Loading...
HomeMy WebLinkAbout09-4002JOHN N. PIKULIN, : IN THE COURT OF COMMON PLEAS Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA V. NO. - 400,2 Civjl764-" LINDA KUGA PIKULIN, Defendant CIVIL ACTION- DIVORCE NOTICE TO DEFEND AND CLAIM RIGHTS You have been sued in court. If you wish to defend against the claims set forth in the following pages, you must take prompt action. Your are warned that if you fail to do so, the case may proceed without you and a decree of divorce or annulment may be entered against you by the court. A judgment may also be entered against you for any other claim or relief requested in these papers by the Plaintiff. You may lose money or property or other rights important to you, including custody or visitation of your children. When the ground for the divorce is indignities or irretrievable breakdown of the marriage, you may request counseling. A list of marriage counselors is available in the Office of the Prothonotary, at the Cumberland County Courthouse, One Courthouse Square, Carlisle, Pennsylvania. IF YOU DO NOT FILE A CLAIM FOR ALIMONY, DIVISION OF PROPERTY, LAWYERS' FEES OR EXPENSES BEFORE A DIVORCE OR ANNULMENT IS GRANTED YOU MAY LOSE THE RIGHT TO CLAIM ANY OF THEM. YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER OF CANNOT AFFORD ONE, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW TO FIND OUT WHERE YOU CAN GET LEGAL HELP. Cumberland County Lawyer Referral Service Cumberland County Court Administrator Floor, Cumberland County Courthouse Carlisle, PA 17013 (717) 240-6200 ROBINSON & GERALDO KRISTOPHER T. SMULL, ESQUIRE Attorney I.D. No. 69140 2505 North Front Street P.O. Box 5320 Harrisburg, PA 17110 Telephone No. (717) 232-8525 Attorney for Plaintiff JOHN N. PIKULIN, Plaintiff V. LINDA KUGA PIKULIN, Defendant IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO. O9 - Nda a C?Ut? CIVIL ACTION- DIVORCE COMPLAINT UNDER SECTION 3301(c) and 3301(d) OF THE DIVORCE CODE AND NOW, comes Plaintiff, John N. Pikulin, by and through his attorney, Kristopher T. Smull, Esquire, and files the following Complaint under section 3301(c) and 3301(d) of the Divorce Code of which the following is a statement: COUNT I - DIVORCE UNDER 3301(c) 1. Plaintiff is John N. Pikulin, who currently resides at 221 Bridge Street, New Cumberland, Cumberland County, Pennsylvania. 2. Defendant is Linda Kuga Pikulin, who currently resides at 1410 Mississauga Road, Mississauga, Ontario, Canada. 3. Plaintiff has been a bona fide resident in the Commonwealth for at least six (6) months immediately previous to the filing of this Complaint. 4. The parties were married on the 120' day of May, 2001, in Aliquippa, Pennsylvania. 5. Neither Party is a member of the Armed Forces of the United States or any of its allies. 6. The marriage is irretrievably broken. 7. There has been no prior action for divorce or annulment instituted by either of the parties in this or any other jurisdiction. g. The Plaintiff has been advised of the availability of counseling and that either Party may compel the other by Order of Court to attend counseling sessions. 9. There have been no minor children born of this marriage. WHEREFORE, Plaintiff respectfully requests that your Honorable Court enter a Decree in Divorce under Section 3301(c) of the Divorce Code. COUNT II - DIVORCE UNDER 3301(d) 10. Plaintiff incorporates by reference paragraphs 1-9 of the Complaint for Divorce as fully set forth herein. 11. The parties to this action separated on or about January 1, 2007, and have continued to live separate and apart for a period of at least two years. 12. The marriage is irretrievably broken. WHEREFORE, Plaintiff respectfully requests that your Honorable Court enter a Decree in Divorce under Section 3301(d) of the Divorce Code. COUNT III EQUITABLE DISTRIBUTION 13. Plaintiff incorporates by reference paragraphs 1-12 of this Answer and Counterclaim as fully set forth herein. 14. Plaintiff requests the Court to equitably divide distribute or assign the marital property between the parties without any regard to marital misconduct in such proportion as the Court deems just after consideration of all relevant factors. WHEREFORE, Plaintiff requests your Honorable Court to enter an order of equitable distribution of marital property pursuant to § 3502(a) of the Divorce Code. A010 ? COUNT IV ALIMONY PENDENTE LITE AUMONY ® 15. Plaintiff incorporates by reference paragraphs 1-14 of the Complaint.for Divorce as fully set forth herein. 16. Plaintiff is unable to sustain himself during the course of litigation. 17. Plaintiff lacks sufficient property to provide for his reasonable needs and is unable to sustain himself through appropriate employment. 18. Plaintiff requests the Court to enter an award of spousal support and/or alimony pendente lite until the final hearing and thereupon to enter an order of alimony in his favor pursuant to §§ 3701(a) and 3702 of the Divorce Code. WHEREFORE, Plaintiff respectfully requests the Court to enter an award of spousal support and/or alimony pendente lite until the final hearing and thereupon to enter an order of alimony in his favor pursuant to §§ 3701(a) and 3702 of the Divorce Code. COUNT V - COUNSEL FEES 19. Plaintiff incorporates by reference paragraphs 1-18 of the Complaint for Divorce as fully set forth herein. 20. Plaintiff has employed the law firm of Robinson & Geraldo to represent him in this matrimonial cause. 21. Plaintiff is unable to pay his counsel fees, costs and expenses and Defendant is more than able to pay them. 22. Defendant is employed and has the ability to pay Plaintiffs counsel fees, costs and expenses. ? o`??sloq 23. Reserving the right to apply to the Court for temporary counsel fees, costs and expenses prior to final hearing, Plaintiff requests that, after final hearing, the Court order Defendant to pay Plaintiffs reasonable counsel fees, costs and expenses. WHEREFORE, Plaintiff respectfully requests that, pursuant to §§ 3104 (a)(1), 3323(b) and 3702 of the Divorce Code, the Court enter an order directing Defendant to pay plaintiffs reasonable counsel fees, costs and expenses. Respectfully submitted, ROBINSON & GERALDO Date: By: ?(? Iv 11OPHER T. SMULL ESQUIRE Attorney I.D. 69140 2505 North Front Street P.O. Box 5320 Harrisburg, PA 17110-5320 (717) 232-8525 Attorney for Plaintiff VERIFICATION I verify that the statements made in the forgoing document are true and correct. 1 understand that false statements herein are made subject to the penalties of 18 Pa. C.S. Section 4904, relating to unswom falsification to authorities. Date: 6 -kt?? OF THE Ft"J3F?y 2009 Jill 15 ! 33 4Hlip.SG Pt pTTY e0 y lo86 n In the Court of Common Pleas of Cumberland County, Pennsylvania John N. Pikulin, vs. Linda Kuga Pikulin, To the Prothonotary: Plaintiff ) ) ) Defendant ) No. 09-4002 Civil Term Civil Action - Divorce Praecipe for Appearance Kindly enter the appearance of Joanne Ross Wilder and Wilder & Mahood as counsel for Linda Kuga Pikulin in the above entitled case as to all matters. Date: June 23, 2009 Joanne Ross Wilder Supreme Court ID #15274 Wilder & Mahood 10th Floor Koppers Building 436 Seventh Avenue Pittsburgh, PA 15219 (412) 261-4040 OF THE PROP NMARY 2009 JUN U PM 1-- 03 P i#'VSY!.1 ANA In the Court of Common Pleas of Cumberland County, Pennsylvania John N. Pikulin, vs. Linda Kuga Pikulin, Plaintiff ) ) ) Defendant ) No. 09-4002 Civil Term Civil Action - Divorce Acceptance of Service I HEREBY ACCEPT SERVICE of the Complaint in Divorce in the above matter on behalf of Linda Kuga Pikulin and certify that I am authorized to do so. Date: June 23, 2009 Q AA Joanne Ross Wilder Wilder & Mahood Attorneys for Linda Kuga Pikulin FILED-OFFICE OF THE PROTHONOTARY 2089 JUN 26 FM 1: 0 3 CUM??_ . 4 ti;?j V WNT PENINSYLVANOL t. In the Court of Common Pleas of Cumberland County, Pennsylvania John N. Pikulin, ) Plaintiff ) ) vs. ) No. 09-4002 Civil Term Linda Kuga Pikulin, ) Defendant ) Civil Action - Divorce Notice to Plaintiff If you wish to deny any of the statements set forth in this Affidavit, you must file a counteraffidavit within twenty (20) days after this Affidavit has been. served on you or the statements will be admitted. Affidavit of Separation Pursuant to Section 3301(d) of the Domestic Relations Act I. The parties to this action separated in or about January, 2007 and have continued to live separate and apart for a period of at least two years. 2. The marriage of the parties is irretrievably broken. 3. I understand that I may lose rights concerning alimony, division of property, lawyer's fees or expenses if I do not claim them before a divorce is granted. I Verify that the statements made in this Affidavit are true and correct. I understand that false statements herein are made subject to the penalties of 18 Pa. C.S. §4904 relating to unsworn falsification to authorities. Date VO 9 ??vv in Kuga Pikulin Certificate of Service I hereby certify that a copy of the aforegoing Affidavit of Separation Pursuant to Section 3301(d) of the Domestic Relations Act was served by first class mail on Kristopher T. Smull, Esquire, Robinson & Geraldo, attorneys for Plaintiff, 2505 North Front Street, PO Box 5320, Harrisburg, PA 17110, on July 2, 2009. C.??Olaca,La?K?o.A C?.Q,,r` Joanne Ross Wilder Wilder & Mahood 10th Floor Koppers Building 436 Seventh Avenue Pittsburgh, Pa 15219-1827 (412) 261-4040 Attorneys for Linda Kuga Pikulin FILF:G-?:?? ;"E OF THE 2009 JUL -6 PH 1' S2 „,jH IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA John N. Pikulin, : Plaintiff vs. No. 09-4002-Civil Term Civil Action -Divorce ~~ t_- ~ N ~ ~ `-a~ -; 7 Linda Kuga Pikulin, : -`~''~`~~ ~,-- _ ~'' rn =~ Defendant : - - ~ ~~ _ ~ ~ _,~,~ '~~ PRAECIPE _-_ ~ -_~ z- r~ -~~~ _ ~ _ ~ To th e Prothonotary: ~ ~> ~3 vz ~ o.., --c Please withdraw my appearance for Plaintiff, John N. Pikulin. Robinson~;Geraldo ~ ,' I Kristopf~er T. Smull, E~quire Attorney I.D. 69140 P.O. Box 5320 2505 North Front Street Harrisburg, PA 17110-5320 (717) 232-8525 Please enter my appearance for Plaintiff, John N. Pikulin. squire Attorney I.D. 7175 300 North Second Street Suite 402 Harrisburg, PA 17101-1303 Telephone: 717-232-9925 Fax: 717-232-9946 Email: chas.law@verison.net FRIEDMAN & HOCH, P Charles E. Friedm n E JOHN N. PIKULIN, IN THE COURT OF COMMON PLEAS Plaintiff CUMBERLAND COUNTY, PENNSYLVANIA vs. No. 09-4002-Civil Term ~ ~ c. ~ __ ~ Civil Action -Divorce ~~`~`~' ~ 7 LINDA KUGA PIKULIN, - _ fiZ sDefendant ~- _~ ~~ Answer to Motion for Sanctions :< ,~ John N. Pikulin, Plai ntiff, by his attorney, Charles. E. Friedman, Esquire, answers Defendant's Motion for Sanctions as follows: 1. Admitted 2. Admitted. 3. Denied as stated. Husband attempted to produce the voluminous documents requested but it is admitted that he did not do so in a timely basis. 4. Admitted. 5. Admitted. 6. Admitted. 7. Admitted. By way of further answer, Husband relied upon the advice and expertise of his former attorney in directing him as to what was required and in proper drafting of pleadings. 8. Admitted. 9. Denied. Husband has served Answers to Wife's discovery requests and has produced the documents requested to the best of his ability. It is admitted was done recently by his new attorney. 10. Admitted. 11. Admitted. 12. Admitted. By way of further answer, there is no requirement that a party produce statements, bills, invoices or any other documents in Answers to Interrogatories. 13. Admitted. 14. Admitted. By way of further answer, Husband relied upon the advice and expertise of his former attorney in directing him as to what was required and in the proper drafting of pleadings. 15. Admitted. By way of further answer, Husband relied upon the advice and expertise of his former attorney in directing him as to what was required and in the proper drafting of pleadings. 16. Denied. Husband has produced the documents to the best of his ability, or has otherwise provided sufficient answers as to why he is unable to do so 17. It is admitted that Husband initiated the divorce proceeding. It is denied that he is delaying the action. To the contrary, it has taken a great deal of time and effort to attempt to locate the documents requested, many of which could have been objected to by his prior attorney. In addition, Husband should not be held in contempt for the failure of his former attorney to comply with the Rules of Civil Procedure. 18. It is admitted that Wife agreed to provide Husband additional time to provide the discovery. It is denied that Exhibit F is the letter of February 9, 2010, a copy of which is attached as Exhibit 1. 2 19. Denied. As previously stated, Husband has provided the outstanding discovery. 20. Admitted. 21. Denied. Some of the information requested is not in Husband's possession, custody and/or control as indicated in his Supplemental Answers to Request for Production. In addition, much of the information and documents requested are not properly discoverable simply because they are within Husband's possession, custody and control. 22. Denied. Husband has produced Supplemental Answers and documents. 23. Denied as a conclusion of law. 24. After reasonable investigation, Husband is without knowledge or belief sufficient to form a belief as to the truth of this averment. NEW MATTER 25. The averments of paragraphs 1 through 24 of this Answer are incorporated herein by reference. 26. The parties were married on May 12, 2001 and separated in mid-January, 2007. 27. This divorce action was filed on June 15, 2009. 28. The first set of Requests for Production of Documents and Interrogatories were served on October 7, 2009, requested financial information and records for the years 2000 to the date of response. The second set was served in February, 2010, and requested updated documents to the date of response. 3 29. The extent of the documents requested greatly exceeds what would be relevant or lead to relevant information, and many would be inadmissible at a hearing, as Husband's claim for alimony has been withdrawn. 30. Husband retained the undersigned as new counsel at the end of January, 2010. 31. Immediately after he notified Wife's counsel and Husband's prior counsel of his representation, and before he had the opportunity to even review the file, the undersigned received copies of Wife's first set of Requests for Production of Documents and Interrogatories, aCourt Order compelling an Answer and Production of Documents in response thereto, a Motion for Sanctions and Wife's second set of Requests for Production of Documents and Interrogatories. 32. The undersigned instructed Husband to locate and provide the documents subject to the Court Order 33. After receiving Mr. McKinley's letter of February 9, 2010, extending the time for production to February 26, the undersigned called Mr. McKinley and said that he would attempt to comply, but that it may not be possible as he had scheduled a pre- paid vacation the following week. Subsequently he was unable to go to his office for 5 1/2 days due to snow storms. 34. Husband's Answers were mailed to Mr. McKinley on March 11, 2010 and the documents were shipped by a copy service on or about March 12, 2010. 4 WHEREFORE, Husband respectfully request that Wife's Motion for Sanctions and an award of undocumented legal fees be denied. FRIEDMAN & HOCH, P.C. Charles E. Fried an, Esquire 300 North Second Street Suite 402 Harrisburg, PA 17101-1303 (717-232-9925) I.D. No. 7175 Attorney for Plaintiff 5 t,~w OFFiG~ JOnNNF 1tUS5 WiLDRtt JAMtis 8. MAHWa ELGtiA1;5TH PRTDS BTtiwN MCKINLEY DARR.GfT K OGT.ESSY YY A~~ OG lvl[iil~~ A t'nOF859~ONA1.CaRlOR+~~N TETJTti FLOoTt KOPPERS BUIT.DMG 436 SEvENTFT AVENUC PICTST3URGH, PENNSYLVANIA 15219-1827 TSt.EI'HONC (412) 261-e~040 TELEFnX (412) 261-2447 OF COUNSEL SRUCE L- W[I.pER February 9, 2010 By Fax Only: 717-23Z-946 Charles E. Friedman, Esq. Friedman & ~Ioch, P.C. 300 North Second Street Suite 402 Harrisbwg, PA 17101-1303 Re. Pikulin Deaz Mr. Friedman: Please allow this letter to confirm our earlier conversation during which 1 agreed to an extension for Dr. Fiklui>.1 to provide his outstanding documentation. I have contacted the 1'rothomotazy and informed them that the Motion for Sanctions is being deferred until further notice_ Accordingly, please forward all Dr. Pikulin's requested information, including those listed in the Motion for Sanctio>s by February 26, 2010. Otherwise, we will be forced to reinstate the Motion for Sanctions. Yours very truly, ~.