mbozek

The employer needs to consult with counsel on the feasibility of recovery of the excess if the employee has been spending it down to pay living expenses. The employer cannot recover excess benefits that were spent by the employee. Given the egregious facts that the employee relied on the plan's statement of vested benefits at the time of retirement a court could easily find that the the excess benefits to which the plan was entitled to recover would be reduced dollar for dollar by amounts spent by the employee. In addition, the employee would have a defense of latches for a delay in notifying the employee of the mistake and detrimental reliance since the employee relied on the statement of benefits in electing to retire. Another problem could be that the employer would be required to rehire the employee as a condition to the return of excess benefits since the employer did not provide the agreed upon amount of retirement benefits that was a condition of the employee's retirement. I also dont believe that the employer could reduce its contributions to a separate plan to recover the excess payments. Given the legal issues why is the plan attempting to recover the excess payments from the employee?

Could you please explain what the parties hope to achieve by litigating this case? What does the employee want as a remedy? An annuity which will pay a greater amount each month than the amount of the annuity offerred? If so then why not come up with a value for the difference and pay the employee? What does the plan fiduciary hope to gain? Vindication that the choice was reasonable? Does the plan fidiciary think that it will collect its legal fees from the participant if the claim is denied? If the plan loses the case it could be forced to pay the participant's legal fees as well as the amount awarded for the bnefefits. The plan fiduciary could be sued by the remaining participants for failure to act in a prudent manner in administering the plan and wasting plan assets. This case is proof of the adage that a bad settlement costs less than a good lawyer.

What benefits are you refering to? A wrap document merely provides the framework to have several separate benefit programs described in one document to meet the requirement for a written plan document as a single plan under ERISA. Need to see what benefits are covered under the corbel document.

An individual account plan can provide for adjustment of a participants' accounts for plan expenses. However there is a queston of whether it is prudent to continue litigation of a claim which will reduce participant's accounts by 10%. Your client needs to talk to counsel.

I dont know what you aer asking. The 20% tax will be imposed if the post 04 deferrals and income do not comply with the provisions of 409A.

I think that legal expenses related to defending the plan against a claim for benefits can be paid from plan assets if the plan permits such expense to be paid. However, I dont know what benefit the employer gets since the expenses will reduce plan assets and increase employer contributions to the plan.

You need to retain qualified tax counsel to detemine what forms of ownership will not violate the PT rules. It will cost a few bucks but you will know what the tax law issues are. You can't get free advice on this issue that you can rely on. There is a separate question of whether it makes good business sense to put your business in an IRA since the IRA cannot take advantage of favorable tax law provisions for cap gains and deduction of business expenses. The IRA will have to retain liquid assets to pay expenses of the business. IRAs are also subject to UBIT tax. The only reason to put a business in an IRA is that it is a cash cow that generates a steady stream of income that would be taxed a marginal rate above 15%.

Line 5 of the instructions for the IRS power of attorney form 2848 limits the ability to designate another person to sign a tax return for the taxpayer to situations arising from disease, absence from the US for more than 60 days and other good cause specifically granted by the IRS after a request by the taxpayer. There is no automatic authorizaton to sign a return for another person.

The agent would have liability for lost earnings which should be pursued by the plan fiduciary.

Yes. See IRC 457(f)(2).

There are cases stating that miscalculation of retirement benefits is a breach of fiduciary duty because of a failure to follow the terms of the plan. The participant could defend against repayment on the grounds of latches, i.e., unreasonable delay which results in detriment. Separately there could be a claim by the fiduciary against the plan's actuary for negligence or malpractice. I dont think the participant can sue the actuary for the mistake. who are you representing?

If the contributions are timely remitted to the agent for the plan there is no employer penalty for the failure of the agent to deposit the checks.

What are u trying to do? an employee is taxed on anything he receives from an employer. If the ee takes a pay cut then the employer can use the extra funds to provide tax free health benefits. The employee cannot receive a deduction for transfering taxable wages to other employees.

457 does not apply to plans established for the transfer of property under IRC 83 or a non qualified trust under IRC 402b but the employee will be taxed when there is no substantial risk of forfeiture on the assets in the plan. Both types of plans are subject to 409A.

I dont understand the question. Was the investment fund the custodian or the agent designated to receive plan assets?

Could you please tell me how you can have a plan yr that is longer than 12 months? 12/31/04 to 12/31/05 is 12 months and 1 day.

What kind of overpayments? Lump sums or perodic payments? Also what was the reason for the overpayments. There was a case that denied a plan's right to a return of overpayments where the fund did not discover the excess payments for 9 years. As discussed, collection agencies are very inefficient because their fee is between 25-50% of amount recovered. The plan admin is better off convincing the participant to return the money without any adverse tax consequences.

I dont understand why roth contributions would be treated any differently than pre tax deferrals to a 401k for withholding purposes. E.g., If pre tax contribution is $100 FICA witholding of $7.65 is taken out of remainder of ee's pay. Roth contributions should be made before reduction for withholing taxes Roth contributions are only a problem if ee contributes 100% of pay which will be reduced for withholding taxes.

The 20% tax will be assessed on a NQDC plan that does not meet the statutory requirements of 409A or is not operated in accordance with its provisions. You need to review the applicable regulations to determine application to persons who do not take a distribution. You need to check the instructions for box 12 of the w-2 to see what must be reported.

I dont understand what our are asking. If the amounts paid are wages they must be reported and income taxes/FICA/medicare withheld.The employee will be responsible for paying the 20% penalty tax and the tax on imputed income when the 1040 is filed. Have you looked at the instructions for codes Y and Z on box 12 of the W-2?

E: the cite you referred to is for collection of fines owed to the Fed govt which are collected by the US attorney. The IRS authority to levy on pension benefits is contained in IRC 6331. There are at least 6 laws that permit collection of pension benefits by federal agencies. Participant needs to consult with counsel.

Short answer to this mess is that prenuptual agreements waiving benefits under a plan subject to ERISA, e.g., a plan maintained by a private employer, are invalid under IRS reg 1.401(a)-20, Q 28. Therfore you have rights to benefits under the plans as his spouse. You need to find an attorney to appear in court on your behalf. Contact the local bar association for the county in which the court is located to get the name of an attorney who handles divorce and QDROs. Most Bar asociations provide free referral services. When you were divorced 5 years ago didnt your attorney prepare a QDRO regarding the benefit issues? Why not contact him/her?

I dont know if estate can continue to make repayments since most plans require that loans be repaid by salary deduction. Also the note is a personal obligation of the participant. I dont know if it could be assigned to another person and I dont know why a plan admin. would want to be involved in such transaction. Need to review the note.

Why merge? Why not terminate the 401k and rollover the assets into the 457 plan, assuming that the 457 plan is sponsored by a govt. and provides for separate accounting of the Qplan assets. IRC 402©(8)(B).

If the plan is subject to ERISA the current spouse is beneficary of 100% of the death benefits if the plan is not subject to the J & S rules, e.g, 401k plan. I will assume that the spouse had not consented to the designation of the x as the bene. If the plan is not subject to ERISA need to check state law to see if ex spouse is automatically removed as beneficary (e.g., CA, HI, WA) or whether divorce decree or plan provided for removal. I dont think the spouse can pay back the loan because it is deemed distributed at death. Check for prior threads on this topic.