mbozek

While I dont understand your question, it appears that you are asking about what law governs when the IRA owner dies domiciled in one state and the IRA is established in another state, eg, the state where the custodian does business. The right of a benefiicary to receive IRA benefits will be determined under the terms of the IRA agreement which is consistent with applicable state law. E.g., designation of ex- spouse as beneficiary under IRA agreement will be invalid if state law revokes designation upon divorce. However, the IRA agreement will determine what payment options are available to the beneficiary.

Maybe I need an education but why cant the employer can reimburse employees/retirees for health insurance premiums under one of the following programs: 1. If the employer reimburses the employees without setting up a fund which will carry over from year to year just follow Rev. Rule 61-146 and reimburse employees for the purchase of health insurance or pay the insurer directly. The employer can pay the funds from its general account. 2. Where the employer wants to permit a carry over from year to year use the procedures in Notice 2002-45 which requires that the program conforms to non discrimination rules of 105(h). Since reimbursement of health insurance premiums is not subject to non discrimination under Reg 1.105-11(B)(2), there is no requirement to test the program for nondiscrimination on the carry over amount. The last time I checked, Tax regulations trump any provisions in an IRS notice or Revenue Ruling. The notice is devoid of examples of how nondiscrimination would apply to HRAs.

Nondiscrimination requirements do not apply to employer contributions to a 403(B) plan maintained by a government. The only rules which apply are the 200k limit on comp and the 40k limit on employer contributions. Employee can put away 15k in sal reduction ( 11k under 402(g), 1k over 50 catch up and 3k g3 catch up if ee has 15 years of service). Employer contribution is difference between 40k and employee contribution or maximum of 29k. There is a difference between a one time election and renegotiation of an employment contract. CEOS and professional athletes renegotiate contracts to take advantage of changes in the tax laws all the time. It is without merit to state that a CEO of a np cannot renegotiate his employment contract to take advantage of a change in the tax law which did not exist at the time the previous contract was agreed on. The way to do it is to have the board offer the make a contribution to the CEO's 403(B) contract equal to the difference between the 415 limit (40K and the maximum that can be contributed by salary reduction to the the 403(B) plan because the employee will not be given the opportunity to make an election. Otherwise an employer could never increase the amount of the employer contribution for an employee after initial eligibility.

The incidential death benefit rule is tax reg 1.403(B)-1©(3) which applies to both ERISA and non ERISA plans.

There is no requirment that a qualified plan must accept rollovers from another plan. The only requirement is that a qualified plan must permit a tax free rollover to distributions to another qualified plan, IRA, 403(B) plan or govt 457 plan. While Dc plans can accommodate rollovers easily DB plans do not usually permit rollovers into the plan because it requires that the rollover funds be treated as an individual account and not part of the assets used to fund the accrued benefits under the DB formula.

Apply the forfeitures against contributions due for 2002. See Reg. 1.415-6(B)(5)-forfeitures allocated during the limitation year are annual additions for such year.

While the IRS has opposed the renegotiation of deferred compensation agreements after they have been effective so as to delay taxation of benefits past the date agreed to in the contract, courts have consistently permitted such a delay of taxation as long as the benefits are not vested or payable to the particpant as of the date of the renegotiation. See Veit (1944) and Martin cases. Renegotiation of the payment due the excutive to a later date in return for a greater amount is a legitimate business purpose with consideration on both sides. E.g., the executive will get a greater amount but risks loss of the funds by exending the deferral. The employer gets to keep the money for an extended period but must pay the employee more in the future for the employee's forbearance in collecting the amount due. You need to get tax counsel involved to structure the arrangement correctly and should get board approval for the extension of the deferral.

Under IRS rules your time to recharacterize the transfer to the Roth Ira back to a dedecutible IRA expired on Oct 15, 2001. See IRS announcement 99-104. However IRS has granted extensions to taxpayers in special situations, e.g, the taxpayer recieved incorrect advice on the rollover (IRS ruling 200116058). IRS reg. 301.9100-3 provides for extension of the time for Rother IRA recharacterizaton under limited circumstances. I am not saying that you are eligible but that you should consult with a tax advisor whether such a ruling would be available and whether certain penalites can be waived. I dont think that ignorance of the obligation to pay the tax is grounds for a waiver but you should consult with a tax advisor.

IN order to be deductible, the contributions must be paid in a taxable year of the employer which ends with or within a year of the trust for which it is tax exempt. Reg. 1.404(a)-3(a). You need to know when the fiscal/tax year of the trust ends. If the PS plan trust tax year ends 9/30/02 then the contributions made by 9/30/02 would be deductible for the employer's tax year ending 12/31/01. The rules for determining the allocation of deductions when the tax year of the employer and the trust do not end on the same date are very complicated and should be determined by the accountant who will prepare the employer's tax return.

Ask him for the authority for such a statement. Once the IRA assets are rolled over to the plan they become plan assets subject to ERISA Reporting and disclosure but are not considered annual additions. 5498 forms are only filed by custodians of IRAs. See Reg 1.408-5.

