mbozek

Qualified plans are approved by the IRS, require that the assets be held in a trust or group annuity contract and do not allow employee contributions on a pre tax basis. A 403(B) plan may provide only for employer contributions and does not receive a determination letter from the IRS. An employee may make pre tax contributions under a different plan to the same 403(B) contract used to fund the employer contributions. Also a 403(B) plan funded by er or ee contributions only files a simplified 5500 form with the Dol. There is a common misconception among some vendors that a 403(B) plan can only provide for employee contributions and that a qualified plan must be adopted if the employer contributes to the plan. Tell the vendor to read IRS pub 571.

2much: I do not understand why it is necessary for the broker to retitle the account. Rollovers require the participant's consent. In order for the plan to terminate, all assets have to be distributed. Why cant the plan make a distribution of the assets without the participants consent in a lump sum as permitted under the 1.411(d)-4 A-2(B)(2)(iv) regs. The plan can withhold 20% of the account balance and the balance of the account can remain in the name of the participant with the broker. The broker does not have the power to hold up the distribution of the plan assets upon termination. You should check the agreement between the plan admin and the brokerage but the agreement should provide that the plan has the right to withhold money in the brokerage account required under the tax law in the event of a distribution. There is another alternative-- forfeit the participant's account and direct that the funds in the brokerage account be returned to the plan for distribution to other participants as permitted under the vesting regs. The agreement should state that the money held in the brokerage account is a plan asset and subject to all the rules of the plan including forfeiture provisions. The assets in the brokerage account are no different than funds held in any permitted investment under the plan.

The VEBA as payor is responsible for all withholding and reporting if it makes payments to the employees which requires that the veba have the necessary tax reporting systems in place for Fed st & FICA witholding. Employers try to avoid this additonal expense by paying the vacation pay to the ee directly and requesting reimbursement from the VEBA for the benefits paid but then the vacation plan is subject to state laws on payment of vaction benefits. See previous posts for comments on effect of paying benefits through the VEBA.

The clients need to consult a tax advisor to determine their status under the tax law. Some insurance company agents are deemed statutory employees under the tax law not independent contractors who may not be able to establish their own qualified plans. I dont know if statutory employees receive 1099s or W-2s.

Austin: the Dol is extremely overburdened and understaffed to handle individual complaints against plans and like the EEOC the investigations are usually cursory and involve asking for a written reponse from the Plan adm which could take months. The participant needs to get an answer regarding where the money that was suposed to repay the loan is and to get a refund of the 8 extra payments ASAP. Having an attorney call the PA will speed up the process. Otherwise the plan will continue to withold the loan repayments and not apply the funds to repay the loan. The only reason to involve the DOL is if the loan repayments were stolen.

There is a solution if the owner meets certain requirements for withdrawal of the ps contributions under the plan and is over 59 1/2 for the 401(k) portion. The owner can withdraw the plan funds and do a tax free rollover to an IRA to invest in individual stock and bonds. The plan needs to have an inservice withdrawal provision but otherwise it is permitted. The other option is to set up a separate plan for the owner which would permit use of a greater degree of investment options but this could violate the BRF provisions because the owners plan would be aggregated for controlled group purposes.

There is also an issue of whether the investment in co stock may be limited to 10% of the plan assets under ERISA 407(B)(2) if the plan requires that the ee contributions must be invested in er stock. I have reviewed 401(k) plans which provide for higher matching contribution percentages when ees invest in er securities, e.g., a 50% match instead of 25% match or permit the purchase of stock at a discount which have been approved by the IRS. Many of the S & P 500 companies(P & G, Coke, Phillip Morris) maintain 401(k) plans where more than 90% of plan assets are invested in co stock which is frequently available with a greater % or at a discount.

There is no reason why one document cant be used for both plans provided that there is recognition of the differences in taxaton/distribution of benfits, e.g., 457b plans are taxed under the 401(a) (9) rules, 457f plans are taxed under the constructive receipt rules, Fica taxation is diffferent, etc. In a txo the participants in both plans are the same, e.g., members of the top hat group.

There is a fiduciary issue here in that you have made payments on a loan for 62 months that was supposed to be paid off in 54 months. I Think you need to file a claim with the plan admin requesting a statement of payments on the loan and where they were applied. There is something wrong here. If you made the payments then the loan should be paid off. If the funds were deposited to the wrong account then the plan admin has to find the funds and apply them to pay off the outstanding loan and you should receive a refund for the last 8 months payments. It is the employer and plan admin responsibility to tell you where your payments have gone. You may want to retain counsel if the plan admin can't answer the above questions and provide you with a refund.

No if the payment is made to him. He is endorsing the check over to the credit card co after he receives the check. It is possible that OJ has arranged for EFT directly to his credit card account so that there will never be a credit balance for a creditor to seize. Also there is a state ct case, Brosamer v. Mark, Indiana ct of appeals, 11 EBC 1365 ( 1989), which holds that the nonalienation provisions of ERISA, unlike the provisons for Social Security benefits do not protect plan benefits from seizure after the payment is made to the participant.

