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Belgarath

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  1. Like
    Belgarath got a reaction from Dave Baker in Mike Preston   
    I didn't know Mike, but always respected and benefited from his knowledge and opinions. The Enrolled Actuary at my former place of employment was a PIX member, and Mike's opinions came up in discussion frequently. He'll be missed.
  2. Like
    Belgarath got a reaction from Luke Bailey in IRA $$ Stolen   
    Other than asking a good CPA...
    Perhaps this will help a bit? And I believe you can maybe deduct a theft loss on a Form 4684? But this is way out of my area of knowledge. My deepest sympathy to the poor lady with a loser of a Son.
    Theft losses
    A theft is the taking and removal of money or property with the intent to deprive the owner of it. The taking must be illegal under the law of the state where it occurred and must have been done with criminal intent. The amount of your theft loss is generally the adjusted basis of your property because the fair market value of your property immediately after the theft is considered to be zero.
  3. Like
    Belgarath got a reaction from acm_acm in IRA $$ Stolen   
    Other than asking a good CPA...
    Perhaps this will help a bit? And I believe you can maybe deduct a theft loss on a Form 4684? But this is way out of my area of knowledge. My deepest sympathy to the poor lady with a loser of a Son.
    Theft losses
    A theft is the taking and removal of money or property with the intent to deprive the owner of it. The taking must be illegal under the law of the state where it occurred and must have been done with criminal intent. The amount of your theft loss is generally the adjusted basis of your property because the fair market value of your property immediately after the theft is considered to be zero.
  4. Like
    Belgarath reacted to Brian Gilmore in Benefits for Highly compensated employees moving to post tax   
    Ha, let's hope that practitioner weighs in to set us all straight, Kenneth.
    Agreed, the distributions already made will just be recharacterized as taxable income.
    Here's an overview of the approaches that I've posted:
    https://www.newfront.com/blog/the-dependent-care-fsa-average-benefits-test
    Correcting an ABT Failure Where HCEs Have Already Exceeded the Reduced Limit
    In some situations, employers will not discover an ABT failure in time to impose a reduced HCE contribution limit prior to HCEs contributing to the dependent care FSA in excess of that limit. 
    For example, suppose the ABT pre-test results show that HCE elections must be reduced by 20%, resulting in HCEs who elected the $5,000 maximum having to drop to $4,000.  If those HCEs have already contributed $4,375, there is a $375 excess that must be made taxable income before the last day of the plan year.
    There are two basic approaches to converting excess HCE dependent care FSA contributions to taxable income:
    Refund/Return: The employer can distribute the excess contributions back to the HCEs through payroll as taxable income subject to withholding and payroll taxes by the end of the year, thereby reducing the amount available in the HCEs’ dependent care FSA account balance.  Note that this approach will not work for HCEs that have already received reimbursement of the excess amount. Recharacterize: The employer can recharacterize the excess contributions as taxable income subject to withholding and payroll taxes without directly refunding the excess to HCEs.  The downsides of this approach are that the employer will need to a) take the withholding and payroll taxes from other income, and b) inform the HCEs that they may take a distribution of the excess contributions (which no longer have pre-tax status) from the FSA without the need to submit qualifying dependent care expenses. With either approach, the employer will need to coordinate with the FSA TPA to ensure proper administration of the correction.  As always, the employer will need to take action before the end of the year to ensure a passing result as of the last day of the plan year.
  5. Like
    Belgarath reacted to CuseFan in Benefits for Highly compensated employees moving to post tax   
    If you've contributed $X YTD then I think the cash refund you'll get is $X less whatever claims have been paid to you. If your paid claims were more than $X, I don't think the excess can be clawed back (like if you terminated and your YTD claims exceeded your YTD contributions). But that is just the cash flow issue. Whatever you had contributed YTD will all be taxable to you regardless of cash refund amount and also subject to FICA and Medicare taxes.
    There is a very smart health and welfare plan practitioner in this forum who hopefully will see this and either confirm my understanding or set me straight and give you the correct answers.
  6. Like
    Belgarath reacted to fmsinc in Benefit Freezes in Advance of DRO Qualification   
    I can only speak from the perspective of an attorney who has been involved in the preparation of pension and retirement orders for the past 37 years.  There are a number of factors in play.
    1.  In most cases the most valuable assets owned by the family unit are the equity in the marital home and their pension and retirement assets.  You cannot treat them lightly.  An Alternate Payee's loss of benefits can be financially catastrophic.  
    2. Most lawyers, and I do mean MOST, have no idea of the complexity if this area of law as applied to the vary narrowly focused question:  "How to I make sure my Alternate Payee client receives the proper share of the Participant's benefits."   They are, for the most part, ineducable.  
    3. Most of the judges in my State have had minimal experience as family lawyers.  They have been prosecutors or criminal defense lawyers, personal injury lawyers, or even real estate, corporate, tax or administrative lawyers.  As competent as these lawyers may be, they don't understand family law, and the nuances are entirely lost on them.  
