mbozek

The amount of the employer deduction is the fmv of the stock on the date of the contribution. Rev. Rul 73-583. If the stock is thinly traded then then the fmv could be the closest valuation to the date of the trade or the average of the fmv before the contribution and after the contribution. Why not ask the accountant- thats their job.

A 403(a) plan is a qualified plan which is funded through a group annuity contract issued to the employer instead of a trust. Otherwise it must meet all the requirements of a qualified plan. A 403(b) plan has no assets held by a fiduciary. The funds are kept in an annuity contract or custodial account in the name of the employee. See IRS pub 560 P 11- 20 rules for qualified plans and IRS pub 571 for description of 403(b) plans. Also see instructions to 5500 form for exemption of employee salary reduction only 403(b) plans from ERISA.

Preemption of state laws. The reporting and disclosure, funding and fiduciary provisions do not apply.

You better think this through before making payment. The only way you can pay this person is if you are sure of his true identity which is going to be difficult if he used a false identity to obtain employment. What documentation are you going to request to prove his true identity if the original documentation, e.g., SSN, drivers liscense, birth certificate, etc. are false? How can the PLan admin verify the true identity of a person who committed identity theft to become employed? The risk the plan sponsor runs if it pays benefits is that another claim will be made for the same benefits using different identity documents. People who are terminated for being illegal immigrants are usually deported and never apply for their benefits which can be forfeited if the plan permits forfeiture.

Under ERISA 502(e) all actions under ERISA must be brought in Fed ct. except that claims for benefits by a participant can be brought in either fed or state ct.

If the employer paid the bonus to the employees without taking out the 401k deferral then the employees have no legal right to the money that should have been deferred. The employee can write a check to the employer for the amount that should have been contributed to the 401k plan and the employer reduces the employee's w-2 income for an equal amt. E.g if employee receives 10,000 bonus and 1000 should have been contributed to the 401k plan the employee can write a check for 1000 to the employer which will be contributed to the 401k plan and the employer will reduce the employee's w-2 comp by 1000.

A plan cannot force a participant to cash a check and after a period of no more than 6 months it will be uncashable under banking laws. After the partciipant dies the representative of the participant's estate can apply to the plan to for the lump sum value of the payments that were not cashed. By the way the participant is taxed on the amount of payments paid in each year even though they are not cashed.

Why not have the employees remit the bonus amount to the employer to contribute to the plan and reduce the w-2 wages?

? Harwood: the excess is part of a salary reduction contribution to each employers plan subject to the ADP test for HCEs. It is an excess contribution to the employee for distribution purposes because the total contribitions from each plan exceed the 402g limit. By the way the refund provision of 402g for excess contributions is in most 401k plan documents.

Arent all salary reduction contributions treated as employer conributions when they are distributed?

The regulations are written to exempt a specific situation- voluntary employee contributions to a 403(b) plan. Since the employer contributions go to a separate plan subject to ERISA the SR plan is not subject to ERISA. Employers maintain separate 403(b) plans for the ee contributions to avoid spusal consent provisions for loans and distributons.

The excess is regarded as an employer contribution which will be taxed a second time when paid. I dont see any prohibition in a rollover since employer funds are rolled over on a pre tax basis and will be taxed when distributed from the IRA. The penalty for excess contributions which are not refunded is double taxation of the employee - once in the year the excess is contributed and again when the employee receives the amount.

You can ask the client for a opinion from a tax advisor that a distribution is permitted. Corporate trustees and custodians would require such a letter because it puts the client on notice and if the client insists on the distribution it becomes the client's responsibility for withdrawing the funds without the opinion.

Under 402(g) if the funds are not refunded by 4/15 the excess contribution is taxed in both the year of contribution and again in the year of distribution which is permitted from a qualified plan, eg. termination, age 59 1/2. There is no effect on the plan if the excess results from employee deferrals to separate salary reduction programs.

If you are not the fiduciary why should you care? If the owner is a fid and requests payment from a custodian/trustee and the owner has authority to request payment then make the payment.

The regs exempt a 403(b) plan from ERISA if it is limited to employee salary reduction contributions. If the employer match goes to the qualified plan, the 403(b) plan is not receivng any er contributions.

Yes if payment is permitted upon termination of employment and the employee has not elected in advance to defer the payment or receive installments. Read the plan.

On June 16th the IRS issued an information letter to Mr Eugene Delgaudio in which it confirmed that under the Defense of Marriage Act the term spouse for the purpose of administering federal law, including the tax law, is defined as a person of the opposite sex who is a husband or wife. According to the IRS DOMA applies even if the state recognizes the union of two persons of the same sex as a legal marriage. While the IRS letter answered the question of eligibility to file a joint tax return, the definition of spouse under DOMA will apply to those provisions of the IRC affecting benefits such as QDROs, contributions to a spouse's IRA, spousal rollovers, payments from an FSA and exclusion of health insurance premiums from income taxation. This means that a QDRO cannot be issued for benefits under an ERISA plan if the marriage is between members of the same sex legally married in Mass or Canada. While spousal death benefits will not be required for plans subject to ERISA (e.g., J & S annuity), there is no prohibition against an employer providing such benefits for same sex couples under a qualified plan subject to ERISA provided the applicable nondiscrimination rules are complied with. (Note: the value of the survivor benefits will be considered a taxable gift of the employee or a taxable transfer by the employee under the federal estate tax.)

You need to hire a tax advisor to determine your options. If your co is bought out in a stock deal then you will receive stock of the purchaser in exchange for your employers stock. In order to recieve the 15% capital gains on the er stock you must receive a lump sum from the ESOP on account of termination of employment or attaining 59 1/2, not on account of termination of the plan. Getting capital gains on er stock is very complicated and you need to spend the money on a tax advisor.

Get the name and address of his employer from his w-2 from the executor of his estate. Then call to get the name and address of the plan administrator. The company is not going to find you. By the way how do you know that you are the bene?

Why is it necessary to use an LLC to purchase assets for an IRA when the IRA owner has discretion to invest the funds under the custodial agreement?

I thought that only comp earned in a plan year that ends in the employer tax year can be used to figure the deduction. Comp earned in a plan year that ends after the close of the employer's tax year is not deductible for that tax year. Rev. Rul 90-105. The employer can claim a deduction for contributions made in the tax year or for the prior tax year which are made by the date for filing the return with extensions. Rev. Rul 76-28. However under IRC 412 contributions to a mp plan must be made no later than 8 1/2 months after the close of the plan year in order to avoid the late payment penalty. Contributions made to a qualfied plan after the date for filing a tax return are deductible for the year in which the contributions are made.

Community property laws are preempted by ERISA.

I dont see any problem with charging for the cost of the actual expenditures of church employees associated with plan administration since such expenses could be charged to a plan subject to ERISA.

Not really. The question you raised requires a legal opinion involving age discrimination since senority can be a proxy for age. There is no discrimination issue under the IRC for a 457 plan.