~~._ ~~ Brian E. McKinley cc' Ms. Kuga EXHIBIT TOTAL P. 01 CERTIFICATE OF SERVICE I hereby certify that I have served a true and correct copy of the within document, by placing the same in the United States Mail, postage prepaid, at Harrisburg, Pennsylvania, on the ~l ~'~ day of ~L , 2010, on the following individual addressed as follows: Brian E. McKinley, Esquire Wilder & Mahood Tenth Floor Koppers Building 436 Seventh Avenue Pittsburgh, PA 15219-1827 /fir harles E. Friedman, Esquire JOHN N. PIKULIN, IN THE COURT OF COMMON PLEAS OF PLAINTIFF CUMBERLAND COUNTY, PENNSYLVAI~A N b ~ ~. '~ ~~ ~ ~~ ~ ~ LINDA KUGA PIKULIN ' t ' DEFENDANT ~ NO. 09'4002 CIVIL ~z~' ~ '~ .L-'~ r.r ~ ``~ t ORDER ~F COURT AND NOW, this 11t" da y of May, 2010, after hearing on the Defendant's M otion for Sanctions and hearing with regard to th$ outstanding requested Discovery, IT IS HEREBY ORDERED AND DIF~ECTED that: 1. The Motion for Sanctions is DENIIED at this time; 2. After review of the discovery sumimary provided by Attorney McKinley, a copy of which is attached to this order First Request for Production of DcDcuments: (1) Federal tax returns have been provided. Plaintiff will not be required to provide the 2001 Pennsylvania state return. (10 & 11) Plaintiff will provide all requested account information for each item listed for the period from May 12, 2001 to January 31, 2007. If the Defendant requires information regarding these accounts outside of the stated period she will be responsible for acquiring the information one her own. First Interrogatories: (7) Plaintiff will provide the ledgers he maintains which contain the column entitled personal expenses. No further doc mentation will be required of the Plaintiff regarding this item. Defendant will have th right to depose the Plaintiff regarding personal expenses if required. Second request for Production of pocuments: (1) The 2009 tax return has been prgvided. (3 & 4) Plaintiff will provide all requested account information for each item listed for the period from May 12, 2001 to Januarys 31, 2007. If the Defendant requires information regarding these accounts outside of the stated period she will be responsible for acquiring the information on her own. Second Interrogatories: With regard to items 20, 21, and 22,,the Plaintiff is directed to provide information in his possession. If Defendant is not satisfiied with this information, the Defendant will be allowed to depose Plaintiff regarding these matters. (27) This item was WITHDRAWN by~ the Defendant. (28) This request is DENIED. (37) This request is DENIED. (38) Plaintiff will provide the spreadsheets contained in Plaintiff's computer records as maintained by Defendant's accountants. Defendant may depose the Plaintiff with regard to the existence of computer records regarding spreadsheets if required. By the Court, M.'' L. Ebert, Jr., J. /Joanne Ross Wilder Es uire q Brian E. McKinley, Esquire Counsel for Defendant ~ ~ m~~ ~~ p ~harles E. Friedman, Esquire s' / ~,l !d 300 North Second Street Suite 402 Harrisburg, PA 17101-1303 bas . _ _ _ _ _ _ _ ... ~..._.. ~ ~ ~, ,u~,u 412 261 2447 biscovery Summary 1~Yrst Request for Production of bocngaents: 1) 2000 federal and state returns; 20101 state return; 2002 state retain; and 2006 state rclurn. 10 & 11) Account statements for investment, retirement and 401(k): American Funds IRA #2637 yGar~cnd statements for 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007 (complete copy), 2008 (complete copy) and 2009. Merrill Lynch Account #34N99 y-end statements for 2000, 2001 (complete ~PY)> 2402 (complete copy), 200 , 2004, 2005, 2006, 2007, 2008 and 2009. Principal Financial Group Anhui #2212 year-end statements for 20~, 2001, 2002, 2003, 2004, 2005 and 2006. Delaware Investments #6117 year 2004, 2005, 2006, 2007, 2008 and Ameriprise Portfolio #9001 year-e 2004, 2005, 2006, 200? snd 2008, MML investors Account #0370 ye 2004, 2005, 2006, 2007 and Z00$. Mass Mutual Annuity #3999 year- 2004, 2005, 2006, 2007 and 2008. First lnterroga#ories: statements for 2dd0, 2001, 2002, 2003, statements for 2000, 2001, 2002, 2003, statements for 2000, 2001, 2002, 2003, statemeents for 2000, 2001, 2002, 2003, P.02 7) Documentation regarding personal expenses. rrrc-~ertC,ic, i i• ~J W 1 L.1)tF~ a MRfi00D Second Request for Production of Doc(u~}ments: 1) 2009 Tax Retwru when filed. 3 & 4) Bank statements: 412 261 2447 P.03 CommercelMetro Bank account ] 56? statements for January 1, 2001 to June 30, 2001; September 1, 2007 to Novmber, 2008; 7antiary 31, 2008; August 24, 2009 to October 24, 2009; and T?eeexnbler 24, 2009 to tlae present. PNC Bank account #9861 statements for January 1, 2001 to June 30, 2001; September 1, 2007 io September ~8, 2007 (complete statement); December 1, 2007 to December 31, 2007 (complete statement}; January 1, 2008 to January 31, 2008 (complete statement}; August 1, 2009 to September 30, 2009; and January 1, 24i 0 to the presetrt. Integrity Bank account #5189 statents for January 1, 2001 to June 30, 2001; September 1, 2007 to Jantiary 31, 008 (complete statements); and January ] , 2009 to January 19, 2010_ Integrity Bank account #6942 statements fQr January 1, 2001 to June 30, 2001; September 1, 2007 to January 31, X008; and January 1, 2009 to November 30, 2009. PNC Bank account #3484 statements for January 1, 2001 to June 34, 2001; September 1, 2007 to January 31, ?008; and January 1, 2009 to present (complete statements}. PNC Back account #7374 statmnen~s for January 1, 2001 to Juno 30, 2001; September ], 2007 to January 31, 2b0$; and January 1, 2009 io December 1 S, 2009. Second Interrogatories: 20) All the information requested in intdrmgatory was not provided. ~~~ 21) All the information requested in in~rrogatory was not provided. o~ ~ c'~° J ~ 22) All the information requested in interrogatory was not provided. W O 27) Authorizations for medical records. 28) All the information requested in inte.~rogatory was trot provided. fl 37) All the information requested in interrogatory was cot pro~vidcd. W t LLtK a rFIrRJUL 38) Computer records for the years 2401 to the prat. $ ~~~~.~ ~ ~c.~ ~~c~1 - ~. 4].2 261 2447 P. 04 TOTAL P.04 _;r JOHN N. PIKULIN, CLf~r .'~~ ~ ~~' ~~' 't"1N THE COURT OF COMMON PLEAS Plaintiff CUMBERLAND COUNTY, PENNSYLVANIA vs. No. 09-4002-Civil Term Civil Action -Divorce LINDA KUGA PIKULIN, Defendant ANSWER TO PETITION TO CONSOLIDATE CLAIM FOR ALIMONY PENDENTE LITE 1. Admitted. 2. Admitted. 3. Admitted. 4. It is denied that husband has taken no steps to move the case along. To the contrary, he has spent a great amount of time answering Wife's excessive, vexatious and unreasonable discovery requests and has filed his Income Statement. The remaining averments of this paragraph are admitted. 5. It is denied that Husband delayed these proceedings. To the contrary, he has spent a great amount of time answering Wife's excessive, vexatious and unreasonable discovery requests. It is admitted that it did take him a long period of time to fully comply with said requests. By way of further answer, the averments of this paragraph are denied as they fail to state material facts which constitute the grounds for the relief sought, namely a consolidation of the claim for Alimony pendente lite with the other economic claims pending. Pa.R.C.P 206.1(b). 6. Admitted 7. No response is required to Wife's claim for relief embodied in the averments of her Petition. 8. The averments of this paragraph are denied as they fail to state material facts which constitute the grounds for the relief sought, namely a consolidation of the claim for Alimony pendente lite with the other economic claims pending. Pa.R.C.P 206.1(b). To the contrary, they are Wife's legal arguments why APL should not be granted and no answer is required. Nevertheless, Explanatory Comment H. to the 2010 amendments states that the primary purpose of considering the duration of the marriage is to prevent the unfairness that arises in a short-term marriage when the obligor is required to pay support over a substantially longer period of time than the parties were married. 9. The averments of this paragraph are denied as they fail to state material facts which constitute the grounds for the relief sought, namely a consolidation of the claim for Alimony pendente lite with the other economic claims pending. Pa.R.C.P 206.1(b). To the contrary, they are Wife's legal arguments why APL should not be granted and no answer is required. Nevertheless, Husband avers that Wife's income and assets are in the millions of dollars and greatly exceed his. 10. The averments of this paragraph are denied as they fail to state material facts which constitute the grounds for the relief sought, namely a consolidation of the claim for Alimony pendente lite with the other economic claims pending. Pa.R.C.P 206.1(b). To the contrary, they are Wife's legal arguments why APL should not be granted and no answer is required. 11. The averments of this paragraph are denied as they fail to state material facts which constitute the grounds for the relief sought, namely a consolidation of the 2 claim for Alimony pendente lite with the other economic claims pending. Pa.R.C.P 206.1(b). To the contrary, they are Wife's legal arguments why APL should not be granted and no answer is required. 12. Denied. Husband did make a claim for alimony pendente lite in his Complaint. He is unable to explain the failure of his prior attorney to file the Petition necessary to frame the issue. By way of further answer, the averments of this paragraph are denied as they fail to state material facts which constitute the grounds for the relief sought, namely a consolidation of the claim for Alimony pendente lite with the other economic claims pending. Pa.R.C.P 206.1(b). To the contrary, they are Wife's arguments why APL should not be granted and no answer is required. 13. Denied. Husband will be prejudiced by not having the resources to adequately prosecute the divorce case to conclusion, while Wife has unlimited resources with which to pay counsel and expert witness fees. 14. Denied. To the contrary, the interest of judicial economy will be served if Wife would allow this case to proceed normally instead of filing vexatious discovery requests, Motions and Petitions. NEW MATTER 16. There is no procedure in the Divorce Code, the Pennsylvania Rules of Civil Procedure or the Cumberland County Rules of Court that provide for the relief Wife is seeking. 3 17. Both the Pennsylvania Rules of Civil Procedure and the Cumberland County Rules of Court have separate procedures for determining equitable distribution and support/alimony. 18. Cumberland County has two separate Masters appointed by the Court to hear cases involving support/alimony and equitable distribution. 19. Husband is not on an equal footing with Wife in his ability to prosecute the divorce action when her millions of dollars of income and assets give her the unlimited ability to pay whatever expenses are incurred in her aggressive defense. WHEREFORE, Husband prays that Wife's Petition to Consolidate be denied. Respectfully submitted, FRIEDMAN & HOCH, P.C. ~~%, CKt1es E. Friedmai5, Esquire 300 North Second Street Suite 402 Harrisburg, PA 17101-1303 (717-232-9925) I.D. No. 7175 Attorney for Plaintiff 4 CERTIFICATE OF SERVICE I hereby certify that I have served a true and correct copy of the within document, by placing the same in the United States Mail, postage prepaid, at Harrisburg, Pennsylvania, on the 25th day of June, 2010, on the following individual addressed as follows: Brian E. McKinley, Esquire Wilder & Mahood Tenth Floor Koppers Building 436 Seventh Avenue Pittsburgh, PA 15219-1827 Charles E. Friedma ,Esquire In the Court of Common Pleas of Cumberland County, Pennsylvania Civil Action -Divorce John N. Pikulin, Plaintiff vs. Linda Kuga Pikulin, Defendant No. 09-4002 Civil Term Verification n ~_ ^~ ~= ; ~ ~T=. r ~-, . _ ~ rw° - ~, ~- -n " , r `"' s r' ' r i-"' ` ~ " ~" fl C1 ~ . ' r~ -Li '?`, ^ ~:;~ Code: ~;,, '~ ~,. ~,. ~, --~ .-< Filed on Behalf of: Linda Kuga Pikulin, Defendant Counsel of Record for This Party: Joanne Ross Wilder Pa. I.D. #15274 Brian E. McKinley Pa. I.D. #86974 Wilder & Mahood Firm #525 10th Floor, Koppers Building 436 Seventh Avenue Pittsburgh, PA 1.5219 (412) 261-4040 ORIGINAL '. Verification I VERIFY that the averments of fact made in the aforegoing Petition to Consolidate Claim for Alimony Pendente Lite are true and correct. I understand that false statements herein are made subject to the penalties of 18 Pa. C.S. §4904, relating to unsworn falsification to authorities. Date: ~ ~ ~U ~ ~2 Lind uga Pikulin In the Court of Common Pleas of Cumberland County, Pennsylvania Civil Action -Divorce John N. Pikulin, Plaintiff vs. Linda Kuga Pikulin, Defendant ~~ "~;' L _ --{ ;-n - - 4"-' _~ _ .w 09-4002 Civil Term ~'_ No ~`= `; ~~ . , ~.. ~... ""C. Inventory and Appraisement Code: Filed on Behalf of: Linda Kuga Pikulin, Defendant Counsel of Record for This Party: Joanne Ross Wilder Pa. I.D. #15274 Brian E. McKinley Pa. I.D. #86974 Wilder & Mahood Firm #525 10th Floor, Koppers Building 436 Seventh Avenue Pittsburgh, PA 1521.9 (412) 261-4040 ORIGINAL In the Court of Common Pleas of Cumberland County, Pennsylvania John N. Pikulin, Plaintiff ) vs. ) No. 09-4002 Civil Term Linda Kuga Pikulin, ) Defendant ) Civil Action -Divorce Inventory & Appraisement of Linda Kuga Pikulin Date of Marriage: 05/12/01 Date of Separation: 01/07 Marital Assets Value 1. Marital component of H's Chiropractic Practice TBD 2. 4918 St. Croix Drive, Tampa, FL 33692, TBD property subject to mortgage; property being appraised 3. 5216 West Kennedy Blvd., Tampa, FL 33602, TBD property subject to mortgage 4. 213 Francis Cadden Parkway, Harrisburg, PA 17111 TBD 5. Proceeds from sale of 203 Francis Cadden Parkway, $31,468 Harrisburg, PA 17111; H received monies following sale of the property 6. Increase in value of 221 Bridge Street, New Cumberland, $20,000 PA 17070 1 7. Increase in value of H's premarital real estates $493,000 8. H's American Funds account #67198183 $11,099 9. H's American Funds IRA account #83062637 TBD 10. Marital component of H's Merrill Lynch TBD account #872-48485/#2AT-34N99 11. Marital component of H's Principal Financial Group $13,962 Annuity account #0286569 12. Marital component of H's Delaware Investments TBD account #007,/5077326117 13. H's American Express/Ameriprise Investment TBD account #000 3154 8456 8 021 14. H's American Express/Ameriprise Investment TBD account #0930 0725 1709 5004 15. Jt. American Express/Ameriprise Investment TBD account #008 0456 7537 1 001 16. H's American Express/Ameriprise Investment TBD account #008 0478 8765 4 001 17. H's American Express/Amerpise IDS TBD Policy #0930 0771 0858 5 044 18. H's American Express/Ameriprise Investment TBD account #0998 7432 9489 9 113 19. H's Met Life Securities Retirement account #SML-905871 TBD The following properties have increased in value during the marriage; the amount of the increase is estimated as follows: 1)171 - 187 Ashford Drive, New Cumberland, PA 17070 = $30,000; 2) 707 Pear Street, Lemoyne, PA 17101 = $50,000; 3) 422 Enola Drive, Enola, PA 17025 = $40,000; 4) 756 Erford Road, Camp Hill, PA 17011 = $9,000; 5) 871 Old Silver Spring Road, Mechanicsburg, PA 17055 = $6,500; 6) 711 Pear Street, Lemoyne, PA 17101 = $42,000; 7) 423 A - F Duke Street, Enola, PA 17025 = $30,000 (property was sold); 8) 422 A- F Duke Street, Enola, PA 17025 = $30,000 (property was sold); 9) 903 Walnut Street, Mechanicsburg, PA 17055 = $35,000 (property was sold); 10) 1767 Kings Arm Court, New Cumberland, PA 17070 = $1,500; 11) 156 - 174 Ashford Road, Enola, PA 17025 = $50,000; 12) 743 & 756 Erford Road, Camp Hill, PA 17011 = $16,000; 13) 1121 Nanroc Drive, Mechanicsburg, PA 17055 = $8,000; 14) 745 Erford Road, Camp Hill, PA 17011 = $7,000; 15) 686 Market Street, Lemoyne, PA 17101 = $45,000 (property was sold); 425 - 431 Duke Street, Enola, PA 17070 = $20,000 (property was sold); 16) 9 Nottingham Road, Camp Hill, PA 17011 = $49,446 (property was sold); and 17) 607 Erford Road, Camp Hill, PA 17011 = $23,388. 2 20. Marital component of H's Smith Barney account TBD 21. Marital component of H's Hartford Annuity account TBD 22. Marital component of H's Exelon Stock TBD 23. Marital component of H's PNC Bank Checking TBD account #51-4004-9861 24 Marital component of H's PNC Bank Checking TBD account #50-0469-3484 25. Marital component of H's PNC Bank Money Market TBD account #SO-490-7374 26. Marital component of H's PNC Bank Certificate of Deposit TBD account#3160-033-4056 27. H's Commerce/Metro Bank Checking account #0536141567 TBD 28. H's Integrity Bank Checking account #0203005189 TBD 29. H's Integrity Bank Money Market account #203016942 TBD 30. H's Integrity Bank Checking account #203001245 TBD 31. Martial component of H's Way Point/Sovereign Bank account #7841 TBD 32. Marital component of H's All First Bank account TBD 33. Marital component of H's Wheat First Investment account TBD 34. H's NCFCU Bank account TBD 35. Marital component of W's First Merit Bank Checking Account TBD 36. Marital component of W's Pepsi Bottling Group 401(K) Plan $101,546 (value as of 05/24/10) 37. Marital component of W's Pepsi Bottling Group Salaried $284,843 Employees Retirement Plan (Defined Benefit Plan, which contains qualified component with a marital value of $114,217 and a nonqualified component with a value of $170,626) 38. Marital component of W's Pepsi Bottling Group Executive TBD Deferral Plan 3 39. Marital component of W's Smith Barney Account #xxx-70451 TBD 40. Marital component of W's Smith Barney Account #xxx-70452 TBD 41. Marital component of W's Smith Barney Account #xxx-70450 TBD 42. Marital component of W's Pepsi Bottling Group Executive TBD Stock Options 43. Marital component of W's Pepsi Bottling Group Restricted Stock TBD 44. Marital component of W's Merrill Lynch Account TBD 45. W's 2003 Lexus TBD 46. H's Lincoln Aviator TBD 47. Personalty & Furnishings TBD 48. H's Jewelry TBD 49. Marital funds used to pay H's premarital debt for real estate $544,500 Non-Marital Assets 50. Non-marital component of H's Chiropractic Practice TBD 51. H's non-marital real estate TBD 52. 