    4.  I advise my attorney colleagues to have the QDRO's prepared, approved by the parties, and ready to initial and sign at the same time they sign the Marital Settlement Agreement ("MSA"), and then present it to the court at the final hearing and get the certified copy in the mail to the Plan Administrator ASAP.  Even before that happens, I suggest that at the earliest possible moment they send a "Notice of Adverse Interest/Claim" to every Plan Administration they can identify, the purpose of which is to give them "actual notice" that a QDRO is or will be on the way. 
    5. Plan Administrators have a fiduciary duty toward both Participants and Alternate Payees.  See 29 U.S.C. § 1104.  29 U.S. Code § 1002(8) defines "beneficiary" as follows: "(8)The term “beneficiary” means a person designated by a participant, or by the terms of an employee benefit plan, who is or may become entitled to a benefit thereunder.  See 29 USC 1132(c) for penalties imposed upon a Plan Administrator for failure to provide information to a Participant or a Beneficiary.  Pursuant to 29 USC 1132(a)(1)(B) a Participant or an Alternate Payee (who is classified as a beneficiary), can sue "to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan".  29 USC 1132(e)(1) states that: 
            "(e)Jurisdiction:  (1)Except for actions under subsection (a)(1)(B) of this section, the district courts of the United States shall have exclusive jurisdiction of civil actions under this subchapter brought by the Secretary or by a participant, beneficiary, fiduciary, or any person referred to in section 1021(f)(1) of this title. State courts of competent jurisdiction and district courts of the United States shall have concurrent jurisdiction of actions under paragraphs (1)(B) and (7) of subsection (a) of this section."  
    6.  What does all of this mean?  If you are a Plan Administrator and receive "actual notice" that a DRO is coming your way, you attorney will counsel you to put a freeze on the Participant's benefits until the matter is resolved by the parties or by the state court.  Failing to implement a freeze may get you involved in a lawsuit that you may very well lose.   I have seen this happen at least 100 times.  Defined benefit plans will not commence the payments of benefits to a retiree.  401(k) plans will not permit loans, or hardship withdrawals, or in-service withdrawals or post termination withdrawals.  
    7.  It is a rare case that a Participant is happy about paying pension or retirement benefits to an Alternate Payee.  One of the ways to avoid may some of all of such benefits is to DELAY the entry of the QDRO by any means possible.  See attached a Memo I recently prepared recounting the consequences of delay.  I would welcome anyone with additional scenarios that I may have missed. 
    DSG  
     
    CONSEQUENCES OF DELAY 04-15-24.pdf
  7. Like
    Belgarath reacted to Ilene Ferenczy in Benefit Freezes in Advance of DRO Qualification   
    I've had this discussion over the years with several people and do have some thoughts to share.  first, if the plan and/or QDRO procedure provides for a freeze, I think the plan terms control.  Of course, if the participant must receive a distribution (e.g., an RMD), the plan can't interfere with those legal limitations or mandates.
    Of course, the purpose of a freeze for a divorce is to protect the nonparticipant spouse, who is presumed (whether it is accurate or not) to be a nonworking wife, if the participant is dastardly and wants to drain the account before she can get a hold of half his account.  While I have all kinds of thoughts about stereotypes, paternalism, and the like, I agree with David Schultz about it not being the plan's place or responsibility to control the participant's behavior.  Further, in many (if not all) jurisdictions, when you file for divorce, the court issues a court order requiring the couple not to impair any potential marital assets.  So, usually, once the divorce is final, the participant is likely in contempt of court if he or she raids the plan, and there are remedies for that which the court can impose.
    The former spouse has no rights at all to the participant's plan interest in absence of a QDRO.  And, the Supreme Court said in one case that it is inappropriate to use a QDRO to state that the spouse has no rights to the participant's account, as that is the status quo.  So, if you do put a hold on the participant's account, when does the hold end?  When the participant shows you his/her divorce decree?  that requires a sharing of information that is really not the business of the employer/plan administrator.  And, if it is decided in the first five minutes of the divorce process that the nonparticipant spouse is not interested in sharing in the participant's benefits, the presumed protection of the nonparticipant spouse is not needed.
    So, from a practical standpoint, the plan administrator really doesn't have access to or shouldn't have access to enough information to know when the hold should be started and when it should end.  For no other reason than the practicality of the hold (or lack thereof), I recommend that they plan only place a hold on the account during the period between the provision of the proposed QDRO to the plan, and the determination by the plan that the QDRO does or does not quality.  The nonparticipant spouse should use his or her lawyer and the courts to control the behavior of the participant vis-a-vis their marital assets.
  8. Like
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  10. Like
    Belgarath got a reaction from Lou S. in IRA $$ Stolen   
    Other than asking a good CPA...
    Perhaps this will help a bit? And I believe you can maybe deduct a theft loss on a Form 4684? But this is way out of my area of knowledge. My deepest sympathy to the poor lady with a loser of a Son.
    Theft losses
    A theft is the taking and removal of money or property with the intent to deprive the owner of it. The taking must be illegal under the law of the state where it occurred and must have been done with criminal intent. The amount of your theft loss is generally the adjusted basis of your property because the fair market value of your property immediately after the theft is considered to be zero.
