mbozek

The only other possibility wold be to add LI as an option to the plan. The proceeds would be 100 x the monthly benefit. I dont know if this is available on a SE person plan or whether the SE is insurable. The surplus could be used to pay the LI premium and upon termination of the plan the LI policy could be transferred to the participant and only the cash value (if any) would be taxed as income. The downside is that the SE would have to pay the future premiums out of pocket and transfer it to a trust to get it out of his estate.

Spousal attribution of separate business interest for benefits issues under the controlled group rules is regulated under reg. 1.414©-4(b)(5)

The questions posed by fourohonekay relate to the liability of the employer whose employees participate in a VEBA not the liability of the VEBA and or promoters. Since the welfare plan funded by the VEBA is not subject to state law as an insurer under ERISA I dont see any liability of the plan (as opposed to the VEBA ) under state insurance law if the VEBA is subject to state insurance law as a MEWA . Also state insurance laws regulate parties acting as insurers in transacting an insurance business and their agents. Policy holders are not not subject to state insurance regulation ( e.g., see NY Ins. Law 1102) since parties who are protected under state insurance laws should not prosecuted for buying a policy from an entity that is not licensed. Under the case law established by the US Supreme Ct, state laws are prempted from applying to an employer who establishes a plan subject to ERISA to the extent the plan is exempt from state laws. My use of leading cases was intended to make the board aware of the general principles regarding employer liability under ERISA for establishing a welfare plan including the difference between settlor and fiduciary functions. As I indicated the issue is complex and a client should seek the advice of counsel. As I understand it, the issue of MEWA regulation is not one of legality but what is the proper forum for regulation of the entity for providing benefits.

GB: We would all be interested in any citations that you have which shows employer liability under state law for establishing a welfare plan that is funded through a VEBA subject to state regulation given the preemption of state insurance laws under ERISA 514(b)(6)© as to the welfare plan. Also the Supreme Ct held in the Curtis Wright Case that the employer decision to establish or terminate a welfare plan is a settlor decision not a fiduciary decision under ERISA. Under Sup Ct decisions in Delta Airlines and Ingersoll Rand employer action regarding a plan subject to ERISA is not subject to state regulation even if there is no regulation of the plan under ERISA. As I indicated in my prior post the employer needs to retain counsel to review the above cases and other precedents to determine whether there is any employer liability. Finally parties who are not acting as an agent or insurance carrier are not subject to state insurance laws.

IRS regs 1.501©(9) -1 provides that a VEBA may cover employees of unrelated employers in the same geographic locale. However, covering employees of unrelated employers may subject the VEBA to regulation as an Insurance company under state law. ERISA 514(b)(6). A welfare plan that uses a VEBA which is a MEWA will not be subject to regulation as a MEWA. 514(b)(6)©. The employer who participates in a VEBA needs to retain counsel to determine what is the risk under ERISA of participating in a VEBA which may not be able to pay all claims (whether or not it would be subject to state law law as a MEWA).

The application of the PT rules to purchases of stock by an individual holding warrants or options is very complicated and the client should retain counsel to review the law and the stock purchase agreements to see if the stock can be purchased without violating the PT rules.

The PT rules of IRC 4975(e)(2)(H) apply to a director of an employer whose employees are covered by the plan. An individual who establishes a HR-10 plan for director fees is not acting in the capacity of a director of his unincorporated business that establishes the HR-10 plan. For example a director of ABC corp is a disqualfied person for engaging in acts with the ABC Corp Pension Plan, but would not be disqualfied ifrom owning ABC Corp stock in his HR-10 plan becuase he is not a disqualfied person with regard to the HR-10 plan.

Have you reviwed the plan document? A 403b plan subject to ERISA is subject to the DOL rules for crediting hours of service. See reg 2530.203-1 and -2 and 2530.200b-2.

A few years ago the NJ Supreme Ct rebuffed the State Bar association's attempt to prohibit RE brokers from representing parties in residentail RE purchases. The reason was that the practice of brokers represneting parties in residential RE purchases was well established in the southern part of the state.

First if you each have no employees there is no annual reporting until a plan has 100k in assets. Reporting can be avoided altogether if you each establish a SEP plan. You should check the instructions to the 5500 forms to see how multiple plans can be filed under one trust.

A trust is required only for a plan that has assets. If there are no assets, e.g., because the employer reimburses the employees directly for med expenses or the er sends the premiums to the insurer, there is no need for a trust.

Section 906 requires CEOs and CFOs of US publicly held co to file a certification of the accuracy of the financial statements of the company filed with the SEC. How is a 401(k) plan an issuer of securites?

There is one possible option- Consult an experienced Trust and Estates attorney to see if state law permits the personal representative of the IRA owner's estate to petition the probate court for a construction proceeding to declare that the IRA owner intended to make the children the beneficaries of the Bank 2 IRA. The estate will have to make bank 2 a party, it is a long shot to prove the intent to make the children the benficaries and it is expensive.

