My 2 cents

It's a Friday afternoon (with all that implies concerning the acuity of my thought processes), but I can't think why it wouldn't be.

Nobody is saying otherwise, but compared to the loan itself (which is not double-taxed), the magnitude of the interest that is double-taxed should be relatively small. Of course, while the loan interest is accumulating, the investment income on the non-loaned balance of the account would be that much less, so maybe, when all is said and done, those double-taxed interest payments are just serving to bring the account balance closer to what it would have been had there been no loan. To analyze it that far, unfortunately, might require the use of parallel universes. So let's just acknowledge that the interest on the unpaid portion of the loan probably results in some double-taxation but not the loan itself.

If the plan terminated and the person had not already been paid out, then there should be a strong presumption that either an annuity was purchased for the person or the person was paid out then. Under a plan termination, all benefits must be distributed in one of those two ways. Masteff was not being unreasonable in pointing out that it is required that all new terminations with deferred benefits must be reported to the Social Security Administration but until recently, there was no obligation to report that people who had been reported previously had been paid out. There is a problem that many of the people of the SSA database are not, in any way, entitled to benefits, and (in the earlier situation) if one is a couple of companies removed from a defined benefit plan that terminated many years ago, the current company may in fact have absolutely no access to relevant records for a plan that had been fully discharged. How can they avoid having to pay for something that they have no ethical or moral responsibility for?

Let us not forget that Congress chose to enact a law that will prevent states from establishing retirement savings vehicles for employees of companies not otherwise doing anything to facilitate accumulation of funds for their rank and file employees, thus ensuring that many such people will have nothing but Social Security to rely on after their working days end. How much concern is to be found in Congress for poor Americans?

Please note that the other discussion was also posted today by the same person about the same issues. Between the two discussions, I (speaking as a non-lawyer) have had my say!

Don't forget that the 100 withdrawn as a loan from the plan is subject, at that time, to 0 taxes, so you get to keep (or use) the 100 on a fully tax-free basis. You could as easily repay the loan from that and not have to take 125 from payroll to repay it. You were going to pay 25 in taxes on the payroll money in any event, and you would then have 100 in after tax money from payroll to use as you please instead of using it to pay back the loan. Receipts: 100 from plan, 125 from payroll (total 225) Expenditures: 25 taxes on payroll, 100 repaid to plan from any or all available sources (plus interest, which is here being ignored), 100 left for any other purpose. (total 225) When the money is later withdrawn from the plan (not borrowed), THEN you pay taxes. Once. Does that help?

I replied to your other post, and continue to not be a lawyer. I would expect that the estate is responsible for the bills, not you. If the estate has any value, the bills could be paid from the estate (including the funeral home charges if not paid - if already paid, you could seek reimbursement from the estate). If the estate hasn't got a sufficient value to cover outstanding debts, you should bear no responsibility personally to pay them. If the property is not mortgaged to full value, you may be able to take a loan on it to pay off, for the estate, the outstanding debts. If the property is fully mortgaged and you wanted to maintain possession of the property, you would use personal assets to pay the taxes. The other creditors can, perhaps, be permanently denied payment unless the property was used as collateral for the debts without it costing you ownership of the property. Local laws may extinguish debts upon the death of the debtor. There may have even been some sort of insurance in connection with the mortgage eliminating the mortgage debt. See a lawyer.

I am not a lawyer, but it is unlikely that any changes can be made to the beneficiary since payments have started, especially if the survivor benefits are contingent on the designated beneficiary's survival (that is, if there are payments to be made as long as the beneficiary is alive). You should probably check with the plan administrator on this. As for seeking a DRO, DRO's can only be honored by pension plans to the extent that they provide support for spouses or other dependents of the plan participant. Can you make a legitimate argument that you should be treated as your father's dependent? If there is any value to the estate, you should probably seek restitution from the estate for any death-related expenses you have paid (like the burial costs). Further, if there is little or no value to the estate, perhaps it would be acceptable for you to refuse to accept responsibility for any of the estate bills or property taxes. At worst, the municipality can fight it out with the mortgage holder for the house. Are there any laws in your state that force adult children to pay for such things? You should probably check with a lawyer on this. As I said, I am no lawyer, so do not rely on what I said above. It is my understanding that people who have died can leave assets to their heirs but not debts, but, again, I am not a lawyer and don't even know what state's laws are involved.

Puerto Rico has its own tax code. Do the Virgin Islands? Are you asking about setting up a Virgin Islands company or having a Virgin Islands company sponsor a 401(k) plan? Need to look for expert legal advice in either case.

Nobody promised that person that the set-up would be tax-efficient! Besides which, isn't one's IRA deduction limited to what one earns? How did the person take any IRA deduction at all while retired?