221 Bridge Street, New Cumberland, PA 17070 TBD 53. Non-marital component of H's Merrill Lynch TBD account #872-48485/#2AT-34N99 54. Non-marital component of H's Delaware Investment TBD account #007/5077326117 55. Non-marital component of H's Smith Barney account TBD 56. Non-marital component of H's Hartford Annuity TBD 57. Non-marital component of H's Exelon Stock TBD 4 58. Non-marital component of H's PNC Bank Checking TBD account#51-4004-9861 59. Non-marital component of H's PNC Bank Checking TBD account#50-0469-3484 60. Non-marital component of H's PNC Bank Money Market TBD account #50-490-7374 61. Non-marital component of H's PNC Bank Certificate of Deposit TBD account#3160-033-4056 62. Non-marital component of H's Way Point/Sovereign Bank TBD account #7841 63. Non-marital component H's of All First Bank account TBD 64. Non-marital component H's Wheat First Investment account TBD 65. Non-marital component of W's Pepsi Bottling Group 401(K) Plan $465,526 (Value as of 5/24/10) 66. Non-marital component of W's Pepsi Bottling Group $1,078,794 Salaried Employees' Retirement Plan 67. Non-marital component of W's Pepsi Bottling Group Executive TBD Deferral Plan 68. Non-marital component of W's Smith Barney Account #xxx-70451 TBD 69. Non-marital component of W's Smith Barney Account #xxx-70452 TBD 70. Non-marital component of W's Smith Barney Account #xxx-70450 TBD 71. Non-marital component of W's Pepsi Bottling Group Stock Options TBD 72. Non-marital component of W's Pepsi Bottling Group Restricted Stock TBD 73. Non-marital component of W's First Merit Account TBD Mari tal Liabilities 74. Mortgage on 4918 St. Croix Drive, Tampa, FL 33692 ($1,100,000) with First Republic Bank ($1,100,0001oan) 5 75. Mortgage on 5216 West Kennedy Blvd., Tampa, FL 33692 ($224,512) with Wells Fargo ($247,512 loan; value estimated) Non-Marital Liabilities 76. Mortgages on H's premarital real estate TBD * The assets and liabilities listed in Wife's Inventory and Appraisement, as well as the values related thereto, will be updated after additional discovery has been completed in this matter. ~~ 'Joanne Ross Wilder Brian E. McKinley Wilder & Mahood 10`h Floor Koppers Building 436 Seventh Avenue Pittsburgh, PA 15219-1827 (412) 261-4040 Attorneys for Linda Kuga Pikulin 6 Verification I VERIFY that the averments of fact made in the aforegoing Inventory and Appraisement are true and correct. I understand that false statements herein are made subject to the penalties of 18 Pa. C.S. §4904, relating to unsworn falsification to authorities. Date: ~o ~ /U Certificate of Service I hereby certify that a copy of the aforegoing Inventory and Appraisement was served by first class mail on Charles E. Friedman, Esquire, Friedman & Hoch, P.C., 300 North Second Street, Suite 402, Harrisburg, PA 17101, on the ~1'I'hday of July, 2010. ~~ ~ ~~ Joanne Ross Wilder Brian E. McKinley Wilder & Mahood 10th Floor Koppers Building 436 Seventh Avenue Pittsburgh, Pa 15219-1827 (412) 261-4040 Attorneys for Linda Kuga Pilculin JOHN N. PIKULIN, IN THE COURT OF COMMON PLEAS OF PLAINTIFF CUMBERLAND COUNTY, PENNSYLVANIA V. LINDA KUGA PIKULIN, DEFENDANT NO. 09-4002 CIVIL ORDER OF COURT AND NOW, this 30th day of August, 2010, upon consideration of Linda Pikulin's Petition to Consolidate Claim for Alimony Pendente Lite, the Answer filed by John Pikulin, and after examination of the cases and articles submitted by counsel, IT IS HEREBY ORDERED AND DIRECTED that the Petition to Consolidate is DENIED. Economic claims involved in this action shall be heard before the Cumberland County Divorce Master and the claims for Alimony Pendente Lite will be heard before the Cumberland County Support Master. By the Court, M. L. Ebert, Jr., J. ?c;harles E. Friedman, Esquire Attorney for Plaintiff 300 North Second Street Suite 402 Harrisburg, PA 17101-1303 nne Ross Wilder, Esquire 41 ? Brian E. McKinley, Esquire Counsel for Defendant 10th Floor Koppers building 436 Seventh Avenue Pittsburgh, PA 15219-1827 bas `n CZ- - Fn C` -. n C N rn V y ? n u G - b I , In the Court of Common Pleas of Cumberland County, Pennsylvania Civil Action - Divorce John N. Pikulin, Plaintiff vs. Linda Kuga Pikulin, Defendant c -ca l? -, No. 09-4002 Civil Term`s ` rn Motion for Appointment of Divorce Master Code: Filed on Behalf of: Linda Kuga Pikulin, Defendant Counsel of Record for This Party: Joanne Ross Wilder Pa. I.D. #15274 Brian E. McKinley Pa. I.D. #86974 Wilder & Mahood Firm #525 10th Floor, Koppers Building 436 Seventh Avenue Pittsburgh, PA 15219 (412) 261-4040 ORIGINAL In the Court of Common Pleas of Cumberland County, Pennsylvania John N. Pikulin, Plaintiff ) vs. ) No. 09-4002 Civil Term Linda Kuga Pikulin, ) Defendant ) Civil Action - Divorce Motion for Appointment of Divorce Master Linda Kuga Pikulin, Defendant, hereinafter "Wife," by her attorneys, Joanne Ross Wilder and Wilder & Mahood, respectfully represents that: 1. Wife and Plaintiff, John N. Pikulin, hereinafter "Husband," were married on May 12, 2001 and separated in January, 2007. The parties' marriage therefore lasted just over five years. 2. On June 15, 2009, Husband filed a Complaint in Divorce, which included ancillary economic claims. On March 8, 2010, Husband filed a Praecipe withdrawing his claim for alimony. Wife filed her Affidavit pursuant to 23 Pa. C.S.A. §3301(d) on July 6, 2009. 3. Defendant moves for this Court to appoint a divorce master with respect to the following claims: divorce; distribution of property; and counsel fees, costs and expenses. 4. Discovery is substantially complete as to the claims for which the appointment of a master is required and should be finalized in the near future. 5. 'The Plaintiff has appeared in person and has been represented by Charles Friedman, Esquire. The Defendant has appeared in the action through her counsel Joanne Ross Wilder, Esquire and Brian E. McKinley, Esquire. 1 6. The statutory grounds for divorce are Section 3301(c) and (d) of the Divorce Code. 7. The action is contested with respect the claims for equitable distribution, and counsel fees, costs and expenses. 8. The action involves complex issues of law or fact. 9. The hearing is expected to take two days. Wherefore, Wife respectfully requests that this Honorable Court enter an order appointing a divorce master to address the claims pending between the parties. Joanne Ross Wilder ?? Brian E. McKinley Wilder & Mahood 10th Floor Koppers Building 436 Seventh Avenue Pittsburgh, PA 15219-1827 (412) 261-4040 Attorneys for Linda Kuga Pikulin 2 Certificate of Service I hereby certify that a copy of the aforegoing Motion was served by first class mail on Charles E. Friedman, Esquire, Friedman & Hoch, P.C., attorneys for Plaintiff, 300 North Second Street, Suite 402, Harrisburg, PA 17101, on the 2no day of September, 2010. Joanne Ross Wilder Brian E. McKinley Wilder & Mahood I Oth Floor Koppers Building 436 Seventh Avenue Pittsburgh, Pa 15219-1827 (412) 261-4040 Attorneys for Linda Kuga Pikulin In the Court of Common Pleas of Cumberland County, Pennsylvania John N. Pikulin, Plaintiff ) vs. ) No. 09-4002 Civil Term Linda Kuga Pikulin, ) } Defendant ) Civil Action - Divorce Order of Court And Now, this day of 2010, upon consideration of the Defendant's Motion for Appointment of Divorce Master, it is hereby Ordered that , Esquire, is appointed Master with respect to the following claims: divorce, equitable distribution, and counsel fees, costs and expenses. BY THE COURT: J. Plaintiff Name: John N. Pikulin Attorney's Name: Charles E. Friedman, Esquire .Attorney's Address: 300 North Second Street, Suite 402, Harrisburg, PA 17101-1 303 Attorney's Telephone: 717-232-9925 Defendant Name: Linda Kuya Pikulin Attorney's Name: Joanne Ross Wilder, Esquire zttorney's Address: 1050 Koppers Building, 436 Seventh Avenue, Pittsbur-h, PA 15219-1827 Attorney's Telephone: 412-261-4040 JOHN N. PIKULIN, THE COURT OF COMMON PLEAS OF Plaintiff /Petitioner CUMBERLAND COUNTY, PENNSYLVANIA VS. CIVIL ACTION - DIVORCE • 7 NO. 09-4002 CIVIL TERM ;F?'- • IN DIVORCE it=? -v, LINDA KUGA PIKULIN, ?``? Defendant/Respondent PACSES NO: 222111703 N' ORDER OF COURT AND NOW, this 13th day of September, 2010, upon consideration of the Petition for Alimony Pendente Lite and/or counsel fees, it is hereby directed that the parties and their respective counsel appear before R. J. Shadday on October 21, 2010 at 1:30 P.M. for a conference, at 13 N. Hanover St.. Carlisle, PA 17013, after which the conference officer may recommend that an Order for Alimony Pendente Lite be entered. YOU are further ordered to bring to the conference: (I) a true copy of your most recent Federal Income "Tax Return, including W-2's as tiled (2) your pay stubs for the preceding, six (6) months (3) the Income and Expense Statement attached to this order. completed as required by Rule 1910.1IV (4) verification of child care expenses (5) proof of medical coverage which you may have, or may have available to you. If you fail to appear for the conference or bring the required documents, the Court may issue a warrant for your arrest. Copies mailed to: Petitioner Respondent Charles E. Friedman, Esq. Brian E. McKinley, 111, F,sq. Date of Order:Itember 13, 2010 BY THE COURT, M. L. Ebert, Jr., .Ju e YOU HAVE THE RIGHT TO A LAWYER, WHO MAY ATTEND THE CONFERENCE AND REPRESENT YOU. IF YOU DO NOT HAVE A LAWYER OR CANNOT AFFORD ONE, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW TO FIND OUT WHERE YOU MAY GET LEGAL HELP. CUMBERLAND COUNTY BAR ASSOCIATION 2 LIBERTY AVE. CARLISLE, PENNSYLVANIA 17013 (717) 249-3166 cc361 In the Court of Common Pleas of Cumberland County, Pennsylvania Civil Action - Divorce John N. Pikulin, Plaintiff vs. Linda Kuga Pikulin, Defendant No. 09-4002 Civil Term PACSES No. 222111703 Motion to Reschedule - to Code: 17?6 7". Filed on Behalf of: Linda Kuga Pikulin, Defer iani- Counsel of Record for This Party: Joanne Ross Wilder Pa. I.D. #15274 Brian E. McKinley Pa. I.D. #86974 Wilder & Mahood Finn #525 10th Floor, Koppers Building 436 Seventh Avenue Pittsburgh, PA 15219 (412) 261-4040 - -q ORIGINAL In the Court of Common Pleas of Cumberland County, Pennsylvania John N. Pikulin, Plaintiff ) No. 09-4002 Civil Term vs. PACSES No. 222111703 Linda Kuga Pikulin, ) Defendant ) Civil Action - Divorce Motion to Reschedule Linda Kuga Pikulin, Defendant, hereinafter" Wife," by her attorneys, Joanne Ross Wilder and Wilder & Mahood, respectfully represents that: 1. Wife and Plaintiff, John N. Pikulin, hereinafter "Husband," were married on May 12, 2001 and separated in January, 2007. The parties' marriage therefore lasted just over five years. 2. On June 15, 2009, Husband filed a Complaint in Divorce, which included ancillary economic claims. On March 8, 2010, Husband filed a Praccipe withdrawing his claim for alimony. Wife filed her Affidavit pursuant to 23 Pa. C.S.A. §3301(d) on July 6, 2009. 3. On or about June 1, 2010, nearly a year after filing his Complaint in Divorce, Husband filed a Petition Requesting Hearing on Claim for Alimony Pendente Lite. 4. Wife's request to have Husband's claim for alimony pendente lite consolidated with the divorce related economic claims was denied by order of court dated August 30, 2010. 5. By order of court dated September 13, 2010, an alimony pendente lite conference was scheduled for October 21, 2010 at 1:30 p.m. A copy of the September 13, 2010 Order is attached hereto as Exhibit A. 1 6. Counsel for Wife was not consulted regarding the prospective date of the conference prior to its scheduling by the Court. 7. Counsel for Wife is unable to attend the conference on October 21, 2010 because of a scheduling conflict that has her traveling out of the state on such date. 8. Wife would be severally prejudiced if the conference was to occur and her counsel was unable to attend the same. 9. Husband would not be prejudiced by the rescheduling of the conference, as he has sufficient income and assets, making an award of alimony pendente lite unnecessary in this matter. Wherefore, Wife requests that this Honorable Court enter an order rescheduling the October 21, 2010 alimony pendente lite conference to the next mutually available date. .27 If ? Joanne Ross Wilder Brian E. McKinley Wilder & Mahood l01h Floor Koppers Building 436 Seventh Avenue Pittsburgh, PA 15219-1827 (412) 261-4040 Attorneys for Linda Kuga Pikulm 2 .JOHN N. PIKULIN, THE COURT OF COMMON PLEAS OF Plaintiff/Petitioner CUMBERLAND COUNTY, PENNSYLVANIA VS. CIVIL ACTION - DIVORCE NO. 09-1002 CIVIL TERM LINDA KUGA PIKULIN, IN DIVORCE Defendant/Respondent : PACSES NO: 222111703 ORDER OF COURT AND NOW, this 13th day oPSeptembcr, 2010. upon consideration of the Petition for Alimony Pendente Lite and;or counsel fees, it is hereby directed that the parties and their respective counsel appear before R. J. Shadday on October 21, 2010 at 1:30 P.M. for a conference, at 13 N. Hanover St.. Carlisle. PA 17013. after which the conference officer may recommend that an Order for Alimony Pendente Lite be entered. Y( W are further ordered to brim w the conference: ( I ) a true copy of your most recent Federal Income Tax Return, including W-2's as tiled (2) your pay stubs for the preceding six (6) months (3) the Income and Expense Statement attached to this order, completed as required by Rule 1910.11 «0 (4) verification of child care expenses (5) proof of medical coverage which you may have, or may have available to you. If you fail to appear for the conference or bring the required documents, the Court may issue a warrant for your arrest. Copies mailed to. Petitioner Respondent Charles E. Friedman, Esq. Brian E. McKinley, III. Esq. Date of Order. Se te_ mber 13, 2010 13Y THE LOUR 1, M. L. Ebert. Jr., qJu YOU HAVE THE RIGHT TO A LAWYER, WHO MAY ATTEND THE CONFERENCE AND REPRESENT YOU. IF YOU DO NOT HAVE A LAWYER OR CANNOT AFFORD ONE, GO TO OR TELEPHONE THE, OFFICE SET FORTI4 BELOW TO FIND OUT WHERE YOU MAY GET LEGAL HELP. CUMBERLAND COUNTY BAR ASSOCIA PION 2 LIBERTY AVE. CARLISLE, PENNSYLVANIA 17013 (717)249-3166 cc361 EXHIBIT a 8 ' SEP 212010 In the Court of Common Pleas of Cumberland County, Pennsylvania John N. Pikulin, Plaintiff ) vs. ) No. 09-4002 Civil Term ) Linda Kuga Pikulin, ) Defendant ) Civil Action -Divorce Order of Court And Now, this ~ day of _ 2010, upon consideration of the Defendant's Motion to Reschedule, it is hereby Ordered that the alimony pendente lite conference scheduled for October 21, 2010 at 1:30 p.m., before R.J. Shadday, is rescheduled to the ~~`' day of ~!)~,19,~~yr , o~~, at I ; 3-~ o'clock~.m., at 13 N. Hanover Street, Carlisle, PA 17013. BY THE COURT: ~~ '~~ -bc~S q~~,fl ~ e . ~iz.~~~~ ~/ate./~~ ~~ Q~C. ~,,~ ~t3 ~..~ ~~ . _~ rim ~ ~ f,~ ---~ te' - .,~ r ~ ~, ~ r~ -~ r , , -n ~ inr rv ~~ ""~ ~ rv -t ca - y° ~ n o-n ~~ ~ w °rn ~ ~ ~ ~ ~ ~ In the Court of Common Pleas of Cumberland County, Pennsylvania Civil Action -Divorce John N. Pikulin, Plaintiff vs. Linda Kuga Pikulin, Defendant ~~ ~ ' ;- ~- ~ ~-- <~ - ~ ~ ~~_~ ¢:°v No. 09-4002 Civil Term PACSES No. 222111703 Defendant's Reply to New Matter Raised in Plaintiff s Answer to Motion for Appointment of Divorce Master Code: Filed on Behalf of: Linda Kuga Pikulin, Defendant Counsel of Record for This Party: Joanne Ross Wilder Pa. I.D. #15274 Brian E. McKinley Pa. I.D. #$6974 Wilder & Mahood Firm #525 10th Floor, Koppers Building 436 Seventh Avenue Pittsburgh, PA 15219 (412) 261-4040 In the Court of Common Pleas of Cumberland County, Pennsylvania John N. Pikulin, Plaintiff ) vs. ) No. 09-4002 Civil Term Linda Kuga Pikulin, ) Defendant ) Civil Action -Divorce Reply to New Matter Raised in Plaintiff s Answer to Motion for Appointment of Divorce Master Linda Kuga Pikulin, Defendant, hereinafter "Wife," by her attorneys, Joanne Ross Wilder and Wilder & Mahood, respectfully represents that: 10. Denied. The parties have been separated for over three years and each have had a substantial amount of time to move this case forward. By way of further answer, Wife has attempted to value the estate through discovery and other means. 