mbozek

What plan requires that a participant must request an RMD each year? RMDs are supposed to be automatic. Since participant's signature is not required to commence RMDs there is no requirement for participant's consent for RMDs in any subsequent year.

Acting as fiduciary under ERISA is a functional test- did the party perform the duty of a fid under ERISA 3(21) e.g., dispose of plan assets. If so then the party is subject to the fid rules. It doesnt matter that the person says I was acting in the capacity of executor of the estate not as plan administrator in distributing the assets. If the executor does not want exposure to fiduciary risk then hire a another party to perform the fiduciary duties of winding up the plan. But there is no way for a plan to authorize the distribution of plan assets without being the plan fiduciary under ERISA. Since the executor is the alter ego of the estate the estate can only act through the executor. Under your logic any party performing a fiduciary duty could claim that they were acting in another capacity to avoid fiduciary liability.

Since the business of the decedent was his property, upon his death the business is part of his estate which is to be administered by the executor or administrator of the estate. The executor can be the plan fiduciary or can appoint a fiduciary/PA to wind up the plan. Otherwise the plan becomes an orphan plan whis is not a preferred outcome since the owner's estate wants the benefits under the plan so that distributions can be made to the beneficaries. In order to pay distributions someone must become the plan fiducary under ERISA with authority to distribute plan assets. The fact that the party who winds up the plan and authorized distributions did not accept fiduciary responsibility is meaningless. Under ERISA anyone performing a fiduciaty function such as distribution of plan assets is a fiduciary under ERISA, regardless of a denial of acting in a fiduciary capacity under the plan. In other words anyone performing a fiduciary duty under ERISA is a fiduciary regardless of whether they accept no fiduciary responsibility in any written document they sign.

The question is whether the accidental pension is a separate benefit that you are entitled to receive because of your injury which occured long after your divorce and hence is not part of the retirement benefit described in QDRO. You should consult an attorney to discuss. What state is this?

Retirement benefits included in a QDRO are limited to benefits which existed during the marriage. A separate benefit that was not accrued until after the divorce will not be included as part of the ex spouse's benefit under the QDRO any more than the ex would have a right to an IRA established after the divorce. If spouse gets 50% of pension benefit under the QDRO and 10 years later employee is injured and receives a disability benefit which is separate from his retirement benefit, the disability benefit will not be considered to be included under the QDRO because employee had no vested right to such benefit during the marriage. While public plans are not subject to ERISA, a public plan can can divide retirement benefits under the procedures for a QDRO to provide for a non taxable division of the benefits, the spouse will be taxed under the QDRO portion or can rollover the distribution to an IRA.

This reg as been in effect for 10 years.

Cant use 100% withholding. Many states will not accept transfers from ERISA plans because of preemption concerns. Does plan have a provision that permits forfeiture of benefits if participant cannot be located?

ROBS are suspect vehicles for aggressive tax planning and the IRS has issued a memorandum of the rules that ROBS must comply with. While ROBS are legal if they comply with the IRC requirements for qualified plans, there are 3 ways in which the a ROBS plan can easily violate the rules. 1. Nondiscrimination requirements. Most ROBS plans restrict the issue of stock to owners or founders of the business and exclude non highly compensated employees which fail the non discrimination tests. 2. To properly establish a plan there needs to be a valuation of the business by a qualified appraisal. Just assuming that the value of the business is the price that is paid to purchase the shares of the business is not a proper valuation. 3. ROBS usually require payment to promoters and consutants who set up the plan. These payments can result in a Prohibited Transaction if they are made from plan assets. See link to article on an IRS PLR which according to the author appears to conclude that ROBS progam is not valid. The PLR does not conclude that ROBs per se violate the tax rules but it does create a red flag on the legitimacy of such a program if counsel concludes that the tax rules have been violated. It also provides a way for the taxpayer to unwind the transaction. http://iraideas.com/?p=619

see Rev Proc 2006-06 for procedures in terminating a plan

The two provisions in question are subject to exceptions from the rules for 401k/403b plan distributions. An amount rolled over from another plan can be distributred before 59 1/2. Employee contributions usually refer to after tax amounts voluntarily contributed by employees to a PS type plan which as I recollect could be distributed prior to 59 1/2. Neither of these two contributions are subject to the restictions on distributions to pre tax contributions made under 401(k) or 403(b)(7).

