masteff

You should look in EPCRS. I don't know it well enough but might be a mechanism in there to let you return the funds to the plan.

I used to work w/ a plan that did this. Depends on: 1) What does the plan say? If it says all distributions under this paragraph get a suspension then you suspend. 2) What is your plan's source heirarchy? Does it provide for other sources to come out first? Then the answer is only if the w/drwl in question is big enough dips into deferals. If you're not taking deferrals then what you really have is a restricted in-service w/drwl.

http://www.irs.gov/pub/irs-drop/notice_2009-75.pdf 1) Not within the qualified plan it can't be; after-tax money is not roth contribution money, list it correctly as what it is. 2) Yes, see the notice in the link above, a participant can now roll directly from a qualified plan to a Roth IRA.

Another test I've seen used but can't put my finger on is whether the program qualifies for federal financial aid programs.

It appears part of your post got cutoff. Please repost here so we have the full facts.

Just occurred to me... what about antiseptic cream or anti-itch cream? Do those active ingredients (especially hydrocortisone) count as OTC medicines (that just so happen to be applied topically)? Imagine that Bandaids are allowable but Neosporin might not be! I can guarantee that athletes' foot creams won't be allowed since most of the current ones were developed by pharmaceutical companies and are recognized by the FDA. While artificial tears might only contain saline and artificial lubricants and thus be allowable as they help treat the condition of dry eyes, what about a different formulation of the same tears that also happen to contain active ingredients for dry eyes or allergies or other eye conditions? Wouldn't those active ingredients count as OTC meds?

And I'm the other end of the spectrum on hardship approvals... It would be onerous for the Service to only honor hardships if the current residence were required to be disposed of prior to a new residence being purchased (and contrary to common practice in home sales). So as long as the purchased home becomes the principal residence, then the other home doesn't matter. Sieve - what about people who keep their original house as a rental property? would you deny them a hardship or make them substantiate the rental first?

This? http://www.irs.gov/pub/irs-drop/a-01-120.pdf

So then, which is the lesser evil... to combine or to treat as individual account plans and not disclose? And why not move the money/recordkeeping/whatever is required so that they really are individual account plan and would it then be moot for future years? If I was the owner and didn't want disclosure, I'd at least give this serious consideration. Oh, and if 1/2 the money is at one place and 1/2 at another... do the employees really know which place their money is at (especially if it's not an individual account plan)? Sure the owner knows which half is his but do the employees have actual cause to know where their money is invested? (I'm about 90% on this topic so if I'm taking it off course by lack of knowledge please feel free to dope slap me and move on)

You seriously overestimate what constitutes notice of a change. I get a little pamphlet from my IRA company every year or three that contains notice of changes. And just like mbozek said, I throw it out after only the quickest glance. That the deceased did the same is of no great surprise to me. Failure to read and understand literature sent by a financial company is the investor's fault and not theirs. You use the word "unilaterally" as if this was a negotiated contract to begin with. You either agree to the IRA custodial agreement or you don't open an IRA there; you either agree to changes made to the IRA custodial agreement or your terminate and move your IRA to another custodian. That is the extent of the negotiation involved.

Have you read the Wachovia Custodial Agreement? See page 25, item 8, "Amendment". https://www.wachovia.com/common_files/Tradi...Disclosures.pdf Unless you can show that the agreement in place at the time she opened the IRA didn't have such a clause, then by continuing her IRA at Wachovia, she implicitly agreed to the change. The lesson learned is always complete a BDF even if it's to do what the current default is.

I'd make the case that it prevents eviction.

QDRO's right on, you're overlooking the "or" in that sentence... if you trim out the extra phrases, you have "eviction or foreclosure".

Good catch austin, I'd overlooked that point of Tom's earlier. It would definitely argue that all plans should put Roth account as #1 source for loan in their source heirarchy. As to double taxation of interest portion of the loan payment... yes, it's double taxed BUT it would be double taxed regardless of who you paid the interest to and whether the loan was inside or outside the loan; someone pays tax on it even if it's not you. If you took a commerical loan and made payments to them, they would pay tax on the interest. The difference is that w/ a plan loan, you get to defer the tax. Furthermore, the growth and earnings you might have otherwise earned (if you hadn't taken the loan; Roth excluded) would be taxed. If I put $5000 in a stock that pays a 5% dividend, then I pay tax on that 5% when I eventually w/draw the money; if I take a $5000 plan loan at 5%, then I pay tax on that 5% when I eventually w/ draw the money. So there is no net negative consequence w/ regard to how much tax is paid. Edit: added excel attachment to illustrate zero net tax effect of a plan loan zerotaxeffectofinterestonplanloan.xls

When I took a small loan to pay for some needed remodeling, I actually treated the loan as an investment choice and adjusted my portfolio accordingly. Whereas a portfolio might include a percentage in bonds (which generally bear a fixed rate of return), I simply substituted my plan loan from what I might otherwise have in bonds (replacing one fixed rate of return with another). This meant manually adjusting my portfolio after the loan was distributed prorata from my investments. The only problem w/ this philosophy is people who take the max 50% of their balance loan as few people should really be 50% invested in a fixed rate of return investment in a tax deferred account.

Part of the confusion about loan payments being made w/ "after-tax" dollars is that's how it shows on a person's pay stub. They confuse treatment on their pay stub w/ the actual treatment of the money going in and out of the plan. It can make it easier to illustrate using "coupon book" payments rather than payroll deductions.

IRS Pub 590, page 28: "Income. You must include in your gross income distributions from a traditional IRA that you would have had to include in income if you had not converted them into a Roth IRA." http://www.irs.gov/pub/irs-pdf/p590.pdf

Unless you combine it w/ an in-service (possibly via a retroactive amendment). I don't know if was just a plan rule or result of old IRS rulings/regs/etc, but we had an old thrift plan that had a "complete" withdrawal which could only be done once every 5 years.

Presuming that 5500 tax penalty notices are the same as others, it should specific the applicable year on it.

Was there an obituary? Did anyone at the company attend the funeral? Presumably the family is corroborating the death since they're ticked about bene designation. I'd say this is a "prudent person" test. Is there enough evidence for a prudent person to conclude the part is really dead and not simply scamming to get the death benefit out of the plan? Don't set the hurdle higher than it actually NEEDS to be for the bene.

Do I have any special issues if I get a mail-order bride from the Bahamas or do they get treated like a normal spouse?

That would be a medical expense and qualify for a hardship distribution.

Lisa - this is probably the best to start with:

You switched from "he" to "her" so I presume you have a specific employee pushing you on this. Explain that this is a common occurance in control group situations. Blame it on Congress, the IRS and the people who abused the system that caused the rules in the first place. Does your plan allow loans while at a related employer? I was about to suggest that but realized it might be a document issue or at least a payroll/payment collection issue.

Similar discussion in this thread starting at post #13: http://benefitslink.com/boards/index.php?showtopic=43340