mbozek

There is no market for M & P documents for non ERISA plans. You need to find a revised individually designed plan for a church.

I think there is a distinction in spousal rights where the employee dies before the divorce decree is issued and when the employee dies after the divorce decree is issued regarding spousal right to benefits but the ee dies before a QDRO is approved. In the former situation the parties are regarded as married and the spouse is entitile to all benefits under the plan. If the spouse had waived the rights to the plan benefits before the ee's death the benefits will be paid to the designated beneficiary. If the EE dies after a divorce decree is issued dividing up the retirement benefits but before the DRO is submitted/approved there is case law which would permit the ct to issue a DRO which would be submitted to the plan admin for approval as a QDRO. There is a case where the ct held that a plan recieved notice of an impending QDRO when the exspouse called a plan turstee to discuss what had to be done to submit the order to the plan but never followed up with submitting the DRO to the Plan admin.

This is interesting. Are there minimum amounts of insurance coverage that the co wants to see or maximum life expectancies?. I know life settlement brokers will purchase term ins of insureds who are age 60 or have life expectancies of 10-12 yrs.

Thnk you for confirming my observation that a remote device is part of the hearing aid. I dont know where GBurns got the idea that the remote is an accessory for use by some one other than the person using the hearing aid.

The purchaser of an individual policy in a viatical settlement receives all of the rights of ownership as a condition to making payment to the insured including the right to make all premium payments. No investor would purchase the policy and pay premiums if there was risk that the proceeds would not be paid. The purchaser assumes the investment risk that the insured may live longer than expected which will reduce the rate of return on the amount paid to the insured and require the payment of additional premiums by the purchaser. Persons who purchase viatical settlements are risk adverse. They purchase syndicted interests in the policies as no risk investments for their IRAs since the insured will die and the proceeds will be paid. I have never seen a proposal for viatical settlement in which the purchaser would assume the risk that the policy would lapse.

Kirk: I dont think the IRS enforces that ruling any more. I have received favorable determination letters for plans which permit employees to make tax free rollovers into the plan before becoming eligible to participate in the plan. Also since former employees are participants they should be permited to make tax free rollovers under the BRF provisions.

GB: If you read the materials that you posted you would have noticed that the articles discussed individual LI policies which can be assigned under the laws of every state. Second, the purchaser assumes the payment of the premiums to prevent the lapse of the policy. Since an employer can cancel a group policy at any time there is no similar guarantee against lapse that is available for the purchaser of a group policy or would require that the purchaser pay for the cost of an equivalent whole life policy. (You obviously failed to read Blackacre's post). Also as noted in one article the face amount must be at least 250k. Finally no intelligent purchaser will buy an employee's right to proceeds in a group policy without an opinion of counsel that the employee can assign the rights to proceeds under the policy and state law. Signing a beneficary designation form is not enough- The employee must properly assign all incidents of ownership to the purchaser in order to transfer all rights and avoid the estate taxation on the insured. The purchaser will have to pay for the review.

Has anyone thought this through. First how does the employee assign their interest in the group policy (which probably consists only of the death benefit) to a thrid party. Second Group ins is cancelled when the individual leaves unless the employee elects to take out an indiviudal policy and pay for it out of pocket. Third who will be willing to take a risk and purchase the rights to the proceeds unless they have some idea of when the emplyee will die. Viatical settlements are predicated on the probability that the insured will die within a time certain because of a terminal illness such as cancer or aids. The purchaser buys the policy based upon the present value of the proceeds at the end of the insureds life expectancy. e.g., 2 year life expectancy at 6% discount rate on $40,000 would have a present value of 35,600. The purchaser would pay 35,000 and gamble that the insured will die in 2 years. If the insured dies sooner the purchaer wins. If the insured lives more than 2 years the purchaser loses. How does this work in a group policy? If there are buyers for this arrangement I have I bridge for sale.

You need to check the state law on liability for automobile related accidents. In some states the auto policy must provide primary coverge for any auto related injury for a covered dependent (e.g. uninured moterist coverage). The parent must call his/her auto carrier to find out if the injury is covered under the auto policy. The Health ins carrier should be liable for all med expenses in excess of the auto policy coverage. In NJ the auto policy is primary for all medical expenses arising from an auto accident unless the policy holder opts out to have the health ins. carrier made primary.

Non spouse beneficaries are subject to voluntary 10% withholding under IRC 3405. The 20% withholding applies only if the distribution can be rolled over. Unfortunately I dont think there can be a refund of withholding. The bene has to apply for a refund on the tax return. The amount withheld can reduce any amounts due for estimated taxes or wage withholding.

As the posts indicate normally there are only three options: 100% income tax withholding, realloction of accounts among remaining participants and payment of plan termination expenses. In the case of a bankrupt sponsor the bankruptcy trustee may want to recapture the accounts to pay off the debts of the employer. Escheating the assets is not a viable opton because there is usually a time limit of one to three years after the check has been returned to the plan before the money can be turned over to the state and many states will not take distributions from qualified plans because of the legal arguments that escheat laws are preempted by ERISA.

