mbozek

The IRS has authority under both the nonalienation regs and case law to levy on plan assets to collect back taxesif benefits are payable to employee. If they are distributable then IRS is first in line to collect funds. U need to consult with tax counsel to make sure that levy is enforceable and to notify emplyee of the existance of the levy in case employee wants to contest levy. Question is whether levy was intended to be made on employees pay or plan assets? Plan should not pay the employee once employer has notice of the existance of a levy unless counsel approves. You should discuss the levy with the trustee who will want to have their own counsel review the levy for its validity on plan assets.

Diet: This is consistent with my experience. The plan sponsors haven't a clue as to what is going on in the participant's accounts and regard it as a brokerage problem. Therefore its up to the broker to fix it. The employer who files a TVC has to pay for the cost of fixing someone elses' problem- either the broker or the employee.

You are missing the point--Under EEOC reg 1625.10(a), the application of the equal cost /equal benefit rule to allow a reduction of benefits is an exception to the ADEA and must be narrowly construed. The Employer/plan has the burden of proving that every element of the exception has been "clearly and unmistakably met". These requirements make litigation attorneys very nervious. The City of Lebannon case has been constructed in conjunction with the EEOC regs to mean that an employer must do an actual study of the plan population to determine what is the "approximate equivalency in cost"- using generic tables is not appropriate. I think I have exhausted my interst in this issue-- Again given the risks it is not worth keeping this type of provision in a plan.

what is a prepaid account for corporate sponsored LI? Is it COLI, Split dollar??

Sorry I dont- but any cal lawyer should be able to tell if it is allowed.

MGB: I had a similar response from the actuary who represented the plan that had the 1% reduction. His claim was that it was permissible because it did not violate the IRS rules for reduction of benfeits. However the client's lawyers decided to eliminate the charge after reviewing the applicable rules under the ADEA. I think the reason this charge continues in plans is because benefits people aren't aware of the EEOC position and the case law. Actuaries tell me the amount of the charge is de minimus and most corporate plans have eliminated it because the plans are overfunded. There is no reason for a plan/ employer to take litigation risk in this matter. The change in the EEOCs position because of a change in adminstration is irrevalent in how the law will evolve since an employee can bring a lawsuit against the plan and recover damages and legal fees under the ADEA.

I have always understood that the cost is incurred when the services are performed. For example it is a settled principle under the rules for individual income tax that a tax payer can only deduct as a medical expense the cost of the services performed/goods purchased in the tax year. For example a if a taxpayer prepays $3000 for orthodonic work for a dependent but only $2000 of service are performed by year end the deduction is limited to $2000. If the services are performed by year end the taxpayer can make payment by Dec to claim the deduction. It seems to me that the services incurred in 01 are a charge against the plan for 01. The cost of the lenses in Feb 02 can be a separate charge for goods purchased in 02. However u should review the contract for the services to see if there is a separate charge for the lenses or whether it is a bundled charge. If it is a bundled charge and the employee only picks up the lenses in Feb 02 then all the charges were incurred in 01. It is my understanding that many optometrists use bundled service contracts to allow employees to drain the FSA aco****s at year end.

They violate the equal cost/equal benefit rule because they use some arbitrary age, e.g, 55, as the dividing line for charging for the QPSA coverage or they use a generic table not specific to the plan as the basis for the reduction. Under the City of Lebannon case the ec/eb rule requires the use of an actuarial table of cost/reduction specific to the covered group. I once represented a spouse who was told to pay a charge of 1% for the spousal annuity under a fortune 500 company plan because the employee was over 55 at termination. Employees under 55 did not have to pay for the coverage. Under the ec/eb rule the plan could charge for spousal coverage only if the plan had prepared a cost table based upon the plan's population. The plan agreed to eliminate the charge for all over 55 participants and paid my client's legal fees. EEOC would disagree with your statement the charge is approppriate given the risk the employer is assuming. If there is no analysis of the population of the plan with regard to cost then the QPSA charge is not appropriate under the Ec/eb rule.

