masteff

http://www.irs.gov/newsroom/article/0,,id=214321,00.html

Or you could be extremely literal about the word "increase" is this paragraph.

"in accordance with regulations prescribed by the Secretary" gives a certain amount of latitude to prevent a reduction.

Would it be this: http://frwebgate3.access.gpo.gov/cgi-bin/P...action=retrieve

I concur w/ Bird's post above and would also quote the sentence before the one he quoted: "For example, some plans may contain distribution language that satisfies § 401(a)(9) without referencing this Code section and thus, arguably, would not be affected by § 401(a)(9)(H); nevertheless, sponsors of such plans may want to suspend 2009 RMDs." Nearly everytime the IRS uses the words "plan(s) may" it indicates a choice that plan makes and is not mandated. Further, the introductory paragraphs for each sample start with: "For use by plan sponsors that want to give". I've added emphasis on "want" which is a very different word from "must" (which is an IRS favorite that they don't shy away from).

I couldn't find an exact answer to the cost of tax deferrals into retirement plans but found the following interesting (in 2002 dollars): http://www.cbo.gov/ftpdocs/54xx/doc5418/05...mentSavings.pdf As of the end of 2002, $10.1 trillion was in tax-deferred retirement plans, of which $9.0 trillion was taxable upon withdrawal. Despite the recent trend toward defined-contribution plans, most of those funds were still in defined-benefit plans: $3.1 trillion in private plans (both employment-based pensions and individual annuities) and $2.9 trillion in government plans. The remaining $4.1 trillion was in private-sector defined-contribution plans and IRAs.

One great flaw of the DB plan is general lack of portability / continuity amongst employers. After 8 years at former job, I can now look forward to ~$325/month at age 65. Allowing for 25 years of inflation, that should almost pay my cable bill. Which that said... I suddenly see the attraction of a broadbased private annuity pool as proposed at the end of the above article. However that's a solution to DB portability and not to the enumerated problems in 401(k)s.

Those statements I most certainly agree with.

You should familiarize yourself with IRS Publication 590: http://www.irs.gov/pub/irs-pdf/p590.pdf See the section entitled "IRA Beneficiaries" beginning on page 36, "Distributions After Owner's Death" on page 70, and "Exceptions" on page 67. Generally speaking, your children would elect to either take the full amount within 5 years or take it based on life expectancy. They would not be subject to the 10% penalty because the distributions would be made to a beneficiary after your death. It could be useful for your wife and children to understand that, if you do pre-decease your wife, it might be beneficial that she explicitly elect to treat the Roth IRA as her own. Of course the laws and rules are always subject to change and you may want to consult with a competent professional tax advisor who can help you better understand how these laws and rules apply to your individual circumstances.

Perhaps they're remembering sound bites from before the final legislation was passed or they're thinking about minimum required distributions for participants age 70.5 and older being waived for 2009 (to the extent not otherwise obligated by plan language).

In my experience with forum software, the signature is not a static part of the posted messages, it actually pulls from the current signature each time a post is viewed, so updating the signature will automatically change it on old messages. Looks like both oriecat and I played w/ this... I can confirm that sigs on older posts are dynamic, meaning current changes to sigs are reflected on those already existing posts (and not just on future posts).

Geez... Good writer, bad journalist. 1) Wow, let's take some statistics w/out citing a reference, draw some broad conclusions and misapply them to people at an individual level. 2) So if I read the article correctly... the day someone leaves employment is the day that the value of their 401(k) is fixed in stone and it will never change, ever again, except for withdrawals??? 3) The words "retirement", "leisure" and "luxury" are all three very different things. I refuse to feel bad that someone can't afford to buy a house in Florida and play golf every day. 4) Um.. so on the last page, the whole point of the article is to justify some group's idea of offering private retirement annuities to our workers?!?!? Don't tell me why 401(k)s are bad; tell me how you're going to fix insurance regulations so private-insurance annuities are actually a reasonable alternative. 5) And finally, the article completely fails to comprehend the modern "3-legged stool" retirement philosophy... Social Security, employer retirement plans and personal savings. The article would have you think that someone can't save for retirement w/out a 401(k). Guess I'm breaking the rules and should close my brokerage account and blow it all on a new car.

Is it to late to retroactively amend the plan definition of comp?

See also this recent thread: http://benefitslink.com/boards/index.php?showtopic=43465

Bumping this so minds more knowledgable than mine will notice your question. My opinion is that unless a) the bank is a trustee for any other assets of the plan (making the bank disqualified as well as the person in question) or b) the person was already a significant stockholder of the bank, then you're okay because the investment isn't "for the benefit" of himself as an individual. But I'll defer to others opinions should anyone find fault in my thinking.

When we went thru EPCRS, the local office of our national audit firm used a guy from their DC office. No telling if the name signing the correction filing actually had any impact. Point being... the DC offices of some of the major audit and accounting firms might be a place to look.

Thanks for this info. I realize that the 100k AGI limitation is being lifted in 2010, but I assume that contribution limitations based on income are still applicable. Do you know if this assumption is correct? Thanks, Item #5 in the article Tom linked specifically addresses that question.

Yes, that is 100% correct. http://www.irs.gov/pub/irs-tege/rollover_chart.pdf http://benefitslink.com/boards/index.php?s...c=43360&hl=

The original question was an "A or B" question, not "correct or incorrect"... could you please be more clear as to what you're stating is incorrect (or are you simply planning to chase Blinky around the board and make vague contradictions to anything he posts?)?

But it should be calculated based on the same compensation as regular 401(k) deferrals (unless the plan has a different definition of comp for designated Roth accounts).

See the last full paragraph here: http://www.irs.gov/formspubs/article/0,,id=181059,00.html Generally, qualified transportation fringe benefits are excluded from an employee's wages even if you provide them under a compensation reduction agreement. However, qualified bicycle commuting reimbursements do not qualify for this exclusion if made under a compensation reduction agreement. Meaning, it's NOT a pre-tax mechanism. If your company contributes toward the cost of transit passes or parking, then "qualified bicycle commuting reimbursements" would allow your company to contribute comparable money toward bicyclists. But if the company doesn't contribute anything (ie it's only a pre-tax mechanism) then it's not applicable for you.

Earlier in the year, the discussions here and elsewhere were that plan language might still require the distribution but it would not be a true MRD from the participant... the importance of which being that it would thus be rollover eligible.

Yes but rare.

So perhaps, if an employee is involuntarily put into the plan, then it would simply need to be an after-tax deduction outside the premium-only 125 plan?

In addition to the above comments, if we try to examine the construction of (D)(i)... Clauses I thru IV qualify the immediately preceeding words: "which becomes payable to the recipient". Further, clauses I and III would result in illogical statements when combined with "within one taxable year", making it illogical to try to combine clauses II and IV w/ those words.