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There is a grandfather in the case of a plan that, as of May 5, 1986, permitted withdrawal of any employer contributions prior to separation from service, then the changes in the basis recovery rules prior to the annuity starting date brought by TRA 86 apply only to the extent the amount distributed exceeds the employee's basis as of December 31, 1986.

According to Notice 88-118: "As a result of the repeal of the 3-year rule by section 1122(c)(1) of TRA '86, all annuity distributions from qualified plans to distributees with annuity starting dates after July 1, 1986, are taxed under section 72(b) of the Code. Section 72(b) provides that a portion of the annuity payments received in a taxable year may be excluded from gross income as a return of the distributee's investment according to an exclusion ratio determined at the annuity starting date. The numerator of this ratio is the employee's investment in the contract, and the denominator is the expected return."

What if the spouse's general purpose FSA could be set up so that only the spouse's expenses could be reimbursed? Would that still have an effect on the OP's HSA eligibility?

Notice 2023-73 just released with 417(e) tables for 2024.

According to the preamble: "The modifications made by the Secretary to the section 430(h)(3)(A) mortality table to determine the section 417(e)(3)(B) applicable mortality table are not addressed in these regulations. Revenue Ruling 2007-67, 2007-2 CB 1047, describes the modifications that are currently applied to determine the section 417(e)(3)(B) applicable mortality table." Does that mean that we do the modifications ourselves? Or will IRS come out with a notice like last year (Notice 2022-22)?

Adopting a resolution in 2007 and not making distributions seem to be problematic. The plan might not be considered terminated. Have they been filing 5500s each year? Have they kept the plan updated for changes in the law? Under Revenue Ruling 89-87: A pension, profit-sharing or stock bonus plan, under which benefit accruals have ceased, is not terminated if, after an amendment is adopted to terminate the plan, the plan assets are not distributed as soon as administratively feasible but are held in the trust which remains in existence in order to make distributions when employees become entitled to receive payments as provided under the terms of the plan as they exist when the amendment is adopted.

Going back to the original post, the age 50 ($6,500) catchup can only go into the 457(b) plan if the sponsor is a governmental entity..

In 1996, a federal law was enacted that basically stated that only your state of residence at the time of your retirement plan distribution can tax that distribution; as a result, the state where you previously worked while accruing your benefits or contributions could not tax them. (There is an exception for certain nonqualified plans that are neither excess benefit plans nor are paid out over life.) Prior to enactment, there had been much litigation. There is still occasional litigation, but that usually concerns whether the recipient actually changed residence.

The IRS generally takes the position that a plan may not impose a “significant detriment” on a participant’s right to defer distribution of the participant's benefit under a plan under Section 411(a)(11). In Revenue Ruling 96-47, the IRS concluded that the disparate treatment of active and former plan participants with respect to investment diversification rights was a significant detriment. In that ruling, actives had full investment diversification rights while the inactives only had the right to invest in a money market fund. The situation in the original post seems analogous to the ruling and there may be a significant detriment.

There's no NJ income tax exclusion for deferrals into a 403(b). However, you will recover your basis for NJ Income tax purposes when you take distributions, assuming you're still a resident of NJ. See the top of page 9 of the link: https://www.state.nj.us/treasury/taxation/pdf/pubs/tgi-ee/git1.pdf

I don't have the EOB, but I think that section is based on Field Assistance Bulletin No. 2003-03, which explicitly overruled Advisory Opinion 94-32A. The FAB says it is specifically answering questions only about DC plans.

EHE: I suggest you google Medicare Part A retroactivity and HSA eligibility. There are a lot of articles out there explaining the retroactivity aspect. I found the following on a CMS fact sheet: "NOTE: If you qualify for premium-free Part A, your coverage will go back (retroactively) up to 6 months from when you sign up. So, you should stop making contributions to your HSA 6 months before you enroll in Part A and Part B (or apply for Social Security benefits, if you want to collect retirement benefits before you stop working)." And I found the following Q&A from CMS: "What happens to my HSA when I sign up for Medicare? You can’t contribute to your HSA once you’re enrolled in Medicare. If you contribute to your HSA after your Medicare enrollment date, you may have to pay a tax penalty. If you’d like to continue contributing to your HSA, you shouldn’t apply for Medicare, Social Security, or Railroad Retirement Board (RRB) benefits. Because your enrollment date for Medicare (i.e., when your coverage starts will generally be 6 months before your application date, you must stop contributing to your HSA 6 months before applying for Medicare. Premium-free Part A coverage begins 6 months back from the date you apply for Medicare (or Social Security/RRB benefits), but no earlier than the first month you were eligible for Medicare. To avoid a tax penalty, you should stop contributing to your HSA at least 6 months before you apply for Medicare." I'm not aware of what extent the IRS and CMS share information about ages and enrollment in Medicare Part A.

