mbozek

Who is the designated payee under the QMCSO? is it you, you, as agent for the children?

Exactly. The evidence here (there is no account balance) indicates that the benefit was paid already. I'd certainly look or ask the client to look for proof of that, but the burden is on the (ex) participant, and I wouldn't pay anything without additional evidence that the benefit still exists. The SSA letter is simply evidence that a benefit used to exist. How does a participiant prove a negative (benefits were not paid) when the plan has all the records (including copies of the 1099R) if payment was made? Plans that paid out deferred benefits at a later date could have avoided inquiries for benefits if they submitted payment information on the 5500-SSA. Under your proposal, plans could avoid paying participants simply by periodically destroying all records of deferred vested benefits that have not been paid and saying there is no record of a deferred benefit when the participant requests payment under SS notice. It doesnt take much space to store copies of of 1099Rs or images of checks.

The IRS has been extremely vauge as to whether there was a requirement to change the info on the 5500-SSA prior to 2009 if the participant cashed out a deferred vested benefit that has been reported on the SSA in year of termination. I thought the IRS said that it was recommended that the cashout be reported, but not required.

Answers: 2. This is tough situation which ilustrates why plan administartors need to keep records of payment forever. One question is whether the plan sponsor can recover the w-2p or 1099R form from the IRS by using the participant's ss #. IRS does have a service which allows taxpayers to recover prior tax returns but I dont kow if information returnas are included. 1. Plan has the obligation of keeping records and paying benefits to participants. There is no statute of limitation for a participant to request benefits so the plan must always be able to demonstrate payment has been made. Saying plan has no record of accrued benefits for participant is not proof that benefits were paid to participant because records of vested accrued benefits could have been lost or misplaced. If participant files a claim for payment how does plan administrator deny claim if there is no record that payment has been made? 3. According to the IRS, under the old 5500-SSA plans could update the status of a participant's benefit by including information that a deferred benefit had beenn paid in a later year which would remove the benefit from the SSA register. 4. See answer to #1. 5 & 6. I dont know. If there are no records of an accrued benefit how can plan determine what participant's account was invested in. See 7 7. Most expedent solution with least cost and risk is for plan to pay $850 to participant as full settlement of his accrued benefit in return for waiver and release of all other claims. Fiduciary justification for paying latent claim for which there are no records of a deferred benefit is business necessity to eliminate litigation risk and cost of determining whether payment is owed which could be greater than amount of payment and prevent further liability to plan. Need to consult with counsel as to how this can be done.

So the LLC should be formed while the RE is held in the Q plan and the owners will exchange their ownerwhip of the RE for interest in the LLC that owns the RE and then the LLC will be spun off from the plan without taxation b/c all of the ownership is held in a 501a entity. The owners would then transfer their certificicates of ownerhip in the LLC to their IRAs in a tax free rollover.

I have heard higher $ amounts depending on the type of plan investments and features but I dont do any audits.

See pub 560 P 15 Self employed person can make contributions for himself only if he has has net earnings from compensation in the trade or business for which th eplan was set up. Reg 1.401-10(b)(2) " If a self employed person is engaged in more than one trade or business, each trade or business shall be considered a separate employer for applying the provisions of sections 401 through 404 to such individual. " Edit: If she is in the 0 tax bracket she could contribute up to 22k in employee contributions to a roth 401k account since her earned income would be eligible for contribution.

The LLC is used as a vehicle to permit holding the RE in an IRA whose the custodian does not allow direct ownerhip of RE because of liability exposure of the custodian for environmental or tort issues. Alternatives to using an LLC include a Corp or transferring the RE to a taxable trust in which the IRAs have a beneficial interest. The choice of entity to hold the RE that would be acceptable to the IRA custodian depends on the protections offered under state law whch is why this is a complicated question. In some cases it is better for the plan to sell the RE and distribute cash to to the owners.

Why not?

So how much more would a client have to pay for a full scope audit if a limited scope audit was not permitted?

Why not establish an LLC under state law and have the IRA of each brother contribute a subscription amount equal to their % interest inth the RE. For Example, if the ownership is 45%, 20% and 35% the IRA of each brother would contribute $450, $200 and 350 respectively to the LLC and receive in return a certificate/share of ownership of an equivalent interest in the LLC. Thus A's IRA would have a 45% interest in the LLC, B's IRA would have 20% and C's IRA a 35% interest and the LLC would have $1000 in assets. The plan would then rollover the RE to the LLC after each brother elects a rollover of his interest in the RE. Each bothers interest in the RE would be equal to their interest in the LLC.Tricky part is getting all the paperwork done right as to the transfer of each brother's undivided interest in each property and titling the ownership of the RE in the name of the LLC.

