masteff

Your word "interpreted" is unneeded because the reg explicitly says "a need cannot reasonably be relieved by one of the actions described in paragraph (d)(3)(iv)© of this section if the effect would be to increase the amount of the need" (emphasis added). So yes, if taking a loan would increase the hardship need, then the loan would be counterproductive and not required. But in my experience, use of the "counterproductive action" exception is rare; the minimum plan loan of $1000 is only $15-20/month; incurring monthly payments is not a hardship by itself unless they can show it would put them into negative cashflow or violate a debt-to-income requirement. Keep in mind the reg addresses all "actions described in paragraph (d)(3)(iv)©", not just loans. Another example is if, per (d)(3)(iv)©(2), an employee had a CD or whole life insurance with an early withdrawal penalty, then forfeiting interest already earned might be considered a counterproductive action. Further, someone once suggested that in the sale of personal assets which would result in taxes (esp such as capital gains taxes), incurring taxes would be a counterproductive action because the person's need is then increased by the additional tax owed. (I disagree because it ignores the net effect but you can see the logic; in favor of the argument is that (d)(3)(iv)©(4) distinguishes taxable vs nontaxable loans.)

A) It's in keeping w/ commercially reasonable practices on loans for first payment to delayed by a cycle (ie, you typically don't buy a car/house/boat on the 25th and have to make a payment a week later on the 1st). B) It's administratively reasonable because of the time lag required to electronically coordinate the payroll deduction between the recordkeeping and payroll computer systems. I used to work at a large employer w/ one of those large 401(k) providers and I can tell you anecdotally that we went thru full IRS and DOL audits w/ no problem on this issue.

Sorry, totally missed the question. I agree w/ Eeyore and here's two useful links from the current online version of the Handbook referred to: http://www.socialsecurity.gov/OP_Home/hand...dbook-1811.html (this is in the section that discusses the earnings test you're referring to) http://www.socialsecurity.gov/OP_Home/hand...dbook-1313.html (this is in the referenced section that defines wages)

Excess SS benefits are reported on lines 20a and 20b of Form 1040. So, we can look at the worksheet on page 28 of the instructions. On worksheet line 3 we find it uses Form 1040 line 7, which is generally box 1 of Form W-2. So, long story short, the answer is: what appears in box 1 of the W-2, which does not include deferrals. (However if contributions were also made to an IRA, also see Pub 590).

Quick look in my CCH US Master Pension Guide, try Code Sec 4975(d)(4) (ERISA Sec 408(b)(4) ).

I don't know much about 403(b)'s but I do know that 402(g) is a taxpayer limit (so have to add plans that the taxpayer is in together, can't count each one seperately) (note that mbozek notes that 403(b)s have to be aggregated w/ 401(k)s, which is a futher extension of it being by taxpayer and not by plan).

Bird, a traditional 100% J&S might be a problem but ins co's aren't as limited as plans can be. After mbozek's post, I immediately thought variable J&S life annuity using IRS RMD tables instead of other actuarial tables. Joel - To get rates, I would ask an insurance broker to run it past a few companies; IRAs and RMDs are old enough that surely the big ins houses can easily structure policies to accomodate... the trick is being sure it's set up properly to begin w/. Maybe ask for quotes on both fixed and variable... the fixed would give you a better idea of the underlying cost of the annuity. You'll have to provide both persons' DOBs and possibly some other info to get the quotes. I'd ask the client if he has a preferred broker and work from there.

Current Pub 590 on the IRS site shows it expired for 2010. And Pub 526 shows it as only for IRAs prior to its expiration. So the correct result is your #2... it counts as taxable income and is then taken as a charitable contribution on Sch A. As a reminder, generally speaking charitable deductions in excess of 50% of AGI are not deductible in the current year but are carried forward to next year.

Other problem is the sep agreement names the specific atty to do the work. Eventually they'll run into risk of retirement, moving out of state, disbarment or death of said atty. Anecdotally, at a former employer, we'd have QDROs come in multiple years after the divorce, especially from Louisiana (can't remember what exactly was different about divorces in La. that made tardy QDROs from there so prevalent). So I can say decades is not impossible. The common factor was the EE finally approaching early retirement age and the AP wanting to get in ahead of that.

Based on my experiences in several corporations and benefits departments (but I'm a retirement guy, not a H&W guy, so I don't know the exact mumbo jumbo of it), the election is health coverage via the 125 Plan, you don't have the option to take health coverage outside the 125 (ie as an after-tax benefit). So any election is a pretax election. A significant majority of companies use a single form; now whether they're doing by the text book manner or simply cutting a minor corner is beyond me but I don't see those companies going to DOL/IRS jail either.

What's going on w/ their demographics for a true up to be so expensive since most particiants should have received nearly all their match already? Do you really have that many people who were contributing a high % and then quit contributing mid-year to result in unmatched comp? You're comparing your base % of YE plan eligible comp to YE deferrals and using the lesser to calc and compare to YE match? I used to work a plan w/ ~2000 participants with a by-pay-period true up and it wasn't as common as what your results would seem to require. (I see GMK got in while I was typing/thinking w/ a comment along the same lines) Unless... my one thought is they messed up comp by including comp prior to the participant's initial eligibility date (which would imply a plan w/ lots of new hires, an easy thing to check). That would blow out the calc fast. Edit: or by including ineligible comp for that matter.

What is your employer telling you?

