jlf

Dear Lyric: Revenue Ruling 90-24 authorizes DIRECT TRANSFERS. Under the Ruling you may only transfer to another IRC section 403(B) investment. See 403(B)1, 403(B)7 and 403(B)9. No triggering event is required to effectuate a TRANSFER. This differs from 403(B)8, the rollover provision, which authorizes ROLLOVERS to IRAs as well as TSAs. You must satisfy an early distribution triggering event under 403(B)(7)(A)(ii) and 403(b)11 in order to effecuate a ROLLOVER of elective deferrals. Try to TRANSFER your current contributions quarterly to the TSA investment of your choice. Insofar as you have separated from employment(a triggering event) you may effectuate a rollover of your former TSA to an IRA if that is what you want to do . Remember you may not borrow from an IRA but you can self direct the investments.Your personal circumstances should dictate your decision. ------------------ [This message has been edited by jlf (edited 07-24-99).] [This message has been edited by jlf (edited 07-24-99).] [This message has been edited by jlf (edited 07-24-99).]

DOES THE ACT CLARIFY THAT: "ELIGIBLE ROLLOVER DISTRIBUTIONS" OF SALARY REDUCTION CONTRIBUTIONS, within the meaning of sections 402©4 and 403(B)8, ARE NOT SUBJECT TO THE EARLY DISTRIBUTION TRIGGERING EVENTS OF SECTIONS 403(B)(7)(A)(ii) and 403(B)(11)? [This message has been edited by jlf (edited 07-21-99).] [This message has been edited by jlf (edited 07-21-99).]

If the death benefit is paid from a group life plan, in or outside of the DB Plan, it is income tax free and may or may not be estate tax free depending on the size of the estate. A pre-funded benefit seems to be the better funding method. The premium will be a fixed expense and, therefore, appropriated at the beginning of the fiscal year. A pay-as-you-go benefit is unknowable and may present a funding problem in an off year or two. Beth: You above all people should know that the death benefit WILL BE PAID sooner or later, with or without a timely notification by the beneficiary. A timely notification is simply helping your client carry out its legal duty. You as the attorney will, therefore, be serving the best interest of your client by encouraging, not discouraging, beneficiary notification. Why would you want to help your client not pay its legal obligation. MOREOVER, HOW COULD THE NON-PAYMENT OF A LEGAL DEBT POSSIBLY BE IN THE BEST INTERESTS OF THE COMPANY YOU REPRESENT AS AN ATTORNEY? ------------------ [This message has been edited by jlf (edited 07-20-99).]

The pre tax contribution is limited to the contribution rate specified in the Plan Document. It is generally a single digit rate; and is only federally taxed deferred.

Is the plan covered under ERISA, the Employee Retirement Income Security Act? If yes, how long were you married? Was he receiving his pension or was he still working? Erisa does not cover the public employee plans of state or local governments. For these plans you must check out the specific state law. ------------------

Ellie, What are the investment options for 403(B)9 income accounts? ------------------

A pre-1989 403(B)1 balance may be rolled over to a self-directed IRA at the discretion of the employee; while a post- 1988 balance is an "eligible rollover distribution" only AFTER the employee satisfies an early distribution triggering event under 403(b)11. SEE FRANK V. AARONSON, COURT OF APPEALS FOR THE 2ND CIRCUIT, 96-9456. If you feel the Court's decision makes little sense, as many practitioners do, may I urge you to write to Chairman Bill Archer of the House Committee on Ways and Means. Under current law, cash flow may only be invested in annuities (403(B)1) or mutual funds (403)(B)7). ------------------ [This message has been edited by jlf (edited 07-09-99).]

ONLY IF THE PLAN DOCUMENT OFFERS A LUMP SUM DISTRIBUTION OPTION. THIS IS AN IDEAL WAY TO ADDRESS THE DEFECT OF "COLD STORAGE VESTING" IN DB PLANS. ------------------

Your situation is and always has been a major defect of DB plans. Your DB, based on your salary at the time of termination, will be eroded by inflation over the next 18 years, until you are entitled to receive your pension at age 65. This is called "cold storage vesting". Let's use just a 3% inflation rate. Over the next 18 years (the cold storage vesting period) you can expect your pension's purchasing power to be reduced by 54%. Let's assume a vested benefit of $20,000 in 1999. It will have purchasing power in year 2017 of $9200.00 (20,000 x .46) YOUR SITUATION REVEALS ANOTHER REASON WHY DEFINED CONTRIBUTION PLANS ARE SO POPULAR!!! ------------------ [This message has been edited by jlf (edited 07-02-99).] [This message has been edited by jlf (edited 07-07-99).]

This question is addressed at the "RETIREMENT PLAN DISTRIBUTIONS" column. ------------------

Go to the Q and A topic: "RETIREMENT PLAN DISTRIBUTIONS". You will find your answer. ------------------

Dear Wessex, You should check the STATUTE!! DISTRIBUTIONS, FROM ALL PLANS, ON ACCOUNT OF HARDSHIP ARE NO LONGER INCLUDED IN THE DEFINITION OF AN "ELIGIBLE ROLLOVER DISTRIBUTION". With reference to FRANK V. AARONSON, there are many benefit attorneys who disagree with the Court. I know of two. Try checking around and I am sure you will also find a few. When you do please e-mail to me their names and addresses. Remember, "no struggle, no gain"!!! ------------------ [This message has been edited by jlf (edited 06-23-99).]