Whether or not there needs to be a court order for separation is a matter to be determined by counsel. However, many state allow legal separation to be created by agreement between the parties without a court order because of the cost of a court approved separation. However, abandoment must be sanctioned by a court order because there are varous proofs and affirmations required by the party allegeding abandoment. therefore the regulations can be read as requiring a ct order only for abandonment.

2much: It has been a while since I reviewed it, but I believe that a separation agreement does not require a judicial order in all states. Some states permit the parties to enter into a legal separation pursuant to a written agreement signed by the parties. See IRC 71(B)(2). As far as I know divorce and separation are not covered under federal law but are governed entirely by state law. The use of the term "legally separated" is intended to require that the separation be in accordance with state law in order to prevent a sham distribution of plan assets under the guise of a separation, not that a judge must approve the separation order.

Shouldnt the review be based upon the provisions of the plan. If participant elected to receive benefits for a period certain the contingent beneficary only has the right to continue recieving the annuity payments for the remainder of the guarantee period after the particpant's death. Since there is no additional risk assumed by the plan because of change in the age of the contingent beneficary the plan does not care who is the contingent beneficary. Second the terms of the beneficairy designation should be reviewed to determine if the designation was revocable without the consent of the former spouse. If so then the plan can make the change. there may be an issue of whether divorce decree permits the retiree to change the beneficiary designation but that is between the parties.

The PA has no responsibility to determine what is the correct amount of withholding for a QDRO under IRC 414(p)--Having the PA get involved in whether the support order is before or after withholding is an unncesssry burden which is the responsibility of the participant-- If you want to do this extra work for the participant go ahead.

To use your example, the PA will pay to the alternate payee the amount specificed in the DRO, i.e., $1000. If the assignment of interest rule requires that the payment be taxed to the participant rather than the recipient, then the participant will get the notice of withholding and upon the advice of counsel will determine whether any withholding should be applied since withholding from periodic payments is entirely voluntary. If the amount received by the alternate payee is less than the DRO requires because of withholding then the participant will be subject to action by the court that issued the dro or the agency that administers the child support enforcement act will have the underpayment withheld from the participants's wages or pension payments. The PA avoids being held in violation of the ct order because it is only performing a ministerial act required under the tax law to notify the participant of the withholding requirement and is assigning the amount of the payment required under the DRO to the AP as required under IRC 414(p)(2)(B).

maybe we come from different worlds but I have never had a problem arise over the issue of withholding. IRC 414(p)(2)(B) states that a QDRO must provide the amount of funds to be paid to an alternate payee. If the order states the amount that is to be paid then that amount is what the PA pays out to comply with the order, not that amount reduced for withholding. Withholding is the ee's problem not the AP's problem. The ee can always increase the amount of withholding from wages to make up for income tax withholding if the AP is a dependent child. A pa who refuses to honor a DRO until it includes statement on withholding is looking for trouble.

Q :participant who elects 100% withholding on child support payment would be held in contempt of court. Also under Child support enforcement act, 42 USC 666(B), state agency which provides welfare payments to custodial parent because of failure of employee to pay child support can enforce mandatory withholding of child support from employees wages by serving an order on the employer. The employer is not liable to the employee for following the order. The order can also be enforced against retirement benefits in payout. I dont think PA has authority to question withholding elected by the participant.

The child would be the alternate payee but the payments would be paid to the custodial spouse as the guardian because a child under 18 is incompetent to provide for their own welfare. Some courts designate the payments to the custodial parent for the benefit of the child. I dont understand how there could be an arreage since the plan would be required to make the payments directly to the custodial parent from the participant's account/benefits. The participant does not have the right to stop payment.

A prohibited transaction under IRC 4975©(1)(E) occurs if a fiduciary deals with IRA assets for his own account. If the Bank does not collect an investment management fee from the IRA there should not be a PT but you should check with the Banks lawyers for a definitive answer that the bank is deriving no benefit from investment of such funds.

I dont understand your question. Is the bank the custodian for the IRA as well as trustee of the common trust fund? If so then I think the bank is engaging in a PT if the bank is collecting a fee from the IRA as custodian and a fee for managing the trust fund because a Fiduciary can not use IRA assets to benefit its own account under IRC 4975©.

Why not amend the plan to permit additional contributions equal to the amount of the surrender charges. The forfeitures have to be used for something upon terminaton. Otherwise they are subject to 50% excise tax if they revert to the employer.

See Rev Rul 61-146. Employer can reimburse employee who has obligation to purchase insurance policy or employer can pay insurer directly. The ruling spells out the requirements to do it on a tax free basis inder IRC 105 and 106.

Employers are not limited to offsetting DB benefits from qualified plans. Db benefits may also be offset for payments from nonqualified plans such as severance payments, life insurance benefits and even payments received for involuntary separation of US citizen from employment under foreign law. The only restriction on offsets is that the payment must be attributable to some form of compensation, i.e., cant be a payment for personal injuries.

Also the last time I looked, the proposed bankruptcy law contains a $1,000,000 exemption for IRAs from claims of creditors.

I though the deadline was on a per plan basis and that employers need to adopt each plan separately. why cant the er adopt the dc plan by the end of 2002 and the DB plan after the sponsor gets approval?