The guy's only 1/2 right. For tax year 2010 only, SE Health Insurance will be deductible for purposes of the SE tax. It's in the new Small Business Jobs Act, Section 2042 (same new law that contains the new Roth provision that's been discussed on the board). From the Summary: "Deductibility of Health Insurance for the Purposes of Calculating Self-Employment Tax. Under current law, business owners are not permitted to deduct the cost of health insurance for themselves and their family members for purposes of calculating self-employment tax. This provision would allow business owners to deduct the cost of health insurance incurred in 2010 for themselves and their family members in the calculation of their 2010 self-employment tax." From the Act: "(a) IN GENERAL.—Paragraph (4) of section 162(l) of the Internal Revenue Code of 1986 is amended by inserting ‘‘for taxable years beginning before January 1, 2010, or after December 31, 2010’’ before the period." I'm not aware of any regs being issued yet and even so, those rarely specify the form that's used. So my answer is it's too early to know for certain, but yes, there's a possibility for 2010 that retirement eligible income will go down as a result of SE income going down. Of course I could be missing something from earlier laws. edited for minor clarification

a) The Participant has 60 days from the date of distribution to complete the rollover, including making the withholding "whole". This is what is sometimes referred to as an indirect rollover. b) The participant uses lines 16a and 16b on Form 1040 to report to the IRS that she rolled over the distribution. Per the instructions for Form 1040, enter the amount from the 1099-R box 1 on line 16a, then subtract the amount rolled over to another plan and enter the remaining amount even if zero on line 16b and write "Rollover" next to line 16b. Also refer to the section on rollovers in IRS Publication 575 http://www.irs.gov/pub/irs-pdf/p575.pdf Edit: and just to be clear, the prior plan DOES NOT change their 1099; see b) above.

IMO it was best for the bank to not ride herd on this investment.

lol, 100110

Someone should take this by the horns and close it down!

This is one that Sieve and I disagree on. You now have proof of default and intent to foreclose. It's been discussed on here before about how imminent must foreclosure be for the withdrawal to "prevent foreclosure". My thinking is the lender has now declared "pay us or we foreclose"; there is no latitude in the demand; it's absolute, not "maybe"; failure to pay the amount will result in foreclosure and that means a withdrawal at this time will prevent foreclosure. Edit: added reading: http://www.lexisnexis.com/Community/reales...he-Mystery.aspx

It falls under 72(p). I'd say approx $72K is taxable distribution. $50K - $22K = $28K $100K - $28K = $72K Of course have to look at whether the refinancing meets the restrictions in the regs (and that the plan permits refi's). Otherwise... what Jim said.

For what it's worth -- I'd think it better to refer to the process as a "back office" distribution rather than to suggest there is no distribution... the semantic between a "distributable event" and a "distribution" is too fine especially given the current version of the bill uses the explicit words "distribution" and "contribution". Just look at the frustrating arguing we wasted here because of that nuiance. EDIT: Just did a search of the full IRS Code ( http://uscode.house.gov/download/title_26.shtml )... the term "distributable event" does not exist. That is a construct of people interpreting the Code. People above making points about "distributable events" are able to do so because the Bill in question states that these are "distributions" and we are able to then determine which rules and restrictions apply.

I think we're all agreed on this point. I think we have disagreement on this point. I think Sieve and I agree there must be a distributable event (and subsequent rollover contribution back into the plan). Whereas mbozek states here that he thinks there's no distribution. The difference being who can take advantage of this: can anyone do it or only those who otherwise qualify under plan provisions for a distribution. Edit: ahhh, just got Sieve's last point... a paper distribution versus a physical distribution. Okay, I'll buy that nuiance, that it could be done as a recordkeeping entry. But I do still think (and think I'm reading Sieve to say the same thing) that there must be a qualifying event for it to occur (which is really the point I've tried to make and indeed my first post above I said "eligible for a distribution").

We'll have to disagree until we get clarification. Since this has tax implications for this tax year, I'm sure the IRS will be on this one faster than normal.

Sorry to disagree but must have a distribution per the proposed new 402A©(4)(B) in the bill: ‘‘(B) DISTRIBUTIONS TO WHICH PARAGRAPH APPLIES.—In the case of an applicable retirement plan which includes a qualified Roth contribution program, this paragraph shall apply to a distribution from such plan other than from a designated Roth account which is contributed in a qualified rollover contribution (within the meaning of section 408A(e)) to the designated Roth account maintained under such plan for the benefit of the individual to whom the distribution is made."

But... it doesn't allow them "within" the plan. Rather it permits rollovers to Roth accounts from a regular QP. So a person would still have to be eligible for a distribution before it could be used. Full text can be found here: http://finance.senate.gov/legislation/deta...29-92cebbd2b7a0 (the legislative text, beginning at page 164)

Everyone is happy unless the participant put the money into specific investments and doesn't want to liquidate them at this point in time.... in which case the plan does a rollover distribution (equal to the RMD) which is then placed in the IRA in cash and the participant instructs the IRA to make the distribution from cash thus preserving the investments. Both parties are saying "we should make a distribution" so let them both make a distribution, just flipflop which is doing the RMD at this point in time. And for the record, I vote w/ Tom Poje on this one... "the amounts distributed during that calendar year are treated as required minimum distributions under section 401(a)(9), to the extent that the total required minimum distribution under section 401(a)(9) for the calendar year has not been satisfied." I read this as an end of year lookback and possible reclassification where if money was not explicitly declared already to be RMD then you reclass a portion of it as such. This would apply, for example, to persons taking monthly installment payments from their plan where those payments are not being coded as RMDs but otherwise count as such. PS - examples are explanatory not definitive/exclusive.