mbozek

Since there is no nonalienation rule required for IRAS under the IRC, attachment or garnshment of an IRA is subject to the provisions of state law. Some states protect IRA assets from creditors, some limit the amount exempt from attachment to a specific $ amount some do not protect IRAs. Also IRAs which are invested in annuities are ussually protected from creditors. You need to consult with an attorney to find out the state law.

Where was the divorce granted- US or UK?

? Isnt the answer none- The assets of a np 457 plan must be subject to the claims of the employer's creditors because assets held in an irrevocable trust exempt from the employer's creditors are included in the employee's income to the extent vested.

There is only one IRS ruling which provided that an plan could not restrict self directed accounts only to HCEs. There is nothing on point because there are too many possible variations- e.g., plans merge and odd assets are acquired, plan permits self directed accounts which allow options restricted only to accredited investors, some options require minimum balances, investment option closes to new investors, etc. The IRS does not want to be involved in deciding what investment restrictions are BRFs and which are not so they have adopted a don t ask, dont tell policy.

I think that plan administrators and TPAs often are not aware of the uncertainities and actual boundaries of regulation under the applicabie tax and benefit laws. Taxpayers, upon the advice of tax counsel, can and do tax positions "outside the box" in many tax law situations where there is no prohibition or the rules do not prohibit such a position. Some clients will take aggressive positions in areas which have not been defined under the applicable regs in order to save money or reduce taxes until the IRS issues rules that prohibit such action. In other cases the statute of limitations (generally 3 years) will limit any liability to the IRS. Finally an opinion of counsel can eliminate any liability for the tax penalities of up to 75% of the amount due for substantial understatement of taxes, even if the taxes still must be paid, leaving the client in no worse a position for taking an aggressive position.

It appears that the TPA is taking advantage of the lack of final regulations on substantiation in order to provide service at a reduced cost because there are no eyeballs reviewing the claim documents. I am not aware that the IRS has issued final regs on substantiation (1.125-2 A-5(B)(7)), therefore the Service cannot enforce such requirement against an employer regardless of what the audit guidelines state. It is an agressive positure which needs to be evaluated on a risk reward basis. There is also the possibility that the IRS may change the substantiation requirements to permit simplified filing of claims via the internet.

Check the status of the rules. My understanding is that there are many FSA rules that have been issued under proposed regs. which are not binding on an employer. I dont know if there are final regs on claims substantiation. Also there is little risk of audit of 125 plans from the IRS. 125 audits are limited to payroll taxes.

Check the status of the rules. My understanding is that there are many FSA rules that have been issued under proposed regs. which are not binding on an employer. I dont know if there are final regs on claims substantiation.

You can find out how to claim IRA tax losses by reading IRS Pub 590 available on the iRS web site.

Your only other option is for the owner to sell the equity interest in the plan sponsor, including the plan surplus, to a financial intermediary. There really arent too many options for a plan sponsor who is terminating an overfunded DB plan other than to merge it with another plan or pay the excise tax.

There is a continuing discussion of how the BRF rules of Reg. 1.401(a)(4)-4 apply to certain options that are disportionately available to HCEs See. 2/28 post on options in plans for HCEs by KJohnson. This situation is uncommon when plans eliminate odd asset investments but cannot distribute the funds because of plan restrictions. The problem also arises when a investment funds is closed to new investors which prevents NHCEs from contributing assets.

The owner has to return the employee's salary reduction to the plan along accrued interest to avoid any DOL enforcement action. The TH contributions to a PS plan are not required to be made by any specific date but the employee could make a claim for the amounts plus interest. The client may should consider terminating the plan to avoid accruing the above liabilities.

D: If you repay any portion of your severance benefits to the er make sure the er reduces the W-2 for severance payments to take into account the repayment. Otherwise you will be taxed on payments you did not keep.

Is the employer aware that you are proposing to issue a 1099-R for 2001 to show that distribution occured after default. This will result in the employees' having to pay back taxes and penalities which was not the result the employer intended when it allowed the employees to cease making contributions. After default the loan balance is treated as an after tax contribution.

