mbozek

Are you saying that a plan cannot condition payment of benefits to a beneficiary on being required to repay the funds if the beneficiay is determined later not to be the rightful payee under law? There is plenty of case law that has allowed plans to recover benefits paid to the wrong party under the doctrine of unjust enrichment since ERISA is a law of equity. Is this any different from requiring competing beneficiaries who agree to share the distribution to waive their claims to additional benefits under any future action? If the person receiving the benefits is not legally entitled to payment what new condition is added by making payment subject to indemnification since the party receiving the benefits is not the beneficiary designated under the plan?

The plan can condition payment of the benefits upon indemnification if some one else is deemed to be the rightful heir since it is not prudent for the plan to be put at risk of paying the same benefits twice. If amount of the benefit is too small for interpleader to be cost effective plan can pay on condition of being indemnified by the beneficiary. The problem is that the beneficiary may not be able to be located or may not be able to pay back the benefits.

There are two seperate issues that need to be answered. 1. Who can receive benefits under the QDRO for your ex's benefit. Only Nevada PERS can tell you what the rules are. If your first ex's benefits are payable to you alone then it is highly unlikely that PERS will agree to pay some one else with you. 2. Are the QDRO benefits part of maritial property which can be divided in divorce? This is determined by OK law. However most states that have equitable distribution law for divorce (where the court divides the property of both spouses without regard to who legally owns it) can only equitably divide property acquired during the marriage. In otherwords your PERS benefits payable under the QDRO were acquired before your present marriage and are not subject to division by an OK court in divorce. If OK law applies the separate property rule instead of equitable distribution then your QDRO benefits and any other property held only in your name will be exempt from division in divorce. Few states apply separate property to divorce. EDIT: OK is an equitable distribution state and property acquired before the marriage is not subject to equitable distribution. your pension benefits payable under the QDRO are not subject to division by the divorce court. You can google "Oklahoma Division of property in divorce" for an explaination. You need consult with a divorce lawyer to determine what rules apply to your case.

This is a contract problem due to the failure of company A to provide notice of termination of the contract to Insurance A. Absent any provision in the contract that would invalidate the contract with A (e.g., entering into a contract with another insurer at the same time as the contract with A is in effect), X is liable to Insurance A for Jan and Feb premiums. See if Co B would give a partial rebate for Jan and Feb since Co A is paying some claims incurred in those months.

If the claim is being made by a state child support agency, then the plan administrator has the obligation to pay the 401k benefits to the state agency under 42 USC 666(b) if benefits are in pay status. What needs to be reviewed is whether the benefits are in pay status and can be paid since the participant has terminated employment and distributions from a 401k are available after termination. It may also be possible that the state agency can impose a lien on the participant's benefit which will require payment to it when the participant requests a distribution. Since the payment by the plan directly to the state agency is required under federal law, preemption of state law under ERISA is not available as a defense. If the Plan administrator does not pay the benefits owed to the state agency under 42 USC 666(b), then the employer will be liable to the state agencey for the amount of child support.

If the FMV of the property is 0 then that is what should be reported on the 1099 but deducting the outstanding mortgage is an accounting Q. Check instructions for 5329 form. However, assets held in a Q plan are subject to UBIT if they are debt financed. See Pub 598, P 14. If the client's account in PSP was receiving income over $1000 per year from the debt financed property UBIT may have applied.

That is not correct. ERISA exempts non profit 457 plans from the vesting, funding, eligibility and the fiduciary (including bonding) requirements of Parts 2,3, and 4 of Title I. They are exempt from the annual reporting and disclosure requirements of Part 1 such as 5500 and SPD if a notice is filed with the EBSA within 120 days of the date the plan was established. Otherwise the R and D requirements must be complied with. However, a NP 457 plan is not exempt from Part 5 of Title I of ERISA and is subject to the claims provisions/preemption since it is a pension plan established to provide benefits after termination of employment under Section 3(2) of ERISA.

