mbozek

Sorry to disagree but must have a distribution per the proposed new 402A©(4)(B) in the bill: ‘‘(B) DISTRIBUTIONS TO WHICH PARAGRAPH APPLIES.—In the case of an applicable retirement plan which includes a qualified Roth contribution program, this paragraph shall apply to a distribution from such plan other than from a designated Roth account which is contributed in a qualified rollover contribution (within the meaning of section 408A(e)) to the designated Roth account maintained under such plan for the benefit of the individual to whom the distribution is made." I agree that the conversion is a regarded as a distribution for tax purposes in order for revenue to be collected (which is true for all conversions to a Roth) but as I understand it there is no distribution from the plan. The language you cite confirms that the pre tax assets are distributed/converted to a Roth account in the same plan. The Roth account is subject to all rules for qualified plans such mandatory distributions at 70 1/2, spousal consent for designation of another person as bene, QDROs, etc.

But... it doesn't allow them "within" the plan. Rather it permits rollovers to Roth accounts from a regular QP. So a person would still have to be eligible for a distribution before it could be used. Full text can be found here: http://finance.senate.gov/legislation/deta...29-92cebbd2b7a0 (the legislative text, beginning at page 164) The proposal allows conversion to a Roth account within the plan so that a distribution would not be necessary. The purpose of this provison is to prevent participants from withdrawing funds from 401k plans which reduces the fees collected by the plan. The proposal woudl also allow Roth accounts in 457b plans (I dont know if this is limited to govt 457bs).

As noted by B, the reason there is no plan failure for which a sanction can be imposed by the IRS is that a lump sum distribution in the year the employee attains 70 1/2 without withholding the RMD meets the literal requirements for a required distribution under 401(a)(9)(A)(i) in that the entire interest of the employee is distributed by the plan not later than the required beginning date, April 1 of the year following the year the employee attains 70 1/2. Since the plan has complied with the requirements of the IRC for RMDs the only possible correction is to require the employee to take the RMD from the IRA. The failure to withhold the RMD is no harm, no foul.

A long time ago the IRS allowed a 401(a) plan funded with annuity contracts to have a feature that permitted employees to make pre tax contributions under 403b to the same contract. It was stopped after the enactment of 401k in 1978 made it clear that pre tax contribuitions under a 401(a) plan could only be made to a 401k plan. Adding a 403b feature to a 401a plan would be a disqualifying amendment. Also 1.403b-10(b) generally restricts transfers from one 403b plan to another 403b plan. The only time 403b plan assets can be transferred to a 401(a) plan is for the purchase of permissive service credits or a repayment to which 415(k)(3) does not apply.

While you are correct that the plan only has to provide that the notices were sent, if the letters were sent by first class mail keeping the letters/envelopes which were returned as undeliverable is irrebutable proof that the letters were sent to the correct address when the employee is contending that he did not receive them because they were sent to his old address. Also I think the plan is required to send the notices to the address listed in ithe DRO, not the most recent address listed on file because the plan may not have the current address of the participant which will be in the court records. If the address listed in the plan's records is incorrect then the plan failed to deliver the notices as requried under 414(p) which will create complications. The plan complies with the notice requirement of 414(p) if it uses the address in the DRO.

ERISA 101: If plan is required to provide notice of the QDROs to PPT, Plan needs to be make sure it has proof notice was provided. How was the PPT notified of the 5 QDROs? Did the plan send notices via certified mail, return receipt requested? Does the plan have a record of receipt of the notices by the PPT? Were any of the 10 notices returned as undeliverable? Did the plan follow the plan procedures for providing notice? IRC 414(p)(2)(A) requires that the QDRO specify the PPTs last known mailing address. The legislative history of IRC 414(p) states that the notices required under 414(p)(6) are to be sent to the addresses specified in the domestic relations order or to the last known address of the participant if the order fails to specify an address. Were the notices sent to the PPT's address specified in the order? Note: Your post states that the orders and notices were sent to the most recent address that the plan has on file for the PPT- Is this the same address as his address in the domestic relations orders?

As the 40th president of the US was fond of reminding voters "Be glad you dont get all of the government you pay for." If you think this is bad wait until heath care reform takes effect in 2014.

