mbozek

Distributions from a govt 457 plan are subject to the 10% tax only to the extent they are attributable to a rollover from a qualified plan or 403(B) annuity plan. IRC 72(t)(9). Same exceptions from 10% tax apply to a 457 plan distribution as apply to a qualified plan. Since distributions from a np 457 plan cannot be rolled over to an IRA or qualified plan they are not subject to the 10% tax.

an IRA owner who dies prior to the RBD is deemed to have never recieved a min distribution. Therefore spouse can rollover proceeds to own IRA . why would spouse want to wait 5 years???

Try constructive receipt under IRC 451/ regs. 1.451-1- If income is made available to a taxpayer , it is taxable income even if not actually received. If the Incentive pay is made avialable and employee electsd to contribute it to a 403(B) plan then its is wages for 403(B) purposes susbject to FICA tax because employee could have received the amount in cash.

IRAs do not permit joint ownership-- Only the person who makes contributions can be the owner. Owner can designate a beneficiary. Custodian/sponsor of IRA will pay designated beneficiary. You need to retain an attorney to discuss your rights under state law. It appears that your agent didnt give the right form to your husband to designate you as his IRA beneficiary. The question is whether you can be designated as the beneficiary under the thhory that you husband filled out a form that he intended to be a change of beneficiary designation naming you as his beneficiary.

Why cant you ask for IRS approval of the forfeiture provision by filing a 5310 form stating that the forfeitures will become assets fo the surviving plan? I thought that a 5310 form covered mergers as well as terminatons but that usually mergers of dc plans were not required to file 5310 forms.

At an ALI-ABA teleconverence this afternnon the question was answered with a no-- Separate accounts can only be set up in a beneficiary designation not under a trust instrument.

There have been court cases which have held that the determination of service under a predecessor plan for ERISA purposes is determined under IRS reg. 1.411-5(B)(3)(v). See Riccaridi v. Ricciardi P S Plan, 630 FSupp. 914 (1986). Only service under a qualified predecessor plan is counted under the IRS regs..

Having been involved in a couple of employer nonpayment of wages cases in the last year I can state that state gov. authorities are not interested in pursuing cases of back wages (no less late employee contributions )where the employer agrees to make up the back wages because they have very limited resources. As for a separate action by participants there is very little to interest an attorney if all that is available is back interest. The DOL has very limited resources to devote to chasing missing contributions in non ERISA plans for which there is no jurisdiction because they have more than enough work recovering late contributions in ERISA programs. The state of the DOL enforement programs for ERISA plans is approaching the symbolic enforcement situation of the EEOC in employment discrimination cases-- too many cases and not enough reviewers. I have not seen any cases or authority to support the claim that an employer who derives more than some vague de minimus benefit from depositing late contributions becomes an ERISA plan- that what state regulation/labor laws are for.

I have seen this issue in two situations: one was a 401(k) plan of a bankrupt employer where there was a side fund which accumulated interest on the float for interest credited on distribution checks before they were cashed. Fund wasnt discovered until after the participants had been cashed out. I thnk the fund was transfered to the bankruptcy estate since the amount pyaable to the particpants would have been less than a $1 each. the other situation was an asset of terminated ps plan which surfaced after the busines owner died. The amount was paid to his estate. First Q- who is the listed owner of the asset? The trustee of the Plan? Second Q- can you identify the paraticipants of the terminated plan. If so why nbot make a distribution to them as after tax money on the grounds that plan terminated yers ago and tax deferred status expired after plan was terminted. Its agood as any other answer. Other possiblityis treat the distribution as a taxable amount from a disqualfied plan (its the opposite of a distirbution from a terminated q plan but less plausible since the plan was qualified upon termination.) Third Q- Is there a sucessor plan? If so why not deposit the asset into the sucessor plan and allocate to active participants as the sucessor to terminated plan. If no plan, can er establish new plan and use aseet as initial asset under merger of plan theory?

Before the PA decides to tax the spouse for amounts that are designated as non taxable child support under IRC 71(a)/215 in the dro and incure the wrath of contempt of ct, perhaps you should have the dro reviewed by counsel to read the entire document. In divorce ct orders it is not unusual for payments of child support which are not taxable income to the child to be paid to the custodial spouse who is the guardian of the minor since the minor cannot receive the payments. The only difference in taxation of retirement distributions is that payments to a spouse are taxable to the spouse under IRC 402(2(e)(1) whereas payments to a child are taxed to the employee under the assignment of income doctrine. If the QDRO provides that the spouse is receiving the payments in her custodial capacity as the guardian of the child, payments are taxed to the employee under assignment of income doctrine. See Darby v. Comm, 97 TC 51. In Stahl v. Comm., TC Memo 2001-22, the Tax Court held that a lump sum payment from an ESOP to a spouse as back child support payments was taxed to the employee and not the spouse. There is no rewrite of the income tax laws since child suport payments from a retirement plan are taxed to the employee.