The 5/12 rule only applies if you apply for Medicare at the time you reach 65. If you apply after attaining age 65, Medicare Part A coverage is retroactive for the shorter period of (a) six months from application or (2) back to age 65, which can result in retroactive disqualification of HSA eligibility. So, if the person in the original post was 68 at the time of application for Medicare, there would be six months of retroactive Medicare A coverage so that not only would the person not be HSA eligible for all of the current year contributions, but the person would also be disqualified for the previous December's contribution. The proposed HSA legislation making its way through Congress would try to change this rule solely for HSA eligibility purposes. From what I hear, passage doesn't look too promising.

I think you might be asking whether or not the employee's accrued benefit will need be increased if the employee does not make the required contribution. According to the USERRA Regs (20 CFR Part 1002.265): (b) In a contributory defined benefit plan, the employee will need to make up contributions in order to have the same benefit as if he or she had remained continuously employed during the period of service. This assumes that the employee contribution is required under all circumstances.

The employer probably could not condition making payments on the student's loan on the employee making deferrals to the 401(k). This would seem to violate the contingent benefit rule of Reg Sec 1.401(k)-1(e)(6). There's a similar rule under the 403(b) regs. There's nothing preventing the employer contribution to the 401(k) based on the employee making student loan payments as a profit-sharing contribution, other than the general nondiscrimination rules.

Probably violates the "contingent benefit rule". This rule prohibits employers from requiring employees to participate in a 401(k) plan in order to qualify for other benefits. Reg. Sec. 1.401(k)-1(e)(6)

The reg that I cited above basicaly says that the excise tax is payable based on the "later of 70 1/2 or retirement" (except for 5% owners), even if the plan requires payments at 70 1/2. So, there would be no excise tax for the employee. However, the plan administrator did not operate the plan in accordance with the document and for that the plan has to follow the correction procedures.

See Reg Sec 54.4974-2 Q&A 4 (b)(4) (the penalty regs)

The recent Rev Proc contains the HDHP limits associated with Archer MSAs, as opposed to the limits that apply to HDHPs associated with HSAs (which were issued back in April). There are two different types of arrangments.

It's my understanding that under Rev Proc 2011-49 a multiemployer plan cannot piggy back on the opinion or advisory letter for a prototype or volume submitter plan. So the plan may be in a situation where it has to get its own letter unless it could merge with another plan that already has a letter.

I've run across a situation in which the pensioner elected a single life annuity with a 10-year guarantee. He died within 2 years of beginning his payments. The named beneficiary predeceased him and there is no named contingent beneficiary. Under the plan, the estate would be the default beneficiary under these facts. So, does this mean the estate would have to stay open for another eight years?

The rules regarding suspension of benefits and actuarial offsets are contained in a set of proposed regulations (1.411(b)-2(b) that were issued in the late 1980s. This shouldn't be confused with the proposed regulations with the same number issued in 2002 or 2003 and subsequently withdrawn. Those regulations provide (and are illustrated with a number of examples) that if benefits are not suspended then the participant is enetiled to both the actuarial adjustment and the additional accrual. However, if benefits are not suspended, the plan can "provide" for an offset so that the end result would be that the participant would be entitled to the greater of the two. The work "provide" means that the offset language would have to be in the plan document. With regard to the IRS requirement for notice, you might take a look at the following. Forgive me but I can't figure out from the bb code how to post a link. IRS Notice Requirements

Just take a look at the change in Code Section 401(a)(9)(H): It specifically says that the temporary waiver only applies to DC Plans and IRAs.

The 12 month rule comes from ERISA Section 403©(2), not the Code. It's referenced in Revenue Ruling 91-4.

I found the following in the preamble to the proposed regs and it might be applicable here: The nondiscrimination and the universal availability requirements are in addition to other applicable legal requirements. . .Another example is that, while employees who normally work fewer than 20 hours per week may be excluded under the universal availability rule, employers who maintain plans that are subject to Title I of ERISA should be aware that Title I of ERISA includes limitations on the conditions under which employees can be excluded from a plan on account of not working full time and that these limiations would generally not permit an exclusion for employees who normally work fewer than 20 hours per week. It's tough to tell whether this applies only to employer contributions or to both salary deferrals and employer contributions.