mbozek

Why would the spouse want to incur the cost of drafting a new QDRO instead of just gifting the funds to the kids which cost 0. Gift tax is inconsequential to 99.8% of taxpayers because taxpayer can gift $14,000 to each person without making a gift and excess would not be subject to gift tax until taxpayer made over 5.4Million in lifetime gifts. 709 form is a no brainer.

Since you already know the answers to the questions that you deem to be important you don't need any further assistance. Good night and good luck.

Ask your employer to establish a non qualified deferred comp plan under IRC 409A for you which would allow you to defer $7500+ on a pre tax basis. Fund earnings would not be taxed until distribution. However the account would be subject to claims of employer's creditors. Employer would have to pay to draft a plan.

I have never heard of a NQ DC plan that did not credit interest or gains on the contributions which built up the account balance. Purpose of a DC plan is to provide additional benefits to participants, not merely defer taxes on the contributions. Everyone has been aware of the fica tax on vested benefits in NQ plans for years. Have you discussed this question with the employer?

If you are thinking of 457 plans for non profits they are not subject to the fiduciary rules of ERISA and the investment account must be held in the name of the employer or other entity such as a rabbi trust which can be seized by the employer's creditors. The contributions can be invested through brokerage accounts, mutual funds, annuities, even LI.

Since there is no requirement that a qualified plan must accept rollovers into the plan, the plan has discretion as to whether it will accept rollovers and from which class of persons. A plan is not required to accept a rollover from a former employee who has not taken a distribution of the benefits from the plan or from that employee's beneficiary.

I thought that the one participant plan with less than 250k in assets was exempt from the 5500 filing if the only other participant was the spouse.

Just how is the refund going to be made by the 15th since the PO is closed? Is the refund going to be made by EFT to the participant? Will FED ex pick up? The purpose of allowing an extension until the next business day is because the official means of submitting the documents, forms, payments cannot be made when the PO is closed.

I have never understood how a state can force a non resident entity such as a retirement plan to withhold taxes on a resident of that state. Seems like there are no minimum contacts by the plan with the state that would require tax withholding. In addition preemption should preclude mandatory withholding of state income tax. If a plan that is sited in another state does not withhold NJ income tax on distributions what is NJ going to do to it? Just because a state demands that a non resident comply with its tax laws doesn't mean that the non resident is subject to state tax law.

IRC 7503 provides that when the date for performing any act under the IRC falls on a Sat, Sunday or holiday the act shall be considered to be timely if it is performed on next day which not a Sat, sun or holiday. So the 3/15 deadline would be extended to 3/16.

Trying to find that one person in the food chain who will agree with the position of the surviving trustee could take months or longer. Or even worse they will not agree. Best way to expedite a resolution is to find out what the other side will accept to allow the transfer of the pension plan assets, not keep trying to find a way around the rules. Without knowing what is in the trust documents no one can opine on what rights the trustee has to transfer the funds. No brainer. Enough said.

negotiating a new QDRO and getting it approved by the Plan will be prohibitively expensive. Do you really think its a better option than to have the ex spouse receive the benefits and gift them to her children? After all she will have to pay taxes on the benefits anyway.

Just who do you think will intervene on behalf of the trustee and agree to negotiate for a party that is not a client? Financial firms do not represent parties in legal disputes.Crafting documents exonerating the financial institution from liability to a customer is something brokerage attorneys excel at. This aint their first rodeo. There is a document template that can be filled in with just a few additions. Its a lot easier than trying to force the firm to give up the money which is in their possession. Of course the surviving trustee will need to hire counsel.

Not exactly. Why does the spouse want to fight with the brokerage's lawyers and trust officers? It could be expensive. You need to review the trust document to see what happens when a co-trustee/participant dies. Easiest solution is to ask brokerage if the remaining trustee can sign a waiver of liability and agree to indemnify the brokerage if the assets are transferred to another financial institution. Or appoint a successor trustee who can consent to transferring the assets.

Cant rely on proposed regs under ERISA 209 because it is not a final reg which has the effect of law. Second, participant suing a DC plan for incorrect benefits must provide a plausible basis under the facts pleaded in the complaint for which there is a remedy under federal law. In other words the participant must demonstrate that benefit values in plan statements are incorrect. Participant cannot merely allege that his account balances should be higher based on performance metrics for funds published by fund co. If participant cannot provide a plausible basis demonstrating that account balance under plan records are incorrect the case will be dismissed.