Austin: Sorry I inadvertently deleted your message by mistake. IRC 403b7Aii: no such amounts may be paid or made available to any distributee before employee, dies attains 59 1/2, has a severance from employment, becomes disabled or encounters financial hardship. Only exception is 72t distributions. How about providing the language from the sungard document. You are quoting the provision on custodial accounts aren't you?

Thanks for finding this ruling. I have been unable to find it my files. TMI. The ruling is based on a simple principle. The MRD for an IRA is based on the account balance of the IRA as of the end of prior tax year. reg 1.401(a)(9)-5 A-3. If the account balance in the IRA on 12/31 of the prior year is 0 then the MRD for the following year is 0. Fact that account balance was rolled over to a Q plan before 12/31 is irrevelant to the requirement of taking an MRD from the IRA for that same year because the rolled over assets in the Q plan on 12/31 are subject to the MRD rules applicable to the Q plan. If Q plan does not require MRD to be taken by a non 5% owner who has attained 70 1/2, then the MRD from the Q plan is also 0.

Record keeper cannot require a signature if MRD must be paid. RK should know that. Dont ask them, tell them to proces the MRD.

What does the plan provide regarding commencing RMDs? Does the plan require participant's consent or does plan provide that RMDs commence when Distribution date , 70 1/2 is attained. If the latter, then distributions are to be sent out without consent. I have never seen a plan that required a participant's consent to commence MRDs because commencement of MRDs is a qualfication requirement. You should send a certified letter return receipt requested to see if some one lives at that address. Also check the SS death registry to see if his SS no is on it.

You are asking questions for which no one can provide the answers without reviewing the relevant documents, plan, trust, TPA agreement, etc. This is why clients retain counsel. If the plan covers union employees it will be even more complex. Someone is going to have to pay for the cost of reviewing the documents to determine the responsible parties. No one will take any fiduciary risk in terminating the plan until the above questions are answered. ING was probably named as corporate trustee to fulfill the requirement that the plan have a trustee under ERISA. (Q did this plan offer ING investment products for participant's contributions?) It is also possbile that ING was a prototype plan sponsor without fiduciary responsibilities under ERISA which is permitted under ERISA 403(a)(1) which is another reason why counsel is needed to determine who is responsibile for terminating the plan. The financial institution told the plan to hire counsel because plan termination is outside the scope of the institutions' responsiblity/expertise under the trust agreement. You need to find out if there is a pension committee that has fiduciary oversight over the plan. Unless this is an orphan plan there is a paper trail of who has responsibilities for administering and terminating the plan. As for the question of who signs the paperwork for each employer, I have seen different ways of doing it: sometimes each employer signs, other times the employers delegate the authority to one employer or a third party. Some plans may require each employer to sign a plan termination but delegate other responsibilites to another party. What exaclty is your relationship to the plan? are you the administrator, custodian, work for the fiduciary?

Why not place the burden on the executor/administrator of the estate to identify the beneficaries of a per stirpes distribution? See below instructions on a beneficiary designation form of an IRA custodian for designating a per stirpes distribution. "I understand that for a designation of “per stirpes”, it will be the responsibility of the Executor/Administrator of my estate to identify to the custodian the specific beneficiaries at the time of my death."

