mbozek

If the employee workes in canada how were his contributions converted to us $ and is this permitted under canadian employment laws or foreign exchange laws. Secondly there may be a question of whether the rollover from the US plan is taxable under Candian income tax law. Employee will need US tax id to open IRA and provide satisfactory proof of identification under US anti terrorism legislation.

Either follow Kirks advice or the particpant can make a direct rollover to an IRA and then withdraw 2500 subject to income tax and penalty.

Asset sales by employers who sponsor DB plans subject to ERISA are subject to certain liability provisons under Title IV of ERISA. Counsel should be retained to determine what the issues are.

I would be interested in any citations you hve to your statements on fid liability- by the way who would be liable for advice? The legislative history of IRC 132(m) indicates that investment advice could encompass all retirement plans not just employer sponsored plans. But there is no reference to including non retirement assets in permissible retirement plan advice.

Forfeitures must be reallocated to remaining participants to extent the 415 limits are not exceeded. IRS termination guidelines specifically state that amounts held in a 415 suspense account that cannot be allocated to participants' acconts due to 415 limits must revert to er. See Reg. 1.401(a)-2(b). You should check the validity of the 71 ruling since it was issued before IRC 415 was enacted. Since the reversion will be subject to both the 50% tax under IRC 4980 and income tax why not use the reversion to fund an anoather DC plan so that the reversion tax will be reduced to 20%?

In most divorce proceedings both parties are required to to provide financial disclosure on all their assets and the Ct can order the employee to give permission to allow the AP accees to information regarding plan benefits. Getting access is not a problem; finding the requested information is.

B: Under existing Dol regs and ct decisions, a plan that only has the owner and spouse as participants is not subject to ERISA and assets can be claimed by creditors under st. law. See cases in Pension Answer Book, 2001, Q 4:25. The uncertainty exists in plans which covers both owners and non owner employees as to whether the owner's benefits are protected from creditors under ERISA. The US Supreme ct. will hear a case this term that will decide this issue. I am unaware of any case that has applied ERISA protection from creditors to a non ERISA plan. The only protections from creditors are those that exist under st. law.

Did the laid off employee collect unemployment benefits? If so how could he be employed at year end?

One obvious difference is that if the trust is the IRA beneficary, the trust can provide restrictions as to when and how much can be paid to the kids, e.g, payments can be made from the trust to the children in the discretion of an independent trustee. The trustee would also invest the funds in the trust. If the kids are named as benficaries of the IRA, then each of them owns their share and can withdraw the entire account at any time or invest it in imprudent investments. An independent trustee would have to paid for services from assets of the trust. You need to retain counsel to discuss the options.

Promissory notes are the lending of money by the plan sponsor to the plan which is a PT under IRC 4975 for qualified plans and IRAs. The IRS pt rules do not apply to a VEBA but the DOL rules might apply to a funded welfare plan. There may also be PT prohibitions for TXOs under IRC 512-14. Also the IRS does not permit deductions to qualified plans for amount of a p. note. Rev. Rul 80-140. I dont know about contributions of stock.

I thought that an employer cannot go more than 5 years without making contributions undless there has been a lack of profits. If the employer is out of business and no contributions are likey to be made why not just terminate the plan and distribute the assets to eliminate administration. The fact that the plan is invested in RE is no reason to keep the plan going because of the risk the RE will go down, not up in the future. Also RE investment has substantial costs such as property taxes, ins., valuations, etc which must be paid from plan assets.

Yo Blink: I never said that that there were no other reasons for putting rollover assets in a DB plan but the there are few good reasons to put rollover assets in a DB plan because of investment issues as well as cost of valuation and accounting for non DB assets which dont exist in an IRA. Most fund families and custodians waive fees if assets exceed 50k to 100k. Also IRAs are not subject to 5500 reporting. Finally investment mgrs will accept IRA assets for mangement along with Q plan and base the mgt fee on the aggregate amount. In a 1 participant plan there will be headaches in determining what is the amount of the assets which are attributable to the rollover and how much represents the PV of the DB benefits and what is the surplus or deficit. Perhaps the reason to commingle rollover assets in a DB plan is to fool the IRS when it comes time to cash out the DB benefits.

annual benefit attributable to rollovers is determined under reasonable actuarial assumptions. Reg. 1.415-3(b)(1)(iii). Only reason to rollover money to DB plan is to provide for guaranteed income stream at a rate more favorable than ins. co.