Briefly the limits are stacked in three tiers: 1. 16,500 elective contribution 2. 3,000 elective contribution for eligible employees of certain 403b plan sponsors (5 years max) 3. 5,500 catch up for employees 50 and over. max 25,000. If eligible for #2, first 3k of contribution by employee 50 or over in excess of 16,500 must be counted toward amount in 2. Excess amounts are counted toward #3. See IRS pub 571 P 9-10 for detailed illustration of how to calculate maximum employee contribution. Also 403b contributions must be aggregated with elective contributions to all 401k plans, but not contributions to a 457 plan.

Why not give the IRS what they ask for even if it is not required, i.e, is there a downside to giving them the letter? If you dont provide the letter what will the IRS do?

pay himself 23,822.41 and deduct 7.65% fica tax (1822.41).

This is question involving Cal. law and federal retirement benefits for which I dont know the answers to Q1-3. I dont know if OPM accepts modified DROs. In 2007 the DOL issued reg 2530.206(b) which provides that a DRO issued after a QDRO has been issued will be valid as a QDRO if it meets all of the provisions that apply to a QDRO under ERISA. I dont think you can divest the CA court of jursidiction over this matter by moving to another state. The CA court would issued a DRO which is valid under CA law which would be submitted to OPM. You need to determine if the revised QDRO would be accepted by OPM because it accepts revised QDROs which are valid under the above reg.

Maybe she threw the notice out without reading it because it was enclosed with some routine informaton such as a statement and she thought it was some kind of advertising or maybe she forgot that she didnt designate a beneficary when she opened the IRA account so she disregared the notice. In any event there is no beneficary desigation on file. Given the nature of the dispute the bank will probably not make any payments under the IRA and until the heirs resolve the dispute among themselves or sue the bank in which case the bank will pay the IRA account into the court and ask to be removed from the case.

From IRC 414(p)(8): 414(p)(8) ALTERNATE PAYEE DEFINED. --The term "alternate payee" means any spouse, former spouse, child or other dependent of a participant who is recognized by a domestic relations order as having a right to receive all, or a portion of, the benefits payable under a plan with respect to such participant. Could you please explain the significance of the bolded language in your post. Its a mystery to me. And could you also answer this question. 42 USC 666(b)(6)© provides that states enacting legislation requiring payment of back child support to a state agency under 42 USC 666(a) must hold the employer liable for amounts which the employer fails to withhold from the income due the employee following receipt of notice from the state agency. Since 42 USC 666 is a federal law state laws enacted to comply with its mandates are not preempted by ERISA (42 USC 666©(3)); therefore if a plan fails to withhold child support from an employee's pension because the state agency is not an alternate payee under IRC 414(p)(8) will the employer will be requiired to pay such amount to the state agency?

If you read the custodial agrement you will find out that the custodian retains the right to amend the agreement at any time. Also most custodians require the IRA owner to designate a beneficary at the time the account is opened.

See DOL reg 2520-107-1(d) for disposal of paper records after transfer to electronic record keeping system that complies with the regulation.

I dont see how this is possible because ERISA 502(e)(1) permits concurrent jurisdiction by federal and state courts over benefit claims and the employee can chose a state court to hear the case, subject to removal to federal court by employer. Plan cannot eliminate extent of statutory jurisdiction to hear a case under ERISA any more than it can negate application of fiduciary provisions. Statutory jurisdiction allowing claims to be heard in state court is different from mandating arbitration under an ERISA plan because there is a federal arbitration statute which like all other federal laws is not preempted by ERISA and the Surpreme court has held that the federal arbitration act applies to all employers engaged in interstate commerce. (I believe it was the Circuit city case). ERISA also applies to employers engage in interstate commerce and the plan is an entity under ERISA.

Because the DOL has determined that the state orders are domestic relations orders eligible to be approved as a QDRO by the plan administrator. From DOL Opinion 2001-6A: " It is the view of the Department that an income withholding notice issued by the DCSE (NY State Agency) or county child support enforcement agencies as part of the States IV-D program (under the Social Security Act) is a domestic relations order as defined in section 206(d)(3)(B)(ii) of ERISA. The notice relates to the provision of child support to a child of a participant in a pension plan, enforces a child support order that is made pursuant to State family or domestic relations law and is made by DCSE or a county child support enforcement agency, which have jurisdiction over child support matters. " Derek should read Opinion letter 2002-03A cited above which determined that a QDRO can be approved if the state agency is named as payee because the state agency acts as the agent for the child in collecting and paying child support.

