mbozek

Taxpayer can claim a loss but must aggregate all Roth IRAs to determine if there is a loss. See IRS PUB 590 in the Roth section for details. Loss is claimed as a misc deduction.

CSRS comes to mind. CSRS doesnt count b/c its a federal plan and unlike state and municipal employee unions, federal employee unions cannot bargain for pre tax benefits. Also federal employees are not covered under 414(h)(2).

OK so based on my understanding of that, since these are indeed "employee contributions" that are being made after-tax, the amount of employee after-tax contributions the participant has made to the Plan would not be subject to the 20% withholding rule. However, the remainder of the lump sum would be, assuming a cash distribution. I never heard of any public employee plan requring employees to make after tax contributions to a retirement plan when pre tax contributions are available. Employee contributions made under IRC 414(h)(2) are considered to be employer contributions and are pre tax amounts the same as employer contributions. Therefore the entire distribution is subject to income tax. You need to determine how the distributions will be taxed on the 1099.

Why not ask for K-1 to see if there is ubit?

Survivor benefits will not talk to ex-spouse because she is not a survivor of a deceased participant and because of privacy concerns for employee. Only rights ex has under the plan is to commence benefits based on employee attaining early retirement age.

I dont know anything about state recievership proceedings and its effect on a plan termination. If this was a bankruptcy filing then whatever the bankrucptcy court decides would be applicable because ERISA does not preempt any other federal law. Is the employer subject to ERISA?

NP 457 plans with vested benefits are only available to highly compensated employees or a member of a select goup of management. Did employee belong to such group?

I have a problem with how a state can require a plan to provide information on withholding if the plan has no nexus or presence in that state. For example, if a plan that is sited in NY pays benefits to a resident of Kansas how can Kansas requre the plan to withold income tax and submit taxes to the state tax authority?

I dont understand the question. Once the the plan is terminated and the insurance company accepts the obligation to pay the benefits under the annuity contract the insurer is solely liable for paying the benefits because the plan has ceased to exist. Participant's contractual obligation is with the insurance company to pay the benefits promised. After the plan has ceased to exist how can plan sponsor monitor the obligation between the participant and insurer?

Why would Valic be responsible for filing the 5500? Was this requirement in their contract with the plan sponsor?

As I understand it the agent is authorized under the POA to request the payment but the plan issues the check to the participant as the legal owner of the account. Agent cashes check by signing own name and adding POA to identify that agent has authority to cash check. I have used the arrangement with several clients where the agent requests the the MRD for the participant under a POA and the plan admin isues the check to the agent in the name of the participant b/c funds are owned by the participant and the agent signs his/her name and adds POA. Trick is that POA must authorize agent to request benefit distributions or act on behalf of principal in retirement matters. NY Short form POA has box that is checked by principal to authorize agent to act on pension matters.

IRC 6057(e) requires that the statement be provided to terminated participants with a vested benefit. IRC 6652(d) provides a penalty for failure to furnish statements up to $5,000 unless plan has reasonable cause for not filing the statements.

Do the termination rules for MRDs at 70 1/2 apply to: 1. seasonal employees who work only during peak periods (Christmas season Oct to Dec) 2. part time employees (whether working the same hours each pay period or on an as needed basis) 3. employees on a leave of absense

The question is one of knowledge. If the son had knowledge that pension benefits were still coming, an argument could be made that the requisite mental state existed to prove the crime. Clearly the OP didn't provide sufficient information. At the very least, a constructive trust could be imposed to obtain recovery of the overpayment. Granted, recovery could only be had to the extent that the assets are still in the possession of the son, *but* since money is fungible and to some extent traceable when converted into other assets (like a new pickup truck or a boat), then the trust could be enforced. And yes, prosecution is not the same as conviction. But I could give you the inmate numbers of more than one person who served time as a result of crimes associated with post death benefit continuations.... A good argument isnt enough to convince a jury of guilt beyond a reasonable doubt. E.g., Casey Anthony, John Edwards, Roger Clements. Son's defense is that he thought benefits were supposed to continue to be paid to him after mom died since it was paid to a joint account. I am limiting my response to the OP facts so I am not opining on other cases based on unknown facts. As for tracing assets to establish a constructive trust, cost of tracing funds plus the attorney's fees to file a suit would exceed the $2500 that could be recovered. If the funds were used to pay the rent, buy beer, gas and food there will no recovery. Better to let this one go. Its a loser.

I dont see why plan cannot allocate all QDRO expenses to participant/AP by charging a reasonable amount e.g., $500 $1,000 for cost of processing QDRO so that plan is made whole. There is no reason for plan pick up cost of discretionary action by participant to divide plan benefits by QDRO since participant and AP could negotiate division of marital assets without involving pension benefits.

