mbozek

yes 401a and 403b plans-65,500 yes- 457b plan 16,500 no- 457b plan 5,500 catch up b/c there is no catch up in a non profit 457b plan However the employee could do a 5,500 catch up in the 403b plan if age 50. To be eligible for the 457b the employee must be a member of the top hat group- e.g., a select group of management or highly compensated employees as defined by the employer.

It's been my experience that IRAs generally should only be escheated after age 70 1/2 (mandatory distributable event) + x years of inactivity & client contact. You might ask the company's policy on escheatment. Is it possible that the account is set up under your parents SSN or other vesting? Do you have an old statement that could help in the location of the account? Where did you ever get that idea? IRAs are subject to state laws on abandoned property which allow property to be escheated after a number of years of no activity by the owner and/or failure of the owner to contact the institution. Escheat does not apply to qualified plans subject to ERISA for which state laws on escheat are preempted.

Where does the IRS say that benefits or contributions under IRC 415 can be reduced because of a decline in the base period as long as it does not drop below the base amont in 2001? Reg. 1.415-1(d) specificially states that the amounts shall be adjusted annually for increases in cost of living. In fact there is no reference in the any part of the 415(d) regs to any adjustments on account of a decrease in the cost of living. Is there any difference in the answer if the cola adjustments in 415(d)(1) are made by incorporating the procedures under the SSA in 415(d)(2)(B) which prohibit any reduction because of a decline in the SS cola amount? All you have done is create a distinction without a difference.

If he is only entitled to 50% of the 41% of your IRA which is the maritial amount, then the number looks ok. Also you do not need to submit a QDRO to divide an IRA (Many custodians will not accept a QDRO to divide an IRA). Under IRC 408(d)(6) you can ask the IRA custodian to transfer the amount due your ex under the divorce decree to an IRA established in the name of your ex. The transfer is a tax free rollover and he will be taxed when he withdraws the funds. Usually all you need to submit is the divorce decree and a completed request for distribution. Also your ex must establish an IRA in his own name. But you should make sure that his attorney agrees on the amount that is to be transferred to him. If you havent already done so make sure that you cancel all credit cards which are joint accounts to prevent the CC company from coming after you for his debts when he defaults.

You should talk to your attorney before you talk to your ex's attorney. You should contact your state child support agency which will collect back child support for you and advance payments to you while you are waiting. Since you didnt show the math I have no clue how you came up with 6489.

It is an urban legend of pension practice that plan administrators can withhold payments of benefits while a plan is waiting for a determination letter after termination since a determination letter request does not trump a participant's right to be paid in accordance with the terms of the plan as required by ERISA. Terminated plans awaiting a FDL are required to be administrered in accordance with their terms which requires that benefits be paid to participants who are entitled to a distribution, for example, on account of termination. Plan administrators do not have any discretion to withhold benefits while awaiting a FDL. File a request for benefits and see what happens. If the plan does not respond within 60 days then file a claim for benefits under the claims procedures in the SPD. Well that's an appalling piece of information to be learning at this stage in my career. For years and years I have seen employers freeze distributions pending IRS letters with nary a peep from anyone. We usually relied on language that said that distribution would be made "as soon as administratively feasible". Am I (and my partners in crime) alone in the pension universe, or have other people been doing this too? I have a Q- assume in the above situation the employer freezes distributions upon termination in violation of the plan terms until an FDL letter is recieved a year later. In the meantime the participant's account balance declines by 50%. What do you think the employer's chances are under LaRue if the employee commences a fiduciary lawsuit for loss of account value on account of the failure to follow his instructions to distribute a lump sum to which he is entitled under the plan?

There is nothing to interpret because IRC 415(d)(1) only allows adjustments for increases in the cost of living. What I cant understand is how the urban legend that limits could fall because of the decline in cola got started. I recall there was an article on 2010 cola changes published by a national consulting company a month ago that quoted one of the authors as saying that the IRS had not responded to their inquiry of whether any limits would be reduced. I gues they could not find the answer in the IRC.

