Belgarath

Didn't say he was well liked, or even likable. Just that he's a great player. As for for production in October, he batted .320 in the playoffs(behind only Matsui among his Yankee teammates) while Jeter hit .245. Now, Jeter is a class act, and A-Rod isn't. I just can't see bashing his performance, which was pretty good. Gaudy numbers in October are largely a matter of luck/coincidence anyway - even the greatest players are inconsistent in a given short series or two. As for teams getting better without him, I firmly believe that ANY team has a good chance of improving if they take out one player making 15 or 20 million a year, and replace him with several other players at a lesser price. No hitter is worth that much, IMHO, although you can make a pretty good argument that a really dominant pitcher, such as Randy Johnson, might be - particularly in a seried where they might be able to pitch 3 out of 7 games. Only one thing I'm certain about - it's harder to figure out baseball teams and players than to interpret IRS regs, but the discussions are a lot more fun!

First base! And I must say I don't quite understand the A-Rod bashing earlier. Aside from his giant ego/personality, which after all isn't an uncommon problem among the spoiled brats in pro sports... Yes, he had an "off" year - for him, which is still better than 95% of the rest of the league. Great shortstop - better than Jeter - but he played third this year, which can be a distraction - not an easy position to learn/play in the first year. Stole bases. I'll tell you what - take a poll of major league managers, and ask them if they'd rather have Rodriguez or Cabrera. I expect he'll again put up stellar numbers next year. I just hope he doesn't do it against Boston!

You mean the creators of the "post season disappearing offense?" I've been rooting for the Braves in the NL since the days of Dale Murphy and Bob Horner. I have to wonder at the limits of my masochism - Braves and Red Sox. There's a combination guaranteed to break your heart. But hey, at least they won ONE series in the 90's. And maybe the Sox will do it this year...

I agree with QP. You are applying the compensation limit in effect for lookback years that begin in a given calendar year. See 1.414(q)-1T, Q&A-3©(2).

Andy - I think what he means by "freezing" the death benefit is really "capping" the death benefit level. So new participants would have life insurance purchased, up to the cap level, but not beyond. If that's the case, no discrimination there, as Pax mentioned.

All of New England just exhaled for the first time at midnight last night. Great series, but I sure am glad it's over. Now I can get some sleep for a couple of nights. I'm hoping St. Louis beats Houston, just because I don't want Clemens to have the opportunity to beat the Sox. If any of my posts seem dumber than usual, just blame it on sleep deprivation.

Win or lose, I'm not sure I'd want to be on campus at BU or BC tonight...

It seems preordained that this would come down to a 7th game. No matter who wins, at least it turned into an exciting series. The Sox and the Yankers have played each other to a standstill over the last couple of seasons, so maybe it's Boston's turn. I think I'd better set up an intravenous caffeine drip in my office, and pray that tonight's game doesn't go into extra innings. And no matter who you root for, you've got to admire Schilling's guts. Pretty impressive performance on his part last night.

Lat's see... With the obvious caveat that the terms of the document must be taken into account, some general thoughts. Both Vebauru and Kirk have put forth some ideas. Kirk - yes, this can be done in a DB plan. Vebaguru - while I don't disagree that using it as "key person" insurance is possible, I must say I'm not a fan of the concept. It seems that in many cases, justifying it could be difficult. Not saying it is impossible, just perhaps questionable in many circumstances. Personally, I'd go with Kirk's suggestion, or surrender as you mention. GBurns - yes, this much insurance is perfectly allowable in a DB plan. Either the "100 times" limit or the RR 74-307 "2/3 rule" have both been approved as "incidental" by the IRS. The pension trust owns the policy. The pension trust is also the beneficiary of the policy. (proceeds paid to the trust, then distributed to the participant's beneficiary as provided under the terms of the death benefit payable under the trust.) Purpose for purchasing? Obviously unknown from this end, but presumably to provide a benefit if the participant dies prior to accruing a full benefit. In a DB plan, this is a very nice benefit for the participants, as it doesn't have any negative effect upon their ultimate benefit. Might not be quite so attractive for the sponsor who has to pay for it, but I'm assuming they wouldn't buy it in the first place if this were a problem. I typically see this only in very small plans where all or most of the benefit goes to the owners and family.

Not specifically. But my interpretation is that since a SEP can be established up until the tax filing deadline, including extensions, that since there's a special extension for filing, it also applies to establishing the SEP.

Tom, thank you. You really made my day. I came in this morning a little grumpy (the prospect of a day filled with useless meetings and IRS regulations can do that) but it's impossible to stay cranky when you read something like this! I've seen pieces of this, but never such a comprehensive example.

It depends upon your plan language, and if the language isn't clear on this issue, then your interpretation. Take a look at IRS Notice 84-11, Q&A-9. Depending upon how you read this, you can let the employee participate immediately, or not. It seems "gray" to me. I think you can make a pretty good argument for NOT including them if they haven't yet satisfied the requirements to become "leased" - assuming no common law service with the recipient employer prior to the leasing arrangement. If you take the more aggressive approach, and bring them in right away, you might want to file for a determination letter. Caveat - I didn't review the 401(k) proposed (apparently soon to be finalized) regs to see what, if anything, they say on this issue.

