mbozek

Funds in a qualified plan (401k, ESOP) are subject to creditor's claims once they are paid to the participant. Also there may be federal legislation which permits the seizure of such assets once they become payable to a participant, e.g., IRS has authorthy to seize tax refunds to pay defaulted student loans.

Before anyone runs to court has any one thought this issue though. Assuming the 0ne year rule applies (and I am not saying it does) what happens next. According to a US Supreme ct decision, if there is no spousal beneficary then the beneficiary is to be determined under the terms of the plan document. Most plan documents provide that if there is no designated beneficiary then the default beneficary is either the spouse or the estate of the deceased. Suggest that the plan document be read.

jpod: Under both state and federal securities laws, a stock subscription /options offerred to an employee can be purchased directly from the issuer by family entities and affiliates of the employee such as a trust or custodian. You must read the prospectus /offering circular to determine who can be a purchaser of the stock rights offerred to the employee. Under certain circumstances an IRA of an employee can be a qualified purchaser of stock under an option plan offerred to the employee as long as the IRA purchases the securities for cash from the company. However, most IRA custoidian will restrict investment in this kind of an offering.

Rick: You need to clarify what you want to purchase for your IRA: Is it stock of the employer for whom you work? ISOs are a special type of stock option which cannot be held in an IRA. However an employee can always direct an IRA custodian to buy stock for an IRA on a stock exchange unless the employee owns more than 50% of the company. It is also possible for the employee's IRA to purchase stock directly from the company but this type of purchase is subject to federal and/or state securities laws.

I dont see how this case can be subject to ERISA since it does not involve the rights of a participant against a plan. This claim is a contract dispute between two parties which is subject to state law.

Did you mean IPO (Initial public offering) instead of ISO? An IRA can purchase shares issued in an IPO provided that the applicable securities and state laws are observed and the the IRA purchases the stock from the issuer for cash.

There is something strange about this story. Medicaid has a claim against the assets of the deceased receipient if the decedent's assets exceed a specific monetary amount. An executor is not personally liable to pay the debts of the deceased reciepent unless the executor inherits property from the deceased for which medicaid has a lien. Medicaid is administered on a state by state basis and each state can enact different rules regarding which assets are subject to recovery. You need to check this story out a little more. Also many State Medicad agencies make exaggerated claims against property which is not recoverable to maximize amount that can be recovered. I think your participant needs to consult counsel.

Section 4(B) of ERISA excludes plans established only for non resident aliens with no US source income. See the instructions to the 5500 form.

I guess you are too young to remember the 22 % decline of the Dow on Oct 21, 1987. It took 16 months for the Dow to get back to the pre Oct 21 level. Also, there were similar articles on pension funding in 1994 and 1995 . As I previously said you need to do further research to learn the distinctions between the actuarial assumptions for funding under the IRC and accounting rules for balance sheet reporting of retirement plans. What have you been reading that makes you think that Bogle is a capable market forcaseter? Bogle's thesis on investing is that since no one can predict the future, indexing is the only strategy that makes sense for non professional investors because it guarantees an average market rate of return. Bogle has no background in advising professional investors.

Jason: If you had taken the time to research the issue you would have found that this type of report is issued by investment firms every time there is a bear market and is discredited when the bull market returns. The 23% figure that you cite assumes that the plans would be terminated today-- if the plans continue then the underfunding is amortized over a specified period of time ( e.g., 10 years for pension plans). If the value of the pension assets increase in futaure years then the underfunding will decrease or disappear and be replaced by a surplus amount. Also most retiree health benefits are not guaranteed- Employers reserve the right to reduce or eliminate such benefits in the future. Employers can also terminate pension plans and cancel liabilities for future benefit accruals. Neither John Bogle or bill Gross are fiduciaries for retirement plans- Bogle believes in index funds and Gross is a Bond Fund manager. If the plan assets consists of 60% in stocks and 40% in bonds the historical average rate of return should be about 8.4% (10% stocks x .6 and 6% bonds x .4). Individual plans may be able to raise the return above the historical average the same way that some investment managers can produce long term returns in excess of the average return for stocks and bonds.

IRS representatives have stated that the moratorium applies not only to conversions but to the Gust amendments of cash balance plans that have previously recieved IRS determination letters in prior years upon conversion. Sponsors are still required to submit Gust amendments by the end of the remedial amendment period.

I think this issue need to be reviewed by counsel to determine what are the rights of the plan participants under the transferring plan. Have you read the plan document to determine how the participants interest is allocated in the note under the PS plan? If the note is reallocated in the name of a single participant how is the interest in the other participants credited under the 401(k) plan? E.g., if note is worth $10,000 and there are 10 participants each with a 10% interest in the note how can 1 participant have a 100% interest in the note in the 401(k) plan without the other participants being compensated. If the note pays an above average rate of interest how can a fid allocate the entire interest to someone who is at a least a party in interest? Also under the PT rules a fiduciary cannot use plan assets to benefit him/herself. I think each participant's interest in the note should be carried over to the 401(K) plan for the remaining 5 years of as an asset that is not subject to participant direction. PS I have never heard of a investment provider/TPA render the opinion that you have stated because they all caveat their advice with the admonishment that they not give legal or tax advice.

