mbozek

There is no date for making contributions to a PS plan under ERISA or the IRC. In a NP there is no deadline for deductions to worry about. The only issue is what year the contributions will be attributed to for 415 purposes. Contributions made in a limitation year are counted for 415 purposes in that year. Dont know why you want to raise this issue with the IRS. Just make the contributions in 04 and move on. I also have question as to why the client should be put through the cost and trouble of EPCRS for a plan that had no assets in 2001. Worst case scenario is that the plan not qualified for 01 but since there are no assets and no contributions due there is no tax consequences to the employees or employer. If the plan was properly amended for GUST as of 1/1/02 then it will be qualified going forward for all contributions from 2002. There is also a question of whether the plan even existed for 2001 if no contribution was made in 2001 since Rev. Rul 81-114 requires that a contribution be made by the date for filing the tax return for 01 in order for the plan to be qualified.

M: The custodian may be treating the plan as being terminated because it has lost its qualified status and will withhold payment until it receives a determination letter. Strange but true. Have you asked the custodian why payments are frozen?

Who is the custodian? The custodian has no authority to prevent the participant from transferring funds to another funding entity or IRA (read the custodial agreement) because the question of whether mrds are required after the transfer of the IRA to a 403(b) plan is the sole liability of the taxpayer not the custodian. After the account balance is transferred to the 403(b) the MRD in the IRA will be 0 because the IRA balance will be 0. Somewhere in the custodial agreement is a statement that the custodian is not responsbile for determining the amount of the MRDs. The participant will be required to receive the MRD from the IRA for 2004 if not already paid.

Thanks for the update. Q1. Will the grandfathering on earnings for pre 05 contributions include earnings on pre 05 contributions which are credited after 12/31/04? Or will any post 04 earnings on pre 05 contributions be taxed the same as earnings on contributions made after 12/31/04. Q2 whose tax year is used for the effective date of the changes- the employer employees, rabbi trust? Q3 what are investment choices if the employer does not offer investment choices in a qualfied plan? What about a NP employer who offers a 403(b) plan? Q4 How is deferred compensation election defined? Few exec in publicly held companies make contributions by salary reducton since there are better avenues for the exec comp such as stock options and bonus payments.

Prototype plans do not define spouse because the IRS LRMs do not require that the spouse be defined in order to be approved by the IRS and most p'type sponsors do not know how to define spouse in the absence of any IRS regulation so no definition is included. Individual plan sponsors pay attorneys to design plans with definitions of plan terms.

The employer can avoid transferring the account balances to IRAs by limiting mandatory cashouts to account balances of no more than $1000. The employer can do direct rollovers to IRAs for amounts in excess of $1000 upon the employee's request.

There is no definitive answer to this question because ERISA is a law of equity in which the judges are required to do justice to the parties (e.g., there are no jury trials). Thus the fact that a DRO was not presented to the Plan admin before the part. dies will not prevent spousal right to benefits awarded to a AP if the Plan Admin is on notice that the divorce decree provided for the AP's rights under the plan and the DRO is filed with the Plan admin within 18 months. Hogan v. Ratheon Co, 2002 WL 31027574.The problem is that some divorce decrees do not spell out the AP rights to survivor benefits. The participant's sudden death shortly after the divorce decree is issued should not prevent the AP from receiving the spousal benefits if the divorce decree specified the APs right to surviving spouse benefits. However, an unreasonable delay by the AP in preparing a DRO after divorce can prevent the transfer of the benefits under the equitable doctrine of latches. In other words a 15 year delay in presenting a DRO for spousal benefits to the Plan admin could prevent the award of the benefits. Finally a part. who dies before the divorce decree is issued is considered to be married on the date of death and the spouse is entitled to all spousal retirement benefits since an action for divorce is terminated at the death of one of the parties. Davenport, 146 F Supp 2d 770.

There are two forms of age discriminaton: disparate treatment and disparate impact. Disparate treatment is discrimination based upon the employees age, e.g., excluding all employees over age 40 from the plan and is prohibited under the ADEA. Disparate impact is age discrimination which affects protected employees under a facially neutral policy, e.g., plan excludes all salesmen who are the only employees over age 40. The US supreme ct will issue a decision as to whether the ADEA prohibits age discrimination which results from disparate impact.

There are many plans that do not define the term spouse or define it in gerneric terms such as the legal spouse of the participant under state law. This is especially prevalent in prototype plans. In plans that do not define spouse the plan can be interpreted with reference to the definition of spouse under the state law designated in the plan. Individually designed plans can define spouse as a member of the opposite sex than the participant to avoid paying benefits to same sex partners of a participant.

Prototype sponsors do not give legal or tax advice so the employer must retain counsel and/or an actuary to prepare a submission on termination. The ptype sponsor will provide an amendment to bring the plan into compliance for all tax changes as of the date of termination but the employer must submit the plan to the IRS. If the plan is overfunded the excess assets are subject to the 50% excise tax penalty as well as state and federal income taxes.

NO. There is no rollover of a 457 plan by a non spouse.

