mbozek

I dont know who at nationwide told her that she cannot deposit the 20 k in the natonwide annuity but I never heard of an insurance co turning down a premium to a 403(b) annuity since all contributions are deemed employer contributions. If there is a problem then change the plan to permit er contributions. If the ins co refuses the funds then find another provider under the plan but be careful of the fees charged some annuity providers have steep up front fees. But the borker should know that. There are no nondiscrimination rules for 403(b) plans of public ers- only the 415 limits apply.

If the union members vote to require mandatory participation by all members then you will have to make the contributions as required by applicable labor laws. I dont know what kind of plans are those that you referred to.

I would like to know what are retirement plan activites performed by non lawyers that the NC Bar thinks could be regulated as the practice of law restricted to lawyers.

GB- See IRC 6501(a)- s/l is 3 years even in the case of underreporting as long as a return is filed. The under reporting of income by the employer cannot be attributed to the employees for s/l purposes. See Estate of King v. IRS, U.S. Tax Court, 1984.

Whether or not the plan has a QDRO language, there is precedent in applying a QDRO to enforce benefit rights in a Top Hat Plan. See Bass v. Mid-America, 1995 U.S. dist. LEXIS 15719. Since a Non qual def. comp plan is a contract between the employer and employee, the plan could charge for costs of legal review and setting up an account provided such costs arre reasonable. (E.g., the plan could charge the employee's account for annual admin costs in a non divorce situation.)

More important the court held that under ERISA there can be no personal liability of the participant to the plan for the overpayment and the only way for the trustees to recover assets is by tracing the excess funds. Therefore if the overpayments were used for current expenses (e.g., taxes and a vacation) or were lost in the stock market there could be no recovery. If the trustees waited a unreasonable amount of time to assert their claim the participant would also have a defense of laches.

There is no requirement that the after tax amounts be rolled over - in fact it makes sense not to roll over the a/t funds because no tax is paid and the participant gets use of the money. Finally A/t funds in an IRA are a pain to administer for rmd purposes because of the allocation rules.

Q-how are you going to fix the mistake? Are you going to go back and issue revised w-2s for prior years? Tax years prior to 2000 are beyond the statute of limitations for collecting back taxes.

Internal Revenue Manual, Plan termination guidelines, 7.7.2.2.19 (4/20/99), Frozen Plans and Wasting trusts (6) states that if the distribution was not completed within 1 year following the date of termination, the trust may not have been liquidated as soon as administratively feasible. Thus the plan would be treated as an onging plan required to to be amended for subsequent changes in IRC 401(a) as well as continuing to credit vesting service, accruals and TH minimums unless there are valid reasons for distributions not being made within one year.

Harry: See Reg. 1.402(b)(2)(ii)© and (D) for the determination of basis in a DB plan.

Under IRC 402(e)(4) a Lump sum distribution from any qualified plan is eligible for NUA.

Only if the PEO would qualify as a 501©(3) tax exempt entity with employees.

See IRC 102© and reg. 1.61-2 for taxability of payments to employees. Unless the payments are excludible under IRC 132 the will be taxable. See Rev. Rule 61-164 for excludibility of health ins. benefits.

UBIT usually results from using plan assets as security to borrow money to purchase investments, e.g., as a margin loan. If plan uses borrowed money to purchase assets, the gains on the assets will be taxed as ordinary income at the rate for a taxable trust in the year of the sale, e.g, 38.6 % for taxable income in excess of $9200.

401(k) plans of many large publicy held companies (Coke, Philip Morris, P & G, etc.) have over 80% of the assets invested in employer stock. Is it imprudent for the fids to allow such concentration? Should the fids of the Philip Morris plan restrict purchases or dump the stock because the Company may have to file in bankruptcy even though this is publicly available information to all stock holders? What if the company stock increases in value after the stock is removed as an investment? Also the curtailment of investment by the fids or the dumping of the stock by the plan would cause a steep decline in the stock value which would be an imprudent act for which there would be fid liability. There is a real problem in curtailing the investment in company stock.

Under IRS reg. 1.401-1(b)(1) a retirement plan provides benefits upon termination or attainment of retirement age. Inservice distributions prior to attaining normal retirement age are not permitted. See TIR-1403 (Announcment 75-110), Q M-15.

Pay the refund to deceased's estate. Since the refund is owed to the deceased it should be returned to the personal representative under state law, e.g. executor.

The spouse may have a claim against the plan because the plan was on notice of the spousal rights under the DRO. See Stewart v. Thorpe Holding Company Profit Sharing plan (2000 CA9) 2000 WL 333377.

No.

Gary: this a response to your march 25 post 1. I have read the SCA that you noted but failed to find any indication that the S/l for tax under IRC 4973 was discussed since the IRS assessed the tax before the 3 yr s/l expired. Further IRC 6501(b)(4) provides for S/l purposes that if a taxpayer files a tax return which includes an entry regarding an excise tax, including an entry on the return showing no liability for such excise tax during the period for the return, the filing of the return shall constitute the the filing of a return for the amount of such tax which are required to be reported for such period. Since a 1040 form provides an entry for payment of excise taxes, an entry of 0 on the line 58 will be sufficient to start the s/l for collection of the tax. 2. I have only questioned your assertion that a SEP must be provided as an executed instrument which is only stated in proposed regs which cannot be enforced against a taxpayer. The IRS cannot create additional requirements in the absence of statutory authority. Some plans (eg. 403(b) plan) can be maintained under the IRC without the need for a written plan document. Also why should the IRS require an executed instrument for a SEP when the proposed regs for 125 plans only require a written plan document?

Pax: When an employer files for bankruptcy the qualified plans fall under the jurisdiction of the bankruptcy trustee who has more important things to do than administer the plan. I have been involved in several employer bkcys and the benefit admin issues are extremely difficult to resolve bevcause the HR staff is usually decimated and expenditures have to be approved by the trustee or the bankruptcy judge.

M: forcing an employee to waive out of a plan in lieu of having his/her salary reduced so as to provide a contribution could be a violation of ERISA 510. There is a case in the 6th circuit where an employer who reduced an employee's salary by 15% in order to enable the sole proprietor/employer to make a SEP contribution for the employee (e.g., the SEP rules require that the er make a nondiscriminaatory contribution for all eligible employees) was held to have violated ERISA 510, discriminatin against a participant.

K Mart filed for bankruptcy protection last year. You may have to contact the bankruptcy trustee for information. If its a DB plan contact the PBGC.

If the only contributions are by employee salary reduction why is is there a 1000 Hour of service requirement? Under IRC 403(b)(12) a salary reduction plan must be made available to any employee who normally works 20 or more hours a week (other than students) There is no requirement that the employee perform 1000 hrs of service. The 1000 hr of service rules applies only to employer contributions to the plan.

IRS Rev. rul 80-351 permits an employee to waive participation in a qualified plan (assuming the plan permits a waiver). However, the waiver does not prevent the employee from being counted under IRC 410(b). If too many non HCE waive out of the plan then plan will fail the minimum participation requirements for a ps allocation. I dont know if a waiver would impact on the ADP % since all eligible employees are deemed to benefit under the plan.