Belgarath

See 1.401(a)(4)-4 for a discussion of "benefits, rights, and features" and the nondiscrimination issues involved.

Not planning to. The maturity date is still 15 years away, and if they are still kicking at that point, and haven't spent it all on trips to Scotland, then they will decide at that point. I expect they will have spent it by then - its purpose (for them, anyway) was not to accumulate lots of money for a future date, but to act as a high-yield savings account, from which they would withdraw money for any purpose desired. Has worked admirably for that purpose.

Still in accumulation. But they make withdrawals once in a while - I don't kow how much, because I only get involved in their finances to the extent that they ask me to. And they are, fortunately, young enough and in complete control of their faculties (to the extent that any parents are - after all, you have to be insane to become a parent in the first place) so that I don't have to get unduly involved. Come to think of it, I read somewhere that insanity is inherited - you inherit it from your children. Worked that way with me, anyway.

Thanks for the links. I had seen these earlier, but forgot about them. I don't think the IRS is attempting to outlaw cross tested plans. Rather, they are attempting to get rid of undue manipulation where hiring practices facilitate "abuse" of the nondiscrimination requirements. Of course, the guidance to perceived abuses often uses a rather broad brush and calls into question situations that are not abusive in the sense that the guidance is meant to correct. "Twould seem to me that if you have, for example, a 1,000 hour/last day requirement with one year eligibility in a cross tested PS plan, as do most that I have seen, that it would be rather difficult to manipulate short service employees in the manner the IRS is concerned about. But maybe you can and I'm just not creative enough to see how!

Yeah, this sounds odd. The IRS is even planning to allow cross-testing in prototypes.

There has been a good deal of good advice given to you - particularly to BE CAREFUL! Of course, this goes for any investment. And I agree that a 7% "guarantee" in today's interest environment is likely to be baloney. I'm not quite prepared to say the broker is a liar without full information, but I would tend to lean in that direction. However, I'm not quite as ready to demonize all annuities as some other folks might be. At the risk of starting World War III, (and I won't respond to diatribes, if there are any - hopefully not) I do think some annuities are a reasonable investment, depending of course on your specific needs and circumstances, and the provisions of the specific annuity and company involved. I'm neither an investment advisor nor in sales, so I have no axe to grind. But I am able to read and understand some annuity contracts. As I posted in another post several months ago, my own parents purchased a deferred annuity a few years back. They have no risk tolerance whatsoever. The annuity was sold by a reputable and highly rated insurance company, by an agent who I have known personally long enough to know he is an honest man. It had no front end load, and no (repeat NO) surrender or withdrawal charges, because they were age 62 when they purchased it. Unlimited withdrawals at any time, and a guaranteed interest rate of 4.5%. (Was paying, I believe, 5% when they bought it, but guarantee is 4.5%). They still have it, and it is still paying 4.5%, tax deferred. They are EXTREMELY happy with it, as it does exactly what they want with no stress. They are well aware that they could have made more in another investment, and also well aware that they could have received less. Does this situation describe most annuities or people? Probably not. I don't even know if such an annuity is available in today's market. I'd just say not to automatically exclude them from consideration just because many people believe annuities are "bad." Some are, certainly - how many I'm not qualified to judge. And although I tend to be rather cynical, I do believe that there are at least SOME honest salespeople in the world, who will adequately and fairly disclose the provisions of a contract (although I wouldn't trust them and would read it myself!) On a personal level, I don't get so worked up over commissions. I'd be more concerned about interest rates, loads, surrender charges. Every investment out there has expenses associated with it, and I personally wouldn't care if someone gets a commission, I'd be concerned with the bottom line for me. But if the commission is outrageous, then naturally the return you receive will be reduced. Having said that, and based upon obviously limited information, I seriously doubt that the broker trying to sell you this annuity, and the annuity itself, fall on the favorable side of the ledger! And take my comments with a grain of salt, because I claim no expertise in the investment world. Good luck.

Joey - when SoCal was referring to "highly compensated" he wasn't necessarily referring to your level of net salary. By statutory definition for purposes of a qualified plan, as the sole owner of a business, you are "highly compensated" - even if you end up with no income. When/if you decide to meet with a local advisor to discuss specifics, they will explain all this to you as it relates to your specific situation. We're all discussing generalities here, as real answers are very fact-specific. Rule of thumb - you can't have your cake and eat it too - if you want anything substantial for yourself in a qualified plan, you are likely to have to do something for your employees. Your local advisor will be able to show you a design with specific numbers so you can determine whether or not it is worth it to you. Ok, I see SoCal already replied while I was typing this!

It's a not an ERISA plan, so protections would be governed by state law applicable to IRA's.

This is an impossible question to answer without detailed information on your age, ages of employees, salaries of you and your employees, stability of your earnings and future outlook, etc., and most importantly, what YOU really want/need. I'd suggest, just as a basic source to see a general description of various plan types, IRS publication 560. This will give you enough background to then do a few web searches for more detailed information. Once you have a general idea, then I'd recommend contacting a local Third Party Administrator if you want detailed proposals.

No.

My undying gratitude! That and a dollar will get you a cup of coffee. Of course, this doesn't explain why it appeared after a couple of law firms. Unless they are ambulance chasers...

Thanks - we are in the process of asking. I was inclined to think "service corporation" myself, but that's only a guess. I did all kinds of web searches trying to find out if this was some specific type of corporate entity, but found nothing. I did, however, see this "SC" after many medical practices and a couple of law firms. (and a lot of South Carolina hits as well!)

What does the "SC" stand for?