Under Rev. Rul 96-48 a plan can accept rollovers from employees prior to the date they are eligible to participate in the 401(k) plan.

B of A also got a one time increase in the corporate balance sheet from the infusion of 401(k) assets into the CB plan. From the participants viewpoint it doesnt matter whether their contributions are actually invested in the funds since the accrued benefit cannot decline. From the plans viewpoint if the participants are taking no risk, e.g., mm or stable value funds then the plan can invest the funds in equities and keep the difference in return or hedge the risk.

Do you work in the same business or do you maintain separate businesses? Multi employer plans are maintained by unions not self employed person. You can sponsor a SIMPLE, SEP or self- employed qualified plan for self employment income.

Bank of America adopted a self directed CB plan in 1998 with 9 investment options.

RE is a permissible investment as long as the PT rules are adhered to-but there are many tax and financial reasons for not using an IRA to invest in RE, e.g. loss of capital gains. There have been several threads on RE investing- One problem is that there are very few IRA custodians who will accept investments in RE and they charge hefty fees because of the liability issues associated with RE ownership (environment and negligence claims) and the requirement that the property owner must provide an annual valuation to the custodian.

The trust receives payments as the beneficiary of the IRA and the beneficiary of the trust is a person. See Reg. 1.401(a)(9)-4, q-5 &6. The IRA makes taxable payments to the trustee of the trust based upon the life expectancy of the person under the MRD rules. The trustee will make payments to the beneficiary of the trust in accordance with the terms of the trust, e.g., the trustee may make payments for specific needs or pay a fixed amount each year. Earnings on amounts held in the trust are taxed at the rate for taxable trusts, e.g., 38.6% for amounts in excess of $10,000. The trustee, as beneficiary of the IRA, generally is the owner of the IRA. Trust taxation is extremely complicated and you need to consult a tax advisor on the taxation of a trust.

What is sufficient notice is not at issue- The Stewart ct held that the plan was liable because a trustee was aware that a DRO had been issued and failed to to protect the interest of the alternate payee. (Appearently the plan ordered the funds to be sent to the AP but no transfer was made. The trustee also corresponded with the AP over the transfer of the funds.) In Schoonmaker the PA put a hold on the participant's ability to make trades of company stock- In its narrowest holding it stands for the principle that the QDRO procedure for the plan did not authorize the PA to put a hold on the participant's account prior to receipt of the QDRO. In a broader sense the PA could not prevent the participant from making investment decisions on the account (which could be a violation of the 404© rules) since the QDRO rules may only prevent the participant from removing assets subject to a divorce action from the plan after receiving notice of a DRO. A participant should be able to receive a distribution of plan assets acquired by inheritance during the pendency of a divorce because such assets are not subject to divorce actions. Finally a PA should not be liable under ERISA for allowing a participant to cash out funds before a DRO has been issued because all the participant is doing is transferring the assets to another pre tax account or to after tax amounts- which are still part of the marital estate subject to division under the divorce action.

Notice of DRO -Stewart v. Thorpe Holding Co. Profit Sharing Plan (2000, CA 9 2000 WL 333377) Retroactive QDRO after participant's death-Patton v The Denver Post, 2002 DC CO, (2002 WL 24351) Termination of equitable distribution action upon death of participant before divorce decree is issued- Davenport v. Davenport, 146 F Supp 770.

P: The IRS has no interest in defining how an owner can prevent lump sum distributions being paid to beneficaries because that is not a matter subject to the MRD rules. An IRA custodial account is a contract between the owner and the custodian in which the custodian will pay benefits under the IRA. Custodial agreements usually provide that the beneficary becomes the owner of the IRA with all of the rights of ownership upon the death of the owner (including the right to accelerate payments) because the custodian is not going to act a fiduciary. An owner does who does not want a lump sum to be paid to the beneficary at death can direct benefit payments to a trustee who will pay the beneficaries under the terms of the trust which is a legally enforceable contract.

As noted previously the cost of an adapter that attaches to a TV set is a dedeuctible medical expense. Substantial authority is the basis for claiming a deducton under the IRC. See IRS Circular 230.

IRS pub 502 permits a deduction of the additional cost of a TV set that includes the cost of equipment that displays the audio portion of the program as subtitles for the hearing impaired as well as the cost of an adapter. The cost of special telephone equipment that allows a hearing impaired person to communicate over a regular telephone is also a medical expense. The remote device is not, as you described it a device for benefit of someone other a hearing impaired person, but a technological feature (similar to remote devices on a wheechair) that allows the hearing impaired person to better adapt to the surroundings to hear audible sounds for which there is substantial authority under the tax law to claim a deduction as a medical expense.

Note: IRC 72(p)(3)(B)(ii) denies the deduction to the extent the loan is secured by amounts attributable to electrive deferrals.