A guardian must be appointed by a state ct to act on their behalf. Need attoney to prepare papers.

Why not ask for a copy of the stock cert?

How long does an employer need to keep obsolete plan documents after restatement. For example client adopted a prototype HR-10 plan in 1994. Plan was restated for two sucessive mergers of the sponsor. The assets were then transferred to a prototype plan of different financial organization. The new plan as well as the old plans all had IRS determination letters issued to the ptype sponsor including gust amendments. The client wants to know if the 4 inch stack of prior prototype documents, SPDs, forms and adoption agreements need to be kept indefinitey or can just the prior determination letters and adoption agreements be retained with the current document.

The real beneficaries of this provison will be the states since assets transferred to IRAs are subject to escheat under state abandoned property laws between 1-3 years after the funds are deposited in the IRAs.

Provision only applies if plan has cashout for amounts between 1-5k. Plan can limit involuntary cashouts to amounts not in excess of 1k to avoid having to transfer assets to IRA.

I think you need to review this matter with canadian counsel. First how are the canadian ees compensated under the plan for benefit purposes- in US dollars or canadian $? If they participate in the US plan then they are being paid in US dollars. Compensating Canadian employees in US dollars may violate canadian currency or labor laws. Second there may be restrictions on Canadian ees working in Canada participating in a US plan not to mention not being covered under Canadian laws. There is also a question of whether the benefits are taxed under canadian tax law because the plan is not deferred under Canadian law. Finally Canada recognizes same sex marriages which could conflict with US law (the defense of marriage act restricts the definition of spouse in a qualified plan to a member of the opposite sex) or the terms of the plan.

Finally the rationale of the 91 ruling is suspect because it treats the employee as assigning future retirement benefits in return for health care benefits without knowing what the future value of the pension contribution will be at distribution. This makes no sense economically because the value of the future benefits paid to the employee may be less than the value of the present value of the cost of health care benefits.

I think that that subsequent IRS rulings have undercut the rationale of 9104050. RR 200311043 permits the employer to contribute excess vacation pay as an employer contribution to a qualified plan as long as the employee does not have the option to elect to recieve the vacation time in cash. The employees only choices are to take vacation pay during the year, forfeit the excess vacation pay or have the employer contribute the excess vacation pay to a qualified plan. Under the ruling there is no constructive receipt of the excess vacation time because the employees cash compensation is not affected by his her choice. (" ...Because the employee did not have the option to receive cash or any other taxable benefit in lieu of the employer vacation pay contribution he/she is not in constructive receipt of income"). Further the holding in RR 9104050 can be distinguished from a qual. retirement plan which provides an additional contribution to employees who are not covered by the health care plan since the employee's cash compensation is not effected by the choice because the employee has no right to chose between taxable and non taxable options in the same plan.

How much of your assets will be transferred to an ex spouse will depend on state law and the property settlement agreement approved by the judge. Most states include retirement benefits as part of the marital estate subject to division in divorce. A court could award your ex other property instead of you interest in your retirement plan, e.g., your IRA or a greater interest in your personal residence. You need to consult with divorce counsel in the state you reside for specific advice.

Q. what do you do for the money your receive? Are you a teaching fellow, researcher or student who has a govt grant to study a topic. IRS publication 590 P.8 states that Scholarship and fellowship income is is compensation for IRA purposes only if shown on box 1 of W-2. Pub 590 is available at www.irs.gov.

Now that the Sup Ct has ruled that under ERISA the assets of self employed owners are protected from creditors if the plan also covers common law employees (Yates v. Hendon, Mar 2, 2004) does this protection also include amounts rolled over from a participant's IRA and funds transferred from or accumulated in an HR-10 plan prior to the time the plan becomes subject to ERISA? If the ct decision is read literally only retirement plans without any employees are not protected by the non alienation provisions of ERISA and the source of the funds before they become plan assets is not relevant for protection under the non alienation rule.

Like other provisions in the relationship between a mutual fund and the customer, the ability to withdraw funds is subject to the the terms of the contractual agreement between the parties. You need to review the terms of the custodial account to see if a withdrawal to purchase service credits is within the discretion of the custodian.

You need to retain qualified tax counsel to resolve this. If the excess payment was made in 2004 the problem could be corrected simply by returning the excess 50k to the employer in 04 and then paying out the 50k from the Q plan. The refund will reduce the ee's taxable income. The employee should agree to this because the employer can reverse the FICA and income taxes, and the amt from the Q plan can be rolled over. However, the ret plan has a problem because it has a 50 k liability to the participant regardless of the overpayment in the NQ plan which cannot be offset by the excess payment. If the employee refuses to return the 50k the employer will have to pay out the 50k in the Q plan and then sue the ee for a refund of the 50k overpyament from the NQ plan.

I think you should check out the tax rates for trusts at the IRS web site - www.irs.gov. The 35% tax bracket for a trust starts at about $9350 of income as compared to over 300k for a married couple. The trust will avoid taxation on income it receives by passing the income through to the individual beneficaries of the trust.