Belgarath

Thank you. As I have stated before, I think the SAR is one of the most completely useless disclosures ever. Nevertheless, I couldn't find any basis to support not sending one in this situation.

I've always understood that these must be provided if you are eligible to defer, even if you choose not to. This is being questioned. I don't see any exemption as being available under the regs - I'm talking about an active, eligible employee, albeit with no account balance. Am I nuts, or missing something? Maybe just Monday fog...

You might try checking with a State or local senior center, etc. - sometimes there are programs where lawyers/CPA's etc. (some of them retirees as well) provide free assistance with tax filing for senior citizens. Your State/locality might possibly have similar programs to provide either free or reduced fee assistance. Worth checking into, and best of luck!!

I remember seeing, many years ago, a writeup by a "big name" accounting firm person that carryovers weren't allowed, and I kept a few notes. 404(a)(8)(C) provided that contributions satisfied the conditions of 162 or 212 to the extent that they did not exceed the earned income of the individual, so that contributions in excess of earned income were neither ordinary and necessary business expenses under 162, nor deductible under 212, and therefore nondeductible for ALL purposes under 404, including the carryover rules. Having said that, in the very limited number of such situations I've seen, rightly or wrongly the accountants carried it over and deducted it in the future.

Kind of an offshoot of an earlier question. Governmental non-ERISA plan (public school). Health FSA. Suppose you have a current plan year of 7/1 to 6/30. However, due to union contract negotiations, and some legal changes at the state level mandating certain changes, there is a one-time "disconnect" with making elections, and what is really needed is an election from 1/1/18 to 6/30/18, then getting back to an annual election from 7/1/18 to 6/30/19. Of course, they already have an annual election in place for 7/1/17 to 6/30/18. Now, this leaves you with (at least) two major choices. First, you can consider the union contract change as an allowable "change in status." I think this is a stretch, but one might argue that the new union contract represents a "commencement of employment." I don't buy it as a valid argument, but looking for any approach that might work. Second, and I think this is more valid, the plan could be amended to change the plan year to run a short plan year from 1/1/2018 to 6/30/2018. Then amend it back to a full year effective 7/1/2018. This would create two consecutive short plan years - one in 2017 and one in 2018. While I have heard that you can't have two consecutive short plan years, I haven't found any official support for that position. What I do find, in the proposed regulations under 1.125-1, is that a short plan year is permitted for "a valid business purpose." It seems to me that this combination of circumstances would certainly constitute valid businesses purposes, as the purpose is most definitely not to "circumvent the rules of Section 125 or these regulations." So this is the approach that I would say is reasonable, and SHOULD be defensible. I'd appreciate any and all thoughts. Any special holes/pitfalls I'm failing to consider? Etc.? Thanks.

I would normally be tempted to make a wiseguy remark, except that I have been humbled, many times, by doing things even more absurd. I well remember, back in the days when you had to do a handwritten fax cover sheet, when I actually wrote on the cover sheet, "If you don't receive this fax, please give me a call at ......" Fortunately, I noticed this foolishness before sending it, but the fact that I even came close is a sad commentary. There are other instances which I shall refrain from relating, lest I be fired from my hereditary post as village idiot. '

Agreed. My intent was rather to avoid publicly utilizing the appropriate pejorative terms applicable to the rogue DOL auditors.

"As far as the missing participants are concerned, the standard is "reasonable" search. I would argue it isn't reasonable to spend $1000 to find a participant with a $500 balance." At the risk of offending certain people out there, I would assert that anyone who isn't mentally arthritic would agree with you. For anyone who disagrees, you are more than welcome to your opinion. As to the fact that certain DOL auditors lack even a vestige of common sense, in the words of Mark Twain, "Let us draw the curtain of charity over the rest of the scene." 'Nuff said.

Yes.

Maybe not on the instructions, but on the form itself. From the Schedule R itself (I didn't bold it, it is bold on the form): Profit-sharing plans, ESOPs, and stock bonus plans, skip line 3.

There was a question that I was replying to, and it apparently disappeared, or at least I can't find it again quickly. It was asking about the definition of "dependent" and questioning whether it had changed after 2004. So here's the response I made, or tried to make, in case anyone is interested. The final regs did modify it. Section 1.401(k)-1(d)(3)(iii)(B) makes some modifications. Hopefully I got the reference right...but it changes the definition of dependents to ..."(as defined in section 152, and, for taxable years beginning on or after January 1, 2005, without regard to section 152(b)(1), (b)(2) and (d)(1)(B)." That's for tuition, etc - I think the other applicable changes refer just to 152(d)(1)(B). Anyway, I'm sure you will want to look it up.

Kind of hard to venture any opinion without knowing the specifics of the plans you are talking about. That line isn't completed for PS plans, which are the bulk of the plans out there these days. Are you talking about pension plans, that did in fact pay lump sum distributions?