All taxable amounts distributed to a foreign national under a qualified plan are subject to us income taxation because qualified plan distribitions are us source income. Only exception is if there is a tax treaty exempting the income from us taxation. Check IRS publication on US tax treaties to see if ther is any exemption for pension income. Its on IRS web site.

I thought tha an IRA owner had 7 days from the date of deposit to cancel deductible IRA contributions without paying the 10% penalty tax. Check the custodial agreement. After that period expires all distributions are taxable if a deductible IRA has been opened.

There are two separate issues: 1. is there a valid qdro- a spouse can be an alternate payee under IRC 414(p). A qdro can provide for payment of child support -414(p)(1)(B). 2. taxation of the payments. Under IRC 71(a)/215 payments of alimony or seprate maintenance are taxable to the recipient and deductible to the payor. However, child support is not taxed to the recipient nor deductible by the payor. Frequently divorce decrees stipulate the taxation / deductibility of the payments by defining it as either alimony or child support. However, the taxation of the payments is not a matter subject to review by the Plan admin for a valid QDRO under IRC 414(p).

Late payments of benefit contributions are rarely prosecuted by st. labor authorities. May be an interest penalty but only if employees complain. Employer should make overdue contributions asap and see if there is any reaction.

No penalty for late contributions However, I believe that contributions must be made by date for filing 990 in order for contributions to be counted as allocations for 2001 limitation year. See Reg 1.415-6(B).

There is also a belief by some in the benefits community that a merger of two plans is considered to be the termination of the plan that is merged, e.g., if a mp plan is merged into a ps plan and the ps plan continues the mp plan is deemed terminated. I believe that the merger rules are cited in the IRS termination worksheets

I dont have a clue of what you are talking about. This a board for employee benefits/ deferred compnsation plans. You seem to be asking a question of how long a government has to make a payment to a provider under a govt sponsored health program. My understanding of govt health programs is that the payors delay payments to providers because of budget /cash flow restraints the same as any other payments (e.g., state income tax refunds.)

According to IRS rev. Proc. 2002-23, Article XVIII(7) of the US - Canadian tax treaty exempts citizens of one country from taxation by the other country on amounts which are deferred under a pension or other retirement plan under rules adopted by the other country.

Under the regs for 457 plans, govt employers have a period of 6 months after being notified by the IRS of the failure to meet the 457 requirments to bring the plan into conformance with the applicable requirements. However given that the recent changes will benefit the participants, e.g, greater contributions, tax free rollovers to IRAs, transfer to purchase retirement credits, etc. govt employers would want to amend the plans. It is not clear whether the govt plans would need to be amended for the recent changes but instead could just opetrate under the changes until the proper govt body or legislature approved the changes.

I have always thought that comp for benefits purposes only inlcudes wages, self employment income, commissions or other payments for personal services and that pass throughs which represent other amounts such as dividends or capital gains were not wages even if paid to the shareholder of an S corp. I dont have a cite-- its just an instinctive answer. Wages for various purposes in determining benefits use either the W-2 definiton or 415 defintion of compensation.

VEBA: I think you misunderstand the eligibilityissue. I am not contesting the availbility of benefits under the QDRO provisions. IRC 414(p) expressly permits qualified retirement plans to pay benefits to former spouses (who are defined as alternate payees) after divorce without disqualifing the plan. However, there is no similar provision in IRC 501© (9) to allow payment of benefits to be made some one who is not a spouse or dependent of the the employee who are the only eligible members. Therefore a DRO cannot order that benefits from a VEBA be paid to an ex spouse since they are not benefits which can be paid under the VEBA plan as required under ERISA for a valid QDRO. Since the awarding of a benefit to an ex spouse under a QDRO would disqualify the VEBA it is not a permissible benefit.

I dont deal with income taxes, but I thought that ex spouses' are not dependents under IRC 152(a).

I dont know how you can say the er has no risk in setting up the VEBA since, as sponsor, er will have to adequately disclose the risks associated with setting up the plan including the possibility that the contributions may not be sufficient and will be subject to annual increase and cancellation of the policy if their are insufficient funds. The ER could be sued on the grounds that the plan was never established on an actuarially sound basis. If there is a shortfall then the trustee of the veba ( e.g,. employer or employee of employer acting as the fiduciary) will have to decide whose insurance gets funds and whose does not and then defend such actions. And who will pay for all of the legal advice to be given to the trustee, the adiministration expenses and annual reporting? The employees of course because their contributions will be the only source of funds. You also seem to be ignoring the effect on employee morale that would result from the increase in annual premiums/cancellation/reduction of benefits. If a VEBA was such a great idea it woud be adopted by the major F500 cos that want to get out of paying for health ins. It is simplier for ers to lower benefits /raise ee premiums under an unfunded plan than engage in an emplyee pay all veba that will be distraction and legal headache.

While a spouse qualifies for benefits, an ex spouse does not --- regs 1.501©(9)-2(b(3) defines surviving spouse and dependents to be members of the association. I dont see any reference to the eligibily of an ex spouse. (QDROs specifically permit benefits to former spouses) Maybe there is another reference?

A 403(B) plan is not a qualified plan for the purpose of crediting vesting service under the 411 regs.