mbozek

Plan admin should investigate whether state abandoned property fund will accept assets of missing participants. ERISA preempts state laws that mandate transfer of assets from plan to state fund but plan can elect to transfer assets of missing participants. Some state funds will not accept assets of ERISA plan.

Why not just tell the plan to not allow investments in MLPS and Reits that generate k-1s. No reason for participant to invest in an asset that loses all of its tax efficiency if it is held in a tax deferred retirement plan. Participants can invest in ETFs or Corps such as KMI that provide MLP investment that pay qualified dividends.

Is retirement defined in the plan definitions or in the adoption agreement? There must be a provision that defines what is normal retirement age no later than 65 b/c this is required under the IRC. Some plans define when distributions can be made in the adoption agreement in a check the box format.

But when does the plan allow distributions to be made?. As I understand it under the IRC all qualified plans have to permit distributions to commence no later than 65. That means there must be some provision the plan document that states when participant may receive distributions such as termination of employment, disability or death. Are you saying that the plan only allows distribution after termination of employment?

If its a ps or 401k plan with no annuity option the plan can just distribute the funds to the taxpayers and issue the 1099. Plan can pay bank to issue a certified check to participant which eliminates the plan assets of the participant in the trust.

Question is when can a participant withdraw funds? Does the plan just prevent withdrawals before normal retirement age such as 65 or does plan say that no withdrawals are permitted until participant terminates employment regardless of age which begs the question what happens if employees continues to work after attaining age 70 1/2?

UBIT in a 401k plan that has multiple participants is very complicated and should be avoided because of the risk of UBIT and the administrative/tax preparation cost that will be charged to the plan. I don't know if the plan can allocate the additional costs to the participants who invested in MLPs. Plans should prohibit investment in any assets which generates a K-1 which could include a REIT invested in mortgages. Pub 598 P3 requires filing of a 990-T when the plan's UBT gross income is $1,000 or more which indicates that the $1000 is the total of all unrelated business income received by the plan. P 21 of the 990-T instructions states that the 990-T filed by a trust must be signed by the individual fiduciary or by the authorized officer of the trust receiving or having custody of the assets or control and management of the income of the trust. The 990-T can be signed by the plan's trustee. It is not unusual for MLPs to delay issuing K-1s until after April 15 or revising a K-1. 990-T preparation involves many tax and income questions such as depreciation recapture and passive activity losses of each participants MLP interest and even net operating losses which is why a tax professional such as a CPA should prepare the returns. Since the 990-T filing is due today plan may want to file for an extension and pay some amount of estimated taxes.

There is nothing in ERISA that requires that an employee have a SS number. However, the 1986 immigration act requires that all employees must present identification proving that they are legally permitted to work in the US or is a US citizen when they commence work. It is easy for individuals residing illegally in the US to obtain forged documents that allow them to work in the US including another persons SS number which will pass through various screens that are supposed to identify illegal workers. But workers with false ID documents have taxes withheld using someone else's SS number which creates problems when the tax returns are filed because the false SS number will result in the US worker being taxed on income that he did not earn. IRS solved the problem by creating the ITIN -individual tax identification number which looks like a SS number except that the first digit is a 9. illegal workers obtain the itin from the IRS before filing their income tax return and use the itin on the 1040 instead of the SS # on their w-2. The tax software for preparing the 1040 prompts the tax preparer to disclose the SS number used on the W-2 which allows the IRS to delete that income from the tax data of the taxpayer who was legally issued the SS number which prevents incorrect income tax being assessed. So the result is that everyone is happy- IRS processes another tax return and collects taxes, the employee is happy because he has paid his taxes and got a refund of the overpayment, SS is content because it collects FICA tax but will never have to pay benefits and the employer is happy because the IRS cannot disclose the identity of the illegal worker to ICE. But none of this has anything to do with taxpayers who are identified as having two SS numbers which does not prevent a person from working or receiving a distribution of retirement benefits. I don't know of any law that prohibits a person with two or more SS number who is legally permitted to work under the 1986 immigration act from being hired.

He cannot make a contribution as a sole prop if he has net loss from self employment. See IRS Pub 560 P 15 col 1.His corp can make a contribution to the plan as a separate employer for up to 25% of his w-2 income paid in 2014 plus elective contributions. See IRS pub 560 P 15. col 3

I have no idea of what exclusion you are talking about. My only recollection was that terms of some older 403b annuity contracts of former employees would not fail 403b status if employer made reasonable good faith effort to include those contracts as part of 403b plan document required under the regs if employer identified discontinued issuers and provided contract information for plan compliance coordinator or unapproved contract issuer communicated with employer to coordinate compliance type information prior to distribution or loan. See Rev Proc 2007-71.

Who is the owner of the contract? If it is the participant then the plan is violating the rules that require that plan assets must be held in trust or in a group annuity contract issued to the employer or plan trustee. Its a PT for participants to own a plan asset.

What do you mean by name record the feds have? There are several federal data bases which have names and SS# which can be recorded differently for the same person. I have one SS # but my name in three federal data bases is recorded differently. My name on my driver's license is different from the other three because the DMV would only accept the name on my birth certificate. There are cases where SS misspelled a persons name and when informed of the mistake issued a second SS #. Also it is common for two people in the same family to have the same name. Or where a person stops using JR or III.

