mbozek

no.

Being pretty sure may not be good enough for a plan administrator who must put the plan's qualified status at risk without IRS guidance. My queston is why should the PA take such a risk in the absence of IRS guidance by transferring assets between the accounts of two spouses within the same plan when it could do a rollover from the account of the deceased spouse to the surviving spouse without any risk.

Card: the tax benefit rule also applies to employees to the extent there is a taxable event,e.g., return of the premium to the employees. You should check the IPO to determine what is the basis of the stock - my understanding is that is is 0. You really need to comsult with tax counsel to determine whether the portion of the stock allocated to employees will be taxed to them if it not paid to them--- it is a facts and circumstances decision under the tax beneft rule.

A roth IRA may invest in RE. However there are limitations - you can not have a Roth IRA invest in a home that you or family member will live in and you cannot use have the IRA borrow money to purchase the RE because these are prohibited transactions. Also there are few IRA custodians who will own the RE because of legal liability issues (environmental and negligence). A custodian will charge a high annual fee for custodial duties. Also owner must provide an annual fmv of the RE to the custodian for IRS reporting purposes. While the Roth IRA assets will not be subject to taxes when sold, no loss can be recognized if the property is sold for less than the purchase price. Foreign RE is almost impossible to place in an IRA.

BPicker: I think the question is whether such a transfer is legally permissible under the applicable tax law provisions since a qualified plan can be disqualified for accepting an impermissible transfer. There is no reason for a plan administrator to make a trustee to trustee transfer/rollover (other than a rollover to a spouse) under facts presented by John A without some IRS precedent and put the plan at risk regardless of wither the plan permits such transfers.

I have never seen a ruling authorizing a trustee to trustee transfer between two participants in the same plan. I think there needs to be a distribution and then a corresponding rollover back to the plan by the spouse. If the beneficary is a non spouse then there must be a taxable distribution because tax policy is to permit rollovers only between spouses.

cdg: why do you care if your ex pays taxes on his payments? If he paying taxes on the payments then you get them tax free. Ct could reduce amount of his payment to u to take that into account. Generally court cannot issue qdro after benefits payments start. Issue is whether ct has jurisdiction to order payments after divorce/ property settlement has been finalized and agreed to by both parties. This issue is similar to cases where spouse's attorney overlooks retirement benefits in divorce settlement. Good luck.

need to check: DOL opinions issued in 2001 on pru demutualizationwhich includes discussion of treatment of employee contributions and prospectus on pru IPO which also discusses these matters in general. I though the point of the getting the triust opinion was to provide a way for employers to avoid having to set up a separate trust under ERISA for holding the pru stock which was allocated to welfare plans as part of the demutulaizaton (since the stock could not be held as an asset of the employer). Under the tax benefit, rule a refund of employer contributions deducted in a prior year would be taxable income in the year received but the employer treats it as a corresponding deduction if used to provide benefits in the year the refund is received. Employers generally sell the stock received in demutualization adn use it to pay for the cost of future premiums to the plan. U need to find counsel to review the plans and your options.

you have three options for distributing PS benefits ( DB benefits are transferred to PBGC in accordance with IRC provisions) 1. attempt to contact missing part by sending notice through SS admin 2. make 100% distibution to IRS as income tax withholding 3. treat their accounts as a forfeiture and distribute it among remaining participants (plan should be amended for this option).MP may have a claim against er if they later resurface -- but I dont know if sucessor would have any liability since it did not maintain plan.

I thought that the payroll deduction IRA is a no cost way for employers to offer an opportunity for employees to save for their retirement wihout becoming a plan sponsor since these arrangements are exempt from ERISA. The employee makes payments ($3,000/$3500) to the IRA and claims a deduction/credit from income tax. IRA deduction will increase to $5000 (+over 50 contributions). Employer is not subject to fiduciary provisions of ERISA since employees control investment. The 403(B)/401(k)/ps options all require employer involvement/risk/cost which is what is avoided in payroll deduction IRA.

I am not an expert but I thought that medicare is the secondary health carrier for those employees over 65 who are covered by employer health insurance and will only pay for some charges not paid by employer health insurance. The law requires that employers with 20 or more employees must cover employees 65 under the same conditions as younger employees. Medicare will not pay health expenses for employees over 65 until the benefits in the bank are used up.

529 plans are state plans that allow individuals to put after tax amounts into a fund to pay for college eduction in a particular state. The funds are not subject to the federal gift tax. But the contributions are made on an after tax basis of as much as $11,000 a year. The only advantage is a state tax deduction. NY's 529 plan is managed by TIAA-CREF. who you can call for further information.

