mbozek

I agree with appleby. The IRS only requires that the mrd for the year be distributed. It does not care who receives the MRD.

IRC 413(b) only applies to qualified plans which does not include 403(b) plans. Since the employee owns the annuity benefits and the employer merely remits contributions to the contract there does not seem to be any need for the employers to operate under one plan. Multiple er plans are used when unrelated employers want to use separate plans but only one trust to hold assets.

D: The reg you cite confirms that the spouse must recieve the MRD that was due the owner.

Most IRA custodial accounts provide that the beneficiary becomes the owner of the IRA for all purposes after the death of the owner. I thought the IRS regs require if the owner dies before the MRD for a year is paid, the MRD due the decedent must be paid out to either the estate or the beneficiary by 12/31. I dont see why the spouse, as IRA owner, could not request the MRD be paid to her from the decedent's IRA to satisfy the MRD requirement and then request that the balance in the IRA be rolled over to her IRA. I would ask the consulting firm for the authority for their position. If the check was not cashed by the owner before he died it would be considered an asset of his estate and would be deposited to the estate's account by the executor - the same as a stock dividend. It would meet the mrd requirements. Derelict: I dont understand the reference to the reg you cite.

I would be vary wary of not paying the spouse because of the sons's claims if the spouse is the legal beneficiary under the terms of the plan. If the spouse is forced to go to ct to receive payment that she is legally entitled to receive the plan could be forced to pay her legal fees. A few years ago a pension plan refused to pay a spousal benefit because of an unfounded belief that the spouse had abandoned the participant. The ct not only awarded the benefits to the spouse but ordered the plan to pay the spouse's legal fees. Interpleader is a viable option when there is a question as to who were intended to be the designted benficiaries under an benefit election form. Where the spouse is the designated beneficiary under both the law and the terms of the plan there is no uncertainty as to her right to receive the benefits.

See thread on Adverse decision on IBM cash balance plan under DB plans topic for latest ct decisions.

I dont understand how accounting firms could be charged with the practice of law in a 125 plan which is soley a creature of tax law which all accounting firms are permitted to practice. Limiting the preparation of tax documents to lawyers would be considered an illegal monoply. Accounting firms provide clients with documents which comply with various provisons of the tax code as part of their professional functions which are covered under professional malractice policies.

I think the plan would have to permit such a charge before it could be billed. Second, I am not sure it can be taken from the particpant's account if there was no disclosure of the charge in the SPD.

Why does the client want to force the participants out? Once they are out their assets will not share in plan expenses. If the participant does not claim the benefit by the time its payble it can be forfeited to the plan.

The need for separate accounting arises because the normal form of the benefit in the MPPP is a j & S annuity. Separate accounting can be avoided by terminating the MPPP and rolling over the assets to the PSP or by making the J & S the normal form of benefit for the PSP benfits.

I have written several letter to the IRS to abate the penalties. Never had one denied.

Maybe I am missing something but why was it necessary to pay counsel to write a letter to these bozos? The PA could have written a one page letter citing the non alienation provisons of the plan with the exception for QDROS and enclose a copy of the plan as the justification for requiring a QDRO. I once had a lawyer threaten to take me ct because I told him that a QDRO could not be used to divide up an IRA account because the custodian has no discretion to make decisions but only follows directions. He never followed up.

I am not sure who owns the investment. Was the plans 40% purchase by the trustee for all participants or for one particpant? Was the employer's 60% purchased as a plan asset or as an investment for the employer's general account?

Doesn't IRC 4975 forbid a fiduciary from investing plans assets for the benefit of his own account. And doesnt this rule apply when an individual invests the funds in a self directed account, Flahertys Arden Bowl, Inc. v. Comm. 115 TC 269, even though the participant is not a fiduciary under ERISA 406?

I think there is a difference between a request for documents pursuant to an audit of a plan's qualified status and the limitation on penalties that can be assessed after the applicable s/l expires. It never ceases to amaze me that IRS agents will request determinaton letters and plan documents for tax years that are closed under IRC 6501(a).

Under IRC 6501(a) the IRS generally has 3 yeras to assess income tax after the filing date of the return. The s/l is extended to 6 yrs if the taxpayer omits an amount in excess of 25% of the gross income. The IRS has 10 years after assessment to collect the tax. while the IRS can audto plans as far back as it likes the it cannot impose any tax penalties for closed years. If a plan was disqualfied in 1995 but the IRS does not audit it unti 2003 the penalties could only pbe assessed back to the 2000 plan year, eg. denying deductions. As a practrical manner the plan should keep copies of the tax forms its files with the IRS forever, in case the IRS questions wther the forms were ever filed. The backup documents can be discarded after the s/l expires.

Blackout periods for trading stock by directors, officers, executives, etc is required under section 306(a) of SOX. It results from ENROn when employees could not sell stock in the 401(k) because of a backout period due to a change in TPAS but executives could sell stock in non qualfied stock plans while the stock declined in value from 13 to 9 a share.

Regardless of the court in which the case were filed, the Xerox case was affirmed by the 7th circuit ct of appeals and is consistent with the decision in the Esden case in the first Circuit. The lump sum value of the participant's account at distribution is defined in IRC 417(e) as the amount computed under the applicable interest rate that can be greater than the participant's account in the cb plan. Since 417(e) was added to the IRC in 1984 before CB plans were created and has always been an issue in CB design I dont see how the Xerox case can be regarded as proof of anti employer bias in a district ct.

There is no advantage to putting your retirement funds in a mm fund that is paying about .50% interest less fees if you have a long term investment horizion. If you have more than 5 years before retirement you would be better off if the money is in an index fund that tracks the broad market such as an S & P Index fund sponsored by vangurd or another low cost carrier. Vanguard's fund charges only .17% a year. The strategy for retirement plans is long term growth by minimizing risk. MM funds avoid risk but have no growth potential. Most gains in equities are made in relatively short periods which occur at random times so being out of the market will reduce your future gains. Since the gains in a roth IRA will never be subject to income tax you should put your assets in those investments that will provide the greatest return over the long term of 30 years or more. You should consult a financial planner to determine your goals for retirement and the proper investment strategy.

What would the client do if an ee who did not recieve the LS value on his benefit statement asks for it? I dont think the plan admin can say no. Given the current employment environment how many ee will quit their jobs just to collect a pension benefit and start over?

The CIP program also applies to SEPs and IRAs. But it only applies to new accounts. The CIP requires that the financial institution obtain the account holder's home address, not busines address for its records.

Zo? what is the diffeence between a P type and a model? Or is it a distinction without a difference?

What is a 5305-SEP? There is no distinction in SEPs that can be combined with a qual plan in Pub 590. Where is this stated?

Contributions to a SEP are aggregated with contributions to a DC plan maintained by the same employer. Pub 590, P 67. An ER can maintain both plans.

If the plan has a provision requiring that the participiant be married for one year then the spouse forfeits the surviving spouse benefit and the designated bene (sons) will inherit the participant's benefits. See Reg. 1-401(a)-20 Q 26. If there is no one year provision then the spouse will be the beneficary since divorce actions are terminated at the death of one party and the parties were legally married at the death of the participant. Also if the plan is not subject to the funding provisions of IRC 412 then the entire vested account balance must be paid to the surviving spouse, not 1/2 of the benefit.