mbozek

The 403(B) providers that have a strong brand identification and provide superior performance will continue to dominate the 403(B) market by generating customer loyalty. 401(k) providers frequently have a difficult time in the np market place because they charge fees for routine services which are absorbed by the larger 403(B) providers. Also the door swings both ways- the 403(B) providers will be able to offer the trading of securities and stable value funds to 403(B) participants on the same level that the 401(k) providers do. There has been no indicaton that the selection of 403(B) providers for np will not be subject to the same ERISA restrictions for prudent investing that exist now which will allow denial of access to inefficient or expensive providers. In the public market most state ORPs already allow the same financial families that provide 401(k), 403(B) and 457 plans to compete for employee accounts so there will be no change in access. Also the largest 403(B) providers are already in the non 403(B) market place throughout the country through designation as state 529 plan providers to take advantage of the state tax deduction and they now will be able to cross sell to their customers who are participants in qualified plans. I would expect that some 403(B) wrinkles will continue such as the 5 year catch up for making an additional $3,000 contribution although it will be of interest to a smaller group of participants. The largest 403(B) providers will be positioned to invade the qualified DC plan market because the regulatory playing field will be the same for all plans if they can provide superior service at a lower cost. Some will provide free retirement planning services to participants. What will happen is that there will consolidaton as the lower tier 403(B)/401(k) providers leave the market or are acquired because they cant compete on the same economies of scale for all customer financial assets as the larger providers in the same way as banks and brokerages houses have combined in the last 10 years (e.g., MHT +Chem. Bank+ Chase + JP Morgan = #2 US bank). The winners will the providers who can gather the largest amount of financial assets of all types.

It depends on what was done- Lawyers charge by the hour- the more hours by more lawyers the greater the fees. Was there a written retainer agreement which defined the terms of the inquiry and how the lawyers were to be compensated? If so then the client will pay according to the terms of the agreement. Or did the lawyers just do the work and submit a bill to the plan without any supervison of the scope of their review by the plan??? I also dont understand what was the lawyers role in reviewing the plan's permformance- normally an investment advisor would be retained to review performance. The real question is did the plan know what it was getting into when it retained the lawyers. By the way what's your intereest in this fee?

The 10% limit only applies to employer securities. I would be concerned by having 43% of the assets in one security. It doesnt appear prudent - The plan should sell some of this investment and diversify into other investments. Q- What does the plan's funding policy statement say?

The asset gatherers (e.g., financial institutions, mutual funds, etc) will support this legislation because it will reduce the cost and complexity of maintaining the assets. They can get rid of their TPA organizatons and still collect asset management fees.

As a member of the minority party in ways and means Pomeroy needs the assent of the republican majority to have any amendments to the chairman's bill reviewed by the committee. The changes will have to come from the republican side of the committee.

As a member of the minority party in ways and means Pomeroy needs the assent of the republican majority to have any amendments to the chairman's bill reviewed by the committee. The changes will have to come from the republican side of the committee.

There can be one contract between the plan admin, the trustee and broker laying out the the terms under which the plan admin expects compliance with applicable law. There may also be a separate agreement between the plan admin and the broker in which the broker dictates its terms to the plan admin. The reason there are two sets of documents is that the plan admin and broker each have a standard document which they want to use because of different legal requirements such as securities laws which apply to broker but not plan. (Eg. broker document will want representation that broker is not a fiduciary to the plan or participant and the plan fiduciaries are responsible for prudent investment under ERISA and conditions for accepting and dropping accounts of participant). There will also be issues regarding how the broker is treated under the agreement with plan admin. Brokers do not want the F word used regarding their relation to the participant-they prefer being the party who executes the instruction of the participant.

The purpose of paying off a mortage is to cease paying the interest on the amount borrowed. Why would a debtor prepay a mortgage and pay interest after the borrowed funds have been paid off? The interest due is for the period from the last mortgage payment to the date of the payoff which is added to the outstanding principal to obtain the payoff amount.

The regs define an employee as a person who performs services for an employer. If the employer is paying taxable wages to the spouse they must be for services, because otherwise it would be a nontaxable gift to the spouse.

There is no requirement that an employer must pay an employee a hourly wage or perform a specified number of hours of service. Employers are free to pay employees a flat salary or retainer pay,e.g., the employee agrees to perform services for the employer if the employer calls on the employee. The IRS has no jurisdicton over the terms or conditions of employment between the parties any more than it has jursidicton over the amount of money paid for the services. I also dont understand what is the fraud in the amount of the payments made between spouses. Since under IRC 2523 spouses can make unlimited transfers of assets as tax free gifts why can't they agree to pay a taxable salary which yields income to the IRS for some vague unspecified service?

