Demosthenes

Probably because I have this mental image of the DOL as the Furies, relentlessly pursuing at the whim of some half-baked deity (read regulation).

Honestly, I wasn't even looking at the 5500 question, mental block because this is always a major pain. But let's break the question down into two parts. Are we agreed that under the constructive receipt rules, the 1099-r is issued for the year in which (to keep it simple) the check is cut? This is under the IRS rules and definitions so it seems pretty clear cut and reasonable to do so. Assuming we're OK there, with the 5500 we're looking at the day the last dollar leaves the plan/trust as defining the year for which you file the final 5500. These are DOL rules and, to me, are much murkier. When does "leaves the plan" occur? Certainly it leaves the plan once the check is cashed. But, what if I've engaged the services of a paying agent outside of the trust? I can argue that the assets are gone, no longer a trust asset, if it doesn't get cashed, it's the paying agent's problem to escheat the funds. If the plan/trust stays in control of the funds i.e. controls the account on which the checks are drawn, then I'd argue that the last dollar isn't gone and while I've filed my last 1099-r, I still can't file my last 5500. At which point I'm stuck playing "Where's Waldo?" (in Boston we call it "Where's Whitey?")also know as find the missing participant. Until we find the last one and make them cash the check, or throw it over the fence to the DOL as an orphan plan, I'm playing the role of Sisyphus and trying to get that rock to the top of the hill.

Expanding on constructive receipt According to the IRS, the date when a taxpayer received income, such as a dividend payment, interpreted as the first date the taxpayer has the right to claim it, whether or not that claim was actually exercised.

It's the year that the distribution was made (check cut, Wire, ACH, EFT, or IBP) not the year that the check was cashed. If the checks have a 2004 date on them, I'd issue a 2004 1099-r.

Nothing in the rules prohibits commodity and option trading, but as John G said, it will be dificult to find a custodian that will permit this type of security. The prohibitions are practical and regulatory, naked calls and options can exceed the account value in an account where the regulations prohibit you from putting more money in to cover.

"The 50k is in a SEP, the sponsor has no control over that" If this is a SEP-IRA why not simply trade in the SEP? If the current custodian doesn't have that ability, move the SEP to one that does, and trade away! Setting up an LLC that day trades and then creating a 401(k) plan funded by a rollover from his IRA, then take a loan that the LLC will then trade sounds way too complicated for something that can be done in the existing account. When things get complicated for no good reason, I start wondering what else is going on.

The broker is an unrelated third party, you are under no obligation to provide him with anything. On the flip side, if the broker is a financial planner, the information is needed to produce a complete analysis of the participant's finances. How about providing an explanantion of the commingled account/balance forward method being employed and a copy of the Plan's Investment Policy? Send it via the participant rather than direct to the broker.

Forget the states! What fiduciary, in his/her right mind, would permit them in the plan? I know the answer is most 403(b) and 457 plans, but it doesn't change the fact that the benefit to the producer is a legalized (in most states) form of theft.

SunGard, ProNvest Unveil Automatic Rollover Service http://www.plansponsor.com/pi_type10/?RECORD_ID=27867 E-Trade to Provide Rollover IRA Accounts Mandated by EGTRRA http://www.plansponsor.com/pi_type10/?RECORD_ID=27857

Is the someone you are working with officially associated with the Plan? Just wondering if the orphan plan service offerred by the DOL could help.

Let me echo WDIK I am not comfortable with this kind of arrangement However, the date of the distribution is the date on which the payee could have assumed constructive receipt of the funds. i.e I have possession of the funds (or at least you no longer have them) and can do something with them. That's the date of the check, Fed Fund Wire, or EFT. As to not being a Trustee, I wouldn't bet the ranch on that one. You have control over the Trust's assets for some period of time and excercise some discretion, at least to the timing of the check, the variable 7-10 days.

Once again we approach the end of another calendar year. As with the end of every calendar year (and April 1st), I fully expect to see at least some situations where RMD's have not been paid out and where the excise tax is going to come due. Does anyone have any hard examples of "river of tears" letters resulting in tax waivers, PLRs on the topic etc? Just trying to get ahead of this years crop of "my dog ate my paperwork" stories and get a feel for what has a reasonable chance of success and what does not. Thanks

Why not have Reish Luftman Reicher & Cohen (the authors) write it? Whenever I read articles like this from law firms or investment advisors, I take them with a grain of salt. Not to be cynical but fear generates fees

Who benefits from the valuation? It would seem that the primary purpose of perfoming the valuation is to determine the market value of the Company and the value of each shareholder's interest. An equally important use, with a tangible benefit to the employer, is so the employer can compute the value of the contribution for their corporate tax returns. On the one hand, I don't have any cites. On the other, I've never seen a privately held corporation charge off the cost of the valuation to the plan. This one feels wrong, I'd ask for a letter of instruction along with hold harmless and indemnification language in case it ever comes back on you.

