Dave Baker

What kind of employer? Sole proprietor?

Here's some related info re holding real estate inside an IRA: http://benefitslink.com/boards/index.php?showtopic=3462 Two custodians that handle unusual assets are suggested here: http://benefitslink.com/boards/index.php?showtopic=3375 Anybody want to suggest others?

An interesting Q&A in Derrin Watson's controlled group column on BenefitsLink might shed some light -- Using options to create controlled groups (click)

Authority for this is Department of Labor Advisory Opinion 84-44A, I think ... does anybody have a copy of that advisory opinion in data format they could paste into a message here?

See also http://benefitslink.com/boards/index.php?showtopic=5185 re excise tax consequences

http://www.irs.gov/forms_pubs/instruct/i5500-toc.html

This one? http://www.benefitslink.com/links/20000615...15-005844.shtml (Firm is called BenefitFinder.com)

http://www.benefitslink.com/links/19991019...19-002998.shtml

Were the sons named as the beneficiaries of the IRA? Was that designation in place on April 1 of the year immediately following the year during which the IRA owner became 70-1/2 (six months after his 70th birthday)?

I think there is no significant risk to the proposed rollover, despite the "a" language ... the idea is that any qualified plan's distribution can qualify for special tax treatment, in particular 5-year income averaging. That treatment is not available for IRA distributions. So the rule behind keeping the conduit IRA "pure" is to prevent a rollover IRA from being used as a way to move IRA non-rollover contributions (which would not qualify for 5-year income averaging if paid from the IRA) into a qualified plan from which they could be paid and qualify for 5-year income averaging. Having two different plan distributions in the conduit IRA shouldn't matter -- those moneys are from *some* qualified plan, where they were capable of being paid using 5-year income averaging, so the payment of the conduit IRA balance into a single retirement plan doesn't turn non-rollover IRA money into qualified plan money -- it's all qualified plan money to start with.

Maybe the $10k was your account's contribution for your last year of employment, which had not yet been calculated when you retired and received your account balance at retirement? It's common for a plan to need to wait until the end of the year to determine how much goes into each eligible participant's account, and to provide a contribution for people whose employment terminated during the year due to attainment of early or normal retirement age as defined in the plan. The contribution might have been for $8,000 but has grown to $10,000 over the past 5 years, as well.

Personal brokerage accounts are the subject of an article on the 401Kafe.com web site this week -- http://www.401kafe.com/commentary/feature/feature.html

Anybody know where the SPARK RFP can be found online nowadays? American Express' site seems to have pulled it off.

Do you have a booklet (the "summary plan description") that describes your distributions, and does it include a single-sum payment option?

test Can anybody help Steve? [This message has been edited by Dave Baker (edited 03-20-2000).]

I think so -- the purchase of the annuity would be a lump sum distribution "in kind" of the contract, which would not cause income taxation immediately to the participant due to the special rules for taxing annuities in Code section 72. I guess the idea is that the trust is clearing out all of its assets. (If the trust continued to operate, e.g. to make further installment payments, then it ought not to be making payments to pre-59-1/2 persons despite the trust's "termination.")

tcunagin said: The HCE have their own investment accounts, several of them. The non-HCE's have their money in a separate pooled account. The client was instructed to make a deposit, and a transfer from two of the HCE's accounts into the pooled account. The transfer occurred and the client deducted the transfer from the total deposit that should have been made, shorting the amount to be deposited!

Fred Reish's take on this issue: http://www.benefitslink.com/reish/articles...d_expenses.html

But the contributions for the HCEs were made on time? (How did that happen -- are these segregated investment accounts?)

Interesting! Would this be education regarding investments in the employer-sponsored 401(k) plan, or financial planning in general?

But even in the worst case of a "single-sum" distribution in the form of stock, the put option would not require the employer to pay cash immediately, yes? The cash payments could be stretched out over 5 years, maybe even 10? (Although there's an "adequate security" requirement that would tie up some corporate property as collateral.) The details of the put option, as set forth in the plan document and ESOP regs, might not be quite as bad as it sounds. (Though $5M is a lot of beans, for sure.)

Good management probably would be the most immediately appreciated and effective -- providing employees with the tools they need, encouraging their judgment and development, showing and telling them that their work is appreciated and valuable to the business, asking for their involvement and advice on matters that will affect them. (My two cents!)

Here's your homework for the weekend - the full text of the IRS audit ("examination") guidelines for 401(k) plans is online at http://www.irs.gov/retirement/article/0,,id=96954,00.html You'll learn exactly what questions they'll be asking, and what circumstances the auditor is being told to look for.

You need a "plan document" that contains the terms of the plan, some forms to give employees, and you probably want some literature to give to the employees explaining how to use the plan. Lawyers and insurance companies are good places to get the documents, as well as companies that are in the business of "administering" these plans (determining how much an employee is entitled to under the plan, helping you fill in the annual Form 5500, etc.). Good basic question-and-answer info appears in the Section 125 Q&A column on BenefitsLink, especially the earliest questions.

Tom is referring to this article: http://www.cbpp.org/3-2-00tax.htm Feel free to post comments and opinions here, too (in this message board topic).