11. Wife without sufficient information to form a conclusion as to the averment of Husband's paragraph 11, and strict proof thereof is demanded. By way of further answer, Husband has had over three years to obtain an expert and complete valuations in this matter. 12. Admitted. By way of further answer, Wife has filed her Inventory and Appraisement and has attempted to move the case forward. Husband has failed to file his Inventory and Appraisement and has delayed these proceedings by failing to move the case forward, including providing full and complete discovery responses. 13. It is admitted that Husband has not filed his Inventory and Appraisement or his Expense Statement. It is denied that Wife has interfered or prevented Husband from filing such 1 documents. By way of further answer, the parties have been separated for over three years, and Husband has had sufficient time to obtain any and all information needed to file the respective documents. 14. Denied as stated. Wife voluntarily produced tax returns and account statements. Furthermore, counsel for Wife requested that counsel for Husband provide a list of documents that were requested by Husband. Thereafter, Husband served his formal discovery requests. 15. It is admitted that Wife filed her Motion for Appointment of a Divorce Master in early September, 2010. Byway of further answer, Wife's Motion was granted by Order of Court dated September 9, 2010. 16. Husband's paragraph 16 is a legal conclusion for which no response is required. By way of further answer, Plaintiff's Motion for Appointment of Divorce Master was granted by Order dated September 9, 2010. Wherefore, Wife respectfully requests that Husband's New Matter be disregarded and dismissed by this Honorable Court. F. r~ Joanne Ross Wilder l-~ Brian E. McKinley Wilder & Mahood lOt" Floor Koppers Building 436 Seventh Avenue Pittsburgh, PA 15219-1827 (412) 261-4040 Attorneys for Linda Kuga Pikulin 2 Certificate of Service I hereby certify that a copy of the aforegoing Reply to New Matter Raised in Answer was served by facsimile and first class mail on Charles E. Friedman, Esquire, Friedman & Hoch, P.C., attorneys for Plaintiff, 300 North Second Street, Suite 402, Harrisburg, PA 17101-1303 on the 28th day of September 2010. ~ ~ Joanne Ross Wilder Brian E. McKinley Wilder & Mahood 10th Floor Koppers Building 436 Seventh Avenue Pittsburgh, Pa 15219-1827 (412) 261-4040 Attorneys for Linda Kuga Pikulin In the Court of Common Pleas of Cumberland County, Pennsylvania Civil Action -Divorce John N. Pikulin, Plaintiff vs. Linda Kuga Pikulin, No. 09-4002 Civil Term PACSES No. 222111703 Defendant Motion to Permit Telephone Testimony Code: Filed on Behalf o£ Linda Kuga Pikulin, Defendant a_ , Counsel of Record for This Party: e-,- ^y ~ ~'7 '~,= ~ Joanne Ross Wilder r- r ; ~ ``' .~ ~~ Pa. I.D. #15274 _'~' ~- ~ ~y ~ ~ Brian E. McKinley =' ` ~" ~ `_. "~ ~T Pa. LD. #86974 r ~,.~,r ~ ' - ~a ° ~,' Wilder & Mahood y._.. ~,,,.. ~-~-r =' Firm #525 `~' 10th Floor, Koppers Building 436 Seventh Avenue Pittsburgh, PA 15219 (412) 261-4040 ORIGINAL In the Court of Common Pleas of Cumberland County, Pennsylvania John N. Pikulin, vs. Linda Kuga Pikulin, Plaintiff ) Defendant ) No. 09-4002 Civil Term PACSES No. 222111703 Civil Action -Divorce Motion to Permit Telephone Testimony Linda Kaga Pikulin, Defendant, hereinafter "Wife," by her attorneys, Joanne Ross Wilder and Wilder & Mahood, respectfully represents that: 1. Wife and Plaintiff, John N. Pikulin, hereinafter "Husband," were married on May 12, 2001 and separated in January, 2007. The parties' marriage therefore lasted just over five years. 2. On June 15, 2009, Husband filed a Complaint in Divorce, which included ancillary economic claims. On March 8, 2010, Husband filed a Praecipe withdrawing his claim for alimony. Wife filed her Affidavit pursuant to 23 Pa. C.S.A. §3301(d) on July 6, 2009. 3. On or about June 1, 2010, nearly a year after filing his Complaint in Divorce, Husband filed a Petition Requesting Hearing on Claim for Alimony Pendente Lite.l 4. Wife's request to have Husband's claim for alimony pendente lite consolidated with the divorce related economic claims was denied by order of court dated August 30, 2010. 5. By order of court dated September 22, 2010, an alimony pendente lite conference was scheduled for November 9, 2010 at 1:30 p.m. ' Husband has pursued his claims for alimony pendente lite without having the required need for such an award. Specifically, Husband's tax returns for the years 2007 to 2009 indicate an average net income of $26,281 per month. Furthermore, Husband has control of assets in excess of $3 million. 1 1 6. Wife resides and works in Ontario, Canada, which is over 430 miles from the Cumberland County Courthouse and approximately an eight hour drive. Wife would have to incur considerable expenses to travel to Cumberland County to participate in the support conference. Furthermore, Wife has significant work commitments that preclude her from taking multiple days to travel and participate in the support conference. 7. Wife requests that she be granted permission to participate in the support conference by telephone. 8. Rule 1930.3 provides that "[w]ith the approval of the court upon good cause shown, a party or witness may be deposed or testify by telephone, audiovisual or other electronic means at a designated location in all domestic relations matters." Pa.R.C.P. 1930.3. 9. Through her counsel, Wife will provide all documentation required for the support conference. 10. Husband will suffer no prejudice if Wife is permitted to participate by telephone rather than in person. Wherefore, Wife respectfully requests that this Honorable Court enter an order permitting her to participate by telephone at the November 9, 2010 support conference. ~ ~ Joanne Ross Wilder <---~ Brian E. McKinley Wilder & Mahood 10th Floor Koppers Building 436 Seventh Avenue Pittsburgh, PA 15219-182? (412) 261-4040 Attorneys for Linda Kuga Pikulin 2 Certificate of Service I hereby certify that a copy of the aforegoing Motion to Permit Telephone Testimony was served by first class mail on Charles E. Friedman, Esquire, Friedman & Hoch, P.C., attorneys for Plaintiff, 300 North Second Street, Suite 402, Harrisburg, PA 17101-1303 on the 6th day of October, 2010. ~_ Joanne Ross Wildex Brian E. McKinley Wilder & Mahood 10th Floor Koppers Building 436 Seventh Avenue Pittsburgh, Pa 15219-1827 (412) 261-4040 Attorneys for Linda Kuga Pikulin 2--- ' b 0 c?A? ?r In the Court of Common Pleas of Cumberland County, Pennsylvania John N. Pikulin, Plaintiff ) ) vs. ) No. 09-4002 Civil Term Linda Kuga Pikulin, ) PACSES No. 222111703 Defendant ) Civil Action - Divorce Order of Court And Now, this day of OCT 1 1 Zuiu 2010, upon consideration of the Defendant's Motion to Permit Telephone Testimony, it is hereby Ordered that the Motion be and hereby is granted. Defendant may participate in the November 9, 2010 support conference before R.J. Shadday by telephone. BY THE COURT: 0 .0 11019 m a t L 04? J. Lo 04 0. ,v? qk J. _.....i ....»j ?__ Z s` 4 . t" ? JOHN N. PIKULIN, THE COURT OF COMMON PLEAS OF Plaintiff/Petitioner CUMBERLAND COUNTY, PENNSYLVANIA VS. CIVIL ACTION - DIVORCE w NO. 09-4002 CIVIL TERM LINDA KUGA PIKULIN, IN DIVORCE Defendant/Respondent PACSES NO: 222111703 - ORDER OF COURT - RESCHEDULE A CONFERENCE AND NOW, this 8th day of November, 2010, upon consideration of the Petition for Alimony Pendente Lft and/or counsel fees, it is hereby directed that the parties and their respective counsel appear before R.J. Shadday on December 8, 2010 at 1:30 P.M. for a conference, at 13 N. Hanover St., Carlisle, PA 17013, after which the conference officer may recommend that an Order for Alimony Pendente Lite be entered. This date replaces the prior conference date of November 9, 2010. YOU are further ordered to bring to the conference: (1) a true copy of your most recent Federal Income Tax Return, including W-2's as filed (2) your pay stubs for the preceding six (6) months (3) the Income and Expense Statement attached to this order, completed as required by Rule 1910.110 (4) verification of child care expenses (5) proof of medical coverage which you may have, or may have available to you (6) IF you fail to appear for the conference or bring the required documents, the Court may issue a warrant for your arrest. BY THE COURT, Date of Order: November 8, 2010 M. L. Ebert, Jr., Judge Copies mailed to: Petitioner Respondent Samuel L. Andes, Esq. Brian E. McKinley, Esq. YOU HAVE THE RIGHT TO A LAWYER, WHO MAY ATTEND THE CONFERENCE AND REPRESENT YOU. IF YOU DO NOT HAVE A LAWYER OR CANNOT AFFORD ONE, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW TO FIND OUT WHERE YOU MAY GET LEGAL HELP. CUMBERLAND COUNTY BAR ASSOCIATION 2LIBERTY AVE. CARLISLE, :PENNSYLVANIA 17013 (717) 249-3166 cc361 JOHN N. PIKULIN, IN THE COURT OF COMMON PLEAS Plaintiff CUMBERLAND COUNTY, PENNSYLVANIA vs. No. 09-4002-Civil Term c ivil Action - Divorce C C= c -tj LINDA KUGA PIKULIN, ern , rC= Defendant . cn > C' 1 -c r- ra ? -' PRAECIPE R C.- iz ,a n TO THE PROTHONOTARY: Please withdraw the appearance of Charles E. Friedman, Esquire, and Friedman & Hoch, P.C. as counsel for Plaintiff, John N. Pikulin. FRIEDMAN & HOCH, P.C. TO THE PROTHONOTARY: Charles E. Friedman, Esquire Supreme Court I.D. No. 7175 300 North Second Street Harrisburg, PA 17101-1303 (717-232-9925) Please enter my appearance for the Plaintiff John N. Pikulin in the above matter. Date: Z. <:2 , - Ga(22ne,? Samuel L. And s Attorney for Plaintiff Supreme Court ID # 17225 525 North 12th Street P.O. Box 168 Lemoyne, Pa 17043 (717) 761-5361 In the Court of Common Pleas of Cumberland County, Pennsylvania John N. Pikulin, Civil Action -Law Plaintiff ) vs. ) No. 09-4002 Civil Term Linda Kuga Pikulin, ) PACSES # 222111703 Defendant ) ORDER FOR ALIMONY PENDENTE LITE Ati AND NOW come, this '16 day of December 2010, upon the agreement of the parties as expressed in the Stipulation of their counsel, we hereby enter the following Order on the Plaintiff's request for alimony pendente lite: 1. Effective December 1,2010, the Defendant Linda Kuga Pikulin shall pay directly to the Plaintiff John N. Pikulin, as alimony pendente lite, the sum of $10,000.00 per month. The payment shall be due on the 5th day of each month. 2. The alimony pendente lite paid pursuant to this order shall continue, without modification, until such time as the Court enters an order resolving the economic issues in the case or until November 30, 2011. If a final economic order has not been entered in the divorce case by November 30, 2011, the terms of this order, and the amount and duration of alimony pendente lite paid by Defendant to Plaintiff will be subject to modification, or termination if appropriate, by the agreement of the parties or by further order of this court. 3. The alimony pendente lite payments are taxable income to Plaintiff and deductible to Defendant. The parties shall file tax returns that are consistent with this provision. 4. Defendant shall continue to cover Plaintiff on the medical insurance provided by her employer until further order of court. Each party shall be responsible for his or her own medical expenses that are not covered by insurance. 5. Payments pursuant to this order shall be made by Defendant directly to Plaintiff at his address in New Cumberland, Pennsylvania, in the event that Defendant fails to make any of those payments for a period of twenty (20) days or more, the provisions of this agreement shall be enforced by the Domestic Relations Office and the laws of Pennsylvania, specifically including a wage attachment if appropriate. BY THE COURT, k-\?" ??A J. Distribution: Samuel L. Andes, Esquire (Attorney for Plaintiff) 525 North 12`x' Street, P.O. Box 168, Lemoyne, Pa 17043 oanne Ross Wilder, Esquire (Attorney for Defendant) 436 Seventh Avenue, Pittsburgh, PA 15219-1827 VTS?-o 0 (%) Q ff ..? N O ;o C7 CD 7 co a_7 t 7 -i cn « . In the Court of Common Pleas of Cumberland County, Pennsylvania John N. Pikulin, Plaintiff ) vs. ) Linda Kuga Pikulin, ) Defendant ) Civil Action - Law No. 09-4002 Civil Term PACSES #222111703 STIPULATION AND NOW, this 'day of December 2010, the undersigned, as counsel for Plaintiff and Defendant in the above matter, hereby represent to the court that they are authorized to enter into this Stipulation on behalf of their clients and hereby stipulate that the court shall enter the attached order for alimony pendente lite. el . n es Joanne Ross Wilder Attorney for Plaintiff Attorney for Defendant JOHN N. PIKULIN, IN THE COURT OF COMMON PLEAS OF Plaintiff/Petitioner CUMBERLAND COUNTY, PENNSYLVANIA VS. CIVIL ACTION - DIVORCE 09-4002 CIVIL TERM NO ° q . LINDA K. PIKULIN, IN DIVORCE r77 r-11 - Defendant/Respondent PACSES CASE: 222111703 r 1 ,,, d ORDER OF COURT `Cr - =c ; r] c:.o AND NOW to wit, this 17th day of December, 2010, it is hereby Ordered that the Cumberland County Domestic Relations Section dismiss their interest, without prejudice, in the above captioned Alimony Pendente Lite matter pursuant to the parties' Stipulation of December 14, 2010. This Order shall become final twenty (20) days after the mailing of the notices of the entry of the Order to the parties unless either party files a written demand with the Office of the Prothonotary for a hearing de novo before the Court. BY THE COURT: - ?K-V- 1-? M. L. Ebert, Jr., J. DRO: R.J. Shadday xc: Petitioner Respondent Samuel L. Andes, Esq. Joanne Ross Wilder, Esq. Form OE-001 Worker: 21005 Service Type: M I In the Court of Common Pleas of Cumberland County, Pennsylvania Civil Action - Divorce C.) John N. Pikulin, - I y Plaintiff No. 09-4002 Civil Term4 VS. PACSES No. 222111703. Linda Kuga Pikulin, Petition for Special Relief :Defendant Code: Filed on Behalf of: Linda Kuga Pikulin, Defendant Counsel of Record for This Party: Joanne Ross Wilder Pa. I.D. #15274 Brian E. McKinley Pa. I.D. #86974 Wilder & Mahood Firm #525 10th Floor, Koppers Building 436 Seventh Avenue Pittsburgh, PA 15219 (412) 261-4040 ORIGINAL In the Court of Common Pleas of Cumberland County, Pennsylvania John N. Pikulin, Plaintiff ) ) vs. ) No. 09-4002 Civil Term ) Linda Kuga Pikulin, ) Defendant ) Civil Action - Divorce Petition for Special Relief Linda Kuga Pikulin, Defendant, hereinafter "Wife," by her attorneys, Joanne Ross Wilder, Brian E. McKinley and Wilder & Mahood, respectfully represents that: 1. Wife and Plaintiff, John N. Pikulin, hereinafter "Husband," were married on May 12, 2001 and separated in January, 2007. The parties' marriage therefore lasted just over five years. No children were born of the marriage. 2. On June 15, 2009, Husband filed a Complaint in Divorce, which included ancillary economic claims. On March 8, 2010, Husband filed a Praecipe withdrawing his claim for alimony. 3. By Order dated September 9, 2010, E. Robert Elicker, II, Esq., was appointed divorce master in this matter. 4. Upon the consent of Wife and Husband, an order of court was entered on December 20, 2010, providing for Wife to pay Husband alimony pendente lite in the amount of $10,000 per month until the parties reached a final resolution of the economic issues herein, or until November 30, 2011. 1 5. Wife is the President of PepsiCo Canada. However, her contract with the company has not been renewed, and her employment will end in February, 2011. 6. Wife is a participant in the PBG Salaried Employees Retirement Plan, with a fully vested interest in the Plan. She is currently eligible to receive benefits from the Plan, including the option of a lump sum payment and/or a life annuity. 7. The Plan requires Wife to obtain a notarized written consent form from Husband if she elects to receive her retirement benefits in any other form than a 50% Joint and Survivor Annuity. Wife does not intend to elect the Joint and Survivor benefit option; therefore, Husband must execute the consent form in order for Wife to begin receiving her benefits. A copy of the required form is attached hereto as Exhibit A. 8. A Joint and Survivor Annuity will not benefit Husband, and waiving it will not prejudice him in any way. 9. Counsel for the parties participated in a status conference with Master Elicker on January 24, 2011. At that time, counsel for Wife provided counsel for Husband the consent form and requested that Husband execute the form in order that Wife could immediately commence receiving benefits. Counsel for Wife also informed counsel for Husband that the execution of the form by Husband would be without prejudice to any possible claims to be raised as part of equitable distribution. 10. By correspondence dated January 26, 2011, counsel for Wife provided counsel for Husband a written reminder that the form needed to be executed by Husband. A copy of the January 26, 2011 correspondence is attached hereto as Exhibit B. 2 11. Counsel for Wife provided a second written remainder by correspondence dated January 28, 2011. A copy of the January 28, 2011 correspondence is attached hereto as Exhibit C. 12. Despite the written remainders, Husband has failed to execute the form, unnecessarily delaying Wife's receipt of the retirement benefits. 