masteff

A quick search of Google News shows that Congress is slowing down on the subsidy and may not get enough support to continue it. So... don't count on it until it actually happens. Keep in mind that the subsidy wasn't in use before the worst of the recession and as the recession passes, so too will government-provided benefits like this. In the grander scheme of things, the subsidy is an anti-recession measure, not an unemployment measure.

Key term: qualified plan distributed annuity contract See Reg 1.402(a)-1(a)(2) which is the basis for the DOL's statement in this comment letter that: "A qualified plan distributed annuity contract is an annuity contract that has been distributed from the plan and that remains tax-deferred even though it is not part of the plan and not part of an IRA."

You have the answer right here... the participant's account was transferred to the beneficiary. That beneficiary account belongs to the beneficiary who then becomes entitled to name his/her own beneficiary or in the absence of a designation have the plan default apply.

We actually looked at "what if instead of an annual raise, we put in a safe harbor plan and put the equivalent of the raise into the plan". One of the biggest problems was unwillingness (on the part of the owners) to commit to it in the long term given uncertainty about future corporate net income levels. And as the others have said... payroll taxes are paid 1/2 & 1/2 by the ER and the EE. So the savings to the ER are less than stated and in a small enough company can be entirely offset by the cost of plan administration. An additional cost is that of covering NHCEs who the employer might not otherwise normally provide extra compensation.

I have to grant the possible spammer was rather sophisticated in posting a seemingly valid question... but I do note it's suspiciously close to this thread from '08: http://benefitslink.com/boards/index.php?showtopic=39562 Even the follow-on of "if over the comp limit" is the same.

The part of this I didn't comment on last night but would like to circle back to is... It's tough luck what the sponsor would "like" if it contradicts laws created specifically to prevent employers from denying rightful benefits to employees. Sometimes advocating the best interest of the company means compliance comes before management's desires. But you can report you've diligently researched the question if you decide in fact that you must count internship service toward eligibility and vesting. Edit: just to clarify, I think we've created two issues. 1) excluding during the internship itself and 2) excluding internship service if the intern is later hired into a regular position.

http://www.dol.gov/whd/regs/compliance/whdfs71.htm http://www.dol.gov/WHD/opinion/FLSA/2002/2...9_05_8_FLSA.htm http://community2.business.gov/t5/Business...ships/ba-p/9340 Mike - they're perfectly legal, but only if they pass the FLSA test discussed in the above links. Too many unpaid internships fail the test and are in fact illegal. Here's a short article on using unpaid interns: http://www.inc.com/news/articles/2010/04/w...d-cost-you.html

So what is the nature of the beneficiary designation made by the sister? Was it on a form provided by the plan and returned, properly completed, to the plan? If so, then by providing that form and accepting it, it would appear to me that an adminstrative interpretation was made at the time the payments were started to the sister that she had the right to name her own beneficiary (subject now only to conclusive proof in the plan text that it was allowed in error).

Just to be devils advocate... if Scottrade isn't raising red flags, aren't you simply overthinking it?

Don't forget the April 1st rule for the first year, so it doesn't necessarily affect this year. Also don't forget that the "no MRD while still working" exception does not apply to IRAs so you might advice the EE that by doing a rollover to an IRA it will become subject to MRDs at 70 1/2. Direct the EE to IRS Publication 590.

That brings to mind a fix we did at a former job... a sister company fell below the threshhold to have its own plan and wanted to merge into ours. To fix their compliance, we added a minimum benefit to their plan and included a couple dozen employees from our company to their plan for the problem year. I'd weigh the cost of giving the minimum legal benefit to one extra employee against the cost plus penalties, etc, of lossing the tax qualification of the plan.

If you do float it thru the corporate account, I too would strongly suggest that the distribution to the participant be processed and posted on the same day as the check is deposited (even if you have to hold the check in your hand for a day or two so the deposit can clear and funds be available to cover the check). This way your paper trail shows the plan sponsor didn't gain a benefit by use of the trust's funds (such as by using them to cover other payments and later paying them back out of other deposits). But if its going to be a regular recurring thing, a separate trust checking account is a good thing (just be sure the bank doesn't connect the trust account to the corporate account and use one for overdraft protection of the other... been there, done that and it creates a nightmare to document the audit trail). Oh, and make sure the trust checking account is setup under the trust's TIN.

