Harwood

The Q & A by M. Silfen: http://benefitslink.com/modperl/qa.cgi?db=...ibutions&id=190

Ignoring 404©, I thought the only legal requirement was to provide a statement 1)upon request, limit of one request per year and 2) upon termination of employment [schedule SSA touches on this]. Of course, in the daily valuation world, the norm is a quarterly report for anyone with a balance.

Plan Characteristics Codes Line 8a/8b Code 2F

The EPCRS every year has a section on "Failure to obtain spousal consent" http://benefitslink.com/IRS/revproc2003-44.pdf

http://www.balser.com/benefit_questions.cfm#id63

Required Minimum Distributions are still required from the IRA, regardless of employment status.

EGTRRA 2001 has a provision that mandatory cash-out of balances between $1,000 and $5,000 - where the Participant fails to make an election - will go to an IRA that will be set up in the Participant's name. This provision is not effective until the Department of Labor issues regulations. The Department has a three year deadline - May 2004.

Musings on severance pay: 1. The employee contributions are like the employer match - no hours or service, so no eligibility for contributions. 2. One could look at severance payments as a form of non-qualified deferred compensation.

http://www.benefitslink.com/boards/index.php?showtopic=20450

If a severance package is such that the employee has the option of getting all their money now, then there is constructive receipt of the $60,000 and it is all taxable now. If, as is probably the case, the severance policy is always to pay the money out over extended periods of time, then the money is taxable when actually received.

This might provoke a few thoughts: http://www.ebia.com/weekly/articles/2003/4...1k030320IRS.jsp

Severance pay, if paid after termination, is not eligible for a 401(k) deferral, since you must be an employee to defer. However, severance pay is compensation for most testing purposes.

They should be sure of their ability to pay someone as both an employee and an independent contractor. Usually the two are legally incompatible.

Reminder: One cannot roll money directly from a qualified plan to a ROTH IRA. From IRS Notice 2002-3: "Your payment cannot be rolled over to a Roth IRA, a SIMPLE IRA, or a Coverdell Education Savings Account (formerly known as an education IRA)"

I like a power-of-attorney to specifically reference the actions that can be taken with regards to a qualified plan. A "blanket" power-of-attorney if not specific enough.

Circular E is the Employer's Tax Guide, Publication 15 http://www.irs.ustreas.gov/pub/irs-pdf/p15.pdf

Do you check all distribution forms against beneficiary forms? Do you question everyone who marks "single" or "divorced" on their distribution form to see if they previously named a spouse on their beneficiary form? Do you then demand a copy of a divorce decree in those situations?

Do you question someone who marks the box "Single"?

"During the year" is during the Plan Year. I don't think you get to ignore hours before the entry date.

If the Participant is a key employee, does a distribution to their Alternate Payee count as an in-service distribution that must be tracked for five years?

6 month suspension may be mandatory for Safe Harbor plans; optional for others

Find out about Sal Tripodi and the ERISA Outline Book at http://cyberisa.com/ The most practical, in depth book I've seen.

1. It is not necessarily code 1; could be a 2 or a 7 2. Code L is only used for a deemed distribution. For your second example, where the person has terminated, the 1099-R Instructions state: "If a participant’s accrued benefit is reduced (offset) to repay a loan, the amount of the account balance that is offset against the loan is an actual distribution. Report it as you would any other actual distribution. Do not enter Code L in box 7."

The ERISA Outline Book chapter on Prohibited Transactions has about a page on the issue

I know a former IRS employee who later wrote a Volume Submitter plan for a well-respected consulting firm. He was adamant that 1.401(k)-1©(1)(ii) did not apply to vesting. The essence of his pre-GUST document clause was: Once an Employee becomes a Participant, they are eligible to make 401(k) deferrals. 401(k) deferrals are always 100% vested, therefore Participants can not incur Parity Breaks no matter how many consecutive one-year breaks-in-service.