Was the failure the result of not filing 5500 EZ each year since the plan had 100K in assets or did the failure result from the er's failure to file for each year in which the assets went below 100k after making an initial 5500 EZ filing? How many 5500s are delinquent? Did the taxpayer retain a CPA or tax preparer for his income tax returns for the years in question? A letter from tax counsel admitted to practice before the IRS should be able to resolve the issue without imposition of major penalities if the letter gives the IRS a reason to close the file.

What kind of Plan? MP, 401k or PS? Disqualification is not the worry- Lawsuit by the participant and enforcement action by the DOL are more likely if the employer did not remit the employee's contributions to the plan. What contributions was the employer delinquent in remitting for 2001 & 2. The TH minimum and the salary reduction? By the way what is the employer doing for 03? Also is the employer remitting the withholding taxes to the IRS?

If you die your benefits will be taxed to the beneficiary who receives the payments. Your spouse can roll the funds tax free to her own IRA. See IRS publicaton 571 for details.

Nonqualified deferred comp is still comp and is reported on a w-2. Under IRC 3121(v) The fica taxes are due at the later of the date the services are performed or the date there is no substantial risk of forfeiture. If the comp is vested in the year the services are performed then there is no FICA tax on the distribution. 1099 income is reserved for amounts paid to non employees which is not wages subject to FICA tax, e.g., payments to independent contractors, distribuations from IRAs and qualfied plans, etc.

DevoFan: If there is nothing in your agreement requiring that you pay the funds back you are not required to do so but the Co could revoke its offer of rehire. However, there are some common sense reasons why it should not request a payback of severance benfits, including the terms of its plan at the time you left and the fact that you waived your rights under all fed and state discrimination laws as a condition of receiving the payments. Making you pay the money back recinds the waiver. Requiring that you return the full amount of your severance pay is a little unfair since you will be out of work for 3 months. In effect the company gets you back without paying for the time you have been unemployed. Also you have already been taxed on the benefit. The company would have to complete an agreement rescinding the payment and reverse the taxation of the payments which can be very complicated. If you agree to return you need to be held harmless on the taxes- you really need an attorney.

Different rights or features exist ony if a right or feature is not available on "substantially the same terms" as another right or feature. Making an option available (again assumung this a plan term) only if there is a minimum balance is not a different right or feature if the minimum amount is not excessive.

I dont know why the DOL is the source of knowlege about vacation plans since vacation benefits are considered wages subject to state laws, not ERISA. Most states (NY) allow an employer to determine its policy of paying accrued vacation benefits upon termination of employment. However, in CA ( right Kirk?) employees accrue vacation time thoughout the year which must be paid upon termination. In other words the vacation pay vests. CA employers avoid this requirement by adopting VEBAs for vacation benefits which permit forfeiture upon terminaton since state laws are preempted by ERISA from applying to a VEBA.

As Justice Scalia would say, the statute must be applied as it is written. " When the last day prescribed under the authority of the internal revenue laws for performing any act falls on a sat, sun or holiday, etc," includes any act, e.g., notice under IRC for ACP/ADP corrections. The practical reason for this provision is that the weekends and holidays are not business days so neither taxpayers or their agents can perform such acts until the next business day after the deadline.

Unless the ps plan adds a CODA provision, the catch up provision does not apply. The accountants need to review IRC 414(v). Makes you wonder what elese is wrong with the software. Does it allow Simple plans to be maintained with a SEP or Qualified plan?

Is it possible that the employer is doing something stupid here, like converting the ee's canadian dollars to US dollars in order for contributions to be made to the plan? The exchange rate for Canadian dollars to US dollars is about 3 to 2.

Could someone one explain what is the liability risk that is at issue here. If the plan merely required spousal consent to a LS distribution in the absence of a requirement under ERISA for such consent is there any liabilitity to the spouse for the payment of the benefit? I dont know if there is any contractual right of the spouse against the plan to 50% of the payment. If the plan had a benefit form for which spousal consent was required before the distribution could be paid to the ee then there is a stronger claim of the spouse to the funds unless one of the exceptions applies. I dont know if there has ever been a case where a spouse has collected the spousal benefit from a plan that did not get spousal consent before making the distribution. Also if the parties reside in a community property state then 50% of the assets belong to the spouse even if the funds are paid to the ee.