I respectfully disagree, and have successfully obtained prosecution against several for having obtained a benefit under "false pretenses" and "forgery" (either by cashing a check, or by obtaining an unauthorized withdrawal from an account). Prosecution is not a conviction- as law professors remind students, a prosecutor can indict a ham sandwich. Crime of forgery requires an intent to defraud. In the OPs case the funds continued to be sent to the son/participants joint bank account after death so I dont see how there could be any intent to defraud by the son simply because the funds continued to be paid by the plan where they were comingled with other funds.

I dont know of any penalty for overpayment of taxes. Taxpayer can file return to receive refund.

HCE could rollover $1M to an TIRA immediatley, establish qualified plan for his consulting activities or business ventures and roll over pre tax funds to a qualified plan by 12/31/12 and in 2013 rollover the AT amount to a Roth IRA with minimum/no tax. Or he could rollover entire $1M to TIRA and park it until he rolls over the funds in a later year to a qualified plan established for his business ventures/consulting practice.

I dont understand what you are saying. If the employer dissolves, the plan should be terminated by notifying the employees. The participant's assets will be held by the mutual fund custodian or insurance co. for eventual distribution under the terms of the contracts of the fund providers. If the funds are held in a mutual funds the custodian will terminate the custodial agreement because there will no longer be a plan administrater/fiduciary who provides it with instructons or pay its fees. Participants wil have 30/60 days to provide instructions to the custodian as to where their account balances are to be sent, e.g., rollover, which is permitted under reg 1.403(b)-10(a). If custodian does not receive instructions it will distribute the funds to the particpants in accordance with the provisons of the custodial agreement, such as purchase of annuity contract or mailing check to last known addess after withholidng 20% which is permitted under Reg. 1.403(b)-10(a). Funds held in an anuity contract are subject to the participants rights under the certificates of insurability which allow participants to withdraw the funds or receive annuity benefits.

ERISA is a a law of equity and under the rules for equity the plan could only recover the excess funds paid to the son which are still in his possesson. If son spent the plan distributions plan has no right to payment from other assets in son's possession or garnish wages. Also there is no basis for criminal action since the son's defense is he did not have any obligation to notify plan of mother's death or that he assumed that he was entitled to receive payments after mother's death.

Foreign beneficiary will be subject to 30% withholding on distributions unless beneficary's country has a tax treaty with US..

ORPs are usually 403b plans where the employee makes elective contributions to a 403b plan in lieu of contributing to the state DB retirement plan. Employer makes matching contributions which are fully vested. For 415 limits, employee is considered to be in control of 403b plan which requires aggregation of all contributions under 403b plan with any contributions made to a qualified plan established for the employee's own business. See IRC 415(k)(4). Employee needs to check with HR to find out if ORP is 403b plan.

Some participants do not want to commence MRDs because they have not done tax planning and receiving MRDs will move them into a higher tax bracket. Qualified plans must require that MRDs commence no later than 70 1/2 in order to retain qualified status which is why benefits must commence at MRD under default option w/out participant consent. Only 2 exceptions are 1) active participant who is not a 5% or more owner can defer MRDs until termination if plan permits and 2) former participants if plan provides for forfeiture of benefits because participant cannot be located.

Sked C is filed by unincorporated business which is owned by a sole proprieter. Companies usually file corporate tax returns claiming the pension deduction unless they are a LLC. If H and W each operate a sole proprietorship which files a sked C then each spouse will claim the deduction for the pension contributions for their employees on the Sked C that they file because pension contributions for employees reduce net earnings from self employment on that business.

IRC 7503 expressly extends the time for performing ANY act required under the IRC to the next business day which has been confirmed by at least two court decisions. As for the DOL deadline for plan funding I thought under Reorganization plan #4 of 1978 the authority to issue regulations under Parts 2 and 3 of Subtitle B of ERISA were transferred to the IRS. The funding provisions of ERISA 303 correspond to IRC 430. Therefore IRS regulations governing the timing of when contributons must be made to the plan under IRC 7503 apply to the time contributions must be made to a plan under ERISA 303(j). There is no need for the IRS to create confusion on a simple question of when contributions must be made instead of following the literal provisions of IRC 7503 as applied by the courts to extend the time for making contributions to the next business day after the 15h. To avoid any questions of timeliness, plan sponsors should make plan contributions by the 15th day of the month or if they want more time send the contributions by certified mail return receipt requested to the trustee on the 15th which will add 3 or more days before the check is delivered.