I'd check with an attorney versed in these matters. Sal has a reference - In Hearn v. Western Conference of Teamsters Pension Trust Fund, 68 F.3d 301 (9th Cir. 1995) the plan was required to provide a survivor annuity to a participant's spouse where the plan administrator had reasonably relied on false statements made by the participant that he was unmarried. However, the survivor annuity was reduced by the value of overpayments made to the participant under the life annuity he had elected.

It's also possible that the plan allows a "cure period." Depending upon the dates when the payment is due, and depending upon whether it is a quarterly payment, etc., it is possible that she'll be back to work well befor the cure period expires. For example - she takes a loan on August 30, 2004, quarterly repayment with first payment due on November 30, plan utilizes maximum cure period allowed by the regulation (1.72(p)-1) so it would end on March 31, 2005. She might easily be out 3-4 months and return in plenty of time to make this up with no difficulty.

As you know, I'm a Sox fan. But the simple fact is this: THEY LOST THE GAME. Paint the comeback in all the glowing terms you want, blame umpires until the cows come home, but they lost. They're 0 and 1. Now, does this mean you write off the series? Absolutely not. But I find nothing terribly praiseworthy about last night - moral victories, if there is such a thing in baseball, don't win you the World Series. As for the sportswriters, it's hard to blame them. They have their bylines written before the games ever started. Most of them lauding the Yankees (after all, historically a safer bet than the Sox) and the optomists have one ready for the Sox finally breaking the curse. Now, Pedro is about due for a great game, so we'll hope for something better tonight! Maybe this is the year...

FWIW - I also know nothing whatsoever about antitrust law, but I can tell you that one of my associates attended some conference (don't know which one) with a lot of other TPA's at some point during the last 3 months. They specifically were told not to discuss fees due to antitrust concerns.

Take a look at IRS Notice 84-11, Q&A-8. Although this deals with the opposite (common law employee becomes leased) my understanding is that this is applied to the reverse as well. It also seems to be common sense - if a "leased" employee is treated as an employee of the recipient while leased, then it would seem to follow that once hired as a common law employee, that service would still count. Q-8. For purposes of determining if an employee has performed services for the recipient on a substantially full-time basis for at least one year, does that one-year period include service of the employee prior to the effective date of section 414(n)? A-8. Yes. For example, in the case of a recipient that is a calendar year taxpayer if, as of January 1, 1984, an individual has been performing services for the recipient on a substantially full-time basis for one year or more and the other requirements of section 414(n)(2) are met, such individual is a “leased employee” as of January 1, 1984. In addition, any period of service performed by the employee as a common law employee of the recipient is taken into account for purposes of determining whether the employee has performed services on a substantially full-time basis for a period of at least one year. For example, assume that Individual B has been a common law employee of Corporation X for a period of 3 years. On April 1, 1984, B terminates his employment with X. On May 1, 1984, B is hired by and becomes a common law employee of Leasing Company Z. Leasing Company Z is not related to Corporation X. Z enters into a contract with Corporation X to provide leased employees. On May 2, 1984, Individual B is leased to Corporation X. Corporation X does not maintain direct control over Individual B's day to day activities sufficient for B to be considered a common law employee of X. Individual B is considered to be a leased employee of X for purposes of section 414(n) as of May 2, 1984, because prior service performed by Individual B for the recipient as a common law employee is taken into account for purposes of determining whether an individual has performed services on a substantially full-time basis for a period of at least one year.

I'll play devil's advocate and take the other side of the fence. And I'm speaking in generalities - even if one accepts my general viewpoint, there are always situations where the opposite is true. From an employee point of view, I would rarely want to roll my personal IRA over to an employer plan. I would want the control of my funds, without having to go through a plan Trustee/Administrator if I want to take a withdrawal, another rollover, etc. With the various low cost/decent yield investment alternatives available even for relatively small IRA's these days, the direct control without one more intermediary (Trustee/Administrator) involved would outweigh the perceived advantages of having it all in one basket. As an employer, I would rarely want to allow rollovers into my plan. Just one more potential hassle for every screw-up that has taken place over the life of the rollover funds. Again, I know there are valid exceptions - I'm speaking in general terms. And as a TPA, it can be a royal PIA. It's fine to say it's the problem of the Trustee/Plan Administrator, but you know where the burden usually falls when it comes to correcting a problem!

Does anyone know if there exists some sort of a state by state survey of whether state law allows an IRA to be set up without a signature? Let's say hypothetically that New York won't allow it. Doesn't matter what the DOL regs say, the plan administrator cannot comply. So the only choice available would be to amend plan to NOT require mandatory cashouts of 1,000 - 5,000. I don't know if any or all states have such restrictions. If none do, does anyone know of a nationwide IRS provider or providers that will be willing to accept this business in all states?