It is an urban legend of pension practice that plan administrators can withhold payments of benefits while a plan is waiting for a determination letter after termination since a determination letter request does not trump a participant's right to be paid in accordance with the terms of the plan as required by ERISA. Terminated plans awaiting a FDL are required to be administrered in accordance with their terms which requires that benefits be paid to participants who are entitled to a distribution, for example, on account of termination. Plan administrators do not have any discretion to withhold benefits while awaiting a FDL. File a request for benefits and see what happens. If the plan does not respond within 60 days then file a claim for benefits under the claims procedures in the SPD.

If it is subject to ERISA (covers employees) and pays retirement income or defers income until termination of employment under section 3(2) then it is protected from alienation under section 206(d) regardless of whether it is a qualified plan. It is assumed that the trust assets are for the exclusive benefit of the participants. Its no different than a plan which has been disqualified under the IRC but is still subject to ERISA.

No, but the definition of a domestic relaitons order is one which "relates to the provision of child support, alimony payments,or marital property rights to a spouse, former spouse, child or other dependent of a participant," Code Section 414(p)(1)(B)(i). A QDRO can only order a payment from the plan to a party designated as an alternate payee under 414(p). Lawyers are not designated as APs who can receive payment from the plan. There was recent federal court case which rejected payment to an attorney for the AP under a DRO. What is usually done is that the QDRO provides for payment to the AP who then endorses the check over to counsel.

The taxation of QDROs used to be determined under IRS Notice 89-25 Q-3 which provided that the AP was taxed on QDRO payments received by him or her but that payments to a child were taxed to the participant who could elect out of voluntary withholding under IRC 3405. I think there is a new citation for this rule. It seems that the parties are trying to evade the tax withholding to the ex spouse by having the AP named as the child instead of having the participant elect out of withholding of payments to the child.

I think the APs (wife #2) estate is SOL in collecting 401k benefits from the plan for the following reasons. 1. At the time of his death the participant had properly executed a beneficiary designation. If the rules of the plan permitted such a designation, then the plan paid the correct beneficary. See Kennedy v. Dupont - plan has final say to determine who is beneficiary under term of the plan. Under ERISA state laws do not preempt plan rules. 2. From the facts presented, at time of P's death and when beneficary was paid plan had no notice that QDRO was pending. 3. AP's estate is entitled to 50% of whatever assets are in P's account at the time a QDRO is issued by the plan. 50% of 0 =0. 4. AP's estate has a right under state law to pursue the son to collect benefits that are owed to AP's estate under the equitable distribution ( see kennedy)

How much justice can you afford? What kind of problem is it: disqualfication, prohibited transacation, etc. Perhaps you could state the code section?

Assets in an unfunded nonqualified plan are general assets of the employer which can be seized by the employers bankruptcy creditor's. In re IT group, 305 BR 402 (2004). In a Rabbi trust the assets must be subject to the claims of the employer's creditors.

If you had been reading any articles in professional journals in the last year you would have discovered that older workers are not retiring because they cant afford to retire- they need the additional income because their defined benefit plans were terminated, they need to rebuild their portfolios whcih lost 30% or more of their value in last years blowout or because they need 100% of their SS benefits at 66 plus an additional 8% for each additional years delay instead of 75% at 62. By the way the Obama health care legislation will not take effect until 2013.

Given that the statutory language for imposing UBTI on IRAs was intended to apply the rules for qualified plans and since IRAs do not conduct a trade or business anymore than a qualified plan why would an IRA's partnership interest be exempt from tax under 513? The election of an LLC to be taxed as a partnership results in the interest being subject to UBTI since the election applies for all purposes.The larger question is whether the taxpayer must dislcose the LLP interest and file a tax return to avoid tax penalities.

Why? IRC 408(e)(1) incorporates the applicability of the UBIT tax of IRC 511 on tax exempt organizations to IRAs. IRC 511 in turn imposes the UBIT tax on unrelated business taxable income as defined in IRC 512. 512 in turn defines UBTI as gross income of the organization as defined in 513 less deductions. By deductive reasoning the application of IRC 511 to IRAs by IRC 408(e)(1) includes the provisions of IRC 513 as noted the the PLR. Also Pub 598 P1 notes that IRAs are subject to UBIT rules as are qualified plans. P13 provides the rules for UBIT to partnership interests of TXOs without mentioning an exception for IRAs.

