mbozek

In my opinion this could be a coin flip. However there is a judicial rule of construction of contracts which states that in an adhesion contract an ambiguity in the terms of the contract shall be construed against the drafter. Since the pension plan is an adhesion contract because the terms are entirely drafted by the plan sponsor, the ambiguity of whether the AP's benefit goes to her beneficiary unless prohibited by the plan where the plan is silent on this question should be construed in favor of the ex spouse's beneficiary. Question for plan fiduciary is whether there is some basis in the plan for resolving the ambiguity to deny the benefit if a claim for benefits brought by an heir of the ex spouse.

There is a DOL opinion that allows a plan sponsor to charge fees only to former employees who have account balances in 401k plan but that amount can only be assessed pro rata based on the plan costs which are not settlor expenses. E.g. if there are 40 accounts in the plan, 10 terminated participants and plan costs are $4000 the 10 terminated participants can be charged $100 each for a total of $1000.

TPA cannot hold up processing termination applications as a condition to being paid. What does the TPAs contract provide as how it is to be paid when the sponsor terminates the plan? TPAs contract with Company A governs the terms of payment of fees for terminating the plan. Does plan permit fees for termination to be assessed from participants accounts?. TPA can sue company A to collect the fees.

In addition to the BRF question of shifting the entire cost of plan termination to the non owners who are most likely nhces, there is a separate issue of whether this action would violate a DOL ruling that a plan cannot impose charges for plan administration on terminated employees which exceeds their pro rata share of the expenses. A separate issue is what provision of the plan allowed only the owners to cash out their plan account before termination but not the non owners??? Or did someone tell the owners that the could elect a distribution? If I were a participant I would call the EBSA.

It depends on your practice. Original death certificates are rarely required - Its needed to probate a will, when transferring US savings bonds to a new owner and submitting a LI policy. Most brokerages and IRA custodians will accept a copy of a death certificate.

Its highly unlikely that a participant who has not contacted the plan for benefits by age 70 1/2 is going to apply at a later date. SS sends a statement of vested benefits that are payable under a qualified plan at the earlier of when an employee applies for SS or attains 66. If the participant has not applied for benefits 4 1/2 years later its unlikely they are alive. As I understand it the notice is provided to the spouse of a deceased worker. The employer can determine if the employee is deceased by checking the SS Death registry which is available to participating employers as a means to verify whether a SS number belongs to a deceased individual. In the past it was available to check the status of former plan participants but I don't know if SS still allows it to be used for this purpose. If death registry is not available the plan can pay a locator service to determine if the participant is alive for a nominal fee. Its no different than the searches used to locate missing heirs of decedents. I don't agree that its more prudent to transfer a missing participants vested benefit to IRA because the custodial fees will eventually eat through the account balance since the assets will be invested in MM fund. The optimal course of action is to forfeit the funds under the plan subject to restoration if the participant returns at a later date which guarantees return of 100% of the account balance. The plan could credit the account with a rate of return equal to inflation in the unlikely event that the missing participant ever shows up. In the unlikely event that a missing participant returns to claims the benefits the door swings both ways- Forfeiting the account balance at MRD could prevent a decline to as low as 0 if the investment was in the wrong sector which will prevent the participant claiming that the plan acted imprudently by not moving the funds to a neutral investment.

Why should the plan transfer assets to a missing participant IRA and have the assets eaten up by custodial fees? Better to just forfeit the benefits and use then to pay admin expenses. Isnt an IRA for a missing participant limited to a certain amount? Check the SS master death registry to find out of the participant is dead.

I would treat it as a distribution form the plan to a surviving spouse and a participant rollover into the plan.

Under DOL opinion letters State laws requiring escheat of property to the state are preempted by ERISA. However, plans can voluntarily escheat benefits to state abandoned property funds if the state will accept them. IRS reg 1.411(a)-4(b)(6) permits a plan to forfeit vested benefit of any participant when the benefits become payable if the participant cannot be located subject to restoration if the participant later appears. This provision prevents a plan from violating the requirement that MRDs must commence at 70 1/2. As it is 99% of missing participants never claim benefits usually because they are deceased. Question is whether such a provision is in the plan.

There are only two possible options. 1. Follow the literal unambiguous language of the DRO which I am assuming was drafted by counsel for at least one party and the signed by the court and distribute the amount prescribed in the DRO plus earnings after segregation. I don't see any liability issue for the plan administrator in following this option if for no other reason than any liability would be due to malpractice of the attorney who prepared the DRO. 2. Contact the attorney who submitted the DRO and confirm that the terms do not include interest earned in 2015 prior to the date of segregation. My opinion, for what it is worth, is that the only time that the plan rep should request clarification of the terms of a DRO is where there is an ambiguity or a DRO provision cannot be complied with under the plan, e.g., the parties want earnings in the investments divided for 10 years prior to the date of the divorce. Since it is plausible to assume in the regular course of plan administration that the parties decided not to include interest in return for no adjustment of earnings there is no need to question the election chosen by the parties and approved by the court.

