jpod

Please explain what you think is the relevance of an effective date prior to the date the employer commenced business/came into existence.

Yes, highly unusual, and a bad choice by him, unless there was no spouse and perhaps he thought he was going to croak very soon.

Here I think you can use forfeitures for the purposes stated because the amount owing to the participant is a plan obligation, not an employer obligation.

Unless I am confusing your situation with another, I think, in order to avoid an impermissible forfeiture under 411, he should have been receiving in-service distributions starting at the point in time his actuarial increased benefit exceeded the 415(b) limit. I believe there is a statement in the DB LRMs to that effect, if not published elsewhere.

ESOP Guy: Not trying to be Debbie Downer here, just curious. If the IRS or some other interested party asked for the legal justification for doing this, what would be the response? If the answer is "we do what the Plan Administrator directs us to do," that's not exactly the kind of answer I am looking for.

My understanding is that the protection in bankruptcy is the same, but short of that it may be possible in some states for a judgment creditor to attach an IRA, at least a custodial account IRA if not a trust IRA.

I don't understand why it might make a difference that it was X's fault as opposed to Y's fault. How do you put the genie back in the bottle to avoid a taxable distribution and a blown 60-day rollover?

No, I would advise to interplead because there is too much risk either way. if it was $1,000 rather than $1,000,000 I would probably err on the side of stopping the distribution (if it could be stopped) and paying it to the QP plan distribution.

Let's assume the IRA beneficiary is the deceased participant's only child, and the Plan beneficiary is his last girlfriend (or whatever ridiculous scenario you wish to conjure up). Further assume the account balance is quite healthy, let's say $1,000,000. For all of you who are so sure of yourselves on this issue, would you advise the Plan Administrator to pay it to the IRA and sleep soundly (assuming the payment to the IRA could be stopped)?

I am no longer convinced that the answer is as clear as I thought it was. A related question: Can the rollover be done if the IRA depositor dies before a check has been cut or a wire transmission sent?

Have you considered whether there are facts to suggest that the fiduciary who is responsible for the decision to invest in the LLC could be conflicted such that this is a self-dealing 406(b)(1) PT (and the equivalent under Section 4975 of the IRC)?

I'd like some of what someone here is smoking.

I agree with the "no plan" theory 100%. By the same token, he should be picking up on his own 1040 any earnings since the money was first invested (interest, dividends, capital gains distributions, etc.)

You may be able to get the money paid out but will they withhold 20% and/or issue a 1099-R?

I suspect it says something like "beneficiary is entitled to the vested account balance," and account balance is defined, explicitly or implicitly, to mean money not paid out plus/minus subsequent earnings/losses. In any event, if plan administrator knew the p had died before the distribution and it was possible to stop it, I'd advise that it be stopped. Thereafter, whether to pay it to one or the other or interplead it would depend upon the precision of the plan language and the amount involved.

Of course it depends on what the plan says, and we don't know what it says, but if it says what I suspect it says we'll have to agree to disagree.

I disagree. Money not distributed at death belongs to the beneficiary. Processing a request is not the same as a distribution. Yes, likely you can go either way here and nobody would care, but if the plan beneficiary and the IRA beneficiary were different, the plan beneficiary would win in my opinion.

I think you first carve out FICA/Medicare taxes, state and local income taxes (if applicable) and other authorized payroll deductions (e.g., deductions for voluntary life insurance, United Way contributions, etc.), and THEN you apply the 100% salary reduction. No IRS agent is going to blink at that.

It may not be the most tax efficient beneficiary designation, but maybe the IRA depositor's primary goal is (was? is he already a decedent?) controlling his son's access to the money, bad tax result notwithstanding, and the terms of the trust effectuate that intent.

If this is your business you shouldn't be DIY, and seeking help from a message board isn't much better.

SoCal: As part of the audit wrap up will there be a refund of FICA taxes?

What happens if the employee quits prior to the Comp. Comm. meeting? If the answer is that the employee forfeits the bonus, then the SROF wouldn't lapse until the Comp. Comm. meets. If the answer is that the employee wouldn't forfeit, then I would next ask what can the Comp. Comm. actually do that would create a substantial ROF?

Let's hope it doesn't go to the estate because that would be complicated and some/all of it could be eaten up by Mom's creditors.

Can you type in a reply here the exact language Fidelity used to inquire about "survivors"? I would be surprised if it was so vague. I would think the questions would be more pointed and aligned with the actual default beneficiary rules under the plan.

I haven't heard what you've heard. If necessary you may, by analogy, be able to rely on the DOL guidance that was issued in the early 2000s on what to do with mutual fund market-timing settlement checks.