Thanks FGC -I agree with you about Carol's expertise. I was hoping something may have come up recently for which she might respond. The IRS cannot issue a ruling to extend a statute beyond its legislative boundaries to designate an indian tribe as a state instrumentality under 457. Retirement programs can be extended to otherwise ineligible entities by legislation. A few years ago Congress legislated that the Armed Forces Medical Institute was eligible to sponsor a 403b annuity plan even though its is not a 501c3 or public school. There is also a legislated exception which grandfathered indian tribes which had established 403b plans for tribal schools prior to 1995. See Small Business Jobs Protection Act of 1996 Section 1450(b). The IRS acknowledged a few years ago that it had mistakenly issued rulings and instructions that allowed federal credit unions to establish 457b plans for many years even though they were ineligible because they are federal instrumentalities. The IRS was supposed to come up with a fix but I dont know what was done.

I looked at that ,and it is basically unclear. I was wondering if anyone has seen anything else related to them being eligible or not for a 457(b) Indian tribes will be eligible to establish a 457b plan only if it meets the requirements for a tax exempt organization or are a state or political subdivison or agency or instrumentality of a state . Indian tribes are regarded as foreign nations under federal law under the supervision and care of the federal government and are exempt from state laws.

While an unusual benefit a few retirement plans permit a separate spousal annuity before the employee's death. Whether this benefit would be part of the martial estate is dependent upon CA divorce law. You need to discuss with counsel whether this benefit would be paid in addition to a surviving spouse benefit if you are divorced. Most DB plans permit the ex spouse to receive a portion of the benefit payable to the employee in addition to the surviving spouse benefit.

Since the plan is sponsored by a state university system it is not subject to the QDRO rules unless the plan voluntarily agrees to follow the QDRO rules. In any event you will be required to follow the plan rules for benefits provided to divorced spouses unless your spouse dies before the divorce becomes final. The difference between divorced spouses and surviving spouses under the plan usually relates to when the benefit are awarded, either before or after the death of the employee spouse. If you divorce you should be able to receive a portion of the benefits that accrued during the marriage including surviving spouse benefits as provided under state law. You need to discuss these matters with counsel.

If there is a delay in requesting a return of the overpayments the participant may not be required to return the funds. In a recent case a federal court denied a participant's request to continue receiving excess payments based on an incorrect estimate but allowed the participant to keep the excess payments that had been been paid in error by the plan.

If the employer contributions were included in the employee's w-2 and then contributed to the plan there is no discrimination. If the employer contributed $150 per month for some Non HCEs but not others there is no discrimination if no contributions were made for HCEs. Availability to participate in a salary reduction 403b plan requires that eligiblilty to make salary reductions be available to all employees who are scheduled work for more than 20 hours a week. I cant emphasize more strongly that you need to retain tax counsel to review these issues including the constructive reciept issue discussed above and the requirement to adopt a written plan document so that your plan will be in compliance with the 403b regs by Dec 31.

I am confused. In you posts on another forum you stated that there were never any HCEs and the contributions were made to the TSAs. Under the IRC employer contributions cannot discriminate in favor of HCEs against the non HCEs. There is no discrimination if some non HCEs get contributions and other Non HCEs do not. ther is no discriminaton testing for salary reduction. The only tax issue is whether the employees who elected to receive health insurance instead of cash had imputed income due to constructive receipt for the value of the health insurance because they had a choice between the health ins and cash for which the s/l for taxes is 3 years. Also if the employer contributions for opting out of health ins. were included in the employees taxable wages which was then contributed to the TSA there cannot be any discrimination issue because the contribution were made by salary reduction which is not subject to any ADP testing and the plan would be exempt from ERISA. You need to retain tax counsel to fully reivew all of these issues to make sure that the plan complies with the IRS regulations by December 31, 2009.

The tax year for cash basis taxpayers which includes all individuals is the calendar year. Therefore a lump sum distribution requires that the balance to the credit of the employee under the plan must be taken in one or more payments between January 1- December 31. The problem occurs when additional contributions or earnings are credited to the employee's account later in the year after a lump sum is withdrawn. Any employee who has attained age 59 1/2 is eligible for NUA if the balance to the credit of the employee's account under the plan containing the employer stock is distributed in a single calendar year which can be any year after 59 1/2 is attained.