13. Pa.R.C.P. 1920.43 provides for the Court to "issue preliminary or special injunctions necessary to prevent the removal, disposition, alienation or encumbering of real or personal property," "to order the seizure or attachment of real or personal property" or "grant other appropriate relief." Pa.R.C.P. 1920.43(x)(1)(2) & (3) (emphasis added). 14. Wife requests that Husband be directed to immediately sign the consent form for the Retirement Plan. 15. The relief requested will result in no prejudice to Husband, as any claim he may have as to the Retirement Plan will be preserved for equitable distribution. 16. Wife needs to access her retirement benefits in order to pay her expenses and make the alimony pendente lite payments to Husband. 17. Wife is without a remedy at law. Wherefore, Wife respectfully requests that this Honorable Court enter order compelling Husband to execute the consent form for Wife's retirement plan within forty-eight (48) hours. C,ctcfl Joanne Ross Wilder Brian E. McKinley Wilder & Mahood 10`h Floor Koppers Building 436 Seventh Avenue Pittsburgh, PA 15219-1827 (412) 261-4040 Attorneys for Linda Kuga Pikulin 3 Verification Pursuant to Pa. R.C.P. 1024(c) I VERIFY that the averments of fact contained in the foregoing Petition are true and correct to the best of my knowledge, information, and belief, based upon information provided to me by Linda Kuga Pikulin, who is outside the jurisdiction and whose verification cannot be obtained within the time allowed for filing. I understand that false statements herein are made subject to the penalties of 18 Pa. C.S. §4904 relating to unsworn falsification to authorities. Date: February 1, 2011 l LJd C(Aff? Joanne Ross Wilder Wilder & Mahood Attorneys for Linda Kuga Pikulin S. Your Spouse's Consent If you are married and elect a payment option other than a 50% or greater, if applicable, Joint and Survivor Annuity or have elected a beneficiary other than your spouse, your spouse must complete this section and have it witnessed by a notary public. Federal law requires that you provide notarized spousal consent not more than 180 days prior to the date your benefit is to begin. l am the spouse of the named participant. t have reviewed the description of the Joint and Survivor payment options with the spouse as beneficiary, t acknowledge that I have a right to receive a Joint and Survivor payment option in lieu of any form of benefit available from the Plan. By signing this form, I acknowledge and consent to the election of an optional form of payment and/or a different beneficiary designation than myself on this form. i understand that this will result in the elimination or reduction of my right to a benefit. Signature of participant's spouse Sworn and subscribed before me this day Date in the year State of County of (seal) Notary Public (Signature) (Print Name) My commission expires (Date) 6. Your Signature and Date I understand that I cannot change my payment option after benefit payments begin. I also understand that if I elected a Joint and Survivor payment option, I cannot change my beneficiary once benefit payments begin, regardless of divorce, death or remarriage. Signature: Date You must sign and date this form in order to receive your benefit payment. • Importantl Please be sure to review the Checklist of Required Information and include any documents requested when you return this form. • Make a copy of this form for your files and return the original in the enclosed return envelope, together with any other required documents, or mail to: PBG Savings and Retirement Center at Fidelity P.O. Box 770003 Cincinnati, OH 45277-0070 For overnight mail: PBG Savings and Retirement Center at Fidelity 100 Crosby Parkway Covington, KY 41015 EXHIBIT 4. PG-B-5D 3,PG-6-363N319991.001 PESC0DS_PG10307757 6 DBSTM7 PG10307757 ****M*;K***M**** -COMM. T DATE JHPI'6 011 N* TIME I 1 +: ?2 + ?.:r.*v M*M t10DE = MEMORY TRANSMISSION -1TAPT=TAh1-,-16 03:`1 EhlG=JAP1-?5 179:5? FILE N0.=499 STN COMM. ONE-TOUCH/ STATION NAME/TEL HO. PHGES DURATION hl0. ABBR NO. 001 OK <17> SAM ANDES 001%001 00:00:15 -14I LDER 6 MAHOOD - ************************************ -WILDER MAHOOD - «*x** - 412 261 2447- ?***?**** Ln W OFFICES WILDER & MAHOOD A PROPE6510NAL CORPORATION TE,4TH FLOOR KGPPERS BUILUI.NG 436 SEVENTII AVENuE PI'rl'SBURGH, PFNNSYLVANfA 15219-1827 TELEPHONE (412) 261.4040 TBLEFAX (412) 261.2447 JOANNE ROSS WILDER JAMES E. MAHOOD EL18AOE:R PRMI; BRIAN MCKINLEY DARRF.N OOLESgy January 26, 2011 By Fax Only: 717-761-1435 Samuel L. Andes, Esquire 525 North Twelfth Street P,O. Box 168 Lemoyne, PA 17043 Re: Pikulin Dear Sam: OF COUNSEL NIUCE L. WILDFA Richard Brabender will be happy to speak with you and answer your questions regarding his calculations. You can call him at 412-431-4460. He is expecting your call. Just a reminder: we need John to execute part 5 on page 26 of the PBG Plan document waiving the Joint and Survivor Annuity option. As we discussed, this waiver is entirely without prejudice to John's equitable distribution claims. As time is of the essence, I look fonvard to your early reply. Yours very truly, V Joanne Ross Wilder cc. Ms. Kuga EXHIBIT JOANNE ROSS WILDER JAMES E. MAHOOD ELISABETH PRIDE BRIAN MCKINLEY DARREN OGLESBY January 28, 2011 Samuel L. Andes, Esquire 525 North Twelfth Street P.O. Box 168 Lemoyne, PA 17043 Re: Pikulin Dear Sam: LAW OFFICES WILDER & MAHOOD A PROFESSIONAL CORPORA I ION TENTH FLOOR KOPPERS BUILDING 436 SEVENTH AVENUE PITTSBURGH, PENNSYLVANIA 15219-1827 TELEPHONE (412) 261-4040 TELEFAx (412) 261-2447 OF COUNSEL BRUCE L. WILDER Enclosed please find a check in the amount of $10,000 representing John's APL payment for February. I am waiting to receive the executed waiver of the Joint and Survivor Annuity option. As I previously indicated, time is of the essence. If there is some problem in this regard, please let me know right away so that we may present an appropriate motion. Yours very truly, ?Jorgar)st-W,?y ,initheamey C tigroup Global Markets Inc. 7515 Halcyon Summit Drive, Suite 300, Montgomery, AL 36117 't ? tl; C1_ t I Ct T f ?at.!_3fi?r.fn UC]l._L_1=i6?yi i•i[] C;E=P1 Chi > ; ., r r 010 AF"*fR 1:30 !SAYS ;-ROM ISSUANCE 1) 4450 60075 •?In4i:f5[ I?1 '1'1.1 114' 70,4`5-0 1 s r? EXHIBIT C 4,-1 1-1-'.11'_I-? 1'7 ;"a j,nr. 1 i 1 -, n.• Certificate of Service I hereby certify that a copy of the aforegoing Petition for Special Relief was served by overnight mail on Samuel L. Andes, Esquire, 525 North Twelfth Street, P.O. Box 168, Lemoyne, PA 17043, on the 1St day of February, 2011. Joanne Ross Wilder Brian E. McKinley Wilder & Mahood 10th Floor Koppers Building 436 Seventh Avenue Pittsburgh, Pa 15219-1827 (412) 261-4040 Attorneys for Linda Kuga Pikulin JOHN N. PIKULIN, IN THE COURT OF COMMON PLEAS OF PLAINTIFF CUMBERLAND COUNTY, PENNSYLVANIA V. LINDA KUGA PIKULIN, ;ate DEFENDANT NO. 09-4002 CIVIL ORDER OF COURT AND NOW, this 4th da y of February, 2011, upon consideration of Linda AkLA's = Petition for Special Relief; IT IS HEREBY ORDERED AND DIRECTED that: 1. A Rule shall issue upon John N. Pikulin, to show cause why the relief requested in the Petition for Special Relief should not be granted; 2. John N. Pikulin shall file an Answer to the Petition with this Court on or before February 11, 2011; 3. If the required "spouse's consent" form has not been signed by John N. Pikulin, Argument on the matter will be held on Thursday, February 17, 2011, at 8:30 a.m. in Courtroom No. 2 of the Cumberland County Courthouse, Carlisle, Pennsylvania. John Pikulin is specifically directed to appear at the argument along with counsel. By the Court, %k 0? 4-k M. L. Ebert, Jr., J. 'Samuel Andes, Esquire 525 North 12th Street P. O. Box 168 Lemoyne, PA 17043 Joanne Ross Wilder, Esquire Brian E. McKinley, Esquire Counsel for Defendant 10th Floor Koppers building 436 Seventh Avenue Pittsburgh, PA 15219-1827 'Id Oop(? .441'00 bas i s In the Court of Common Pleas of Cumberland County, Pennsylvania Civil Action - Divorce John N. Pikulin, Plaintiff vs. Linda Kuga Pikulin, Cl c - -a Co rn;:= No. 09-4002 Civil Term s n :- PACSES No. 222111703 Petition for Special Relief and for Sanctions Defendant Code: Filed on Behalf of: Linda Kuga Pikulin, Defendant Counsel of Record for This Party: Joanne Ross Wilder Pa. I.D. #15274 Brian E. McKinley Pa. I.D. #86974 Wilder & Mahood Firm #525 10th Floor, Koppers Building 436 Seventh Avenue Pittsburgh, PA 15219 (412) 261-4040 ORIGINAL I s In the Court of Common Pleas of Cumberland County, Pennsylvania John N. Pikulin, Plaintiff ) VS. ) No. 09-4002 Civil Term Linda Kuga Pikulin, ) Defendant ) Civil Action - Divorce Petition for Special Relief and for Sanctions Linda Kuga Pikulin, Defendant, hereinafter "Wife," by her attorneys, Joanne Ross Wilder, Brian E. McKinley and Wilder & Mahood, respectfully represents that: 1. Wife and Plaintiff, John N. Pikulin, hereinafter "Husband," were married on May 12, 2001 and separated in January, 2007. The parties' marriage therefore lasted just over five years. No children were born of the marriage. 2. On June 15, 2009, Husband filed a Complaint in Divorce, which included ancillary economic claims. On March 8, 2010, Husband filed a Praecipe withdrawing his claim for alimony. 3. By Order dated September 9, 2010, E. Robert Elicker, II, Esq., was appointed divorce master in this matter. 4. Upon the consent of Wife and Husband, an order of court was entered on December 20, 2010, providing for Wife to pay Husband alimony pendente lite in the amount of $10,000 per month until the parties reached a final resolution of the economic issues herein, or until November 30, 2011. 1 i 1 5. Wife was the President of PepsiCo Canada. However, her contract with the company has not been renewed, and her employment ends as of February 25, 2011. 6. Wife is a participant in the PBG Salaried Employees Retirement Plan, with a fully vested interest in the Plan. She is currently eligible to receive benefits from the Plan, including the option of a lump sum payment and/or a life annuity. 7. The Plan requires Wife to obtain a notarized written consent form from Husband if she elects to receive her retirement benefits in any form other than a 50% Joint and Survivor Annuity. Wife does not intend to elect the Joint and Survivor benefit option; therefore, Husband must execute the consent form in order for Wife to begin receiving her benefits. A copy of the required form is attached hereto as Exhibit A. 8. A Joint and Survivor Annuity will not benefit Husband, and waiving it will not prejudice him in any way. 9. Counsel for the parties participated in a status conference with Master Elicker on January 24, 2011. At that time, counsel for Wife provided counsel for Husband the consent form and requested that Husband execute the form in order that Wife could immediately commence receiving benefits. Counsel for Wife also informed counsel for Husband that the execution of the form by Husband would be without prejudice to any possible claims to be raised as part of equitable distribution. 10. By correspondence dated January 26, 2011, counsel for Wife provided counsel for Husband a written reminder that the form needed to be executed by Husband. A copy of the January 26, 2011 correspondence is attached hereto as Exhibit B. 2 I 1 11. Counsel for Wife provided a second written reminder by correspondence dated January 28, 2011. A copy of the January 28, 2011 correspondence is attached hereto as Exhibit C. 12. Despite the written reminders, Husband failed to execute the form, unnecessarily delaying Wife's receipt of the retirement benefits. 13. On February 2, 2011, Wife filed a Petition for Special Relief. The Petition, which contained an exact copy of the specific form that needed to be executed by Husband, requested that Husband execute the paperwork for Wife to begin receiving her retirement benefits, without prejudice to any claims to be raised at equitable distribution relating to the benefits. 14. On February 4, 2011, this Court issued an Order, entering a Rule against Husband to show cause why the relief requested by Wife should not be granted. The February 4, 2011 Order also directed Husband to file an Answer to the Petition on or before February 11, 2011, and scheduled an argument on the matter for February 17, 2011 if the waiver form had not been signed by Husband by such time. A copy of the February 4, 2011 Order is attached hereto as Exhibit D. 15. Husband failed to file an Answer to the Petition. 16. By correspondence dated February 9 and 14, 2011, counsel for Wife wrote counsel for Husband, stating that the retirement issue needed to be resolved prior to addressing any other issue in this matter. Copies of the February 9 and 14, 2011 correspondence are attached hereto as Exhibits E and F, respectively. 17. On February 15, 2011, counsel for Wife received a facsimile from counsel for Husband that made reference to a February 9, 2011 correspondence from counsel for Husband, which purportedly contained the executed spousal waiver form. Upon receipt of the facsimile, 3 counsel for Wife contacted counsel for Husband, informing him that the February 9, 2011 correspondence containing the waiver form had not been received by counsel for Wife, and requesting that counsel fax and mail a copy of the letter and form. 18. On February 15, 2011, counsel for Husband faxed counsel for Wife a copy of the February 9, 2011 correspondence, which referenced the enclosure of the completed waiver form.' A copy of the letter is attached hereto as Exhibit G. Thereafter, counsel for Wife contacted this Court's chambers, informing the Court that the argument on Wife's Petition for Special Relief would not be necessary because counsel for Husband had represented that the waiver form had been executed by Husband and was forthcoming. 19. By correspondence dated February 17, 2011, which was sent by overnight mail, counsel for Wife provided counsel for Husband another copy of the spousal waiver, requesting that the form be executed by Husband and returned to counsel for Wife by overnight mail. A copy of the February 17, 2011 correspondence is attached hereto as Exhibit H. Counsel for Wife's correspondence was received by counsel for Husband on February 18, 2011 at 9:05 a.m. A copy of the delivery confirmation is attached hereto as Exhibit I. 20. Upon receipt of the mailed copy of the February 15, 2011 correspondence, counsel for Wife recognized that Husband had not completed the required paperwork, including the spousal waiver form, which was provided to Husband on multiple occasions and included as Exhibit A of Wife's February 2, 2011 Petition for Special Relief. 21. As of February 22, 2011, the executed waiver form had not been returned to counsel for Wife. 1 Counsel for Husband's February 9, 2011 correspondence was mailed to the wrong address for counsel for Wife's office. Therefore, the correspondence was never delivered to counsel for Wife. Furthermore, the United States Postal Service confirmed to counsel for Wife that because of the error in the address, the correspondence would be returned to counsel for Husband upon its return to the post office. 4 1 A? 22. On February 22, 2011, counsel for Wife telephoned counsel for Husband's office and was told counsel for Husband was unavailable to speak with counsel for Wife because he was taking another phone call. Consequently, counsel for Wife left a message with the secretary for counsel for Husband, inquiring as the status of the waiver form and requesting that counsel for Husband contact counsel for Wife as soon as possible. 23. Counsel for Husband never returned counsel for Wife's telephone call. On February 23, 2011, counsel for Wife again attempted to reach counsel for Husband by telephone and was told counsel for Husband was out of the office. Counsel for Wife was further informed by the secretary for counsel for Husband that he would be out of the office until March 2, 2011. Counsel for Wife inquired whether the waiver form had been mailed by counsel for Husband and whether he would be contacting his office to check his phone messages. The secretary for counsel for Husband informed counsel for Wife that no waiver form had been mailed, but that she had provided counsel for Husband the previous message from counsel for Wife. Counsel for Husband has apparently decided not to respond to counsel for Wife's February 1.7, 2011 correspondence or February 22, 2011 telephone message. 24. Pa.R.C.P. 1920.43 provides for the Court to "issue preliminary or special injunctions necessary to prevent the removal, disposition, alienation or encumbering of real or personal property," "to order the seizure or attachment of real or personal property" or "grant other appropriate relief." Pa.R.C.P. 1920.43(a)(1)(2) & (3) (emphasis added). 