  11. Like
  12. Like
  13. Like
    Belgarath got a reaction from Bill Presson in Mike Preston   
    I didn't know Mike, but always respected and benefited from his knowledge and opinions. The Enrolled Actuary at my former place of employment was a PIX member, and Mike's opinions came up in discussion frequently. He'll be missed.
  14. Like
    Belgarath got a reaction from Sabrina1 in Late Form 5500 Filing - Multiple Plans   
    Separate penalties for each plan filed under the DFVCP program.
  15. Haha
    Belgarath got a reaction from AndyH in "JUST DO IT"   
    I'm sure Nike has this trademarked or something, but it would be fun to have this on our client engagement letters - the endless amounts of time we spend because the client is trying to "get around" something they have to do, or won't do what we tell them to, etc., etc. - wouldn't it be great if we could contractually point to "JUST DO IT!"
    Just one of those pleasant daydreams...
  16. Like
    Belgarath got a reaction from Bill Presson in Late Form 5500 Filing - Multiple Plans   
    Separate penalties for each plan filed under the DFVCP program.
  17. Like
    Belgarath got a reaction from RatherBeGolfing in Late Form 5500 Filing - Multiple Plans   
    Separate penalties for each plan filed under the DFVCP program.
  18. Like
    Belgarath got a reaction from Bill Presson in Repaying QBADs   
    Wouldn't you just file a 1040-X, reduce your AGI, and explain the change in Part II (or III if electronic filing)? I've never done this, so I'm not certain, but it seems logical to me.
    I'm a little grumpy about IRS tax filings about now...
  19. Like
    Belgarath reacted to C. B. Zeller in Repaying QBADs   
    IRS just published a fact sheet about Qualified Disaster Recovery Distributions: https://www.irs.gov/newsroom/disaster-relief-frequent-asked-questions-retirement-plans-and-iras-under-the-secure-20-act-of-2022 (Thanks to the BenefitsLink bulletin for the timely notification!)
    Under Q9, "May an individual repay a qualified disaster recovery distribution?," the guidance given states
    I realize this guidance is in relation to QDRDs and not QBADs, but the statute under 72(t)(I)(vi) says that rules for repayments of QDRDs shall be "similar to" those for QBADs. So it seems reasonable that the same guidance would apply.
  20. Like
    Belgarath got a reaction from QDROphile in "JUST DO IT"   
    But since this is MY daydream, I can choose to have it apply only to the items WE tell them to do. 😁 
    It never rains on my parade in my daydreams...
  21. Like
    Belgarath got a reaction from Lou S. in SDBAs for owners (can it be done?)   
    Since there is no official guidance on the effective availability requirement under 1.404(a)(4)-4(c), I'm not sure what degree of confidence there is - depends on how aggressive you are (or more to the point, how aggressive your client is willing to be). Your proposed parameters seem pretty safe to me, although the minimum value to have a SDBA could be an issue. If, for example, the minimum is say, $5,000, and 90% of the NHCE's have $5,000 or more in their accounts, then it seems "reasonable" that this would qualify. I would tell them, if they wish to pursue this, that they need ERISA counsel opinion, etc. - the usual CYA stuff.
    And of course, the plan fiduciary must determine that the fees are prudent and reasonable, etc., etc., and a flat fee for small brokerage accounts might not qualify.
    As you said, potentially a bad idea on many levels. 
  22. Like
    Belgarath got a reaction from ratherbereading in "JUST DO IT"   
    I'm sure Nike has this trademarked or something, but it would be fun to have this on our client engagement letters - the endless amounts of time we spend because the client is trying to "get around" something they have to do, or won't do what we tell them to, etc., etc. - wouldn't it be great if we could contractually point to "JUST DO IT!"
    Just one of those pleasant daydreams...
  23. Like
    Belgarath got a reaction from Mr Bagwell in "JUST DO IT"   
    I'm sure Nike has this trademarked or something, but it would be fun to have this on our client engagement letters - the endless amounts of time we spend because the client is trying to "get around" something they have to do, or won't do what we tell them to, etc., etc. - wouldn't it be great if we could contractually point to "JUST DO IT!"
    Just one of those pleasant daydreams...
  24. Like
    Belgarath got a reaction from Bill Presson in "JUST DO IT"   
    I'm sure Nike has this trademarked or something, but it would be fun to have this on our client engagement letters - the endless amounts of time we spend because the client is trying to "get around" something they have to do, or won't do what we tell them to, etc., etc. - wouldn't it be great if we could contractually point to "JUST DO IT!"
    Just one of those pleasant daydreams...
  25. Like
    Belgarath reacted to C. B. Zeller in Participant Counts for 2023 5500s--Eligible Employees WIthout Balances   
    There is no change to the question asking about the number of active participants. There is a new line item (6g(1) on the 5500, 5c(1) on the 5500-SF) which asks about the number of participants with account balances at the beginning of the year, and that new item is the one used to determine whether the plan is required to have an audit.
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