Salary Employees Income Deferral Plan
My employer, Chrysler, together with Merrill-Lynch offered something they called a Salary Employee Income Deferral Plan, which was an opportunity to save additional income tax deferred over and above the limits of a 401(k). Now I am 70-1/2 years old and have to calculate my RMD. I don’t know whether I can group this SEIDP with my 401(k) or not and cannot find my answer in [i]The Retirement Savings Time Bomb[/i]
Neither the company, nor Merrill-Lynch has been any help in answering my question. There must be some law authorizing them to create this SEIDP, but the people I can find don’t know about it.
Can you give any guidance on this?
Thank you,
Bill Sullivan
Permalink Submitted by Alan Spross on Thu, 2008-09-11 03:37
Bill,
I think you need to press them further for the answer. My guess is that the RMD for a non qualified top hat or SERP plan cannot be combined with that of a qualified plan (401k). Unless you get an authoritative response to the contrary, I would not risk attempting to aggregate the RMDs for these two plan types.
Permalink Submitted by Al Fry on Thu, 2008-09-11 22:12
If this is a NQ Top-Hat SERP plan (as Alan says, it sounds as if it is), no RMD is required. You simply pay taxes on the distributions when received.
Permalink Submitted by Bill Sullivan on Fri, 2008-09-12 16:32
Thank you alan and alfry. The first correspondence I have about this plan, from 10 years ago, describes it as a non-qualified plan, whatever that means. I have engaged the services of an attorney to help me find an authoritative definition.
I think your advice is going to prove accurate and helpful.
Thanks to you and to Ed Slott for providing this forum.
Permalink Submitted by Al Fry on Fri, 2008-09-12 16:40
Non-Qualified simply means that it did not have to follow the pension rules, and the Corporation could not deduct their contributions. These plans are NOT eligible for rollover to a IRA.