What is a bad ss#? Please explain so we can understand the problem.

OFAC regulations apply to violations by Banks engaging in illegal financial transactions with countries such as Iran, Sudan, Burma and Cuba where Congress has imposed economic or financial sanctions. Or transferring funds involved in drug transactions under the Drug kingpin act. E.g. HSBC paid a penalty of $1.92B to settle violations of the Bank Secrecy Act, the Trading with the Enemy Act, the International Emergency Powers Act and several sanctions programs. I don't think that participants are using their accounts in 401k plans to engage in the type of illegal acts regulated by OFAC. So I don't understand why a bank acting as a trustee for a 401k plan would investigate participants requesting distributions or loans for violations of money laundering and international sanctions just because they have a name that is close to someone on a government list. Its Bizarre.

Does this requirement apply to IRAs or Non ERISA qualified plans? I would advise a participant to file a claim for benefits with the plan if bank refused to distribute the funds due to some nyc requirement. Can bank legally decline to pay the funds? Just what participants are being subject to such scrutiny? I don't see the connection of the OFAC rules to a request for a distribution. I receive distributions from my IRA accounts as well as my PS plan without being asked to comply with OFAC.

Who is asking for this information and for what purpose? Is there some legal requirement to provide the information? What is a cedula number?

He can transfer the deed to an IRA custodian who is willing to hold RE. However the IRA will need to have other assets/cash to pay all expenses attributable to the RE including insurance, taxes, repairs. He will also need to have periodic appraisals and after 70 1/2 take RMDs. Of course he cannot live in the home. He could not substitute cash which would be rolled over to the IRA instead of the deed to the house because the IRS requires that only the property received from the plan can be rolled over.He can sell the home after it is rolled over without being taxed on the sale or collect rent from a tenant if he continues to own it.

I don't think that the agricultural and hospitality employees mentioned in the OP would be a potential OFAC match.

Someone needs to tell fidelity to stop putting restrictions on participants accounts because they have no legal authority to interfere with plan administration and such actions could create liability issues for the plan sponsor. Having two or more SS is not uncommon and results from many non criminal actions: resident alien becomes US citizen, father and son or two family members have the same name, SS # is stolen and new SS# is issued. Most common reason for two SS # results when HR enters incorrect SS# of new employee which creates new wage record.None of the above are illegal but they are complicated to fix. One article claims that 6% of Americans have two or more numbers. Q1-who authorized fidelity to do a SS# search? Q2- How is participant with 2 SS# supposed to get their benefits? Google" having two social security numbers" to see how often it happens. One legitimate way to detect illegal use of SS # is if employee is using SS # of someone reported in SS index of deceased persons but I don't know if HR/benefits has access to that data base.

If the plan document requires that that plan or amendments are to be adopted by the employer and the employer conducts its activity through a duly constituted board of directors then all resolutions adopted by the board are considered to be actions of the employer. The board can delegate certain acts to a specific board member or even the president or another officer to act on behalf of the board. Bylaws may also delegate authority to act on behalf of the corporation that adopted the plan. Sometime IRS agents need to be educated on authority of a board or a corporate officer to act officer to act on behalf of an employer. The effective date is the date of the of the board resolution or date officer signs document.

I thought that interest credits on the account balance continued but there would be no further annual credits of comp. What does the plan say?

I don't know if there is an answer for this Q. One way to look it is if the PC merely adopted the Law firm plan as a participating employer who is a member of the controlled group then the PC owner could claim that his ownership interest in the employer who established the plan was less than 5%. If on the other hand his PC is deemed to have established its own plan by signing the adoption agreement then he could be considered a more than 5% owner of the plan his employer adopted. Language of plan and adoption agreements will be crucial.

none that I am aware of. Only way to get a lump sum in an RA is to die.

Plan has complied with the applicable law and refunded the excess contribution to the employee and reported it to the IRS. Plan has no further responsibility to the participant and participant has taxable income under the principles of constructive receipt of income even if he does not cash the check. It is participant's responsibility to report the income on his 1040 and pay taxes. Plan should not automatically reissue a new check because payment has been included as employees taxable income in year in which check was mailed to participant. Issuing a new check would confuse the taxation issues. Since the excess payment has been reported to the IRS its up to the Service to send an audit notice to collect the taxes. Given the reductions in IRS budget for compliance its possible that the IRS may not try to collect the taxes before the 3 year S/l expires. If first check was issued in 2012 IRS has until at least april 15, 2016 to issue a deficiency notice. State escheat laws are preempted by ERISA from applying to qualified plans. Plan can always issue a new check if old check is stale if requested by participant.

Question. If a participant in a DB plan elects to commence annuity benefits on 4/1 of the year after 70 12 is attained, is the participant required to take a second distribution by 12/31 of that year? Or can the second payment be delayed until 4/1 of the following year? Or does the participant just receive payments on a periodic basis, e.g., each month beginning 4/1 after age 70 1/2 is attained?