mbozek

The regs specifically include as considerations for limiting providers the number of employees and the administraive burdens placed on the employer. Because they do not have an adequate HR staff, small employers cannot deal with the rules of mutliple fund families, the hassles of tranferring funds between the families and admin issues such as multiple spds, 5500s and distribution forms imposed by each fund group. Adding funds because of the demand of a single employee will result in the plan collecting funds serving a inadequate number of employees. Offering multilpe fund families usually results in offering duplicate funds through each fund family withhout greater choice. I dont know where you came up with the number 5 from but it is not required in order for a plan to be exempt from from ERISA. I would be interested in hearing if the DOL ever investigated an exempt plan for not providing an adequate number of funds. The reason for having an exempt arrangement for salary reduction type plans is to avoid spousal consent for loans, beneficary designations and spousal annuity requirements which are administrative burdens for plans. In the non exempt t/c plans there is usually no in service distribution of funds- benefits are only paid one time at termination, death or retirement.

Isnt there a provison in the nonalienation regs that allows a participant to make a revocable election to a third party in writing of some or all benefits? A revocable living trust is really the alter ego of the participant for tax purposes since it is a grantor trust under IRC 671 and the income is taxed to the grantor (participant). Otherwise the part. can assign/endorse the check to the trustee.

There is no requirment that the sponsor offer more than one fund /investment family to its employees. Many employers maintain a non ERISA 403(B) plan for salary reduction contributions only to avoid the requirements for spousal consent or annuity as normal form.

What is the amount of the forfeitures in the accounts of the terminated employees? If it is small why not just vest them 100%. It is not worth the trouble to do the research to determine if there is a partial termination for a few thousand $ in forfeitures.

There is no choice in my answer. The employer makes a contribution automatically for all employees who do not have health ins. The ee cant elect cash in lieu of the contribution. Also this is not a qualifted plan. Finally what is the audit risk in a 403b plan?

As you said a QDRO can only apply to payments to an AP. If the plan permits inservice withdrawals the court could order the participant under the divorce decree (not the qdro) to withdraw the funds to pay off the debts. The employee would be subject to contempt if he failed to comply.

I thought the purpose of the act was to restore the military personnel to the benefits they would have received had they not be called for military duty. Why not project the comp the employees would have received during their absence along with any raise they were entitled to.

Since the employer is the plan sponsor the employer determines what is the eligible plan, not the vendor. Adoption of sucessor vendor plans does not affect the eligible employer plan as defined by the employer. Also Govt employers whose plans do not conform to IRS regs have 6 months after notification by the IRS to correct the defect witout any adverse affect to the plan. See IRC 457(B). Given IRS funding constraints and lack of personnel I doubt whether there will be any implementation of an audit program for 457 plans because their is no revenue collection to be gained, e.g., no loss of tax deduction and the ability of the er to correct the program within 6mos. The IRS recently closed an audit of the NYC pension system after the city admitted removing millions in plan assets to pay its general expenses without any penalities other than a promise by the city not to do it again. I dont think that the IRS will take any adverse action against the retirement plan of the state in which the Governor is the president's brother.

Since the spouse has a vested right to the benefits upon the death of employee the way to proceed is for the spouse to sign a valid disclaimer. But you need to confirm that the brother would be the person who will inherit the benefits as next inline under the terms of the plan since the spouse cannot direct who the benefits will be payable to under a disclaimer. I dont think a waiver of benefits would be effective after the death of the employee since the employee usually signs the beneficary request form to which the spouse consents.

Under the language of IRC 404(a) and PLRs for qualified plans, as long as the extension is filed the contribution can be made by the expiration of the extension, even if the tax return is filed on the due date. I see no reason for SEP plans to be treated differently since the SEP deduction provison is similar.

The number of caveats is directly related to the amount of the fee. The larger the fee the greater the number of caveats in the opinion. I would sure like to know for my own clients how the attorney finessed the return of the expenses as not being a reversion of plan assets to th employer.

I think the rule is that a taxpayer can make one rollover for each IRA no more than once every 12 months, e.g, rollover on 5/1/02 no rollover is permitted until 5/2/03. Also 12 month restriction only applies for rollover to another IRA. Participant can rollover IRA to qualfied plan within 12 months after rolling funds into IRA from another IRA.