TIAA-CREF 212-490-9000

I dont see a need to prepare an amendment for terminating a SARSEP because it is not a qualified plan and is not subject to IRS termination procedures. The employer can simply notify the employees that no further contributions will be accepted after [fill in the date]. All contributions are 100% vested, employees have investment control over the accounts and no final annual report is filed.

As a general rule only property acquired during the term of the marriage is subject to equitable distribution or community property laws. See NY Domestic Relations Law Section 236(B)(1). Property acquired by inheritance or gift during the marriage is also excluded from ED or CP. However, courts have great latitude on how to divide property under ED and CP laws. I dont think a plan admin or TPA has standing to contest the amount of benefits awarded to the ex-spouse. There is also the possibility that the attorney may not know how the law applies to retirement benefits.

yes- it no different than any other condition of employment, e.g., annual salary, work hours, title. The employee is free to decline employment if he/she does not want to contribute to a plan. Contributing to a plan is a contractual matter between the employer and employee.

yes- it no different than any other conditon of employment, e.g., annual salary, work hours, title. The employee is free to decline employment if he/she does not want to contribute to a plan. Contributing to a plan is a contractual matter between the employer and employee.

You need to remember that custodians, TPAs, etc who hold assets and administer IRAs do not practice law and thats why they avoid answering the issue you raise. The answer is deceptively simple. IRAs are non probate property that can be transferred by the owner to his/ her beneficaries under state law without regard to inheritance laws or a will. Under most IRA custodial agreements, the IRA beneficary is given all rights of ownership of the IRA upon the death of the owner, including the right to designate contingent beneficaries. This language is in the custodial agreement. Under State law, the owner of property can designatate a beneficary who will inherit the property when the owner ( I.e., designated beneficary) dies (e.g, In NY EPTL Section 13.3.2) without the need to execute a will. Under IRS reg 1.401(a)(9)-5, A-7©(2), the designated beneficary's remining life expectancy will be used to determine the distribution period for the payments to be made to the subsequent beneficary designated by the deceased beneficary. In other words, state law, not the IRS determines the procedure for designating who can recieve the remaining payments from the IRA after the designated beneficary dies. IRS rules only determine the amount of the minimum payment to be made each year.

generally yes if the beneficiary is a natural person. Check with the custodian or IRA sponsor for the proper forms.

You have nothing to lose by filing a cliam with Plan admin. Indeed I dont think they will be inclined to turn you down because they will have to state the reason for deducting the fee in writing and cite the plan provison that justifies such a fee and the denial could beused by the DOL in any investigation of the plan. It is more likely that the Plan Admin will try to avoid having to make a decision but all claims must generally be answered in 120 days.

Corely v. Hecht Co., 530 F Supp 1155 -Failure to disclose to participants that employer advances to cover group LI premiums in a contributory plan were to be repaid to employer from future dividends was a breach of fiduciary duty. Also see Pegram v. Herdrich, 120 S. Ct. 2143, 2154, N. 8 for dicta on this issue.

the question is how much time should you spend trying to find people who do not want to be found. If the employee does not provide a change of address and the letter comes back addressee unknown it is likely the person does not want to be located. Put a memo in the file documenting the info you have and the returned letter and treat the assets as a forfeiture. Also it is a good idea to require plan participants to notifiy the Plan admin of a change in address by putting such a statement in the SPD. If the plan admin is eager then have them try to contact the participant through SS.

MGB: Under prop reg. 1.457-10(a)(2) a municipality that terminates a 457 plan may permit a rollover to any other qualified plan or a trustee to trustee transfer to another 457 plan of a public employer in the same state. The 457 plan assets can be rolled over to grandfathered 401(K) plan as a separate account. Otherwise the municipality could establish a qualified plan to accept rollovers from the 457 plan and transfers of excess vacation/ sick pay of employees.

see reg. 1.401-14

Most participants are not encouraged to review plan documents and second most participants would not know where to find the provisions on plan expenses in these cumbersome, opaquely worded documents written by inarticulate lawyers. This is why the dol regs require that expenses be disclosed in the SPD. However, there is legal precedent that an employer cannot take permissible expenses listed in a plan if the expenses are not disclosed to participants. Also expenses permitted under the plan must be reasonable-- A 6 % fee for admin of a plan is not likely to be reasonable under Dol reg 2550.408c-2. An employer cannot just wack up any plan admin expenses charged by a TPA among the plan participants to avoid paying the expenses-- There is a fiduciary responsibilty to determine whether the fees are reasonable as well as permitted under the terms of the plan.