The legislation is in any handbook or description of the 2001 tax act. However retirement planning excludes accountling, tax, legal and brokerage services which are usually provided as part of financial planning services for executives. The FP services include non retirement advice such as exercising options, estate planning and investments of personal assets. Finally retirement planning services must be offerred on a nondiscriminatory basis. The taxable value of FPservices can be in the $10,000 and up range depending on the services provided.

Some states ( NY) allow a person to assign the right to direct benefit payments under a POA. If there is no POA then a conservator or guardian would have to be appointed.

Ask the spouse for a marriage certificate and power of attorney. Then Have your counsel review the documents.

S & P 500 fund offered by Vanguard with 17 bp fee. Or Vanguard extended market fund. Call the 800 no opertor.

B: I thought that passive income such as dividends are exempt from UBIT tax. UBIT would apply if only leveraged funds are used to generate the dividends.

If the benefits are provided under a 403b annuity or qualified plan sponsored by a church a distributon can be rolled over to an IRA, a qualfied plan or a 403(B) plan.

Its in the section under the equal benefits/ equal contributions rule issued by the EEOC-but only employment lawyers read these rules.- Plan cant reduce benefits of persons 40 and over unless its is on the basis of an actuarial reduction justifiying a reducing for increase age. There is case law on it. I advise clients to eliminate the QPSA coverge cost provision because it doesn't cost very much to get rid of it. By the way it does have ramifications beyond the little old QPSA change- it applies to LTD benefits among others-- its just that plan admin /actuaries don't read case law. An employer recently got wacked because it charged retirees over 65 a higher premium for health ins than employees under 65. Also because this is a ADEA violation a case would be heard by a jury which can double the damages if the violation is intentional as well as require the employer to pay the enmployee's legal fees. There is no reason for an employer to take litigation risk on such a trivial provision. The problem with the benefits community is that administrators are not aware of non benefits laws ( e.g.,ADEA, Securities laws) that impact their plans.

Asking for the waiver is the consideration provided by the spouse which is the qud pro quo for paying the rea benefit. Even if the er can prove the notice was sent that is not legally sufficient if there is no record that a notice was sent to the participant - Most plans do not even keep copies of the notices that were prepared. Also Do not require the spouse to pay for the QPSA coverage because it will violate the ADEA unless the plan has prepared a table showing the actuarial cost of the coverage specific to the plan population. I have never seen a plan that has done this study because of the cost.

PS plans are different- they can provide for distributions without a termination of employment because they are not established for the purpose of providing retirement benefits.

Taxable income under IRC 61 includes the providing of services by an employer with respect to services. See the Regs under IRC 61. Whether financial planning service is a de minimus fringe benefit is not clear and some programs provide extensive benefits. Because of this uncertainty Congress passed legislation last year allowing employers to provide retirement benefits planning as a tax free fring benenft. Employers will not offer such a service if the tax implications are not clear. Some employers limit the financial planning to senior executives and include it as a taxable beenfit and reimburse them for the taxes.

To avoid having the plan prove that it provided the notice to the deceased participant. It is my understanding that if the notice was not provided to a participant then the spouse has a right to a J & S benefit. This is why u need to consult with counsel.

Then pay her the REA benefit contingent on her signing a waiver of the right to the pre rea benefit in writing based upon the uncertainty of a rea benefit election in plan records. By the way does plan have a record of any participant electing a pre rea j & s? Need to consult counsel to draft waiver.

Excess contributions are subject to a excise tax- but consider it to be a contribution for the suceeding year. What was not contributed ? employee or employer contributions? Since the IRA is owned by employee Employer cannot invade account.

my experience tells me that no one is going to be able to locate such records or there will not be any record that the decedent elected the J & S. Real Q- how did this issue arise?? IS spouse asking aobut the J & S?

All I can cite are statements from taxpayers who have filed the abatement request without paying the tax and have gotten approval from the IRS.

then try PLR 9107033 -make it a contribution for the current year. Also see if Rev rul 91-4 works.

A -Dont beleive everything you read Some taxpayers just give statement of reasonable cause with tax return and get the IRS to cancel the tax... also IRS has become flexible.