been sent due to forebearance during the refinancing.

Reg Sec 1.411(d)-4, Q&A-1 (d): "Benefits that are not section 411(d)(6) protected benefits. The following benefits are examples of items that are not section 411(d)(6) protected benefits:" ... "(8) The allocation dates for contributions, forfeitures, and earnings, the time for making contributions (but not the conditions for receiving an allocation of contributions or forfeitures for a plan year after such conditions have been satisfied), and the valuation dates for account balances;" I read this as agreeing w/ GMK... the condition to receive an allocation of forfeitures for a plan year has NOT been satisfied because it's a discretionary match and said match has not been declared (nor will it be per the OP).

Worst case scenario to me is: 1) prospective amendment of the plan so any new forfs are used to pay expenses and 2) simply declare a match that is exactly equal to the amount of forfs currently available.

The IRS's handy dandy rollover chart: http://www.irs.gov/pub/irs-tege/rollover_chart.pdf

The job postings for the Cherokee casino in Tulsa clearly show they offer a 401(k). The casino is 100% on tribal land. I found an article that says Federal Circuit Courts have ruled differently on whether ERISA applies to tribes. But I'm baffled unless as leevena suggests it's a misunderstanding of tribal sovereignty or a result of what district the land is in. You could try the tribe itself (surely your client isn't the first company the tribe's done business with) ("and don't call me Shirley"). No idea if the Bureau of Indian Affairs would be of any help on this.

Often people looking for advice on a matter here ask for code and reg citations.... would sure be nice if the Service would provide the code and reg basis for their conclusions. If their logic is as flawed as "forfs came from non-vested sources so therefore cannot go to immediately vested sources" then I'd like a target we could actually shoot at.