Proceeds from demutulaization are generally regarded as a dividend which accrues to all participants who benefitted under the insurance policy before the company was demutualized. Therefore the participants who had accounts on the record date would be the correct parties for receiving the demutualization proceeds based upon their account balances as of the record date.

Doesn' t Reg. 1. 401(a)-13(e) permit payment to a thrid party of all or any portion of a benefit to a third party?

Q: On what laws do you base your legal conclusion that a crime has been committed by the participant? Better leave the legal analysis to people who know what they are talking about.

Why is the attorney acting unethically for facilitating the distribution? The attorney did not commit any crime and has the benefit of client confidentiality. Anyway the participant did not commit any crime. It seems that attorneys always are beleived to act unethically unless they represent the writer of the post.

The participants would have to sue the fid for delaying the distribution but participants rarely win these cases unless the plan fid failed to follow plan provisions requiring the distributions to be made by a fixed date. Even if there is a fixed date the plan admin usualy has discretion to make distributions.

Why would a np be looking at a 401(k) plan instead of a 403(B) plan? There is only one advantage to a 401(k) plan in that participants can invest in individual stocks and bonds as well as mutual funds and annuities. But disadvantages include more complex administration, compliance with qualification requirements, approval of frequent amendments by the IRS, 5500 reporting and non discriminaton requirements which limit contributions by employees making over 90K. In a 403(B) plan all employees can defer up to 12K and over 50 employee can defer 2K more in 2003. Employees with 15 or more years of svc in certain orgainzatons can defer an additional 3k. The 401(k) requirements result in additional admin costs which must be paid by the employer or employees. The Er would be better off establishing a 403(B) plan for all ee and and using the savings to establish a 457(B) plan for HCEs who can defer an additonal 11k above the 403(B) limit.

One more point-- the non alienation rules do not apply to IRS tax liens which may be enforced to collect taxes owed by a plan participant.

I dont know how a ct could extend the non alienation provison beyond the contours of the plan/trust since under the non alienation rules of ERISA 206(d) benefits provided under the plan that cannot be assigned or alienated. Once the assets are paid to the participant, the nonalienation requirement no longer applies because the benefits are not plan assets. They are no different than amounts held in the employees bank account.

Under IRS rules a plan which has recieved a favorable determination letter upon termination must distribute all assets within 12 months after receiving the letter. If the assets are not distributed then the plan must be amended for any changes in the tax law occurring after the date of determinaton letter and must apply for a new determinaton letter.

I dont know anything about OJ simpson but I do know that there is case law which has allowed seizure of pension benefit payments after the payment is deposited in the participant's bank account. Non alienation only applies while the funds are held in the tax exempt trust. Maybe simpson's claim was that the value of the accrued benefit held in the plan was not subject to seizure under state law. I also believe that there is a different rule for SS benefits which cannot be seized after payment is received bya retiree.

PR has a separate tax code for PR residents who do not pay US taxes. There are separate provisions under the PR tax code (sect 165) which a qualified plan must meet and some provisions are inconsistent with requirement for US qualified plans, e.g., 401k(k) contributions are less. A US corp that is subject to US IRC must establish a plan subject to IRC 401(a) to claim a deduction under IRC 404(a). IRS reg 1.401(a)-50 permits trust established under PR tax law to be qualified under IRC 401(a) if the plan meets the requirements under IRC 401(a) and an election is made by the plan sponsor.

Ther is no need to go through the procedure in the non alienation rules if the participant is willing to sign the distribution payment over to the creditor becuase the non alienation rules do not apply after payment is made from the plan. The problem lies in the plan admin becoming an agent for a creditor which is inconsistent with the exclusive benfit rule if the check is sent to the creditor without the particpant's consent.

IN order for any fees or charges to be assesed there must be some written document authorizing such a fee/charge. The fact that a service document can not be located does not mean that one does not exist. The vendor should produce the service agreement in order to legally be entitled to the charges. Otherwise the surrender of the policies will be subject to the fees chages contained in the policies. I dont under understand what NASD rule would apply to an insurance policy. NASD governs stocks traded on an exchange.

A Q plan must be in conformance with all provisons of the code in effect on the date of terminaton. This means that all gust amdendments must be adopted as of the date of terminaton. P type plan sponsors make a termination amendment kit available for plans which terminated prior to the gust amendment date. However, since a q plan is submitted to the IRS for a determination that it meets all the requirments for qualfication it should be permitted to be amended for any gust amendments required as of the date of terminaton. The question is whether the amendments can be retoactively effective back to the date required under the IRC even though the remedial amendment period expired on 2/28/02. The IRS is focusing on the issue that the plan should have been amended for gust prior to its termination not after because the plan must be in conformance with all IRC provisons in effect on the date of terminaton.

Could someone explain how sending the check to the company is consistent with the exclusive benefit rule? Also what if the participant does not come in to sign the check. The participant can ask for another check to be mailed to him. I dont think that the pa can send a distribution to a third party without the participant's written consent. The pa is not a bill collector for the participants creditors. The remedy for the creditor is to start a collection action.