Church plans are subject to the 200k, 402(g) and 415 limits as well as mrd rules, hardship, plan loan rules and requirements for salary reduction. But the plans are exempt fom the non discrimination requirements, and ERISA requirements such as spousal consent, non alienation and fiduciary provisions unless the church waives the ERISA exemption. There are no model or p- type plans because there is not a large enough market for such programs. Most large church groups sponsor their own plans.

If benefits accrue while the plan is subject to ERISA then the annuity/ account will be subject to all ERISA requirements after termination until the funds are rolled over to an IRA or paid to the participant. If the benefits are not held in an ERISA plan then the account balance may be subject to creditors claims under state law.

Check the custodial account agreement and and forms you sent in to see if the march 2003 contribution was allocated to the 03 year. If not then see the penalties provision in IRS pub 590 to determine how to fix it. Usually you must withdraw the excess from the account and pay a 6% tax.

Section 107 of ERISA requres that plan sponsors maintain records for which disclosure is required for not less than 6 yrs. This would include providng a statement of a participant's accrued benefits once a year which is required under Section 105. I dont know of any requirement to keep records of account balances for prior years if the participant does not request a statement. Separately the IRS requires that each participant's account be valued at least once a year. I assume that the employer must keep the records for three years but I have never reviewed whether this is consdered a record for tax return purposes, e.g., payroll tax returns must be kept for 4 years. In the absence of any of the above requirements the plan sponsor has no responsibility to keep plan records for any other reason other than protection from claims from a employee, e.g., hours of service records in event employee makes claim of benefit eligibility. Bene designation forms and spousal waivers should be kept as a permanent record to avoid uncertainty of payee when the participant dies. But bene forms can be disposed of when participants cash out. Spousal waiver should be kept as permaent record in case ther is a claim of fraud at a later date. Also DB and MP plan should keep permaent record of ee and spouse birth certificates, benefit election and marriage certificate to protect against later claim by another spouse.

I dont think that the advice would be a tax free fringe benefit for retirement planning under IRC 132(m) if it extends to non retirement assets. The employer needs to retain counsel to determine if investment advice could be provided by an investment advisor and paid by assets of the participant's accounts. However, I dont think advice could be provided on investments that are not in the 404© plan.

Check the IRS determination letter issued to the prototype sponsor for the exceptions where the employer cannot rely on the det. letter issued to the sponsor, e.g., maintaining another DC plan.

So make the payment to the deceased if you think that getting the TIN for the estate is a problem. The spouse or personal rep will deposit the check to the estate's or spouse's account.

The fact of that the guaranteed benefits are less in a multi employer plan is not the issue- it is the fact that solvent employers like UPS are required to fund benefits for insolvent employers will make the cost of doing business more expensive. Any further liabilites to the PBGC for guaranteed benefits are unwelcome even if they are lower than the liability for single employer plans. The long term financial liabilites of DB retirement benefits and retiree health care are unaffordable for most plan sponsors and the US government as fewer employees support more retirees. The PBGC cannot afford to lose another industry such as airlines or autos to involvency as it did the steel industry.

Its more than airline and auto industries. There are many trucking, tire, telecom and transporationmultiemployer plans, that have seen liabilities increase as participating employers are go out of business. Contributions by UPS to the teamsters multi employer plan are increasing because other employers have gone out of business requiring larger contributions by remaining employers. UPS has asked Congress to freed from having to contribute for the employees of liquidated employers in order to remain competitive. In addition, the employers who participate in the above plans have large retirement heath care obligations. GMs cost alone is estimated as $1200 per car sold. These two long term obligations put US companies at a competative disadvantage with foreign companies and will increase dramically as boomers retire. Many employers will file for Ch 11 bankruptcy to shed these liabilities and pass the pension liabilities along to the PBGC for paying reduced benefits. The PBGC could not handle the bankrupcy of another major airline such as Delta or American which is inevitable if air travel remains depressed for the next 12 months. As the number of plans and participants decline, the remaining plans will be required to pay larger premiums to provide the PBGC guaranteed benefit.

How about the plan document?

Why not make the check payable to the estate of the participant and send it to the spouse with a letter stating that it should be turned over to the administrator/executor of the estate.

Can you explain the reason for switching other than that the hospital is no longer a c3 employer since it now will incur the expenses of maintaining a qualfied plan? In addition the deferrals for the HCEs of the hospital are limited to the ADP % instead of the max 402(g) deferral of 19k (13+ two 3k catch ups). Or will the hospital maintain the 403(b) for HCE contributions which exceed the ADP %?