Kirk, The two year rule refers to profit-sharing plans. Have you read FRANK V. AARONSON? Do you agree with me that the Court just didn't get it? [This message has been edited by jlf (edited 06-14-99).]

Distributions on account of hardship are no longer eligible for rollover treatment.(All Plans) I am in FULL AGREEMENT with QDROphile's statement. The Court of Appeals for the second circuit in FRANK V. AARONSON,however,disagrees. (CA 2ND 96-9456). This decision makes eligible rollover distributions from TSAs subject to the early distribution triggering events of IRC sections 403(B)(7)(A)(ii)and 403(B)(11). The Court's decision flies in the face of the regulatory/statutory definition of an "eligible rollover distribution" of section 402©4; which states that an "eligible rollover distribution" is "any distribution........etc." The decision also renders the REPEAL of the specific triggering events that needed to be satisfied,prior to January 1,1993,for distributions to be afforded rollover treatment under 403(B)(8) meaningless. (see UCA'92). I have brought this issue to the attention of the Hon. Bill Archer and the Hon. William Roth along with the members of their respective Committees. May I urge all to write to these two gentlemen in support of a STATUTORY CLARIFICATION THAT ELIGIBLE ROLLOVER DISTRIBUTIONS ARE NOT SUBJECT TO THE TRIGGERING EVENTS FOR AN EARLY DISTRIBUTION. The Court of Appeals has decided that only an "early distribution" is an "eligible rollover distribution". This is rediculous! The decision is clearly contrary to the intent of Congress. (See Committee Reports for the UCA'92) [This message has been edited by jlf (edited 06-14-99).]

What are the plan's distribution options? The plan may not allow transfers/rollovers. They may require you to annuitize; especially if the employer contributed to the plan. Kathy is assuming that your plan is funded solely by your salary reductions. This is probably not the case. [This message has been edited by jlf (edited 06-03-99).]

In addition to providing a DB pension, the TRS of the City of New York has been designated by the Board of Education as the sole carrier for TSA/403(B). No other 403(B) carriers are allowed in. This has been the fact ever since the TSA Program began for NYC pedagogues in 1970!!! Now that I have clarified the facts for you would you be kind enough to provide me with the names of some lawyers so I may start the Class Action? ------------------

The teachers of the City of New York are offered only one 403(B) carrier. This carrier offers only 2 investment options: a fixed interest rate and a general equities fund. One may change investment contributions every 90 days. Accumulations may be exchanged no more rapidly than 1/12 of the account balance over 12 months. I want to commence a class action to force this employer to offer more investment choices and a flexible exchange program. Please e mail names of attorneys. ------------------

WHILE GOVERNMENTAL PLANS ARE NOT SUBJECT TO ERISA, MANY OF THE SAME STANDARDS APPLY THROUGH THE STATE'S COMMON LAW. I WANT TO LEGALLY ASCERTAIN IF THESE STANDARDS ARE BEING BREACHED. PLEASE E MAIL THE NAME OF AN ATTORNEY WHO MAY EXIBIT SOME INTEREST. ------------------

ERISA does not apply to governmental plans. I believe we are entitled to a reasonable choice of investment options as well as a reasonable (flexible) exchange program. THIS IS A VOLUNTARY SALARY REDUCTION PLAN. Can a legal case be made? There must be attorneys out there that have an opinion!! ------------------ [This message has been edited by jlf (edited 05-17-99).]

The NYC Board of Education offers only one 403(B) carrier; the TRS of the City of New York. The TRS offers only two investment options: a. a fixed interest account. and b. a general equities account. A participant may change future contributions every three months. Accumulations may be transferred no more rapidly than 1/12 of the account balance over 12 months. The employer says "take it or leave it". I want to start a class action to force the Board of Education to offer more investment choices. Please recommend three lawyers. ------------------ [This message has been edited by jlf (edited 05-15-99).]

Check out FRANK V. AARONSON, ET.AL; COURT OF APPEALS FOR THE SECOND CIRCUIT. 96-9456. In light of the fact that 403(B)8 governs rollover amounts,and the restrictions under 403(B)8 were repealed; was the Court wrong in ruling that a post 1989 amount is only eligible for rollover treatment after one of the early distribution triggering events of section 403(11) is satisfied? ------------------ [This message has been edited by jlf (edited 05-04-99).]

TSAs are trapped in the annuities loop because annuities were the only investment option from 1959-1974. The custodial account option (403(B)(7)) is the new boy on the block.

Why don't you keep the TSA carrier and request a change of agent? ------------------

Take a look at 403(B) message board. Then go to topic "rollover transactions" dated 10-30-98. Also go to "Retirement Plans in General" Message Board. Topic: "What qualifies a distribution for rollover treatment" ------------------

PLEASE TAKE A LOOK AT THE "RETIREMENT PLANS IN GENERAL" MESSAGE BOARD. THEN LOOK FOR THE TOPIC: "WHAT QUALIFIES A DISTRIBUTION FOR ROLLOVER TREATMENT? IS THERE ANYONE OUT THERE THAT DISAGREES WITH THE DECISION REACHED BY THE SECOND CIRCUIT? ------------------