tja
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Everything posted by tja
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Recoupment of overpaid withholdings
tja replied to tja's topic in Defined Benefit Plans, Including Cash Balance
Thanks. Did you file using a Form 945-X? -
Has anyone had any experience with the iRS regarding recoveries of withholding overpayments made by a pension plan or is aware of any guidance? For example, assume that a pension plan continues to pay benefits to a deceased retiree's bank account and the joint holder of the account retains the funds or the funds are returned to the plan by the bank. An IRS letter dated May 15, 2003 from the Office of Chief Counsel entitled "IRS Letter on Recovery of Erroneous Withholding" states that the plan can file Forms 843 and 941c (apparently Form 941c was replaced by Form 941-X). The guidance contained in this May 15, 2003 letter appears out of date. And it would appear that IRS Form 945x is more appropriate. IRS Letter May 15, 2003 re withholding recovery.pdf
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Is anyone aware of any authority that would support a view that a defined benefit multiemployer pension plan could exclude retirees from a mass distribution of an updated SPD? Even though the language in 29 CFR section 2520.104b-2 is somewhat inconsistent, it appears that retirees in pay status are not excluded from a mass distribution of an updated SPD.
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One of the requirements for a pick-up arrangement is that the "employer must specify in writing (e.g., minutes of meeting, a resolution, or an ordinance) that “contributions on behalf of a specific class of [its] employees . . . although designated as employee contribution , will be paid by the employer in lieu of employee contributions.” Is there any guidance on what constitutes a "specific class of employees"? It appears that the employer need not cover all employees, just a "specific class." Is anyone aware of any guidance on this point? For example, it would appear that the employer could commence pick-ups after two years of service and have different rates of pick-up for different classes of employees covered by the plan. Can the employer prospectively change the amount of the pick-ups, provided the employee doesn't have a cash or a deferred election right?
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One of the earlier posts addressed the point that a if pick-up arrangement reduces salary, FICA is owed. Assuming salary has not been reduced, an IRS website nonetheless states there is a FICA obligation unless such picked-up contributions are mandatory for "all employees covered by the retirement system.” See https://www.irs.gov/government-entities/federal-state-local-governments/employer-pick-up-contributions-to-benefit-plans That seems incorrect and I can find no authority for the IRS's position. Does anyone have any insights?
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A governmental plan requires employees to contribute to the Plan post tax. The monthly benefit reflects both the taxable and non-taxable portions and are reported appropriately. If a retiree dies before receiving benefits equal to his or her contributions (plus interest at the plan's rate), then his or her beneficiary receives a refund equal to the difference between the total benefit received and the retiree's post-tax contributions (plus interest). Is this refund taxable? How is the refund reported to the beneficiary?
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Can a governmental plan permit a participant to purchase an enhanced benefit without relying upon section 415(n) if it otherwise complies with section 415?
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Refund of employee contributions - Defined Benefit Plan
tja replied to tja's topic in Governmental Plans
All or virtually all picked up. -
Refund of employee contributions - Defined Benefit Plan
tja replied to tja's topic in Governmental Plans
The plan currently requires separation of service but an amendment is being considered to allow in-service refunds to employees who leave covered employment by transferring to management. . -
It is my understanding that an employee's contributions to a governmental defined benefit plan cannot be refunded to an employee who is no longer covered by the plan if he or she remains employed with the sponsoring employer unless he or she reached normal retirement age. This issue arises in the context of a collectively bargained employee who leaves the bargaining unit to become part of management. Does anyone know of any exceptions or is there any authority that supports the refund of employee contributions to someone who transferred to a position not covered by the plan but has not separated from service?
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Withdrawn.
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I am reviewing a governmental defined benefit plan that allows a participant to elect to a refund of employee contributions (picked-up contributions) plus interest when he leave employment. The plan also provides for a death benefit of the employee contributions plus interest, less any retiirement benefits received. The plan does not have any rollover provisions. Are the amendments that would have been required under a DC plan needed here as well? If so, what is the best approach for amendments made this year?