There really isn't any such animal as a non-contributory SEP. Basically, if the employer makes a contribution to the SEP then the contribution must be allocated using the same % of compensation to all eligible participants. Form 5305-SEP is the model form and available at the IRS web site. It's a short sweet description of the requirements and I'm betting that whoever told your client about SEPs has never read it. This is a very common mistake, I can't tell you the number of times I've seen someone establish a SEP and only make contributions to their account. Often it's on the advice of someone else who has a SEP and only makes contributions to themselves. Or the advice is traced back to a broker or accountant unfamiliar with the regs. In any case, it doesn't fly with the IRS and bad things happen. The worst case I've seen; go back to the date the SEP was established, credit the % of compensation placed in the owners account (in this case the max allowed in each year) to all eligibles and make up the foregone earnings.

Your candidate may very well have grounds for breach of contract. Here's an excerpt from a Q & A in the Boston Globe http://bostonworks.boston.com/globe/job_do...es/011203.shtml "Breach of contract: Once you received the offer and mailed the signed acceptance letter, the employer was precluded from simply withdrawing the offer. According to Greenbaum, ''You relied to your detriment upon the belief that your acceptance of the offer created a contract when you turned down the second offer.'' Since it sounds as though you were hired - as most people are - as an employee at will, the amount of ''contract damages'' in this situation would be, according to Greenbaum, ''open to question.'' Without knowing what the law is in the state where the company was located, it is difficult to make a determination." Not knowing all of the details, I'd advise you to consult an attorney, hastily. The longer you are unresponsive to the candidate, the more annoyed they will become. Even if it doesn't end up in litigation, be assured that this candidate's experience with your Company is going to make the rounds to the detriment of the Company's reputation.

To R. Butler We're from the government and we're here to help! Here's the URL for the DOL's orphan plan fact sheet which includes a phone number and email address. They may take it off your hands or at least take on the task of finding the last handful of participants. http://www.dol.gov/ebsa/newsroom/fsorphanplans.html

Try the latest IRS newsletter at http://www.irs.gov/pub/irs-tege/se_102204.pdf. In part it says "In the next few months, the IRS expects to publish guidance under section 401(a)(31)(B) including a model amendment that may be used to apply the automatic rollover provision." There is also a link to the DOL regs on the page. Not very definitive, I admit, but at least it's something.

"All I can suggest is that you estimate the earnings, estimate the cost to allocate them properly, and say that the cost would be paid by the plan" Don't even think about charging the plan to correct what the DOL sees as an error by the Employer!!! The DOL can be unreasonable, obstinate, and arrogant, and that's their good side! Want to see the bad side? Try charging the Plan and Participants to correct an error the DOL found. I think the hold your nose and pay is probably the best bet

If all of the 403(b) participants are under a single annuity contract and the RK system handles it, there shouldn't be a problem. I'd be surprised to find a RK system that couldn't adequately handle forfeitures. However, my bet is that like a lot of 403(b)’s, each of the participants has one or more individual 403(b) annuity contracts scattered across any number of financial institutions. It might be possible to find a TPA to handle just the employer contribution piece of it, but the co-ordination, reporting, testing issues that would require info from the individual contracts and the employer contribution piece gets to be a complex and expensive process. Janhubber; Are they individual contracts or one big contract with individual accounts?

I've never seen where anyone has come up with a cost effective solution. Applying any plan wide activity to a bunch of individual 403(b) contracts is like herding cats. Frustrating for you, annoying for the cats, and the herd never makes it to the end of the trail.

Go with the termination, if you terminate the MP and roll the assets into the PS plan, you leave behind those pesky spousal consent requirements

Previous posts were on track, just my humble attempt at humor. To expand, my advice is free, usually also worth what it costs. "Run to the nearest exit" is just an encouragement to get out of the annuity pit.

Free advice, worth every penny. Run, do not walk, to the nearest exit. Lots of 403(b) annuities have sub par performance because of the internal expense loading on the annuity and/or mediocre investment management. I'd bet the reason it's under performing are the fees you're paying either explicitly or deducted out of the investment fund. I expect this may bring some response from people in the annuity business, but I never met an annuity (at least in the accumulation phase) that didn't underperform a comparable investment in mutual funds.

Yes From the IRS web site "The SIMPLE IRA plan contribution is dependent upon which contribution formula you have chosen in your SIMPLE IRA plan document. If you decide to make a 2% nonelective contribution, then each eligible employee must receive a contribution equal to 2% of compensation regardless of whether the employee makes contributions. However, if you decide to make the dollar-for-dollar match up to 3% of pay, then only the eligible employees who have elected to make contributions will receive an employer contribution, i.e., the matching contribution. Note that you may reduce this 3% to a lower percentage, but not lower than 1%. You may not lower the 3% for more than 2 calendar years out of the 5-year period ending with the calendar year the reduction is effective." See IRS Publication 560 from the IRS for details