You can avoid separate accounting by making the annuity option available to the entire account balance under the PS plan. Other than requiring spousal consent for plan loans on PS accounts, there will be no other admin issues since spousal consent would be required for a non annuity distribution from the merged plan. The distribution forms could utilizie the language from the MP plan. Simplest form would permit only two optoins: Annuity and lump sum. The only other option would be to purchase the annuity contract for the participants now and make it part of the participant's account but this would be a very poor way of investing plan assets.

Rev. Rul. 67-69

For 403(B) plans subject to ERISA, the contributions are generally required to be remitted no later than the 15th day of the month following the date they were withheld from the employee's pay. Late payments may be subject to a 5% penalty under ERISA 502(i) but you need to check with counsel. For non ERISA plans there is a pre ERISA IRS ruling that allows the employer to remit the funds as infrequently as once a year. Also Reg. 1.415-6(B)(7) requires contributions by tax exempt employers to be remitted no later than 5 1/2 months after the taxable year/fiscal year with or within which the limitation year ends in order to be credited as an annual addition for such tax/fiscal year. I don't how this rule extends to government employers who do not file 990s.

It is good to know that the IRS believes that the only consequence of investing in stock is that the contributions (not earnings) for the year are included as taxable income because the contract is not an annuity for that year. Therefore the only penalty to the employer is for income tax and fica tax withholding, if any. I don't know how the employer will be able to contact the IRS about the problem because many employers do not get copies of what are the investments used by employees in a 403(B) plan since the account relationship is between the broker and the employee.

Answer depends on how merger was accomplished. It used to be IRS policy that a DB plan could not be merged into a DC plan without a termination of the DB plan. This required the purchase of annuities for the DB benefit. The question is whether the DB accrued benefits were carried over to the CD plan in some distinct form; e.g,. as the present value of the accrued benefits or as an annuity contract purchased for the employees which is part of the accrued benefit under the DC plan. If accrued beneft for each participant was transferred in a $ value form for each participant then that amount should be segregated for the purpose of the J & S annuity which must be purchased. But what happens to the earnings on the amount allocated to the J & S annuity? Is it credited to the participant's account under the MP plan? If an annuity was purchased from an insurace co then the annuity benefit will be paid from the contract The terms should have been spelled out in the plan documents effective after the merger.

This problem can be solved by requiring the plan or employer to purchase a specified amount of stock (10%) from the employee at fmv at a specified time or after number of years or allowing the employee to sell the stock on an established exchange through the plan without a distribution in order to diversify the investments in the plan before retirement age so that the employee will not be left destitute if the stock tanks. There would be no distribution. The proposal is not fool proof (employer who becomes strapped for cash would not be able to buy stock back) but it is better than the present system. A more draconian solution would be to require all ESOP sponsors to keep some of the plan assets in cash at all times to satisfy the request for sales by the employees.

RLL: The reason their will be changes in ESOP diversification was noted a post in the 401(k) plan thread under lesops and esops: Because the stock can goe to 0 (Polaroid) before the employees can diversify at age 55. In the post Enron world there is no public policy reason for allowing employers to get tax deductions for the contributions of the stock if the value of the stock declines to 0 before the employes can sell it.

NRA cannot be later than age 65 or 10P. If u want to put in a an age later than 65 be prepared answer questions from the IRS. The question is why do u want to go outside the statute instead of providing a NRA at the later of 65 or 5 yrs of participation for all participants?

I was thinking of a DB plan with an ERD. There is no need to have an early retirement date in a 401(k) plan because payment cannot be made until attainment of age 59 1/2 if in service or upon termination. Early retirement is a useless concept in a PS plan and would have relevance in a money purchase plan only if the participant could commence retirment benefits at ERD without terminating employment.

MGB:IRC 401(a)(14) states that that unless a participant elects otherwise, retirement benefits must commence no later than the earlier of age 65 or the the plan's normal retirment age. There are limited extensions until terminaton of employment after NRA or until the 10th aniversary of participation. This provision was added by ERISA to prevent employers from denying employees the right to retirement benefits when they attained SS retirement age. I though the origional queston related to the date the benefits could be distributed?? The NRA cannot be any age. I don't understand why the ERD cannot be a distributable event since a participant could recieve a lump sum an roll it over to an IRA.

According to news reports Enron's ESOP permitted employees to sell Enron stock at age 50.

I have understood that an employer could always be more liberal than the minimum required under a statutory provision, e.g., employer can provide faster vesting than 5 year cliff/7yr graded with out being disqualified. In the post Enron world this will probably be changed to allow diversification at a far earlier age.

Workers comp plans are not qualified plans becuse they do not provide retirement benefits or provide for the sharing of profits by the employees. However it is my understanding that some worker's comp plans may established as tax exempt VEBAs under IRC 501©(9). A VEBA would not be subject to ERISA's requirement for a fidelity bond if it was operated exclusivley to comply with wc laws because wc plans are exempt from ERISA. .