A shared interest QDRO could provide for survivor benefits for ex-spouse. Did this one? That would be independent of divorce or property settlement. It would not surprise me if the ex-spouse would be permitted to at least seek to revise the order. I don't think there are any time limits. Is the participant still alive?

I continue to be concerned - it would certainly be unacceptable if the sponsor or its owner stood to benefit from the non-publicly traded investment. The selection of the investment is not to be made with the owner's interests in mind!

And the elimination of two other regulations?

Things to watch out for: Prohibited transactions Choosing investments to benefit the sponsor rather than the participants Issues with fair valuation of the investment Issues with illiquidity Just guessing here, but is one plan mainly benefiting the owner and the other plan mainly benefiting young, rank-and-file employees? Does this investment at least work neutrally with respect to its possible adverse impact on the latter group? Out of all the normal, liquid investment vehicles out there, is this the best they can do when they are wearing their "fiduciary" hats? If the owner wants to invest in a non-publicly traded real estate investment, let them do so without involving either plan, especially if the owner has any further interest in it. Don't PS plans have to also deal with annual valuation issues?

A few days ago (April 15th), there was a link to the draft 2017 forms on BenefitsLink (always there when you need them!), and despite my best efforts, I could not even find the old compliance questions (other than those on the Schedule H). The extra section at the end of the Schedule R, for example, wasn't even there. So it looks as though, at least for 2017, it is a non-issue!

This is a matter to be determined by the plan administrator (as to whether the plan permits a varying stream of payments month after month). It does not sound as though the participant is looking for nearly equal installments over a specified period of years. So the first question is can they make such an arrangement? Is the participant over 59 1/2? If so, it might not matter much - all payments would be ordinary income. If not, if there is any variation, the payments might be subject to the early distribution excise tax. Is that a factor here?

As a general rule, if an employee complains about something someone else said or did, HR is not going to tell them to get a life.

I forget - in what way does completing a Form 8955-SSA constitute work subject to Circular 230? It is not a tax document. It is an information document prepared for the Social Security Administration. 5500 filings are not tax documents either. Preparation of either form should not be construed as providing tax advice. Or am I missing something?

If you are not the taxpayer and the taxpayer has not submitted a 2848, the IRS flat out will not talk to you. Or at least that is what is supposed to happen. I am not sure whether or not one must, as a prerequisite, also be authorized to practice before the IRS to be designated on a Form 2848. But no 2848, don't even try to discuss things with the IRS, even to provide requested information.

Probably OK, so long as the eligible group passes coverage. How else would an early retirement window work?

For what it's worth, the July/August 2010 issue of Contingencies magazine addressed this topic on pages 10-14, including a column on page 12 labelled "Debunking the Myth of Double Taxation".

Delayed filing due dates for weekends and holidays are for wimps!

Not to fear - nobody is calculating service under the 1,000 hour rule that way!

Looking back at the posting where concern was expressed, I would have expected that there would be a very strong inverse correlation between the size of the recordkeeper and the likelihood that they would credit a year of vesting service for each full 1,000 hours of service during a plan year (i.e., 1,000 to 1,999 hours = 1 year of credit, 2,000 hours or more = two years of credit). I would never expect a "very large recordkeeper" to so totally misunderstand how the service crediting rules work! To make sure that all are in agreement here, there is no such thing as an "employed on the last day of a plan year" rule with respect to vesting service. Even for 401(k) plans. One can only take termination before the end of the plan year into account for benefit accrual purposes and/or entitlement to annual additions (and even then, I don't think you can invoke such a rule in the context of a defined benefit plan).

[If the plan uses an hours of service rule for vesting] The plan would specify the computation period for vesting purposes (most commonly plan year) and the hours of service required (say 1,000). If, on the date the participant separates from service, the hours completed in that plan year are enough to satisfy the definition of a year of vesting service, it is not possible that the participant could be denied that plan year as a year of vesting service earned. So if a person was hired in June 2014 and terminated in August 2016 and worked full time, and the plan defines a year of vesting service as a plan year (calendar year) in which the person completes 1,000 hours of service, it is inescapable that that person would have 3 years of vesting service on the date of termination notwithstanding having worked, on an elapsed time basis, barely more than two year. [If the plan uses elapsed time for vesting] One makes it to the end of the third year of employment (measured from date of employment to date of termination with each day counting for something like 1/365 of a year) or one does not wind up with three years of vesting service. Of course, if the person works at a school that is open from September to May, the period from the end of the school year in May to the start of school in September would certainly count as vesting service even if the person is considered "terminated" during that period, so long as they recommence being an employee in September (or, actually at any time within a year of the date of termination).