The only way to transfer IRA assets to an ex spouse under a divorce decree or separation agreement which does not result in taxation to the IRA owner under the assignment of interest rule (which applies to all other IRA distributions to another party) is to follow the procedures to effectuate a trustee to trustee transfer of IRA funds from the owners IRA to an IRA of the ex spouse as stated on P. 28 of Pub 590. Any other transfers from the owner IRA to the ex will result in taxation of the IRA owner. In Jones v. IRS,TC memo 2000-219 an IRA owner who received a distribution from his IRA and endorsed the check to his spouse was taxed on the distribution because he failed to satisfy the requirement for a non taxable transfer under IRC 408(d)(6). My question is why would an IRA owner take a risk of taxation by transferring an interest in his IRA to his ex spouse outside of the clear path to a non taxable transfer stated in IRS pub 590.

I think the OP gave two different possibities: 1. where the the IRA owner paid the ex spouse an amount in cash directly from the IRA, i.e. she received a distribution paid in her name from H's IRA account. According to the IRS the tax is paid the by IRA owner because it does not come within the exception cited in Pub 590. PLR 9422060 and 8820086. 2. where the funds were routed through the IRA in the ex spouse's name. I assumed that in # 2 he meant that the IRA funds were transferred to the ex spouse from the custodian of H's IRA to the custodian of the Ex's IRA in tax free transfer as permitted in Pub 590, P28. (H could also elect to have his IRA retitled in his ex spouse's name). If H's IRA funds are routed the ex spouse in another manner such as by giving her a check drawn from his IRA payable to her IRA H will have made a taxable distribution.

I dont know what the other posters were referring to in their comments but pursuant to a divorce decree or separation agreement some or all of H's IRA account can be transferred by H's custodian to the custodian of W's IRA without incurring any tax or penalty. See Pub 590 P 28. After the funds are transferred to W's IRA she will be subject to the 10% penalty tax on premature withdrawals. The transfer is effectuated by inserting a provision in the divorce decree or property settlement agreement ordering the transfer of X dollars/% from X's IRA to an IRA established by W. H's custodian must be notified by sending the divorce decree to his custodian along with instructions of how to transfer the funds to W's IRA. If H pays W the amount ordered by the divorce decree/property settlement directly to W from his IRA H will be taxed on the transfer and will be subject to the 10% penalty tax. There is no rollover option for IRAs which allows H to write a check from his IRA to W's IRA which W can deposit in her IRA without H being assessed tax on account of a distribution. Transfers to an ex spouse from an IRA are not subject to the QDRO requirements. Distributions of plan benefits to an ex spouse under a QDRO can be rolled over to her IRA. See IRS pub 590 P 27.

As noted IRS pub 590 limits a participant's retirement plan investment in gold to US coins to and gold bullion. Any other participant directed investments in gold are deemed a taxable distribution in the year invested subject to income tax and the 10% penalty.

There are at lest 4 ways to retain the post 86 AT funds received as part of a distribution without paying any tax on the pre tax funds. 1. If the plan permits, make a direct rollover of all pre tax funds to an IRA. Under IRC 402©(2) the first distribution is deemed to be from pre tax amounts. See Pub 575, P 26. At a later time, such as the next year withdraw the AT funds. 2. If the plan permits, receive a distribution of the AT funds and attributable earnings. Under IRC 72(d)(2) this distribution is permitted to be rolled over because it is a separate contract. Only the pre tax earnings will be subject to the 20% withholding tax which can be paid from the AT amount and the amount withheld can be recovered by lowering W-2 withholding or a refund when the tax return is filed. 3. If 1 or 2 are not available receive a distribution of the pre tax and AT funds and pay the 20% witholding tax on the pre tax amount. As long as the pre tax funds and an amount equal to the taxes withheld are rolled over to an IRA within 60 days of the distribution, the entire AT amount can be retained. See Notice 2009-68. The amount withheld can be recovered when the tax return is filed. 4. Elect a direct rollover to an IRA of both pre and AT amounts and then later in the year roll the pre tax funds to another Qual plan. In the following year the AT funds can be removed from the IRA without tax and any earnings can be rolled over to an IRA if there are no other traditional IRAs subject to the Pro rata rule. All of the above options are complicated and require the assistance of a tax advisor and a review of the plan provisions with the plan admin.