Hey, FWIW - one of my cohorts was cleaning up some accumulated debris on his desk, and discovered this precise question had been asked at the American Bar Association May 7 meeting with the IRS. He has no idea where he got a transcript of this meeting. Anyway, although this is an unofficial view and does not necessarily represent agency policy, etc... the IRS response (Q&A 44)was that the distribution could be made, because the distribution is made to the individual in his or her capacity as an alternate payee, not as participant. There were a couple of other questions in this transcript that ring some bells - I think the same or substantially similar questions have since been asked. If I can locate them here on the boards, I'll post those responses as well.

Difficult to say without seeing specific document language. I'm only guessing, but I suspect the document does not allow forfeitures to simply accumulate - in other words, the forfeitures for any given year pay fees, reduce contributions (whatever that means in a PS plan) and are then reallocated - right away. But not accumulated for years. If that's the case, you have operational errors stretching back apparently several years. If they are deemed "significant" then you may have lost the window to self-correct, and may have to correct under VCP - possibly a "John Doe" approach. I'd consult someone experienced in the correction procedures under Rev. Proc. 2003-44. There's enough money involved, with potentially serious ramifications, to make it worth the client having to pay for some good tax/legal advice.

I root for the Braves in the National League, BoSox in the AL. Maybe they'll meet in the series, and I won't feel quite as bad of the Sox lose. Hey, why should you never run over a Yankee fan who is riding a bicycle? Chances are good it's your bicycle.

October 15. And I confidently predict that some actuary will accurately predict the date once it has already happened. (That's for you, John)

The mere fact that there is a combined 401(k)/PS plan does not necessarily require gateway. It is the PS allocation method itself which will either require gateway or not.

See # 4 below. P.S. - for anyone who is interested, I jotted down the following points when zipping through the regs - feel free to add, disagree, etc... This is not meant to be any kind of detailed analysis, but just some points that struck me. The DOL has issued the final regulation on this subject. It clears up some issues, and ignores or confuses others. Big surprise. My initial reading indicates the following: 1. The DOL also issued a Prohibited Transaction Class Exemption - 2004-16. I don't see that this affects most TPA's - it is for banks, ins. companies, etc., to select themselves or affiliates as the IRA provider for mandatory distributions from their own plans. 2. The regulations provide that they can be used for amounts of less than 1,000 dollars. Note, however, that this is voluntary - only amounts in excess of 1,000 (and less than 5,000) are required to fall under the mandatory rollover rules. 3. These regulations provide a safe harbor, but are NOT the exclusive means by which a fiduciary could comply with the requirements. Realistically, it seems likely that the safe harbor would be used in most situations. 4. As to whether a participant loan would be considered a portion of the present value for purposes of the safe harbor, the DOL declined to rule, and referred this to Treasury. Personally, in the absence of guidance, I would say that a loan should be included. After I sent this, I've revised my opinion on #4 above. Since there's an immediate offset once there's been a distributable event, then I don't think an outstanding loan should be included in the account balance. Wasn't really thinking about this when reviewing the reg. 5. IRA providers who want to receive funds will be required to provide a written agreement on which the plan fiduciary may rely in making the rollover under the safe harbor. The fiduciary is not required to monitor the provider's compliance with the terms of the agreement beyond the time to funds are rolled over. 6. Investment product, fees and expenses - it must be designed to preserve principal and provide a reasonable rate of return (but doesn't have to be guaranteed); must be offered by a state or federally regulated financial institution (bank, credit union, insurance company, Registered Investment Company); fees and expenses cannot exceed those charged for comparable IRA's of that provider for non-mandatory rollover IRA's; the participant will have the right to enforce the terms of the IRA contract against the IRA provider, not the plan fiduciary. 7. Information concerning the automatic rollover procedures must be provided in the 402(f) notice, as well as in a SPD or SMM. I do not know yet, and will need to determine, if plans must physically be amended prior to the 3-28-05 deadline. It would seem unreasonable for this to be the case. 8. In terms of state laws regarding signature and escheat laws, the DOL ducked the issue entirely. If you have a state law that says, for example, that no account may be established without a signature, then it is unknown how this will play out. 9. Re the requirements of the USA PATRIOT Act, the DOL has affirmed that both Treasury Department and other Federal regulators have interpreted the PATRIOT Act to only apply at such time as the former participant or beneficiary first contacts the IRA provider to assert ownership or exercise control over the account. Customer identification and verification procedures (CIP) will not apply at the time the IRA is being established. So if state law permits, and a willing provider could be found, this would allow IRA's to be established for lost or missing participants - the one major benefit I see to this whole bucket of manure. We'll see. If there are no providers who are willing to accept such IRA's, then the fiduciary is in an impossible position. Presumably the DOL would have to address this - but who knows when, or how adequately. 10. Beneficiary designations would NOT carry over from the plan to the IRA.