Assuming that the notice was delivered late (and I dont know if it was) what relief is the client seeking? It seems that no one has prevented him from receiving his distribution which he has not requested.

That makes sense - Why should the fed. govt guarantee obligations that are insured by state insurance funds. Is this the exemption for a DB plan that is treated as individual account plan defined in ERISA 4021(b)(12)?

While your premise sounds palusible in theory, recent financial history indicates that acquiring risks that are deemed to be unlikely can bring down the largest insurers with AAA credit ratings. AIG insured almost $450B in credit obligations of 300 european banks for which it recieved a palty 20 basis points in premiums for guaranteeing against the remote contingent risks of a default/decline in value of the securities. When the Banks CMO's begain declining in value after 2006 AIG was required to put up cash collateral equal to the decline in value which culimated in needing $50B in cash in Sept 2008 or file for bankruptcy. To prevent a collapse of the global financial markets the Fed and treasury bailed out AIG with an infusiion of $180B in cash/loans and today the US govt owns 50% of AIG. Accepting remote contingent risks can result in a catastrophic event for any financial institution.

Under ERISA 4021(b)(9) PBGC coverage is not available to DB plans established and maintained exclusively for substantial owners. A DB plan covering only the owner is no more eligible for PBGC coverage than a plan covering government employees which is excluded under 4021(b)(2) regardless of whether the PBGC accepts the premiums because the exclusion is statutory. Your assumption of entitlement to government guaranteess for business owners is shocking (and Not as depicted in 'Casablanca') because you want a government agency that has a shortfall of $23B in pension benefits it has guaranteed to extend financial guarantees to a privledged class of business owners who are statutorily inelgible in order to protect them from the volitality in investments that over 90% of US employees are exposed to. Why should self employed business owners have their retirement expections guaranteed by the government over employees' social security benefits? No one has been able to explain how the PBGC is going to grow their way out of the $23B deficit other than by substantially raising premiums on the declining number of DB plans while the number of failed employers grows, e.g., Kodak, AA, or the more likely scenario of an infusion of cash from taxpayers similar to Treasury loans made to Fannie and Freddie ($160B and growing each month) because of the default of homeowers on their mortgages without any hope of recovery. As a separate matter I believe that after exec life failed the PBGC issued a statement that it did not insure retirement benefits guaranteed by an insurance company.

Are you saying that the information required by PPA 1102 was included in the Distributon Notice sent by the broker to the participant in April 2012? What is the Distribution date supposed to signify? Was it the first day the particpant could receive a distribution? Has the participant requested a distribution from the plan?

What does the plan say?

I dont understand how this can be done. I dont think the MF will wait a week to be paid for a purchase that was confirmed and I dont think that margin loans are allowed to purchase MF in a retirement plan b/c retirement benefits cannot be subject to alienation or assignment. So what exaactly is going on here?

I dont understand what you are trying to describe. What is "this money type from one of my plan list"? Who is asking for a distribution? A financial advisor?

Geez, no need to be rude. Inquiring minds want to know.

Under 72(t)(2)© payments made to an alternate payee under a QDRO are exempt from the tax. Dol opinion 2001-06 states that child support orders are enforceable as QDROs. According to the DOL opinion, the state agency is authorized to receive the payment as the agent for the child who is the Alternate Payee so by inference the payment is being made to the AP.

Just what part of a DC plan cannot reduce allocations to the plan on account of attainment of any age (IRC 411(b)(2)) dont you understand. This is an IRC/ERISA requirement and applies to employees at any age, e.g. 22 as well as 50.

Only requirement that I am aware of is notification by SS to a retiree who has commenced SS benefits that benefits may be available under an ERISA retirement plan.

Why not determine who is the default bene under the plan to whom Plan admin should send a distribution form. Plan should request a death certificate. Why do you think a court order is needed if bene can be identified- retirement plans are non probate assets so benefits do not pass under court supervision.

Isnt the purpose of an SPD to provide such information? It seems that the need for more disclosure is being pursued by advocates for employees to require the plan fiduciary to inform participants of the obvious features that are described in the SPD for which there is no further obligation to provide information.