mbozek

The question of who is an employee or IC is determined under the IRS twenty factor test which was revised recently. Just google independent contractor or employee. The Factors determining the status of the service provider under the IRC are grouped into business, financial and type of relationship categories. There is still no fixed number of factors that definitively determines what category the service fit into. I haven't looked at the 20 factor test recently but I don't think it redifines the relationship of professionals who perform services for hospitals because I see a lot of bills from Doctors who perform designated services for hospitals such as emergency medical care or anesthesia under a separate professional entity. So I have a question- why is there a risk if a solo Doc performs professional services for a hospital when there is a growing trend toward outsourced professional medical practices performing medical services for a hospital as non employees. There are also corporate medical service providers employing doctors who are 100% owned by the hospital but are separate entities from the hospital because of insurance or state laws regulating hospitals.

Why cant the 3,000 be credited as a withdrawal at the end of the plan year and a contribution at the beginning of next plan year ?

In an ERISA plan bad boy clauses which forfeit benefits for violation of company policy or crimes are prohibited except in the limited case of a fiduciary who uses plan assets for his own benefit. I don't know why corp management would launch such a kamikaze strike that will bring the full weight of the EBSA down on them as soon as it is reported by a participant.

Plan administrator should be notified that contribution was not made so PA can investigate what happened, e.g., glitch in transfers, embezzlement, etc but TPA should not go beyond its responsibilities spelled out in its contract with the plan. My view is that if a non fiduciary acts in a fiduciary capacity it will be at risk of being held liable as a fiduciary. TPA should not notify plan attorney or auditor because that would interfere with the privileged relationship between the attorney and plan or auditor/plan which would open up a different can of worms.

I don't know of any. The IRS issued a model 403b plan several years ago and promised to open an approval process for ptype 403bs but I don't think any plan has been approved.. Why not call tiaa cref?

2 cents: If a pension plan writes a check to pay benefits the funds remain as plan assets until the check is cashed. It may be moved to another plan account but the funds are still plan assets. Years ago I reviewed a 401k plan of an employer who filed for bankruptcy which had a segregated account consisting of many thousand $ from uncashed distribution checks that had been mailed to plan participants. Question was who owned the funds. If plan wants to clear its account of the liability for payment then it should issue a certified check to the participant where the payee is a bank. Payment of the funds from the plan to the bank to purchase the guaranteed check will remove the distribution from the plan's asset account. Plan can hold the check indefinitely if participant cannot be located. Reason why trust co will escheat checks to state in SE is because Trust Co execs do not want to get on the wrong side of state banking auditors who look for stray assets that can be deposited to state abandoned property account where state can invest the funds. Years ago I had a dispute with an insurance co. attorney over request by state auditors to escheat payments from ERISA plans which had not been cashed. Even though he agreed with me that the funds were exempt from state escheat laws he said that he was not going to give the state auditors an excuse to find other violations in the company's operations.

Bird: you are sooo right. I have done the same thing and the RK backed down because there is no authority to ask for spousal consent.

Why were the checks sent out? MRDs, election by participant? Can plan check SS death register to see if participant is deceased? If participant had a designated beneficiary try contacting that person. Does plan have provision that deems benefits to be forfeited when distributions must commence if participant cannot be located? If participant requests benefits in the future then they must be restored to account. Default option is to send payments to state abandoned property fund if fund will accept transfers from an ERISA plan.

So if a SE retiree plan gets a form letter from the IRS all that needs to be done is to respond that all participants are 100% vested and problem goes away. solo 401k plans are exempt from 5500 filing if assets never reach 250k.

Record keeper does not understand that spousal consent does not apply if there is no J & S requirement. What does plan sponsor/ admin think of requiring married participants to obtain a spousal consent not required under ERISA?

Requiring spousal consent in order to receive a distribution from a PS/401plan that has no J & S requirement has become a common practice by record keepers who fear that plans they administer will be subject to claims by disgruntled spouses who claim they did not waive their rights under the plan. Its a useless requirement since spouse has no claim of right to benefits in PS/401k plan that does not pay an annuity as the normal form of benefit. Q Does plan admin require spousal consent for loans?

Austin: Who would sign an oxymoronic document that requires a special trustee to agree to all the obligations and duties imposed on the trustee but then states that the trustee has only one responsibility- collect contributions? What does collect mean?

Can someone explain when a plan contribution is deemed by the DOL to become a plan asset since DOL can only regulate plan assets. Does DOL deem a plan asset to be created on the date the contribution is due?

examples of when state law would apply - what is a valid power of attorney, is common law marriage valid, who is a successor beneficiary under state law, which state community property law applies, which spouse is beneficiary when deceased employee was married to two spouses at death, was divorce valid. Of course the plan can elect to file an action in interpleader and let a federal judge decide the rights of the parties. I don't think a plan needs to determine whether a trust is valid under state law or whether a trust is a valid plan beneficiary under state law in order to receive a benefit since the Kennedy decision only requires that the plan administrator determine who is the beneficiary under the plan without reviewing whether the beneficiary is eligible to receive the benefits under state law. After the benefits are paid another claimant can challenge the beneficiary's right to the benefits under applicable state law without the plan becoming involved. Advantage of designating in advance what state law applies to questions arising under the plan is that plan administrator has a presumptively valid basis for making decisions if there is a legal dispute involving the plan, e.g, beneficiary dispute. I don't understand the reason to omit a choice of law provision when having one eliminates uncertainty or ambiguity as to how the plan is to be interpreted.