You need to provide more information on what assets the government is searching for and whether they were innocent investors or insiders. If the clients invested IRA assets in the Ponzi scheme, recovery of their losses on their investment will be subject to whatever the bankruptcy trustee collects on their behalf. However if the clients profited from the Ponzi scheme then they may have to give back their profits. For example, in the Madoff ponzi scheme some innocent investors received more in total distributions than they paid into the Madoff fund as an investment The trustee is seeking a return of the excess funds on the basis of equity, i.e., the recovery of all investors should be treated equally based on the amount they invested. Other Madoff inside investors received returns of 50% or more per year on their principal and the trustee claims that they should have known that the payments were from a Ponzi scheme and not a legitimate investment. Google litigation on Sterling investments and Stanley Chais. The clients would also be required to repay distributions received that were a "fraudlent conveyance" or a voidable transfer under the bankruptcy law. The statute of limitations for commencing an action for a fraudlent conveyance is 2 years from the bankruptcy filing while the s/l for a voidable preference is only 90 days. What government agency is looking for assets? Is it the bankruptcy trustee, the SEC, SIPC? Note: state laws that protect IRA assets from creditors claims do not apply to a fraudlent conveyance. I dont know about claims for recovery made by the bankruptcy trustee under a claim of equity or another government official.

Under IRC 404(a)(6) all contributions are deductable on a cash basis for the tax year in which the contribution is made or for contributions made no later than the date for filing the tax return for the tax year. Rev Rul 76-28. According to Pub 560 the deductible amount cannot exceed the plan's unfunded liability. Excess non deductible contributions can be carried over and deducted in a subsequent tax year but will be subect to the 10% penalty tax on non deductible contributions. Excess contribution tax can be eliminated by withdrawing the excess amounts before the date for filing the tax return or deduction of the excess contributions in a later year. If the client contributes the funds in 2011 the only way they will be deductible in 2012 is if the contrbutions exceed the unfundied liability in 2011 but the excess will be subject to the 10% penaly tax in 2011. See Form 5330. If the client contributes all the funds at the beginning of 2012 the client can deduct the maximum deduction permited for 2011 and the excess can be deducted on the 2012 return without any excess contributions tax.

There are two separate classes of creditors. If the church plan is qualified under IRC 401(a) then the benefits of participants cannot be seized by a bankruptcy creditor. If the participant is sued by a judgment creditor on a non bankruptcy claim the retirement benefits will be protected from such a creditor if state law does not permit seizure of pension benefits by a creditor or if the plan contains a spendthrift provision not allowing seizure of a participant's benefits by a creditor.

You need to review the restrictions in the PT rules of IRC 4975, specifically an employee using a 401k account to purchase a business in which he or she owns more than 50% interest. See Flahertys Arden Bowl Inc v. Comm, 115 TC 269 (2000). Or loaning his /her plan assets to a family member.

There are several IRA custodians who will accept non traditional assets such as Entrust or Delaware Charter but the annual fees are steep, e.g., $800+ and the custodians disclaim any responsibility for insuring compliance with the IRC 4975 rules. Google "non traditional IRA custodian or IRA alternative investments" to find the links. Most custodians have an approved IRA document that allows the use of non traditional assets. While an IRA can loan money to an unrelated third party, some family mermbers such as, spouses, parents and children are parties in interest. However, siblings are not parties in interest. Need to check IRC 4975 to find out if loan is a PT. Best thing to do is to put loan in a separate IRA so as not to contaminate other IRA assets.

This presentation from the IRS seemed to be related, starting on page 10. Still no mention of the provider or participants. Under IRS privacy laws all identifiying information of the taxpayer is deleted in a PLR.