25. Wife requests that Husband be directed to immediately sign the consent form for the Retirement Plan. 26. The relief requested will result in no prejudice to Husband, as any claim he may have as to the Retirement Plan will be preserved for equitable distribution. 5 4 r 27. Wife must access her retirement benefits in order to pay her expenses and make the alimony pendente lite payments to Husband. 28. Wife is without a remedy at law. 29. Husband's refusal to provide the correct waiver form and his counsel's refusal to return counsel for Wife's communications warrants sanctions under the Judicial Code. 42 Pa.C.S.A. §§ 2503(6), (7) & (9). 30. Wife has incurred counsel fees as a result of Husband's improper conduct. 31. Wife requests an award of counsel fees as a sanction for Husband's improper conduct. Wife further requests that Husband's alimony pendente lite award be suspended pending execution and submission of the correct waiver form by Husband and Husband's compliance with the relief requested herein. Wherefore, Wife respectfully requests that this Honorable Court enter an order: a) compelling Husband to execute the waiver consent form for Wife's retirement plan within twenty-four hours; (b) awarding Wife counsel fees in the sum of $1,000.00; and c) suspending Husband's award of alimony pendente lite until the waiver form has been executed and submitted to counsel for Wife, and Husband has fully complied with the relief requested herein. F Joanne Ross Wilder Brian E. McKinley Wilder & Mahood 10th Floor Koppers Building 436 Seventh Avenue Pittsburgh, PA 15219-1827 (412) 261-4040 Attorneys for Linda Kuga Pikulin 6 Verification Pursuant to Pa. R.C.P. 1024(c) I VERIFY that the averments of fact contained in the foregoing Petition are true and correct to the best of my knowledge, information, and belief, based upon information provided to me by Linda Kuga Pikulin, who is outside the jurisdiction and whose verification cannot be obtained within the time allowed for filing. I understand that false statements herein are made subject to the penalties of 18 Pa. C.S. §4904 relating to unsworn falsification to authorities. Date: February 24, 2011 (,'? ?` F• / v ??= Brian E. McKinley Wilder & Mahood Attorneys for Linda Kuga Pikulin . 5. Your Spouse's Consent If you are married and rlect a oavment option other than a 50% or greater. if applicable. Joint and Survivor Annu+ty or !,ave elected a beneficiary other than your spouse, your spouse must complete this section and have it witnessed by a notary public. Federal law requires that you provide notarized spousal consent not more than ISO days prior to the date your benefit is to begin. t am the spouse of the named participant. I have reviewed the description of the Joint and Survivor payment options with the spouse as beneficiary. I acknowledge that 1 have a right to receive a Joint and Survivor payment option in lieu of any form of benefit available from the Plan. By signing this form, i acknowledge and consent to the election of an optional form of payment and/or a different beneficiary designation than myself on this form. l understand that this will result in the elimination or reduction of my right to a benefit. Signature of participant's spouse Sworn and subscribed before me this day of State of County of Notary Public (Signature) (Print Name) My commission expires (Date) Date in the year (seal) 6. Your Signature and Date I understand that I cannot change my payment option after benefit payments begin. I also understand that if I elected a Joint and Survivor payment option, I cannot change my beneficiary once benefit payments begin, regardless of divorce, death or remarriage. Signature: Date You must sign and date this form in order to receive your benefit payment. • Important! Please be sure to review the Checklist of Required Information and include any documents requested when you return this form. • Make a copy of this form for your files and return the original in the enclosed return envelope, together with any other required documents, or mail to: PBG Savings and Retirement Center at Fidelity P.O. Box 770003 Cincinnati, OH 45277-0070 For overnight mail: PBG Savings and Retirement Center at Fidelity 100 Crosby Parkway Covington, KY 41015 EXHIBIT c - ,CODE o ; f93077r, Or 5TW HME7 , . , I 1 it ifF - ! It r11 ]PY I Pl •111' ;11A I d i i ! FILE till.=I'9 1 "tll1. ITIF-ffOiCH% (Hrlldl flydfl? fll;ll a I. •UER till. 10L IK 17, NII ritl[f'5 ?:U1 ?'tlt u1:?IIJ: Li -I4 1L_L'I?P ? 4H1-4 ID «kl•vv 0* v x.v r h M Xk Y V.v k k kk 1, +. 0++t Mt t k#Y -I.11 LC'FP Itlit Yi Fk - It -' 1 -'117- ?+ FVxrK Lvx -. IFFICT-S WILDER &c MAHOOD A PROF E3 i IONAL CO9 fQRn TION TEVrH FLUOR KUPPERS BUtUx.110 436 SEVENTH AVENUE PI"rl'SBURCH, PFNNSYLVANIA 15.19-1327 TELEPHONE(312)261.4040 1'ELUAX (412) 61.2447 JOANNE ROSS WILDER JAMES B. MAHIX)D F,LISAIIE H PRMIS f3R6kN MCKINI,Fy DARRFN OGLESSY Qr COUNSEL llnuLG L. Wil-JER January 26, 2011 By Fax Only: 717-761-1433 Samuel L. Andes, Esquire 325 North Twelfth Street P.O. Box 168 Lemoyne, PA 17043 Re: Pikulin Dear Sam: Richard Brabender will be happy to speak with you and ans«er your uesti i q ons regard ng his calculations. You can call him at 412-431-4460, He is cxpectinn your call. Just a reminder: we need John to execute waiving the Joint and Survivor A t part 5 on page 26 of the PBG Plan document nnui y option. As we discussed, this waiver is enrirely without prejudice to John's equitable distribution claims. A3 time is 4 the your early reply. essence, I look forward to YOuurs very truly, V cc: Ms. Kuga EXHIBIT ?3 -1- 1 I - , a WILDER J'c NIA110m) 7 1'I+1 IF I. \Slr iN \I. i iKPI w,\ I if iN I F.N III FLOOR Koppi-,RS BLILDING 436 SEVFN'1-11 AVENUE PITTSBURGH, PENNSYLVANIA 15219-1827 rELEPHONE (412) 261.4040 rELEFAX (412) 261-2447 JOANNF. Ross WILDER JAMES E. iMAII001) FLISAHE'rn PRIDE BRIAN McKINLEY DARREN OGLESBY January 28, 2011 Samuel L. Andes, Esquire 525 North Twelfth Street P.O. Box 168 Lemoyne, PA 17043 Re: Pikulin Dear Sam: OF COUNSEL BRIX E L. WILDER Enclosed please find a check in the amount of S 10,000 representing John's APL payment for February. 1 am waiting to receive the executed waiver of the Joint and Survivor Annuity option. As I previously indicated, time is of the essence. If there is some problem in this regard, please let Ine know right away so that we may present an appropriate motion. Yours very truly, r:lmup a00al'Aarkels111C. 7515 Halcyon Summit Drive, Suite 300, Montgomery, AL 36117 r .,• ' 4450 00075 r r- - I r F EXHIBIT '? ' -1 JOHN N. PIKULIN, PLAINTIFF V. LINDA KUGA PIKULIN, DEFENDANT IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA NO. 09-4002 CIVIL ORDER OF COURT AND NOW, this 4th day of February, 2011, upon consideration of Linda Pikulin's Petition for Special Relief; IT IS HEREBY ORDERED AND DIRECTED that: 1. A Rule shall issue upon John N. Pikulin, to show cause why the relief requested in the Petition for Special Relief should not be granted; 2. John N. Pikulin shall file an Answer to the Petition with this Court on or before February 11, 2011; 3. If the required "spouse's consent" form has not been signed by John N. Pikulin, Argument on the matter will be held on Thursday, February 17, 2011, at 8:30 a.m. in Courtroom No. 2 of the Cumberland County Courthouse, Carlisle, Pennsylvania. John Pikulin is specifically directed to appear at the argument along with counsel. By the Court, M. L. Ebert, Jr., Samuel Andes, Esquire 525 North 12th Street P. O. Box 168 Lemoyne, PA 17043 EXHIBIT J. I IN e* =+****;** *** -COMM. NAL- ? +.* + + **k**:r;** DATE FEB-09-2011: )** TIME 14:45 ?:***** RODE - MEMORY TRANSMISSION START=FEB-09 14:44 END=FEB-09 14:45 FILE N0.-522 STN COMM. ONE-TOUCH/ STATION NAME/TEL t-0. PAGES DURATION NO. ABBR NO. 001 OK <17> SAM ANDES 001/001 00:00:14 -WILDER a MAHOOD - ********************************-k*** -WILDER MAHOOD - ***** - 412 261 2447- ********* LAw OfFicbs WILDER & MAHOOD A PROMMIONALCORPORATiON TENTH FLOOR KOPFERs BUILDING 436 SEVENTH AV'ENL'C PRTSBURUH,PENNSYLVANIA 15219.1827 TELEPHONE(412)261-4040 TELEFAx (412) 261-2447 JOANNE ROSS WILDER JM1ES B. MAMOOD ELKABM PRIDE BRIAN McKIHLiiy DARREN O(iLLSBY OFCOUNSEL BRUCcL. WILDER February 9, 2011 By Fax Only: 717.761-1435 Samuel L. Andes, Esquire 525 Vorth Twelfth Street P.O. Box 168 Lemoyne, PA 17043 Re: Pikulin Dear Sam: I am working with our financial people to formulate a settlement proposal. We really cannot do that until the Joint and Survivor Annuity has been waived. What is causing the delay? I hope that it will not be necessary to have the court rule on the matter and we look forward to hearing from you in this regard. Yours very truly, Joanne Ross Wilder cc: Ms. Kuga EXHIBIT ' I a ***w********** -COMM. JC'"ZtAL- «****:**a::** k ?* DATE FEB-14-2011 * TIME 14:20 MODE = MEMORY TRANSMISSION START=FEB-14 14:19 END=FEB-14 14:20 FILE NO.=528 STN COMM. ONE-TOUCH/ STATION NAME/TEL PJO. PAGES DURATION N0. ABBR 110. 001 OK <17> SAM ANDES 001%001 00:00:14 -WILDER 6 MAHOOD - *****H *H H H *» * I yolW Hololok I ?nl HC*** * k l *H Hgc -WILDER MAHOOD - :* * ,*** - 412 261 2447- k k K* K K K K LAW OFFICES WILDER & MAHOOD A PROFESSIONAL CORPOMTION TENTH FLOOR KOPPERS BUILDING 436 SEVENTH AVENUE PITTSBUROH,PENNSYLVANIA 15219-1827 TrLEPHONE(412)261-4040 TELGFAx (412) 261.2447 JOANNE ROSS WILDER JAMES E. MAHOOD ELISABETH PRIDE BRIAN MCK)NLEY DARREN OGLE30Y OF COUNSF% BRUCE L. WILDER February 14, 2011 By Fax Only: 717-761-1435 Samuel L, Andes, Esquire 525 North Twelfth Street P.O. Box 168 Lemoyne, PA 17043 Re: Pikulin Dear Sam. Your letter of February 9, 2011 that arrived in the mail today must have been sent before my fax letter to you of the same date. We really need to get the issue of the Joint and Survivor Annuity resolved before anything else. Please advise. Yours very truly, Joanne Ross Wilder cc: -Ms. Kuga EXHIBIT I 1 r FEB-15-2011(TUE) 13:58 5.- 1 Andes, E-sq. (FAX 761 1435 P. 00 11004 SAMiJLL L. Arrvx:s ATTORNEY AT LAW 52S N012TU TWELFTH STREET F C). 11QX IGO Mi1Ll NO ADO"un: LUMOV14 r, PF.r7N52'Ltii?Iv its 17043 T-1.11ruuNr R O. Dox I"d (7171 1K1.13N1 LWHOYNL. PA 17043-0100 E-3LA M*. LatiAndes Oaol.com 15 February 2011 SENT BY FAX 412-261-2447 and Regular Mail Brian E. McKinley, Esquire Law Offices of Wilder & Mahood 10`h Floor, Koppers Building 436 Seventh Avenue Pittsburgh, PA 15219-1827 RE: Pikulin and Kuga Dear Brian: Enclosed is my letter of 9 February 2011 with John Pikulin's signed waiver attached. If you do not receive the original in the mail by Thursday, let me know. I understand your mail has been delayed and hopefully you will receive it by then. rAA (717) 701-I.Lis In the meantime, please notify Judge Ebert that the matter has been resolved so that argument need not be scheduled and you can withdraw your petition when you receive the original document. Sincerely, Samuel L. Andes le Enclosure E EXHIBIT G _ 1 t w L.\\V 01+1( I'.ti WILDER & MA1-1001) A PR()I+SSI0\AI, CORPORA 11(0, TEN'rtt FLoolz Kol'I'FRs Briiu ulNa 436 SEVENTH AvFNI E NITS[itIKOH, PENNSYLVANLv 15219-1827 TELEIIII0NE (41?)?6l-4040 TELEFAX (412) 261-'_447 JoANNt. Ross Wn.i*iz IASII'.s E. MAnooD ELISABETH PRIDE BRIAN McKINI.I;Y DARREN OGLESnY February 17, 2011 Via Overnight Mail Samuel L. Andes, Esquire 525 North Twelfth Street P.O. Box 168 Lemoyne, PA 17043 Re: Pikulin Dear Mr. Andes: OF CoUNSIiI. BRU( 'I'. L. WILDER John's original signature on the waiver has not turned up in our mail and we do not believe a faxed copy will be accepted by Linda's pension plan. Consequently, 1 am an enclosing an additional copy of the waiver form. Please have John re-execute the form and return it to us by overnight mail. Thank you for your cooperation in this matter. Yours very truly, Brian E. McKinley Enclosure cc: Ms. Kuga Wo enclosure) EXHIBIT I j V Page 1 of I Fed :hip Lack Manage Learn rpab Office' Detailed Results r i;n,1d], -, t Lwk Enter tracking number Tracking no.: 794438147833 Select time format 12H 24H F' n,aii nohfieation; Delivered _ Delivered Shined for by: C. HA'VIKINS Shipment Dates Destination Ship date ;'": Feb 17, 2011 LEMOYNE, PA Delivery date,''? Feb 18, 2011 9:05 AM Sinnalure, Pmof ul Delivery L^ Shipment Options Help Hold at FedEx Location Hold at Fed6a Location service is not available for this shipment. - Shipment Facts _ Halo Service type Pdonty Envelope Delivered to Receptionist/Front Desk Weight 0.5 Ibs/.2 kg Shipment Travel History Helo Select time zone: Local Scan Time All shipment travel activity is displayed in local time for the location Daternme Activity Location Details Feb 18. 20119 05 AM Delivered LEMOYNE, PA Feb 18, 2011 7 AM On FedEx vehicle for delivery MIDDLETOWN, PA Feb 18, 2C1 t 725 AM At local FedEx facility MIDDLETOWN, PA Feb 1e, 20116 17 AM At lest sort facility MIDDLETOWN, PA Feb 18, 20115:08 AM Departed FedEx location INDIANAPOLIS, IN Feb 17, 2011 11:38 PM Arrived at FedEx location INDIANAPOLIS, IN Feb 17, 2011 8.30 PM Leh FedEx origin facility PITTSBURGH, PA Feb 17, 2011 337 PM Picked up PITTSBURGH, PA Feb 17, 2011 2:43 PM Shipment information sent to FedEx a?\ - loorx mare . '. tl hiw EEX?HlBrr v ? a ,, r Certificate of Service I hereby certify that a copy of the aforegoing Petition for Special Relief and for Sanctions was served by overnight mail on Samuel L. Andes, Esquire, 525 North Twelfth Street, P.O. Box 168, Lemoyne, PA 17043, on the 24th day of February, 2011. F /tl-j Joanne Ross Wilder U Brian E. McKinley Wilder & Mahood 10th Floor Koppers Building 436 Seventh Avenue Pittsburgh, Pa 15219-1827 (412) 261-4040 Attorneys for Linda Kuga Pikulin In the Court of Common Pleas of Cumberland County, Pennsylvania Civil Action - Divorce John N. Pikulin, Plaintiff vs. Linda Kuga Pikulin, Defendant No. 09-4002 Civil Ter' ==C O CD M Pretrial Statement of C c' Linda Kuga Pikulin Code: Filed on Behalf of: Linda Kuga Pikulin, Defendant Counsel of Record for This Party: Joanne Ross Wilder Pa. I.D. #15274 Brian E. McKinley Pa. I.D. #86974 Wilder & Mahood Firm #525 10th Floor, Koppers Building 436 Seventh Avenue Pittsburgh, PA 15219 (412) 261-4040 In the Court of Common Pleas of Cumberland County, Pennsylvania John N. Pikulin, Plaintiff ) ) VS. ) No. 09-4002 Civil Term ) Linda Kuga Pikulin, ) Defendant ) Civil Action - Divorce Pretrial Statement of Linda Kuga Pikulin Assets and Liabilities The marital and nonmarital assets and liabilities of the parties are listed on Exhibit A. Expert Witnesses 1. Richard F. Brabender, 3816 South Water Street, Pittsburgh, PA 15203. 2. Maureen O'Brien, 2555 Washington Road, Suite 631, Upper St. Clair, PA 15241. 3. Joni L. Herndon, 1306 North Armenia Avenue, Tampa, FL 33607. 4. Celia P. Evans, 2429 Maryland Drive, Pittsburgh, PA 15241. 5. Alan H. Thompson, ZVT Systems, Inc., 636 Hamilton Road, Pittsburgh, PA 15205. Other Witnesses 6. The parties. 7. Any witness listed on Husband's Pretrial Statement. 8. Rebuttal and/or impeachment witnesses. Exhibits 1. The expert reports of Mr. Brabender, Ms. O'Brien, Ms. Herndon, Ms. Evans, and Mr. Thompson. 2. Tax returns of the parties. 3. Any documents exchanged in discovery. 4. The pleadings. 5. Rebuttal and/or impeachment evidence. Income Husband's net income, based upon his earning capacity, is $12,000 per month net. In addition, Husband has income from investment real estate and other investment holdings, and Social Security payments of approximately $30,000 per year. Wife is currently unemployed. Until she can obtain other employment, she has no income other than her retirement savings and investments. Expenses Wife does not intend to offer testimony with respect to her expenses. Retirement Benefits The marital and separate components of Wife's 401(k) and pension plans are as set forth in the reports of Richard F. Brabender and Alan H. Thompson. The parties' accounts are as set forth on Exhibit A. Counsel Fees An award of counsel fees is not necessary to place the parties on par in asserting their rights in the within proceeding. However, Wife has indicated her intention to seek counsel fees against Husband pursuant to the Judicial Code for his dilatory conduct, including his failure to execute documents necessary for her to put her pension into pay status with the resultant legal expenses. Tangible Personal Property Issues regarding tangible personal property are very limited as the parties have possession of the personalty belonging to each with the exception of several items retained by Husband that Wife wants to have returned, including two lion sculptures. Wife previously returned the items of personalty belonging to Husband that were in her possession. Marital Debts and Payments Since Separation Since separation, Wife has made all of the payments on the parties' interest-only mortgage on their jointly owned Florida property. The interest is $5,133.33 per month. Through December, 2010, Wife paid a total of $246,400. She continues to make these payments. Husband's Nonmarital Debt Paid During Marriage During the marriage, Husband made payments against his premarital liabilities totaling $562,500. These payments were made to pay mortgage principal, interest, and real estate taxes on Husband's separate real estate. The payments exceed the increase in value during the marriage of Husband's separate property. Detail of the payments is contained on Exhibit B. Wife's Claim for Rental Credit Since separation, Husband has assumed exclusive possession of the parties' Florida real estate. At times he has occupied the property himself and has, without Wife's knowledge or consent, rented the property and kept the rental payments. According to the report of Ms. Herndon, the fair rental value of the property is $6,500 to $8,500 per month. Husband has opined that the property could be rented for $7,000 to $8,500 per month. At $6,500 per month, the annual rental is $78,000 per year. At $8,500 per month, the annual rental is $102,000. For the four years of the parties' separation, the total is $360,000. Assuming Wife's share to be 50%, Husband owes her a rental credit of $180,000. Proposed Resolution of the Economic Issues Pending before the Court are the parties' claims for equitable distribution and counsel fees. Husband included a claim for alimony in the Complaint in Divorce that he filed on June 15, 2009. He withdrew his claim on March 8, 2010. The Court is required to "equitably divide, distribute or assign" the marital property after considering "all relevant factors" including the statutory factors. 