This is very interesting. I never understood the distinction between an action at law and equity. So does this apply only to ERISA plans? In other words, if an IRA withdrawal is overpaid to me, to the tune of 50,000, then if I blow it in Las Vegas, the IRA custodian can collect from my other assets because it isn't an ERISA plan? Just making sure I know how to be completely unethical in case I'm ever overpaid...

Yes, with regard to benefits already accrued. But it can be amended prospectively for future benefit accruals.

Mbozek - while I agree that it is usually not practical, sometimes it is. We had a DB plan where a participant was overpaid on a lump sum distribution by 55 thousand dollars. Entire distribution was rolled to an IRA. When participant refused to return it, Plan Administrator hired an attorney, sued, and the funds were returned. Now, I'm no lawyer, so whether the former participant could have avoided paying this money if he'd had a different attorney, I can't say. But what little I've seen on this subject in the past seems to indicate that there is a fiduciary obligation to attempt to recover overpayments. And I'm inclined to think there may be a fiduciary breach issue if a lawsuit could reasonably be expected to recover all or part of the funds, obviously depending upon circumstances and the amount of money involved. Watcha think?

1.401(a)(9)-5, Q&A-4. Minimum distribution is required for the year of death.

Andy - here are 3 that may help. The first one contains several links to tables and data that may be very helpful. The second one is really for public universities, but I threw it in anyway. http://www.aaup.org/publications/Academe/2...ja/ja01ehre.htm http://www.tiaa-crefinstitute.org/Publicat...ags/issue50.pdf http://chronicle.com/stats/990/

Well, I wouldn't necessarily say ALL overpayments. For example, if the plan has individual accounts, and when the fund liquidates the account they send the participant an extra amount to which he is not entitled, then I wouldn't necessarily say it is the responsibility of the Plan Administrator to attempt to recover this - it is a fund error, and if the fund wants their money back, they can go after it themselves. But once notified of the error, then I'd agree that a corrected 1099 must be done by the Plan Administrator. However, in most situations, I do believe the Plan Administrator must attempt to recover the funds, with notification that the excess is not an eligible rollover distribution, corrected 1099, etc. Rev. Proc. 2003-44, appendix B, .05 (which refers you back to .04(1) and (2))deals with the correction, and only specifies "reasonable steps" to have the overpayment returned. I think there's some exercise in judgement - if the overpayment is 3 dollars, no Plan Administrator is going to go to court to attempt to compel return of the overpayment if the participant refuses. But a letter, and corrected 1099, seem to be the very least that can be done. It's also worth noting that the Appendix B correction, while an approved correction, is not the ONLY possible method of correction. It's just that other corrections may or may not receive IRS blessing.

This was changed by EGTRRA, and was effective for plan years beginning in 2002.

Agree with J2D2 - For a nonperiodic payment that is not an eligible rollover distribution (such as this) the withholding rate of 10% is mandatory UNLESS the participant elects out of it. So it is voluntary in a sense, but the withholding is the mandatory default. See IRC 3405(b).

Ashlea - just for the record, especially if you are going to be a regular poster and we will be "conversing" in the future - I was not in any way questioning your integrity, and if my post implied that somehow, I apologize.

Ashlea - you may scrape a few raw nerves with this one. "I am unsure why some think it is a complicated thing to do. Setting up and maintaining a one person plan is not complicated at all." Then why are you asking questions if it is so easy? There's a lot more to setting up and maintaining a plan then just signing a document. For one thing, being able to answer all the questions such as these, and many others, that will arise. Even the "easiest" plans usually end up with some screwball situations. Getting beyond that, rollover funds are generally not subject to J&S requirements. See 1.411(d)-4, Q&A-3.

This Schedule D stuff makes me cross-eyed. Probable takeover case where a Schedule H is required, and one question led to another, ad infinitum - you know the routine. Plan investments are all through the "John Doe" Trust company, which allows participants to direct their accounts by purchasing only mutual funds. They are limited to (x) funds - I believe around 50 of them. I find the form 5500 instrructions and DOL regs referenced to be somewhat less than a model of clarity on Schedule D and DFE issues. The Trust company does NOT file a 5500 as a DFE, and they say that a Schedule D is not required as this is not a PSA, or a CCT, etc. This is the conclusion I also rather belatedly arrived at, although I originally expected the opposite. But since this is the first time I've wrestled with this particular question, I'd appreciate any comments from others who may have gone through this same exercise. Do you agree or disagree that a Schedule D is not required? And assuming not, then the value of the funds should be listed on 1©(13) on the Schedule H? Thanks in advance!

On this side, rock. On the other side, hard place. Between them, you. This is so dependent upon the preferences of the person reading the resume that's it's nearly impossible to decide the "best" course of action. You could perhaps try something like "previous employment history available on request." There are some folks who want to see every job back to your lemonade stand when you were 6. Others just want recent employment history, as you mentioned. Once you get the interview, this experience can easily be turned into a plus, "I've had first hand experience in the importance of accurate and proper business practices, and the consequences of noncompliance. This makes me far more attentive to detail than an average employee." Etc., etc. - it's very true that all experiences contain their own lesson for someone willing to learn. I'm with Pax - I may be old fashioned, but if I were reviewing the resumes, I'd want to see employment history prior to current employment. If you are absolutely convinced that employment with the TPA you mentioned is a red flag that will otherwise remove you from consideration, then I see little choice but to address it squarely (but VERY diplomatically) in your cover letter. If the person doing the hiring is going to toss you out automatically if you've been employed by the TPA, it would likely come up in the interview at some point anyway. However, I would think that since you've been at another reputable firm for 7 years, this would count for more than the fact that you worked for this TPA prior to that. So I'd personally be very hesitant to assume it will be held against you. If 'twere me, I'd list the TPA employment on the resume, and hope for the best. The negativity of trashing a former employer in a cover letter, even if done diplomatically, will turn off most employers.