If the order meets all of the requirements for a QDRO other than it is authorized by an adminisrative officer instead of judge then the order is valid as if it is a QDRO and the plan makes the check payable to the state agency. Under 42 USC 666(b) the check is paid to the state agency to reimburse it for making payments to the AP due to the failure of the employee to pay child support required under the divorce decree. Therefore the payments are owed to the state agency. Since the payment to the state agency is required under federal law the order issued by the agency under state law is not preempted by ERISA.

To expand on this inquiry, if the plan is paying your ex before the QDRO is approved, that is probably not permitted by the plan. If you are paying it directly to ex, pending approval of QDRO, that is not a QDRO payment and you are responsible for the taxes on those amounts. I am currently paying her the 1/2 gross monthly out of my checking account. the short paragraph in the mediation agreement states she is responsible for any tax consequences... however I am the only one beinng taxed on the entire amount you are saying that when the qdro takes effect, I cannot issue a 1099 form to her... showing she recieved these monies and that i paid her portion of the taxes? AND that I will not be able to consider her portion of the taxes an overpayment/ i was assuming I would be able to "deduct" her portion of the taxes that i paid for her before the qdro comes into effect. comments? thanx! Who instructed you to pay you ex from your pension payments prior to approval of the QDRO? Once the benefits are paid to you you will be taxed on them. The mediation agreement does not determine your taxes. The rules for taxation of QDROs are clear. Your ex is taxed on the amount of the pension benefits paid to her under a QDRO. You are taxed on payments made to you. The only exeption is that you can deduct the payments to your ex from your taxable income if they qualify as alimony or separate maintenance under IRC 71. You will need to check with a tax advisor. The mediation agreement language only requires that she will be responsible for the taxes on the retirement benefits paid to her.

Under IRC 402(e)(1) payments made to your ex under a QDRO are taxed to her. The question is whether the QDRO will be made retroactive to include all payments she received before the date the QDRO is approved by the plan administrator. If it is retroactive then she will be taxed on the payments received before the QDRO is issued and will receive a 1099 from the plan. I am assuming the QDRO would be retroactive because otherwise she would not be allowed to receive payment of your benefits from the plan. What I dont understand is why the plan is paying her before the QDRO has been approved. The correct procedure is for the plan to withhold 50% of each of your pension payments until the QDRO is approved and then pay her all of the withheld amounts which would be taxed to her. You cannot issue a 1099 to her.

Under 403(b)(12)(d) 403b plans sponsored by governmental entities are exempt from all of the eligibility requirements under IRC 410(b). Governmental plans are not exempt universal availability under 403(b) ERISA Section 201 exempts government 403b plans from the eligibility reqirements identical to IRC 410(a).

Why do you need a QJSA? Is ths plan subject to ERISA? Yes this 403(b) plan is subject to ERISA. I dont know if the product you are looking for exists for this situation. Group annuities have different provisions than indivudal contracts and provide more favorable rates/terms for insured participants. Participants dont normally lose their more favorable rights under the group annuity contract when the contract ends. They recieve a certificate of insurablilty that guarantees the benefits provided under the group annuity contract. If the insurance company issues individual contracts the provisoins should not be less favorable to the participants and spouses than the provisions in the group annuity contract. There are a few insurers who issue QJSA group contracts for ERISA plans (TIAA-CREF, VALIC, Principal ) but I dont know if they will alow conversion to an individual contract. Also the final 403b regulations do not mandate that the 403b benefits must be distributed in the form of an individual annuity upon termination of the plan. The preamble to the 403b regs states that in order for a 403b plan to be considered to be terminated all accumulated benefits must be distributed to all particpants as soon as administratively practicable after termination of the plan. A distribution for this purpose includes delivery of a fully paid individual annuity contract. The preamble indicates that a distribution of an individual contract is only one means of effecting a distribution. What is left unsaid is whether distribution of certificates of insurability under a group annuity contract would be considered a distribution of the particpnat's interest sufficient to terminate the plan. Perhaps you should contact Bob Architect the IRS official who wrote the 403b regs to see what he thinks your options are. He now works for VALIC which may have changed its name. There are also FAQs on the terminating 403b plans at the IRS website.

Why do you need a QJSA? Is ths plan subject to ERISA?

What important assumptions are being left out?

Why does the plan want to limit the comp included for deferral purposes since there is no ADP testing and NPs prefer 403b plans to 401k plans because the HCEs can defer the max $16,500 (22,000 if 50) regardless of the level of deferral by NHCEs?