Belgarath

Thanks. I actually knew that if I'd thought about it for just a minute. Sorry to have bothered you!

I don't know why COBRA is suddenly popping up all the time.... If an employer (A) has a new employee coming from another employer (B) who offered COBRA, can the new employee us the FSA from (A) to pay for the COBRA payments?

Bill, yes, good point. I assumed, and you know where that gets me...

Was this notification/call from the Plan Administrator, or some flunky at the investment house? You need the Plan Administrator to make the decision. Assuming that this beneficiary wasn't required under the terms of a prior QDRO or something like that, then your mother should be the default beneficiary under the plan. My guess is that in most situations, she will receive the funds, and may not necessarily need to hire an attorney. However, I'll let some of the attorneys chime in - they have seen the strange and unusual...

Regulation 1.402A-1, Q&A-12, seems reasonably clear to me - the loan default would/should be treated as a pro-rata distribution from the Roth account as a separate account, and not combined with all plan assets to determine the taxable distribution. So while the total taxable distribution might be minimal, assuming there are ANY earnings in the Roth account, there would be some level of taxable distribution, albeit possibly a small amount. And it would of course be reportable.

I got a copy of the plan document, and the document does permit it. Thanks again, I'm all set now.

"Are you asking if the taxable pay for some or all of the COBRA premium can be reduced and applied to the COBRA coverage? That would be a question for the employer's section 125 plan and negative if the employer does not have a section 125 plan or the plan does not expressly permit it." Yes, the above. Thanks for the response.

Luke - it is same day. Or at worst the next day. "Trustee deposited it into the EMPLOYER checking account and simultaneously wrote a check to the terminated participant for the appropriate amount, and submitted the 20% withholding to the IRS. "

Say an employee is terminating shortly, but will receive a last paycheck - possibly including severance pay. Can the employee elect to "prepay" the next 6 months of COBRA premiums out of the last paycheck?

What is the Plan's default beneficiary heirarchy? Typically it is something like spouse, children, surviving parents in equal shares, estate. But thsi should tell you who the appropriate bene is under theplan.

Thanks.

This is a case where the regs seem clear, (to me) but third party write-ups seem less clear, and I'd like to confirm that I'm not missing anything. This is an S-CORP leveraged ESOP, and the employer also sponsors a 401(k). So you have the general 404(a)(3) limit of 25% of comp. The increased deduction limit under 404(a)(9) specifically does not apply, as per paragraph (C) of 404(a)(9). Some of the write-ups appear to say that you could deduct up to 25% of eligible compensation on principal repayments of an exempt loan in the same year you take a deduction under 404(a)(3) for contributions to the non-ESOP 401(k), as long as you comply with 415. Am I missing something?

Why not submit as an anonymous VCP filing with what you propose? If it works, great. If it doesn't, you aren't any worse off than before?

Yes, I think the one that we see most commonly (at least I do) is the ability to remove installment payment options in a profit sharing plan, as long as a lump-sum option is available. I can't recall with certainty, but I believe it was EGTRRA that changed the law to allow this. But as Mike says, you couldn't use this to eliminate the in-service withdrawal option altogether for accrued benefits.

Have they not already deferred for 2018, and therefore subject to TH anyway? Or have they not yet deferred anything?

Thanks for the input.

This kind of stuff used to happen eons ago when there were more pooled plans, but I haven't seen it in a long time. Pooled account. Plan apparently didn't have a checking account. Check for (x) sent to the Trustee, for a distribution to a terminated participant. Trustee deposited it into the EMPLOYER checking account and simultaneously wrote a check to the terminated participant for the appropriate amount, and submitted the 20% withholding to the IRS. Yeah, it's a PT, but what is the penalty? There is zero loss or gain to any party involved, and no "amount involved" if one were to try to pay a 15% excise tax anyway. What do folks do with this on a practical level, rather than a theoretical level? Or is there an exemption for this that I'm missing?

From my less than exhaustive research on this, it appears that it is required for a stand-alone HRA. If the HRA is integrated with the medical plan, then it is possible to have the health plan SBC cover the HRA as well, but if it doesn't, the HRA will need an SBC. And the SBC requirement doesn't extend to stand-alone "excepted benefits" plans such as dental or vision plans, and many FSA's (if they are HIPAA "excepted benefits"). Any disagreement? Any other comments welcome as always! Thanks.

Probably with the insurance company/agent. If it is a group annuity, they might issue the participant a "certificate" or something. Individual annuity policies can be assigned to the individual. If the participant wants it, possible the company will issue an individual annuity policy as an IRA rollover/transfer instead of distributing cash. A lot has probably changed since I flushed all this insurance stuff from my memory banks.

Hmmm - thanks Tom. I've always suspected you might be the missing link, and now it is confirmed.

This is just a general "design" question In the limited number of ESOP documents I've ever perused, they seem to generally provide for a 5-year distribution period for funds attributable to company stock. (longer for very large distributions) Several have also required a 5-year break in service prior to the payout even beginning. Is the purpose of this to protect/cushion the employer/plan from big swings in stock prices - so there isn't a major cash flow problem due to a high payout, or is it due to other considerations? I assume that if a sponsor CHOOSES to provide for immediate lump-sum, they could do that, even if potentially might be unwise/risky? Any thoughts on this in general? Also got a question from a CPA on a plan we don't handle - if you have a 5 year payout on a person who has reached NRD, (assume it is over the $5,000 mark) and the person doesn't fill out the distribution paperwork for the first installment, can the second installment be "forced" including the first missed installment? General question, as I don't have a document to look at anyway... Thanks.

No. But I'm curious as to why it matters? 415(e) was repealed last century.

First, this is a memo, right? Not official guidance? It is interesting that this refers to the Employer providing the TRUSTEE with this written instruction. In many pre-approved documents, the plan specifies that the EMPLOYER (if OTHER THAN THE ADMINISTRATOR) must provide the ADMINISTRATOR with written notification of the contribution to be allocated, blah, blah, blah... In many small plans, the Administrator IS the Employer. This would appear to negate the requirement. Under the "duties of the Administrator" it is far less black and white. Ours, for example, doesn't hit it head on, but the closest clause is: to compute, certify, and direct the Trustee (or insurer) with respect to the amount and the kind of the benefits to which any Participant shall be entitled hereunder... Question - has anyone ever had the IRS address this specific question? Seems to me like virtually any "written notification" that actually gives a breakdown (i.e. the valuation report or whatever) should be sufficient. Maybe I'm way off base, but I can't see getting too worked up over this. In my prior life a zillion years ago, (probably in response to the memo) we used to do a specimen corporate resolution specifying the allocation to each classification/group (this was before everyone in their own group) but it has been many years since I've seen that done routinely.

Chutzpah - a child murders his parents and then throws himself on the mercy of the court because he's an orphan. Or, Congress having an ethics committee.

Thanks!