23. Pa. C.S.A.§3502(a). Equitable distribution does not require an equal division of the marital estate or of any individual asset, and the Court must "[e]ffectuate economic justice" between the parties. 23 Pa. C.S.A. §3102(a)(6). Application of the statutory factors may require that one party be awarded "the lion's share", Platek v. Platek, 554 A.2d 1049 (Pa. Super. 1982), or even the entire marital estate. Mellon Bank, N.A. v. Holub, 583 A.2d 1157 (Pa. Super. 1990); Dunn v. Dunn, 544 A.2d 448 (Pa. Super. 1988). A presumption or even a starting point of equal division has been expressly disapproved; rather, the court must fully consider each relevant factor. Fratangelo v. Fratangelo, 520 A.2d 1195 (Pa. Super. 1987). An analysis of the factors as they apply to this case follows. (1) The length of the marriage The parties were married on May 12, 2001 and separated in January, 2007, a marriage of brief duration. The separation is nearly as long as the marriage. The import of this factor is the degree to which the parties' circumstances changed as a result of the marriage. In the case at bar, the parties never actually established a marital residence because they continued to pursue their respective careers. They had no children. They lived separate lives. They filed separate tax returns. As the marital estate consists primarily of increases in value of each party's nonmarital assets, application of this factor militates against any distribution of one party's assets to the other. (2) Any prior marriage of either party. Wife was not married previously. Husband is divorced and paid alimony to his former wife during the parties' marriage, diminishing his financial contribution to the marriage and the marital estate. (3) The age, health, station, amount and sources of income, vocational skills, employability, estate, liabilities and needs of each of the parties. Wife was born on May 5, 1955 and is 55 years of age. Husband was born on May 5, 1941 and is 69 years of age. Both parties are in good health. Each party has a significant separate estate, and each is able to meet his and her respective needs. Without a contribution from the other. Wife is currently unemployed. She was previously employed as President of PepsiCo but her contract was terminated in February, 2011. Her future employment prospects are uncertain. It will be necessary for Wife to draw on her retirement savings to meet her expenses. Husband is self-employed as a chiropractor. He continues to work in his profession; his earnings are determined by the hours that he elects to work. He claims to currently work only 2'/z days each week. According to the report of Ms. Evans, Husband works far below his earning capacity. Husband has invested in real estate for many years and has a sizable portfolio. He supplements his earnings from his chiropractic practice with rental income. He also receives Social Security payments of approximately $30,000 per year. (4) The contribution by one party to the education, training or increased earning power of the other party. Both parties were established in their respective careers prior to their marriage and each maintained that career path without sacrificing anything to promote the other's success. Husband made no contribution to Wife's earning capacity or to increase her assets. Wife provided money to Husband throughout the marriage that he used to pay premarital debt and make investments. (5) The opportunity of each party for future acquisitions of capital assets and income. Although Wife's separate estate is currently greater than Husband's, his wealth consists primarily of real estate that has historically increased in value while Wife's assets consist of retirement and savings that she must consume. The marriage has had no effect on the opportunity of the parties for future acquisitions. Because of the nature of the assets of each party, this factor favors Wife. (6) Sources of income of both parties, including, but not limited to, medical, retirement, insurance or other benefits. Wife has continuation health insurance coverage derived from her former employment. Throughout the marriage and separation, Husband received benefits from Wife's health insurance. Husband is eligible for Medicare and is able to obtain his own Medicare supplement. Income and retirement are discussed in connection with other factors. (7) The contribution or dissipation of each party in the acquisition, preservation, depreciation or appreciation of the marital property, including the contribution of a party as a homemaker. Wife sold a residence that she owned prior to marriage and contributed the proceeds of $880,000 to the jointly owned Florida property. Throughout the marriage, Wife provided funds to Husband for payment of his premarital debt. Without these contributions by Wife, Husband would not have been able to double his net worth during the marriage by utilizing only his income. See Exhibits C and D, discussed below. (8) The value of the property set apart to each party. Husband's personal wealth has increased substantially during the marriage from investments. His personal financial statement of December, 2001 shows his net worth at $2,800,000. Exhibit C. His net worth had more than doubled by the time of separation in 2007 to more than $5,700,000. Exhibit D. Wife's separate assets increased in value during the marriage as a direct result of her employment. The increase in value of Wife's separate property resulted from her active efforts as opposed to Husband's increase that was generated by passive investment, this factor favors Wife and militates against a distribution of Wife's assets to Husband. (9) The standard of living of the parties established during the marriage. The parties never lived together during their brief marriage and maintained the standard of living that each had separately established prior to the marriage. They have maintained the same standard during their lengthy separation. Both have sufficient resources to maintain their standard of living post-divorce. (10) The economic circumstances of each party, including federal, state and local tax ramifications at the time the division of property is to become effective. and (10.1) The Federal, State and Local tax ramifications associated with each asset to be divided, distributed or assigned, which ramifications need not be immediate and certain. The parties' retirement funds are subject to income tax. The real estate will be subject to transfer taxes and possibly capital gains and realtor commissions. The divorce itself produces no tax consequences and no unanticipated or unusual result. Other Factors Although increases in value of separate assets are included in the marital estate, increases in value are treated differently than marital assets acquired during the marriage under the Divorce Code. Although marital assets are generally valued as of the date of distribution, increases in value of separate assets are valued at the date that produces the lower value. 23 Pa. C.S.A.§3501(a.1). This rationale supports the retention of the respective increases in value in the case at bar. Proposed Resolution Each party should retain his and her separate property together with the increases in value. Wife should be awarded the property located at 4918 St. Croix Drive in Tampa, Florida, subject to the outstanding mortgage. Husband should receive one-half of the net equity in cash. The joint bank accounts, totaling approximately $100,000, should be divided equally between the parties. Joanne Ross Wilder Brian E. McKinley Wilder & Mahood Attorneys for Linda Kuga Pikulin Certificate of Service I hereby certify that a copy of the aforegoing Pretrial Statement was served on Samuel L. Andes, Esquire, 525 North Twelfth Street, P.O. Box 168, Lemoyne, PA 17043, by overnight mail on the 28 h day of February, 2011. Joanne Ross Wilder Brian E. McKinley Wilder & Mahood 10th Floor Koppers Building 436 Seventh Avenue Pittsburgh, Pa 15219-1827 (412) 261-4040 Attorneys for Linda Kuga Pikulin A R ?4)y^ c?:- I JOHN N. PIKULIN, Plaintiff vs. LINDA KUGA PIKULIN, Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 09-4002 Civil Term IN DIVORCE PLAINTIFF'S ANSWER TO DEFENDANT'S PETITION FOR SPECIAL RELIEF AND FOR SANCTIONS AND NOW comes the above-named Plaintiff by his attorney, Samuel L. Andes, and makes the following Answer to Defendant's Petition: 1 through 4. Admitted. 5. Plaintiff has been so informed by Defendant's counsel but the information regarding these matters is within the exclusive control of Defendant and so Plaintiff denies these averments and demands proof at any hearing. 6. See answer to Paragraph 5 above. 7. See answer to Paragraph 5 above. 8. Denied. Such an annuity would benefit Husband and waiving it causes him a potential financial loss. 9. Admitted. Plaintiff denies, however, the claim that executing the form would not cause him any prejudice or loss. 10. Admitted. 11. Admitted. 12. Denied. Plaintiff was not able to meet with his counsel during the last week of January or the first week of February because Plaintiff's counsel was engaged in a complicated arbitration hearing with the American Arbitration Association and then a multi-day jury trial. As soon as Plaintiff could communicate with his attorney on the matter, he signed the waiver form and returned it to his attorney. 13. Admitted. By way of further answer, Plaintiff states the Petition was premature because the document was not needed until sometime in March 2011 and Plaintiff was in the process of executing and returning the requested document to Defendant's counsel. 14. Admitted. 15. Denied as stated. Plaintiff did not file an Answer to the Petition because the parties, through their counsel, had agreed an Answer was not necessary since Husband had, by that date, already signed the requested form. In fact, Plaintiff had signed the requested document on 9 February 2011 and Plaintiff's counsel both faxed it and placed it in the regular mail to Defendant's counsel on 9 February 2011. Attached hereto, and marked as Exhibit 1, is a copy of Plaintiff's counsel's letter sending the requested document to Defendant's counsel. As a result of those communications, counsel for Plaintiff and Defendant agreed that it would not be necessary for Plaintiff to file an Answer to Defendant's Petition. 16. Admitted. By way of further answer, Defendant's counsel was aware that the requested document had been faxed and mailed and explained to Plaintiff s counsel that it was having trouble getting its mail delivered and that may have explained why it had not yet received the original, signed document. 17. Admitted. A copy of Plaintiff s counsel's letter of 15 February 2011 is attached hereto as Exhibit 2. It was both faxed and mailed, once again, by regular mail to Defendant's counsel. 18. Admitted. By way of clarification, Plaintiffs counsel states that his office never received back from the US Postal Service the original letters and documents mailed to Defendant's counsel on 9 February 2011 and 15 February 2011. Plaintiff admits that, as a result of the communications between counsel, he believed the matter has been resolved to Defendant's satisfaction. 19. Admitted. However, Plaintiff s counsel determined it was not necessary to have another copy of the form executed because the original had already been mailed to Defendant's counsel and both attorneys believed the matter had been resolved. 20. Denied as stated. Plaintiff completed and signed the document which had been provided to him by Defendant's attorney and took steps to timely return that signed document to Defendant's attorney. He was not aware, until 1 March 2011, that the document he had signed was not satisfactory and had not been delivered. 21. Plaintiff denies these averments because they are beyond his knowledge. He knows that he signed multiple copies of the waiver form and had his attorney mail them, on both 9 February 2011 and 15 February 2011, to Defendant's attorney. He cannot explain why they were not delivered. 22. It is admitted that Defendant's attorney called Plaintiff's attorney to inquire about the document. However, because of the death of a close family friend and the necessity to travel to Florida to attend services and help the family of the close family friend through the crisis of his death, Plaintiff's counsel was not available from 22 February 2011 until 1 March 2011. 23. Admitted for the reasons set forth in Paragraph 22 above. Plaintiff's counsel was out of his office from 22 February 2011 until 1 March 2011. Plaintiff denies that his attorney's secretary stated that a form had not been mailed. To the contrary, the form had been signed and mailed twice, on 9 February 2011 and on 15 February 2011. 24. No answer required because this is merely a statement of the law. 25. It is admitted that Defendant has made that request. By way of further answer, Plaintiff states that, upon his attorney's return to Pennsylvania on 1 March 2011, he signed the second form which had been provided by Defendant's attorney (and which Defendant's attorney now claims was the correct and required form) and his attorney sent it, by overnight mail, to Defendant's attorney on 2 March 2011. 26. Denied. The claim that Plaintiff has against the retirement account consists of the right to receive a survivor's annuity which he has agreed to waive as a concession and convenience to Defendant. By waiving that, he is likely to suffer a significant prejudice which he is willing to do to help get this matter resolved. 27. Denied. Defendant has assets worth several million dollars, the majority of which are financial assets and are available to her to pay her living expenses, her alimony pendente lite obligation, and any other expenses she chooses to pay. 28. Denied. Defendant has received her remedy by Plaintiff signing a series of the forms requested and returning them to Defendant's attorney. 29. Denied. Plaintiff has not refused to execute or return the document. To the contrary, Plaintiff has executed the document multiple times and done his best to see to it that the document is returned to Defendant's attorney. Plaintiff's attorney did respond to Defendant's counsel's communications by having the document executed and mailed and faxed to Defendant's attorney. He was not able to return Defendant's attorney's phone calls because he was unavailable being out of state due to a family and personal emergency. 