Don't accountants read anymore? See Pub 590 P 72 for the reqirements for claiming the credit. Also IRC 25B. Pickups are deemed to be employer contributions. Tell the govt employers to adopt a 457 plan so that the ee can claim the credit.

The reason why they should not do it is if the plan document does not permit such actions since the plan must be administered in accordance with its terms. They might be able to finesse what they are doing if the plan had provisons that allow for such actions but I doubt that there is such language. The problem with doctors is that they do not want to abide by the rules because they believe that they should be allowed to do what they want with their money.

As I said previously the employee needs to retain a tax advisor to determine what are the options, e.g., can the employer be notified late. I did not say that the failure to notify the employer on time could be remedied now. The advisor will have to review the precedents to see if there is a way to provide the notice to the employer now in order for the employer to issue a revised w-2 for 2002.

ERISA requires that a fiduciary who manages plan assets for a fee must be a registered investment advisor under fed or state law. However under the 404© regs a participant who directs investment of his or her account is not deemed to be a fiduciary. A participants can give a power of attorney to an investment advisor to invest the account. I would assume that an advisor who manages a participants account for a fee must be an investment advisor under ERISA. However, becoming an investment advisor is fairly easy. Some states, ( Eg. NY) now permit Certified Financial Planners to be licensed as investment advisors under state law. Fed rules govern investment advisors who manage more than $25 million for clients.

A bonus program is not subject to ERISA if it does not systemically defer payment of benefits until termination of emplyment or retirement. Many non ERISA bonus programs are formalized to make sure that they are not subject to ERISA. See DOL op. ltr 2002-13A

The benefit accrues as provided under the terms of the plan. Not when it is deposited in the account. If the ee doesnt work the necessary hours then no accrual occurs. Isnt this how the plan is written? Why cant the contributions be held in a suspense account until the ee works 500 hrs?

Under IRC a Section 83(B) election must be made within 30 days after the property is transferred with the IRS office where the taxpayer files his return and one copy is to be submitted with the tax return. The taxpayer is also to submit a copy of the notice to the person for whom the services are performed. See Reg 1.83-2 Your client needs to retain a tax advisor to determine whether the failure to submit the notice to the ER negates the election.

yes because the republicans control both houses with greater majorities than they had in 2001 and because the pension proposals will be part of the overall tax reduction package. There will be some tweaking in the proposals.

I still dont understand what you are saying. Are the participants accounts invested in mutual funds under IRC 851? If so then each participant has a right to the portion of the funds which are in their account balance. Are you saying that the fund co does not know what each particpant has invested in his/her own account because the fund only reports the aggregate amt to the employer? If so the then er has the responsibility to determine each ees interest in each fund and either transfer the funds to each ees account before termination or terminate the plan and convert each ees account to a mm funds and let the ee invest/transfer the funds. Have you read the plan document? In 403(B) plans funded through mutual funds the plan usually provide that upon temination the er will purchase an annuity for the ees. Your cleint really needs to retain counsel in this matter. I recently represented a client who had a similar situation and the np had to hire an accountant to determine each participants right to amounts invested including interest.

Two Q: Q1. Is this contribution showing up in the employees benefit statement as an accrued benefit beore the svc is completed? If so what disclaimers and caveats which permit withdrawal of the funds. Q2. What does the plan say about when a contribution is made to participant's account. Presumably a contribution will be made only for eligible ee who meet the svc requirements. If so then no allocation should be made before the ee meets the requirements. This is about plan design not cites to authority. The sponsor should have looked at the plan terms before taking this action.

The Federal Thrift savings plan is found at 7 USC 8437. Benefits are paid under section 8440. If the fed gov is going to pay the spouse what is the sister going to do? Her only option would be to file a suit against the thrift plan and and the spouse.

To put this all in a musical perspective perhaps you should consider the following lyrics while contemplating the future: "Its the end of the world as we know it and I feel fine" by REM "You dont need weatherman to know which way the wind blows. " R. Dylan, Subterranean Homesick Blues. "Woke up this morning and got myself a beer. "Woke up this morning and got myself a beer. "Cause the future is uncertain and the end is always near. "Let it roll baby, roll." The Doors, Roadhouse Blues

Since an alt payee is regarded as a participant under the plan, the APs account should be treated the same as any other participant's acct. balance after the determination date.

Regardess of whether we think the IRS would waive the taxes because of the brokers advice, the taxpayer is required to submit a request for a waiver of taxes to the IRS and receive a denial from the IRS in order to make a claim for repayment from the broker. If no request is made the broker can claim that the taxpayer did not attempt to mitigate the damage caused by the brokers mistake and the Arbitrator could rule against the taxypayer claim for reimbursement of taxes. (A party claiming injury has a duty to mitigate damages). I can prepare a request to the IRS for the client.

see IRC 403(B)(11)(B)