IRS reg 1.401(a)-13(e) provides that a participant or beneficiary can direct that all or any portion of a plan benefit be paid to a third party if the arrangement is revocable and the third party files a written acknowledgement of the arrangement with the plan administrator within 90 days after the arrangement is entered into. This arrangement is not considered to be an assignment of interest. The assignment of benefits would be taxable to ex spouse under the rules for constructive receipt. The plan would have to allow for such a payment. Corrected cite.

IRS has an obsession with semantical terms which create distinctions without a difference. Same problem exists with roth conversions from a qualified plan which the IRS considers to be both a rollover and a conversion.

I have always abided by the rule that the Plan administrator determines whether the plan can comply with requests to credit gains and loss or contributions to the parties to comply with a proposed QDRO. Many plans set a limit of how far back they will go -some may only go back 12-24 months. Another option is to tell the attorney that the plan will comply with the request to the extent the plan can find the records but the participant will be required to pay for the cost of searching for the records and doing the calculations. QDROS are not a free service. As plan keeping records forever, many plan records disappear when companies are acquired or merged and Corporate record retention policies determine how long records will be preserved. And then there are the records that are sent to the warehouse and cannot be located.

Why cant the employer establish a 401k plan with a 1/1/15 effective date and allow deferrals to commence sometime in march so that employees would get benefit of a full year of comp being included? Since 1/1/15 is more than 12 months after assets in prior plan were distributed there would be no look back issue.

The common understanding is that the period of time between two dates includes both the beginning and ending date. If the plan was going to contribute15% for the calendar quarters ending between 1/1/15 and 12/31/15 then the calendar quarter ending 12/31/15 is included. Alternatively you could say all of the calendar quarters ending in the 2015 calendar year.

There are a number of defects in the VZ employees case that are inconsistent with legal principles: 1. The constitution requires that only cases or controversies can be heard in federal court. Hypothetical claims are not permitted. Under the VZ employees complaint no harm is alleged to have occurred as a result of transferring the VZ pension liabilities to Prudential. Complaint is based on possible risk that Pru will not be able to pay the pension benefit to the 41,000 VZ retirees because of some financial default in the future which would not occur if VZ had retained the benefits in the VZ retirement plan. The other risk cited is that a VZ retiree could have his Pru annuity benefits seized by creditors in the event of bankruptcy. (Of course ERISA does not protect a participant's retirement benefits after they have been paid and a creditor can seize them from his bank account.) The claim of possible harm in the future is not a claim that can be brought in federal court. 2. The employees also claim that the decision to purchase the annuity is a fiduciary investment decision which violates several provision of ERISA. Federal courts have held that the purchase of an annuity is a settlor decision to distribute benefits which is permissible if made under the terms of the plan and complies with the DOL reg on selection of the annuity carrier. 3. The VZ employees association is mistaken in its believe that Pru could sell off assets in its General account which could impair the ability of the insurer to pay benefits to VZ retirees in the future. The insurance reserves of a state regulated Life insurance Co are the property of the policyholders/beneficiaries, not the stockholders of the insurance Co and cannot be sold by the insurer if it would impair the ability to pay annuity benefits guaranteed by the company's general account.

Some administrators and HR personnel believe that offering investment education will prevent lawsuits by employees who make poor investment choices since they were offered the opportunity to learn about retirement investing. This is a good as it gets in 401k plans because plan sponsors and fiduciaries do not want to be sued by participants for providing investment advice.

2016 RMD cannot be take before Jan 1, 2016. Any distribution in 2015 can only be allocated toward 2015 MRD.

I have not researched the question but I thought a general principle of taxation under IRC 61 and the regs is that anything an employer provides to an employee in the form of money or property was taxed as income unless excluded. If the health ins is provided in return for services it is considered to be w-2 income. I don't know what else it would be classified as. Maybe the answer is in PUb 17 which has an extensive discussion of taxation of employer provided health insurance.

There is always audit risk when a 5500 is amended. The question is whether the assets should be excluded from the 5500 under the applicable regs. If there is an audit then the correct response would be that the amended return was filed to correct a mistake. I don't know whether there is much interest in auditing 403b plans by the DOL. The above is my recollection of the application of the regs to 403b plans. You need to look at the 5500 form instructions and applicable regs.