Luke Bailey

One data point, waid10, is that when the buyer's new employees continue to be covered under the seller's plan (which is common, assuming the seller sold only part of its business and continues to have a plan) you technically create a MEWA, but the DOL Form M-1 instructions say you don't have to report if does not extend beyond the end of the plan year following the plan year of the acquisition.

EBECatty, I have never run into this but I will point out that the Tax Adviser article I linked to in my prior post indicates that while a grantor trust is usually required to file a 1041, there are apparently alternatives explained in regs or 1041 instructions. I did not read in depth but you may want to review.

I think the right answer is 73. A person born in 1959 would attain age 73 in 2032, so there you are. It's 73. Even though the same person will attain age 74 after December 31, 2032, you don't skip 2032 because what is being determined is the "required beginning date" for a continuous stream of distributions.

Note that IRC section 4972 imposes a 10% excise tax on nondeductible contributions.

If a J-1 visa holder working in U.S. has his or her service covered by a tax treaty between the U.S. and their country of residence covering temporary employment as a trainee or apprentice or the like, then they can File IRS Form 8223 and the payments they receive from their employer in the U.S. is not subject to U.S. Federal income tax. You have to check whether the individual is covered by a treaty and then also check the treaty's wording, because the language is not uniform for all treaties and requires interpretation in many cases. The detailed and lengthy instructions for Form 8223 do a pretty good job of explaining the principles involved. In most cases, this will mean that they have no "compensation" under the employer's 401(k), 403(b), or 457(b) plan document, making their participation in the plan impossible, even if they are not excluded by the standard "nonresident alien with no U.S.-source income" exclusion.

FWIW, in this specific instance, it seems to me that the language of the statute has always been much broader than the old regulation, and would fully support the new.

Did this involve a VEBA benefit trust?

I think you'd have to know the nature of the complaint and the basis for the settlement. If (as seems unlikely) the settlement said, "Yeah, you were employed for X period and we should have been paying you all that time," then there would be a basis for saying the plaintiff was an employee entitled to plan benefits. But if it said, "We disagree with your allegation that you were wrongfully terminated, but we're going to throw $20k at you anyway to get you and your lawyer to go away, and because of the IRS rules we'll put it on a W-2," then I would question whether you wouldn't just follow the specific agreement of the parties that there should be no plan contribution.

VeryOldMan, yes, I think you should talk to a lawyer and do it quickly.

fmsinc, as a point of information, in my experience most lawyers (both with firms and in-house with plans) working with governmental plans call state law orders dealing with divisions of retirement benefits in divorce "QDROs" even though not governed by ERISA.

As you note, Albany Consultant, it is the business, whether a partnership or corporation, that must be the plan sponsor. If the purpose of the business's adoptiong two plans is so that each brother can decide on his own contribution rate beyond the 402(g) max, then the IRS could look at this as a way of evading the nonqualified CODA prohibition. Would depend on the facts.

Mark Va, it seems to me that both CuseFan and Carol V. Calhoun are right in the abstract. The actual answer for your son will probably hinge on the plan provisions and the wording of the election. They are irrevocable, but usually only apply to the mandatory employer contribution.

pwitt, Peter Gulia's analysis of the issues is excellent. From a practical standpoint, I would want to know (a) whether the person who would take the money through the estate is different from the person who would be the contingent beneficiary and (2) whether the amount of money at stake is significant. If the takers are different and there's enough at stake for the one who would not get the money under the plan administrator's interpretation to hire a lawyer and sue, the plan might want to hire it's own lawyer to interplead the benefit into court.

Berto, what you explain that they explained to you could well be right, but of course it depends on the actual facts and on what the plans say, as pointed out by ratherbereading.

Plan Doc, because Section 415 does not apply, the unfunded benefit, at least for tax purposes (i.e., I am not addressing tax-exempt org reasonable compensation issues) the benefit can be whatever you want. Just must be unfunded and not vested.