k man

A client of ours has given us an IRA beneficiary designation (his son is beneficiary) drafted by his attorney that basically directs the custodian to distribute the RMD based on the son's recalculated life expectancy. the custodian (fidelity) will not take the form. i noticed a sample beneficiary designation in a forms book i have with similar language except that it is permissive (not mandatory). is this the reason they wont accept the form or are the wrong in not accepting the form?

Small plan (the only participant currently is the owner). the owner would like to invest plan assets in a closely held bank and he will be a director of that bank. is this a PT? i think it is a transaction with a party in interest. however, an investment is not a sale or exchange so i have some doubt.

so the following is valid? "only employees hired prior to September 1, 2004. it just bothers me for some reason.

plan sponsor does not want any new participants right now. is there any way to exclude all new hires until they exceed 30% of the workforce? i dont believe this is a valid exclusion.

for the record, i told them that they should not try to keep the money because i thought it rightly belonged to the participant. however, i was interested in getting other opinions.

the return was sent back for failure to include the audit report but it was returned over a year ago. at this point are the penalties the same as the penalty for not filing the 5500? in my view the penalty would be the same as the penalty for not filing the report.

i am concerned after reading my plan document (ppd/corbel). It seems as though they cant waive after the participants death. i need to review it again.

Can the beneficiary (spouse) waive the QPSA after the death of the participant (Before RBD)? If so, how long does the spouse have to waive?

actually he was not ineligible. he was illegal in that he was an undocument alien. however, he was not excluded as a non resident alien and he has us source income.

i dont think it was an identity theft situation. the participant has been around for 7 or 8 years. i am not sure how they would identify them. i believe they know who the person is that worked for them. i think there must be a way to make them get some form of tax id number.

does anyone have the name and number of someone at the service to discuss compliance program related questions. you can send me a private message if you so desire.

kodle or anyone, did you ever figure this one out? i have a similar issue.

i just read through many of the threads on this topic and the one thing i cant seem to resolve is how to report the distribution in light of the invalid SSN. i dont see any viable way of forfeiting the participants money.

a client just called and said they have an employee (terminee) fully vested that was illegal to work. they used an incorrect social security number. now they want to know what to do with his retirment plan account. some his employer money. they actually dont want to give the money to him. of course they have to give the deferrals. do you let him roll it over or do you withhold and send to the irs. how do you report this if you dont have the correct ss number?

Anyone know the correction method. there does not seem to be one listed but it would seem to me that you would have to redo all the tests using the appropriate definitions and if the plan fails you would correct using the method for failures to pass adp/acp

is it possible to exclude comp personal and vacation time from the definition of compensation? the plan document makes no specific reference to these types of comp.

i think it is an error as to amount, not participation. i believe the participant was allowed to defer, just not as much as they would have liked. as to the comment on operational error resulting in disqual, i do not believe that is correct. unless the plan provides rules pertaining to increasing deferrals in the actual plan document, the employer would not be violating the plan doc but rather an adminstrative policy. this can not result in disqualification.

this is off the top so hopefully someone will confirm but i dont see that as a qualification issue. the employee would basically be out of luck in my opinion. they could increase their deferrals the rest of the year to make up for the shortage. failure to increase deferrals is probobly nothing more than a ministerial error which would not effect the plans qualification. as far as references you can look at the revenue procedure that deal with correction of plan defects. you can see from the flavor of the rev. proc. that not inreasing deferrals is not the type of error you need to fix.

the attorney representing the plan threatened the irs that the employer would disqualify the plan if they had to make the contribution. i believe the irs backed down at that point.

you could do what mbozek suggests but i know of circumstances where the IRS attempted to force an employer to make a substantial contribution on behalf of foreign migrants that were the employer incorrectly failed to exclude.

lets say an irs auditor is scheduled to walk in your door in order to audit a plan and while reviewing the files you notice an operational error. if you bring it to the attention to the auditor can you take advantage of SCP or even VCP or do you have to resolve the situation in audit cap because the plan is under examination?

we have some sponsors that want to continue to charge participants for all distributions including lump sums. would you let them do it in light of the FAB?

Field Assistance Bulletin 2003-3.

is everyone disclosing all the fees participants pay in the spd as a result of the dol guidance that came out last year?

FAB 2003-3 which came out in may, 2003 provides that fees for distrubutions can be charged to participants when distrubutions are paid on a periodic basis. certain commentators have said they were not sure if this applied to lump sum distributions. does anyone have an opinion on this?