Being that this is a NON-ERISA plan, is this type of beneficiary designation even allowed? Mahalo for all the responses. Getting educated.... Why does ERISA matter? Per stirpes is a common law definition that is recognized in estate planning in every state. It appears in IRA beneficiary designations filed with custodians. No one wants to spend the money to draft a trust to divide up the plan assets because of the prohibitative cost. I dont see the problem with leaving the plan benefits to beneficaries in the following division: 50% to John Jones per stirpes and 50% to Jane Jones per stirpes. The children of a deceased beneficary can retain counsel to provide the necessary proof that they are heirs of the deceased beneficiary.

Why not sell the RE and take the RMD from the proceeds? There is an option for the plan to issue a certificate of x% ownership in the RE as in kind distribution to the participant which would be taxed as an RMD but the document drafting/accounting is complex. As noted participant would have to pay taxes without having cash from distribution.

The QDRO is the document that the plan administrator approves to divide up the participant's benefits. Marital property agreements or divorce decrees do not include all of the special nuances of how the retirement benefits are to be divided in the DRO and division of the pension benefits is left to the negotiation between the parties and their counsel. Once the court signs off on the DRO it is a valid court order which is submitted to the plan adminstrator to be aproved as a QDRO. There is no requirement that the participant's signature be on the DRO that is approved by the court. Just because the participant instructed his lawyer not to provide a survivors benefit to his ex spouse doesnt not mean that the court could not order the survivor benefits to be paid to the ex. Some states mandate what benefits will be provided to the ex spouse or give the court discretion to order survivor benefits to be provided to the ex. There was similar discussion on this board with a disgruntled participant over benefits that had been awarded to the ex spouse over the objection of the participant which turned out to be required under state law. Going back to court to convince a judge that the QDRO is inconsistent with the divorce decree is an expensive proposition and will be difficult to prove there was an error if the court had discretion to award the survivor pension benefits to the ex spouse under state law. You need to discuss this matter with counsel. Q1 You mentioned that your husband retired in 2006. Is he collecting pension benefits under the plan in which his ex is entitled to survivor benefits after his death? Q2 did you marry your husband after the QDRO was accepted by the plan?

What does the PAs accountant think should be done?

plan has no obligation to provide information because he is not a participant. Even if he was a participant, plan could decline on the grounds of administrative difficulty in retreiving records or require that participant pay for all adm costs of searching for such records and determining the values.

Q1 what is the amount that your ex will recieve if it is not $900? You may want to consult an attorney to determine what benefit rights your ex has. Appearently under PA law post seperation benefit increases in pensions that are not due to the indiviual efforts of the employee are considered to be martial property subject to division under a QDRO. For example, benefit increases that are part of the COLA formula of the pension plan are included in the portion of the benefit to be paid to the ex spouse because they are not the result of any effort on the part of the employee. See below link. http://www.ulmerlaw.com/blog/2012/05/divis...n-divorce.shtml Q2- what is the reason for the benefit increase in your last 3 years?

Under Reg 1.401(a)(9)-8 Q/A-6(b)(1) and (2) AP is required to take mrd on the 50% in her separate account based on her life expectancy in accordance with the rules of 1.401(a)(9)-5. Since there was 0 in her separate account on 12/31/11 her MRD for 2012 is 0. Her MRD in 2013 is based on her account balance as of 12/31/12. Problem for him is that for the purpose of his 2012 MRD he owned the entire account balance as of 12/31/11 so he has to take MRD on Option 1. MRD for 2013 will be based on his 50% of account as of 12/31/12. AP did not become owner of 50% of benefits until funds were transferred to her separate acocunt in may 2012.

Social Security still has a forwarding program - although I haven't used either the SSA or IRS in years (one never knows if they've been successful). I've used Intellius.com with some success and Berwyn seems to be a common choice as well. SS charges $25 per letter. Other options include locating the beneficary to find the address of the participant. Problem is that many participants will never be located because they are dead or have changed their identity to avoid being found. If you have access to the SS ID data base check to see if the partcipant is deceased. Ultimately the benefits can be forfeited when they become payable to avoid violating the rules for commencing MRDs if the plan has such a provision.

If he has a SS number retitle account under his identity and SS #.