So, a check with a date of April 1, 2011 that is mailed by the bank on April 2 would be in violation? If a Plan makes payment as of the end of the month, then would your explanation mean that a check dated April 30 that is mailed March 31 is okay? If not, then the Plan would need to have the pension start March 31 and mail the check prior to this date. Under IRS rules the check is deemed received on the date it mailed/postmarked at the PO, the same as a tax return is deemed filed on the date is mailed/postmarked. It will also be received on the date is sent electronically. If the check dated April 1 is mailed on April 2 it will be a timely MRD if April 1 is a Sunday. I dont understand why a plan would send a post dated check that could not be cashed for 30 days, since the check would be taxable in 2011 regardless of when it is cashed. The IRS rules deem the check to be received on the date is is mailed out, subject of course, to collection of the funds by the participant. I dont know whether a post dated check would be legal under the banking laws. Why cant the plan mail the check for the MRD due April 1 on the last business day in March like any normal business?

Rules for DB commencement: Reg. 1.401(a)(9)-6 Q/A-1© Annuity payments must commence on or before the employee's RBD (April 1 of the calendar year following the year in which the employee attained 70 1/2). Under the IRC if the date for performing an act under the IRC falls on a Saturday, Sunday or a holiday the date for performance is extended until next business day. The date of payment of the RMD is the date the check is mailed by the plan adminstrator or trustee, not the date on the check.

If permitted under state law and the sponsoring employer has reserved the right to terminate the plan at any time then future benefit accrual can be eliminated after the plan is terminated. You will have to check the state consitution or case law for the state in question to see if there are any restrictions on eliminating benefits. For example, the NY state constitution prohibits the reduction of benefit accrual after an employee becomes eligible to participate in a public employer retirement plan. This has been applied to prohibit a reduction in future benefit accrual by a state employee. You can google "Public Pension Plan Refom: The Legal Framework" by Amy B. Monahan for a good survey of the retirement plans for public employees in all 50 states. According the article only about 24 states have any case law or state constitution provisions that answer the question of whether public employee retirement benefits can be eliminated or reduced prospectively or retroactively. However there are lawsuits pending in MN and CO on recent state legislation which will reduce the cost of liviing increases paid under the state pension plan in future years to state retirees receiving benefits, even though there will be no reduction in the current benefits paid to the retirees. The retirees claim that the state constitutions prohibt a change in state retirement laws which will reduce future cola increases even if the increases have not accrued. Thats like taxpayers claiming that a state could never increase income tax rates after the state legislature reduced the tax rates in a prior year.

You need to be more specific in your question. What is an OPEB trust? What benefits does it provide? Who are the employers? Other Post Employment Benefits - like retiree health, long term care, etc. The trust is used for holding the advance funding of the lifetime benefits. For example, union-guaranteed life-time health coverage for fat-cat govt workers. Isnt the tax exempt status of a trust that provides welfare benefits determined by designation as a tax exempt organizaton under IRC 501©((9) instead of a PLR or if the trust is established by government employer, exempt under IRC 115?

You need to be more specific in your question. What is an OPEB trust? What benefits does it provide? Who are the employers?

We are dealing with a plan that does not want to honor FL-460 since they are claiming the participant/ex husband is not in pay status. Any case law or suggestions There are two different types of child support orders which can be enforced against retirement benefits. 1. Under 42 USC 666(b) a state child support agency can issue an enforceable order against a retirement plan to require that back child support be paid to the state agency. The funds are a repayment to the state agency for amounts that the state agency paid to the custodial parent because of the failure of the employee to pay child support required under the divorce decree. The child support initially ordered by the divorce decree is not contingent on a retirement benefit being payable payable to the employee. Since this state agency order is authorized under federal law, the state order is not preempted by ERISA. However, the order is only enforceable against retirement benefits that are in pay status. Presumably the payments will be taxed to the participant. The failure of the plan to pay benefits to the child suport agency will result in liability of the employer to the child support agency of the amount of child support owed. 2. Under IRC 414(p) a state court can issue a DRO that a retirement plan pay funds from a participant's vested retirement benefits to a child who is an alternate payee. The DRO can be approved as a QDRO if the requirements of 414(p) are met. The funds can be paid to the custodial parent for the benefit of the child. The payments can be ordered even if the retirement benefits are not in pay status. Under the IRC payments to a child who is an alternate payee are taxed to the participant. Q which type of payments are FL-460?

What kind of plan? While the above statement is generally true for a qualified plan of a calander year employer, there are exceptions. For example, elective contributions to a 401k plan can only be made after the date the plan is adopted.