My suspicion is that the TPA is alluding to instances of "piercing the veil" in which the partners' PCs were insufficiently separated from them as individuals (or even more likely, instances where the partners were simply individuals w/out PCs). That would be my argument as devil's advocate for sure, that X's PC was not truly separate from X and therefore the 412 plan is really inside the partnership. But that leads to the next question... what corporate form does the "partnership" really have? is it really a partnership which files a 1065 and K-1s, is it an LLC that has elected to be taxed as C-Corp, is it a normal C- or S-corp, etc. The more corporate like, the better in my opinion when trying to fight a "piercing of the veil" on something like this. Step number 1 is they need to not take legal advice from a TPA and go talk to an ERISA attorney (and when they say "but we're attorneys" say but ERISA isn't your specialty and it's a deep hole to fall into). And I personally would make X pay most of the legal bill since it's his dumb move that caused this.

IRC 72(p) "(ii) Exception for home loans Clause (i) shall not apply to any loan used to acquire any dwelling unit which within a reasonable time is to be used (determined at the time the loan is made) as the principal residence of the participant." Emphasize: used to acquire Refi of house is not acquisition so can't be amortized greater than 5 years.

LRDG - in two threads you appear to be lumping non-drug items (like bandaids and blood pressure monitors) in with OTC medication and drugs. In fact, you refer to "aspirin and bandaids". My point is that non-drug items are not included in the new language. Meaning, you can't lump bandaids in with aspirin. That's the distinction I'm making. Bandaids, etc. are NOT a medicine or a drug. I don't see the uncertainty that you're alluding to.

I'd agree w/ rcline. I'd now change the payroll deduction to the correct payment amount and continue payments until the balance reaches zero.

Correction: the OTC repeal applies to medications and drugs w/out a prescription only. It does not apply to non-drug items like bandages, etc. LRDG - you need to read Section 9003 of PPACA... you're misunderstanding the mechanism by which the change was made... it doesn't directly repeal 105(b), rather it adds the following to 106: ‘‘(f) REIMBURSEMENTS FOR MEDICINE RESTRICTED TO PRESCRIBED DRUGS AND INSULIN.—For purposes of this section and section 105, reimbursement for expenses incurred for a medicine or a drug shall be treated as a reimbursement for medical expenses only if such medicine or drug is a prescribed drug (determined without regard to whether such drug is available without a prescription) or is insulin.’’.

Missed that it was a double hop. But my point about checking into your fidelity bond / crime insurance still stands if the money can't be recovered.

One thing I'm not seeing in the discussion is regarding the plan's fidelity bond / criminal insurance. As the plan permitted someone other than the participant to initiate a distribution to a bank account in a foreign country, I might talk to my insurance agent if the last $3500 can't be recovered (of course if the deductible is greater than that then the company might simply repay the loss itself to have it over and done with). Don't forget the PR that might result if make the employee suffer the loss and he goes around telling all his coworkers about how the company permitted his retirement money to be sent to Russia.

I'll just add to my previous comment that if, at the end of the day, you're uncomfortable with it, then don't do it. I know the hardest task is telling someone in financial distress that they're denied, but you can sometimes soften the message by presenting other options (i.e. financially sound ideas like reviewing their budget and cutting other monthly costs). Oh, and using the IRS as a scapegoat can be helpful when having a denial of withdrawal conversation... "the problem is that the IRS's definition of a hardship is much stricter than what you or I would think of as a financial hardship".

The Visa on it's own is definitely unacceptible because it allows monthly payments and is not due in full (and doesn't otherwise meet the hardship safe harbor reasons). I'm going to send you a personal message so the rest of my response is not documented in the open. I'll just say here that you're not the first one to figure how far into the grey area to let yourself go.

I wasn't around when it was established in the 80's so I can't truly speak to why not to allow 1% or 2%, but 3% is the amount for full matching (in that particular plan). As for impact on testing, I guess I should disclose that we had a QNEC of 1% for all participants and I seem to recall that it saved us a time or three. (Due to a raid on the pension, the 401(k) was very generous as there wasn't a salaried pension plan for a number of years and the rich 401(k) offset that loss.)

I suppose you could try filing for a Private Letter Ruling from the Service asking permission to convert the money to after-tax. But if they permitted that, I think it'd only be for the deferrals and not the profit-share. And you'd have to ask permission to retroactively amend the plan to allow after-tax if not already allowed.

It's a weak fallback and it will generate as many questions as it avoids but... Form 1099-R box 2b "Taxable amount not determined"

The IRS has NO problem w/ a 3% minimum. We had this at my previous employer in our salaried plan and it's passed IRS and DOL audits several times during its existence (plan had 2000+ participants so it wasn't just a small fluke plan that slipped by).