Agreed, but this is a disclosure to the fiduciary, not to participants. I don't know if the DOL utilizes (unofficially) a different standard than they do for participant disclosures, particularly where the fees are not being paid from the plan. As I re-read this, perhaps not the most lucid of posts. I added in a factor which really isn't germane to the issue, so I'm removing it.

I'd be cautious about definitive determinations on this, without knowing the facts and circumstances. Do I agree with the above comments? Yes, with the caveat that you should check this with ERISA counsel. It may be, for example, that the corporate reorganization can be legitimately characterized as two separate and distinct corporate events. And the ERISA counsel could conceivably advise no PPT whatsoever under the right combination of circumstances. Likely? No. Possible? Yes. I know there has been some litigation in this arena, including Matz, and Sea Ray, among many others. I don't know many of the details, and certainly don't presume to offer an opinion as to the possible interpretations and application of cases to this particular situation - that's up to the attorney! Also, I don't know how much money is involved. Often it is cheaper to 100% vest than it is to hire counsel, risk IRS ire, possible litigation, etc... Now, if that isn't a wishy-washy answer, I don't know what is! Have fun!

Just playing Devil's Advocate - or perhaps they were attempting to have every combination in one disclosure, so that is would not be possible to give the wrong disclosure. Particularly if it is given by their agents/field force, the possibility/liability of incorrect disclosures for a given product or product combination is probably staggering.

It has been many years since I worked for an insurance company, but the distribution is reported on a 1099, it isn't a taxable distribution. It goes in a separate box - perhaps box 8, but you should look at the 1099 instructions to confirm what needs t be done.

Oh, I thought I had forever banished some of this from my so-called mind. However, an annuity contract that is nontransferable may be distributed with no current taxation. Payments subsequently received from the contract will be subject to tax. I think the citation is 1.402(a)-1(a)(2). This will also refer you to other sections. I don't recall all the permutations, but it sounds like MM is correct.

Maybe he's just being nice, and the actuarial increase by the time he must start RMD payment will give her a higher monthly payment. Of course, he could jump off the Saginaw bridge, and then she'll get nothing. Wouldn't THAT show her. And I apologize for my strange sense of humor - some people don't get it, and may be offended by such a joke.

MoJo - just curious - if you had to "guess." As a non-lawyer, I'd think that in the absence of unusual circumstances, if a valid divorce decree and QDRO have provided for a certain settlement, and one party wants to modify that to their benefit, and to the detriment of the other party, that the judge would be unlikely to grant it. Is that reasonable, or is it a completely unwarranted guess in your experience?

I know my parents always told me that they were "divorce-proof," since they had an agreement that whoever ASKED for the divorce had to take 100% custody of us kids!

Just a matter of idle curiosity - now and then, in a QDRO situation, an attorney includes the entire divorce decree, or draft decree, or whatever it might be called. This is the exception rather than the rule, but it happens. I was wondering if this violates any sort of privacy rule, client confidentiality, etc.? It isn't that I mind receiving them - in fact, they sometimes make for fascinating reading - I've seen some crazy, zany, entertaining, humorous, and sometimes incredibly sad stuff. Just wondering if it is allowed, or technically a no-no?

No one can answer that question for you. But consider this: You aren't out one single penny. You got paid the after tax contribution, that would otherwise have gone to the plan, in your paycheck. Do you really want to risk the potential ire (and retaliation - officially they cannot retaliate for this, but there are ways!) to be greedy and get some "free" money to which you aren't really entitled by most common sense standards? If I were in your shoes (and I'm not, so my advice is at best uninformed, and most likely useless) I'd lighten up and drop it at this point. And don't forget - the argument can be made (although I don't think the argument is necessarily valid, as I stated earlier) that under the Revenue Procedure, no correction is due. Good luck.

Ah - thank you both!

Hi Luke - we'll agree to disagree on this. I don't think it is thin support at all. I think it is explicit. "Contributions are made pursuant to a cash or deferred election only if the contributions are made after the employee's performance of service with respect to which the contributions are made (or when the cash or other taxable benefit would be currently available, if earlier)." With forfeitures, the funds were contributed to the plan long before the service was performed. It is interesting to note the specific difference between this, and the exception offered for matching contributions - see 1.401(m)-1(a)(2)(iii)(B). I doubt that this is coincidence. "Tis an interesting question., regardless of which interpretation you choose. Personally, I wouldn't want to have to argue this with the IRS, but I'm generally pretty conservative on most of this stuff. Anyway, I have no pearls of wisdom to offer!

Thank you for the response. However, where, if at all, do you find a requirement for advance notice of an amendment reducing future benefits in an HRA? For example, calendar year HRA provides that once a participant pays $1,000 out of pocket, the HRA kicks in. If the employer decides that they want to change this to $1,500 effective October 1, 2017, is advance notice required - and if so, what is the specific timeframe? In the qualified plan world, we have ERISA 204(h). What, if any, is the corresponding citation for an advance notice requirement for an HRA? Thanks!