IRA distribution provisions usually provide that distributions will be paid in accordance with the MRD rules of IRC 401(a)(9) whcih permit payment over a beneficary's life expectancy. However there is no requirement that such option be provided. If the IRA custodian only permits payment in a lump sum the beneficiary can move the funds to another IRA custodian tax free as a trustee to trustee transfer.

Employers can prevent retroactive benefit accrual by excluding service prior to the date the IC is reclassified as an employee in the terms of the plan.

Since plans are not required to accept rollovers from other plans, why not ask the new employer as to what are the conditions for accepting rollovers?

C: There are many issues to consider. First are the plans db or dc plans. DB plans subject to the PBGC rules have issues regarding transfers of liabilities. Second are there different provisions for the shareholder plans which may have to be accomodated in the sucessor plan, e.g. benefit options? Third there may be a question of who can deduct contributions and which sponsor would get a greater tax benefit if a consolidated return is not filed for all sponsors. This issue should be reviewed by an acountant. Fourth the Controlled Group rules would require crediting of service for vesting, etc. Fifth are these employers subject to the affiliated service group rules? It would be advisable for benefit counsel to review all of the plan documents to determine what issues need to be resolved to effectuate a seamless transfer of sponsorship.

The plan administrator controls the resolution of the dispute because the funds can only be paid with his/her approval. Kirk has the right idea -use interpleader. The plan admin can tell the parties that they either agree to a voluntary settlement and execute waivers and releases against the plan or the the Plan will commence an action in interpleader in Fed ct. which will be very expensive to them. There is no reason for the PA to expend any time or funds researching what is the validity of a dro on a deceased participant's benefits. I have found that warring parties quickly come to a settlement over disputed benefits when faced with the alternative of paying for the cost of litigation to justify their right to the benefits. The only risk is the plan admin may have pay for the cost of commencing an action in interpelader.

GB: Everytime I read one of you posts I feel like that duck in the AFLIC commercial after listening to Yogi Berra explain the benefits of having disability insurance.

GB: I dont know where you are from but accounting firms in NY & NJ (including Big 4 firms) offer audits of qualified plan to clients as part of their professional services to make sure that the plan is being operated within the law and provide the client with a written opinion or audit letter. I have performed audits of plans for clients where I reviewed plan procedures and complience with ERISA and IRC and issued written opinions even though there is no specific topic on the Bar exam for audits or pension plans for that matter. [i dont understand what you mean by stating that pension plan auditing is learned outside the CPA arena since the services will be performed as part of professional accounting/auditing services- I dont think a client would accept an audit if there was a disclaimer by the CPAs that the audit was outside their professional expertise.] Just because a topic is not tested on a professional exam does not mean that a professional cannot render an opinion on a matter within the scope of the professional's expertise.

Could some one explain the financial advantage of repaying the loan with after tax dollars? If the taxpayer was in the 32% tax bracket there would be a tax of $12,800 due on the phantom income. That is $27,200 less the $40,000 in cash needed to repay the loan, assuming that an estate can repay the loan (which I dont believe is possible under the terms of the note). The 27,200 saved by paying the tax on the phantom income can be invested in capital assets which will generate capital gain at a rate of no more than 20%. Both the $40,000 invested in the plan and earnings will be subject to income tax at a higher marginal rate.

Why is death a different distribution event for a loan than termination of employment?

The CA method is called Global taxation and applies to corporations as well as individuals. NY also uses global taxation in computing the NY tax on non residents. I am not sure tht this is a violation of fed law since the amount of the tax is a based on the % that CA income bears to global income (eg. fed income) thus retirement benefits are not included in the numerator (CA income). Check the income tax return to see if there is a line to remove the non CA pension amount from the global income on the CA return.

All custodians reserve the right to limit investments by an IRA. I dont know of any custodian that will permit an IRA owner to make investments that would expose the custodian or the IRA to loss exposure in excess of the IRA assets. You should contact the CBOE to see whether an IRA custodian could legally permit the trading of naked puts and calls under the applicable laws .

IRS pub 502 includes the cost of hearing aids and batteries as a medical expense. There is no distinction between convenience and necssity. If the remote technology is part of the hearing aid why not allow it as a deduction?

I dont know how one could determine ownership under the CG rules by a membership corporation which has no equity ownership, e.g. each member has a voting interest in the association.

The employer's only recourse is to sue the employee for conversion of the funds and after getting a judgment, recover the funds from any assets of the employee, e.g., bank accounts. The employee's 401(k) benefits cannot be attached until paid to the employee. The employer cound attach any nonqualified deferred comp benefits due the employee if permitted by the plan.