I do not know of any Q plan that was DQed because of a lack of recurring contributions. IRS doesn't have the resources to review plans to determine whether recurring contributions are being made. There are many old keogh plans that exist solely to pay benefits to the owner or spouse.

IRS doesn't care about leaving a state choice of law provision blank because IRS only regulates the tax law. Every ptype /individual plan I have reviewed designates a state law because sponsor wants a law that it is familiar with, e.g, state of incorporation, which will not disrupt its operations. Most financial institutions designate NY because they know the state laws and they do not have to deal with anti business laws in other states which could cause a conflict. If plan does not designate a state law under a choice of law provision then it runs the risk that a court will select a state law that will be detrimental to the plan sponsor's interest.

70 1/2 was the date for RMDs of self employed persons under IRC 401© which dates back to 1962.

Someone is confusing the requirement that SS benefits are reduced by earnings over $15,000 for SS beneficiaries under 66 with the funding of a retirement plan. Under IRC there is no max age for SE owner maintaining/contributing to a retirement plan, e.g.,contributing to a SEP. Only requirement is to take MRDS at 70 1/2.

I have no idea whether PA requires payment of interest. If the refund is made by the employer it will be up to the state agency to determine if interest is payable.

For what its worth excerpt from 86-128, description of exemption states that the exemption provides exemptive relief from 406(b)(3) receipt of commissions by a fiduciary but does not provide relief from 406(a)(1)(A) which prohibits a fiduciary with respect to plan from causing the plan to engage in a transaction that constitutes the direct or indirect sale or exchange of property between a plan and a party in interest. In the absence of other exemptive relief this latter transaction woud be prohibited. 4975 uses the term disqualified person which includes a fiduciary to the plan.

There is no exemption for brokerage commissions in Pub 590. I don't know of any ruling by the IRS specifically excluding the receipt of IRA commissions by a broker under the PT rules. If you believe that 86-128 would exempt a PT under the IRC then go for it. In any event broker can only receive comp permitted by brokerage.

I don't have an answer under 86-128 but what does the Brokers compliance dept say about being able to receive the commission under 86-128? IRS does not follow DOL exemptions from PT violation under IRC. In the Flaherty Arden Bowl case,115 TC 269 (2000), IRS applied PT against participant in 401k plan who was not a fid under ERISA but was a fid under IRC 4975.

In order for the employee to get a refund of contributions everyone needs to understand the following principles: 1. State and government pension plans are exempt from ERISA so none of the ERISA protections including the provisions filing a claim for benefits apply. State govt employees only apply state law and regulations which are both arcane and opaque and they have little discretion to act on cases that are not in the playbook for payroll or pension plan administration. Under state budgetary laws all budgeted amounts are allocated to specific programs or areas delegated under state law and no unauthorized distributions can be made. An employee can only receive a refund of contributions if a refund is authorized. 2. State civil service laws protect govt employees from disciplinary action for making mistakes or violating rules. There is little recourse if a state employee will not use discretion to act. Payroll manager doesn't care if there is systemic problem because it exists under state law and he cannot be disciplined for not fixing it. 3. Only way for the employee to get the refund is to find the person in the state govt hierarchy who is authorized to resolve the problem. If the payroll mgr. will not resolve the problem the employee should contact her state senator or reps office and ask for assistance in contacting the proper party in the state govt who can assist in getting the refund. I recently assisted a NJ worker whose unemployment benefits has been stopped because she was late in filing her claim online. The phone # she was supposed to call to reopen her account was always busy for over a month. Her state senator gave her the direct line to a manager in the unemployment dept who was able to open her account and pay back benefits. The employee can also find out if there is an ombudsman or advocate at the state employer who can assist with the refund. 4. Although several posters believe the employee should receive an equitable payment to make her whole she will only receive the amount permitted under state law. Interest will only be paid if required under state law.

Excluding a 60 year old employee from a PS plan to avoid making a contribution is a very real violation of the age discrimination laws imbedded in the rules for qualified plans under the IRC, ERISA and the ADEA. Owners need to consult employment discrimination law counsel to determine if these rules apply.

I don't know what is the issue because several plan provisions have not been explained. Why did the payroll mgr say that contributions withheld could not be refunded because of two tax years? What is significance of two tax years? Is she vested in plan after two tax years? Don't need to involve violations of wage hour law- not relevant to question. Payroll mgr may not have authority to refund contributions because they were remitted to pension plan and employer/mgr is not allowed to refund contributions after they are sent to plan. What are the options that are available to the employee?