Other than offering free money to employers to contribute to the plan and claim a tax deduction I don't know of any incentive that would motivate an employer to take on a mortgage with unlimited liability for an infinite duration for an expense that adds 0 to the value of the plan sponsor. This is why only about 25% of S & P 500 offer DB plans and they are phasing the out their plans or closing participation to new hires. Its my understanding that Boeing stopped benefit accruals to its DB plan as of Jan 1.IBM terminated its cash balance plan about 10 years ago.

There will never be any laws restricting the ability of employees to take their retirement benefits in a lump sum when they are eligible to receive benefits, e.g., termination because employees want portability of their money and Congress does not want to take any political heat from voters who don't want restrictions on their benefits. Congress will leave it to the employer to decide what the distribution options should be. I remember back in the day when TIAA -CREF only issued retirement annuity contracts (RA) that did not allow a lump sum unless the employee died. They caught a lot of flack for the lack of portability and colleges began offering mutual funds in their retirement plans so T/C created group retirement annuities (GRA) that paid a lump sum. Besides buying a car is good for the economy. One unknown unknown is whether congress may weigh in on the change in the tax regs limiting lump sum options since it will increase the cost of funding DB pension plans which increases deductions and reduces tax revenue.

According to the iRS notice The reg is intended to prohibit offering a lump sum option to a retiree who is currently receiving an annuity. The IRS issued PLRs 201228045 and 201228051 which allowed a lump sum option under the existing (a)(9)-6 Q/A-1 regs. as a one time offer of a benefit increase resulting from a plan amendment..These rulings would now be prohibited.

All individual taxpayers get an automatic 6 month extension to Oct 15 by filing form 4868. There is an automatic mid june extension for US citizens/resident aliens who live outside the US or PR and whose main place of business or post of duty is outside US or PR or are outside the US/PR on military duty. There is no 60 day extension for investors instead of filing form 4868. I don't know where this guy gets his information.

The Obama administration believes that annuities should be the preferred form of payment for retirees and wants to discourage lump sums. Of course this change only applies to retirees who are currently receiving an annuity benefit. It doesn't apply to employees who can elect to receive a lump sum instead of an annuity when they retire.

Under the IRC a couple is considered married for the entire year if they are married at the end of the year. Under IRS regs a qualified plan can be established on the last day of the plan year and employee compensation earned during the plan year can be included in determining the employer contribution for the year. If the couple is married in Nov 2015 and a 401k plan for calendar year 2015 is adopted on Dec 31, 2015 why isn't the plan eligible to be a solo 401k plan for 2015?

I am not an accountant who prepares tax returns but I thought that the deduction for contributions made by one employer to cover the contributions of another employer who participates in the plan can only be made if they are members of a controlled group filing a consolidated tax return. Off the top of my head 404a allows deductions based on compensation of employees of the employer.

He can roll over his IRA to the PSP to avoid MRDs after 2015 because IRA MRDs are based on value of IRA as of 12/31 of prior year. If value of IRA is 0 on 12/31/15 then IRA MRD for 2016 is 0.MRD for 2015 must be received.

Plan is required to have provisions on when distributions can be made from Roth 401k. Roth 401k distributions cannot be deferred after 70 1/2 but can be rolled over to a Roth IRA. Edit: roth account is subject to tax rules for MRDs which requires distributions at 70 1/2 for all participants other than non 5% owners who participate in a plan that allows MRD commencement to be deferred until Apr 1 of year following retirement.

Joel: You need to direct your question to Mike Bloomberg.

Instructions to 1099 misc form. box 7.

A small autonomous NYC agency adopted a 401k plan prior to the 1986 cutoff date when it became grandfathered. Under the regulations for grandfathered 401k plans any other agencies, instrumentatilities or government entitles of the same municipality can adopt the grandfathered 401k plan after 1986. In 2002 NYC adopted the 401k plan for all NYC workers.

They can establish a SEP and deduct 20% of net earnings on line 32 of the 1040. Since the board members are HCEs of their employers, their 402g amount may be limited to less than 18,000 which would allow for some deferrals to a solo 401k. 1099 is self employment income reported on Schedule c.

One of the obvious reasons why NP board members don't want a 457b plan is that the account balances cannot be rolled over to an IRA. np board members can contribute fee to solo 401k plan where deferrals can be 23,000 and/or 20% of net earnings from SE which will allow them to deduct part of fee as business expense.

Every plan I have reviewed allows payment to the AP under the rules for a beneficiary before the participant is eligible because they do not want the AP requesting a plan loan, a hardship distribution or badgering the plan administrator for the benefits because counsel needs to be paid. Its easier to payout the benefits.