I think you have to discuss the chances for success with your attorney -cant lose is a prelude for disaster. If your wife's case was so overwhelming in her favor the employer would have made a better settlement offer rather than go to trial. This not a forum to second guess attorneys who you have selected to represent you.

Your attorney is required to convey any settlement offer that he receives to the client. The client has the right to reject any settlement offer and proceed to trial. Trial is a lottery. You have chosen to roll the dice. The company may have made the offer to you because it does not think that you will prevail at trial including your ADA claim. Have you discussed the likelihood of your prevailing at trial on your claims with your attorney?

Q: I dont share your views that pay 15k in a dc plan means no interest since many plans do either explicitly or implicitly grant the AP the rights of a participant and the TPA wants to make sure that the AP properly waives those rights as well receives all the notices required by tax reporting rules, 402(f), 1099-r, etc. Just sending the AP a check without the proper waivers, etc could result in a claim against the plan by the AP for because of a failure to provide information (eg., AP did not know that a benficary could be designated for AP's interest or that the distribution could be rolled over). Second, in response to a question of when the benefits can be paid to the AP, Q 3-9 of the DOL QDRO manual states that a plan may permit the AP to receive a lump sum payment of a separate interest at any time. This indicates that the QDRO award creates an interest of the AP in plan assets as of the date stated in the QDRO and that the AP has rights to a distribution under the plan.

How is the return of the funds as a plan expense not a reversion of assets to the employer? I see no exception 4980. Also I thought that plan assets cant be used to pay settlor expenses.

The plans for athletes are usually set up as a personal service corporation and does not cover any other persons who work on a full time basis. The assistants are usualy seasonal employees who are not employed for 1000 hrs in a year.

The NRA for major league baseball players is 45. Many professionals in indiviual sports, e.g., tennis, set up Q. retirement plas with earlier NRA such as 35 because their playing careers are limited.

I dont know what provisions of title I you are referring to. SEPS are not subject to spousal consent or QDROs (see In re Groff, 234 Bank. Rptr 153 (1999)), reporting and disclosure or the fiduciary provisions.

I dont see how Fidelity's positon is out of line with ERISA or the QDRO since the ct order is being obeyed, e.g., 15k is being transferred from the employee's account to the spouse. Once the funds are in the acct of the spouse, the funds are owned by the spouse and are not the property of the ee. Therefore it is prudent under ERISA to pay interest since the spouse maintains an account under the plan even if only for a temporary period. The ee has no right to the interest earned on the account once it is segregated and placed in the spouse's name. Q would this procedure be any different if the spouse's interest was segregated under a plan that did not outsource their admin and the spouse did not request a distribution from the plan? Wouldn't the spouse be entitled to interest?

Could u please explain how a SEP can be a title I plan? SEPS are not subject to Title I provisions such as spousal consent or minimum service rules or filing of annual reports. There is no ERISA protection from creditors in a SEP because the assets are held in an IRA instead of a trust. The IRA does not have the anti assignment language required for qualified plans and ERISA.

The ability to transfer the funds depends upon the type of investment - In a group annuity the employer as policy holder could restrict the right of an employee to tranfer funds.

I think we have to deal with the issues presented in the context of the clients plan- If forfeitures can only used to reduce expenditures then the client must follow the terms of the plan. As I stated previously this problem should not have gotten to this point. Also the er doesnt want to do the right thing- allocate the forfeitures among the participants to make the problem go away. IRC 4980 does not distinguish between reversions of DC or DB plans. The IRS will accept the tax from all plans.

They can pay a 50% excise tax on reversions plus income tax which will eat up about 90% of the surplus. If the plan had not been terminated the er could have merged it with another qual. plan. Seriously making an allocation to the particpants is the best thing to do with the assets. By way this issue should have been handled before the participants were given their distributions.

As long as you understand that the provisions of IRC 408(d)(3)(A)(1)(iii) permits a rollover of distributions if the entire amount received is paid into an eligilbe plan. This iindicates that there must be a distribution. There is no statutory authorization for a tax free transfer of accounts within the same plan although some people believe that such a transfer should be permitted as a rollover.