30. If Plaintiff admits that Defendant may have incurred counsel fees but states that those fees were unnecessary. The requested document was signed and returned to Defendant's attorney multiple times and the failure for that document to be received by Defendant's attorney is not the fault of and was beyond the control of Plaintiff. Plaintiff is not guilty of any "improper conduct" which justifies an award of counsel fees. 31. Plaintiff denies that Defendant is entitled to counsel fees or any other sanction. Plaintiff denies that Defendant is entitled to a suspension of the alimony pendente lite, particularly since Defendant has very substantial financial assets from which she can pay that without regard to the pension involved in this matter. WHEREFORE, Plaintiff prays this court to deny Defendant's Petition because Plaintiff has repeatedly complied with the demands of Defendant and her attorney for the document they have requested he sign. amuel L. Andes Attorney for Plaintiff Supreme Court ID 17225 525 North 12th Street P.O. Box 168 Lemoyne, PA 17043 (717) 761-5361 I verify that the statements made in this document are true and correct. I understand that any false statements in this document are subject to the penalties of 18 Pa. C.S. 4904 (unsworn falsification to authorities). Date: 2 Ma4 CS; SAMUEL L. ANDES CERTIFICATE OF SERVICE I hereby certify that I served an original of the foregoing document upon counsel for the Defendant herein by regular mail, postage prepaid, addressed as follows: Joanne Ross Wilder, Esquire Law Offices of Wilder & Mahood 10th Floor, Koppers Building 436 Seventh Avenue Pittsburgh, PA 15219-1827 Date: 2 March 2011 , L-7A OuAI:1 Amy Harkins Secretary for Samuel L. Andes Exhibit 1 SAMUEL L. ANDES ATTORNEY AT LAW 525 NORTH TWELFTH STREET MAILING ADDRESS: P. O. BOX 168 LEMOYNE, PA 17043-0168 P. O. BOX 168 LEMOYNE, PENNSYLVANIA 17043 TELEPHONE (717) 761.5361 E-MAIL: La-Andcspaol.com Brian McKinley, Esquire 3`d Floor, Coppers Building 436 Seventh Avenue Pittsburgh, PA 15219-1827 RE: Pikulin Dear Brian: 9 February 2011 PAX (717) 761-1435 Enclosed you will find the Marital and Waiver History Form signed by John Pikulin. This document waives his right to receive a survivor's annuity from the one pension plan for which you'have requested such a document. I was out of my office last week in a jury trial. I still have not seen a copy of the petition you filed, only the order entered by the court. Please send me a copy of the petition. Since we have delivered the requested document, I assume you will file a Praecipe to withdraw your petition. If you are not going to do that, please do not deliver the waiver signed by my client until we work this matter out. I will need to hear from you immediately so I have time to file an answer to your complaint. Hopefully, none of that will be necessary, because we have delivered the waiver. Please get back to me on the withdraw of the petition as soon as you can. Sincerely, 7-let- 24+7 Samuel L. Andes amh / Enclosure cc: Dr. John N. Pikulin `i PBefore you can begin receiving pension benefits, you must provide information on your marital and QPSA waiver history. Whether you are single or married (including a common law marriage where'recognized by law), you must complete and return this form to provide your marital (including common law marriage) history. This information will be used to determine your benefit, including any QPSA coverage charges, if applicable. If you do not return this form, you will not be able to commence your pension payments. Be sure to sign and date the last page of this form. 1. About You t}OLI&) Last Name BPI Address I Home Telephone Numhe I Middle Sta ie Telephone Number Marital and Waiver History Form 2..: Please^chec>?V6J 193b6x bA6 r } 7 ? s =4 .+ ?K 1 K'mT? > 1+ r t r C T - ahv :w i } zuAn a f f! ° vF ? I am currently single and have been single since age 35. ? 1 am currently single but was previously married as of or after age 35. am currently married. If you are or have been married, please provide the date of each marriage and, if applicable, the date of divorce or death for each spouse. You do not need to provide information for marriages in the following situation: • Marriage ended before age 35. Please provide a copy of each applicable marriage certificate, death certificate, and divorce decree. t?) pouse Date of Name of Spouse Date of Marriage Date of Death/Divorce Name of Spouse Date of Marriage Date of Death/Divorce Form continues on the back of this page. ,?IBIIt.l,11 5P UE27 Social Security number Code Page 1 of 2 3 Pr' R_zn4 e -1 nq FILE COPY SAMUEL L. ANDES ATTORNEY AT LAW 525 NORTH TWELFTH STREET LEMOYNE, PENNSYLVANIA 17043 Mailing Address: P.O. Box 168 Lemoyne, PA 17043-0168 15 February 2011 SENT BY FAX 412-261-2447 and Regular Mail Brian E. McKinley, Esquire Law Offices of Wilder & Mahood 10th Floor, Koppers Building 436 Seventh Avenue Pittsburgh, PA 15219-1827 RE: Pikulin and Kuga Dear Brian: Telephone: (717) 761-5361 Fax: (717) 761-1435 E-Mail: LawAndes @ aol.com Enclosed is my letter of 9 February 2011 with John Pikulin's signed waiver attached. If you do not receive the original in the mail by Thursday, let me know. understand your mail has been delayed and hopefully you will receive it by then. In the meantime, please notify Judge Ebert that the matter has been resolved so that argument need not be scheduled and you can withdraw your petition when you receive the original document. Sincerely, Samuel L. Andes le Enclosure Exhibit 2 In the Court of Common Pleas of Cumberland County, Pennsylvania Civil Action - Divorce John N. Pikulin, Plaintiff vs. Linda Kuga Pikulin, Defendant M, m Fri :7 -.? rrt uz? t No. 09-4002 Civil Term mac, -; -71 C) CD Supplemental Pretrial Statement of Linda Kuga Pikulin Code: Filed on Behalf of: Linda Kuga Pikulin, Defendant Counsel of Record for This Party: Joanne Ross Wilder Pa. I.D. #15274 Brian E. McKinley Pa. I.D. #86974 Wilder & Mahood Firm #525 10th Floor, Koppers Building 436 Seventh Avenue Pittsburgh, PA 15219 (412) 261-4040 ORIGINAL In the Court of Common Pleas of Cumberland County, Pennsylvania John N. Pikulin, Plaintiff ) vs. ) No. 09-4002 Civil Term Linda Kuga Pikulin, ) Defendant ) Civil Action - Divorce Supplemental Pretrial Statement of Linda Kuga Pikulin Defendant files the following supplemental pretrial statement, which includes an updated report for Richard F. Brabender, marked as Exhibit A, and an updated estate summary, marked as Exhibit B. Both documents are attached hereto. J? lJ Joanne Ross Wilder Brian E. McKinley Wilder & Mahood Attorneys for Linda Kuga Pikulin B BENDER MASCETTA, LLc BUSINESS VALUATIONS AND LITIGATION SUPPORT February 25, 2011 Attorney Joanne Ross Wilder Wilder & Mahood, P.C. Koppers Building, 10fi' Floor 436 Seventh Avenue Pittsburgh, PA 15219 Re: Linda A. Kuga - Pikulin Stock Options and 401K Dear Attorney Wilder: We have calculated the fair market value of Linda A. Kuga-Pikulin's Non-Qualified Stock Options from Pepsico, Inc. as of February 25, 2011. Ms. Kuga-Pikulin's outstanding options included 36,338 shares which were granted on March 1, 2004 and 18,060 shares which were granted on March 1, 2006. The Non-Qualified Stock Options granted before the date of separation (January 2007) were fully vested as of February 25, 2011. We have calculated the value of the Non-Qualified Stock Options pursuant to the Black-Scholes Model and the Intrinsic Method. The Black-Scholes Model produces a value based upon a formula which considers a stock's volatility, dividends, exercise price and the current market value, Other factors utilized in the Black Scholes Model include the maturity of the option and the risk-free interest rate. The Intrinsic Method employs a simple calculation involving the current stock price and the option exercise price. The per share market value of Pepsico stock as of December 14, 2010 was $63.60/share. In determining the per share value of the stock options pursuant to the Black Scholes Method, we utilized the risk free rate, volatility and dividend yield reported in Pepsico, Inc.'s 2010 annual financial statement. These factors were not necessary for our analysis pursuant to the Intrinsic Method. Set forth as Schedule 1 is a summary of the Non-Qualified Stock Options pursuant to the Black Scholes Method. Set forth as Schedule 2 is a summary of the Non-Qualified Stock Options pursuant to the Intrinsic Method. We have adopted herein as the appropriate fair market value for Ms. Kuga-Pikulin's Stock Options the value calculated pursuant to the Intrinsic Method since that value exceeds the Black Scholes value. The pre-tax value of the Stock Options is $851,126. We applied a combined Federal, New York and Medicare tax rate based upon the anticipated tax, per Schedule 2 which Ms. Kuga-Pikulin will be required to pay. The 42.3% tax rate produces an after-tax value of $491,100. EXHIBIT -A- 3816 South Water Street I Pittsburgh, PA 15203 1 phone: 412/431-4460 1 Pax: 412/431-4486 B RABENDER MASC ETTA, LLC Attorney Joanne Ross Wilder February 25, 2011 Page Two Schedule 3 sets forth a calculation of the current marital value of the PBG 401K Savings Program. The account value as of May 12, 2001 (Date of Marriage) was $218,303. Ms. Kuga- Pikulin made marital and post-separation contributions to the account. We have allocated the annual earnings based upon the respective marital and non-marital year-end balances. The total account balance as of August 10, 2010 (most current statement) was $595,285. The pre-tax marital portion of this account is $164,889. We applied the 42.3% tax rate to the pre-tax marital portion to arrive at an after tax value of $95,141. Please let me know if you have any questions. Truly, R, t,, ? r g,, Z, ? kichard F. Brabender, Esquire Encl:pm N n to a c 0 O Q D r ? 1 O 7C) p w ? a w .? oo w rn O ?? @ C H D (D y o A) O 7C m ' OD W - c O N Cl) a 0 Ol a O O p1 V co O C A 0) 4NL m ate: ?e O ? ?ii N I? y ' Q ? N O OD 7cc c`O c`D O ? p_ I O ? <D ?p 0) A O cr _ CL N o o 4A ?69 4 00 I w S '? d v O <D N N fD ? ? c11 fl. O ? `D m ffl 4!a N rt oT CL c 7P 1 ° n (D O NON .ppi CD ? M ?+ f D al ?_ c Cn Cn = O $ a ? 40 (A (A ? ? N c co N 0 4 ? ? o co V w CcoJ? M EA fA w c x m N A .O 4 t ?1 ??pp 15 O. c (O v Ul v e p °? D v m A - to M IL T - C, n a c c? N Z v D r W y Q ?? W G) L y . m C) C) ? C4 ... ? 0 00 O C C W N o (A N a D A eo Iw N p V c 0 C4 - . 0 e? w , V ti c`o tN10 I? 'O_ w !D ;e rn p z 2 CL Up 0 CL s e .1.9 4zO b m k Al -l a) O cn a w ° P K ?' ? ? ff1 40 O „ p j =r a c w m CA w obi p w ? ego w w rL a o +r? 4A 69 00 a? W y Al 0 w 4A a m ?a 06 c 714 w a .-? co v v o d? d1 169 w 41 a ? N y w O N UNi ? John N. Pikulin v. Linda Kuga Pikulin Marital Estate Summary Date of Marriage: 05/12/01 Date of Separation: 01/07 Date of Divorce: pending Marital Assets & Liabilities Titled to Husband Husband's Wife's Description Value Value Comments 4 7 Increase in value of H's Chiropractic TBD Expert will determine value Practice with additional discovery if no settlement can be reached by the parties. H 5216 West Kennedy Blvd., Tampa, TBD Property was purchased in FL 33692 December, 2006 for $310,640, subject to a mortgage. Building is a condominium, with 2 bathrooms and 2 bedrooms. H Mortgage on 5216 West Kennedy ($212,198) Wife value based upon Blvd., Tampa, FL 33692, with Wells amortization schedule prepared Fargo for mortgage as of December, 2010. The mortgage was $248,512 as of date of purchase; $224,802 owed as of December, 2009. Increase in value of H 221 Bridge $45,000 This is the increase in value of Street, New Cumberland, PA 17070 Husband's premarital property. Wife's value based upon documents provided at Husband's deposition during which he stated the property was worth $200,000. Proceeds from 203 Francis Cadden $31,468 Property sold in September, Parkway, Harrisburg, PA 17111 2008, with Husband receiving a net total of $31,468. 213 Francis Cadden Parkway, $50,000 Property purchaed for $43,900. Harrisburg, PA 17111 Wife's value based upon estimation by Husband at his deposition. Increase in value of H's other Premarital $493,000 $493,000 Stipulated Real Estate EXHIBIT I _ f? H American Express/Ameriprise $376,910 The account's total balance as Investment account #000 3154 8456 8 of separation was $419,722 021 and $615,297 as of December 31, 2007. Wife's value only includes marital component of the account. Post- separation contributions made by Husband excluded from value. H American Express/Ameriprise $134,079 IDS Fixed Life Account, Investment account #0930 0725 1709 which was created on 5004 November 18, 2003. Retirement account component created in April, 2006. Wife's value is as of separation. H American Express/Ameriprise $100,859 Account opended on October Investment account #008 0478 8764 4 26, 2006, with a transfer from 001 American Express #1001. Account closed on May 24, 2007, with Husband retaining the funds. H American Express/Amerprise $32,414 Account opened on August 30, Investment account #0998 7432 9489 9 2004. Account does not 113 appear on statements after 2005. Wife believes Husband retained the funds. H Met Life Securities Retirement $42,674 Account opened during parties' account #5ML-905871 marriage. Wife's value as of separation. H American Funds account #67198183 $11,099 Account opended on November 23, 2001 and closed in March, 2007 after separation. Husband retained the funds after the account was closed. H American Funds IRA account $0 Husband's nonmarital #83062637 property. The account opened on December 26, 2007 by rollover transaction from Principal account #532212. H Merrill Lynch account #872- $0 Account: was Husband's 48485/2AT-34N99 premarital property. Account had no increase in value. In December, 2003, account closed and $43,000 transferred to American Express #8021. 10 11 12 13 14 15 16 17 18 19 20 21 22 Increase in value of H Principal $13,962 Account increased in value Financial Group Annuity account during the course of the parties' #0286569 marriage. This account was transferred to American Express #5004 (IDS) in May, 2006. Increase in value of H Principal $0 The account was opened in Financial Group Annuity account 1996 and closed in November, #5322212 2007. The account had no increase in value. Husband received $244,000 at time of the closing, which he placed in American Funds #83062637. Marital Component of H Delaware $23,016 Husband's premarital account. Investments account #007/5077326117 2,844.1 19 shares acquired during the parties' marriage. Shares were then transferred in November, 2005 and November, 2006. Wife's value from closing share price multiplied by number of marital shares transferred as of the respective dates. H MML Investors Account #JAV- $0 Husband's post-separation 130370 account.. Had a value of $46,761 as of December 31, 2009. Need to determine source of funds for this account.. H Mass Mutual Account $0 Husband's post-separation #EVN4601399 account. Account opened in October, 2008. Account had a value of $212,616 as of December 31, 2009. Need to determine the source of funds for this account. H's Other Investment Accounts $90,000 Includes Exelon stock, Smith Barney and Hartford Annuity. Need updated information for these accounts. H Jewelry $17,395 Watch and Cufflinks. Value from O'Brien appraisal. 23 24 25 26 Increase in value of H PNC Bank $15,414 Account: used with Husband's account #51-4004-9861 practice.. Wife's value as of separation. Account had a balance of approximately $23,000 as of marriage and $38,414 as of September 1, 2007, which is the earliest statement provided by Husband. Value was $68,058 as of February 26, 2010, which was the last statement provided by Husband. H Other Bank Accounts $254,551 Husband had accounts with PNC Bank, Integrity Bank, Sovereign Bank, Metro Bank, Way Point BAnk, All 1st Bank and NCFCU. Some of the accounts are jointly titled with Wife. Wife has estimated the total value based upon Husband's net worth statements and accounts statements provided. Need updated information. H Personalty TBD H Auto TBD Marital Assets & Liabilities Titled to Wife 27 28 28 30 31 32 33 34 35 36 37 38 Marital Component of W PBG Pension $170,628 This is a non-qualified plan. Equalization Plan Value calculated by actuarial expert. Marital Component of W Pepsi Bottling $114,217 This is a qualified plan. Value Group Salaried Employees Retirement calculated by actuarial expert. Plan Marital Component of W Pepsil $95,141 Wife's value calculated by Bottling Group 401(k) Plan Richard Brabender. The value is the after-tax value. Marital Component of W Pepsi Bottling $1,258,914 Marital contributions to plan. Group Executive Deferral Plan Marital Component of W Pepsi Bottling $491,100 Value calculated by Richard Group Stock Options Brabender. The value is the after-tax value. Marital Component of W Pepsi Bottling $0 Value determined by Richard Group Restricted Stock Brabender. Marital Component of W Smith Barney $765,634 Value as of separation. account #-70450 Formerly Merrill Lynch account #575-11428, transferred to Smith Barney in September, 2007. Marital Component of W Smith Barney $999,538 Value as of separation. account #70451 Formerly Merrill Lynch account #575-75762, transferred to Smith Barney in September, 2007. Account now closed. Marital Component of W Smith Barney $2,726,209 Value as of separation. account #70452 Formerly Merill Lynch account #575-10499, transferred to Smith Barney in September, 2007. W First Merit Bank account $0 No increase in value for the First Merit Account. W Personalty TBD W Auto TBD Jointly Titled Marital Assets & Liabilities 39 40 41 42 43 J 4918 St. Croix Drive, Tampa, FL $2,200,000 Wife's value from July 13, 33692 2010 Appraisal. J Mortgage on 4918 St. Croix Drive, ($1,100,000) Interest only mortgage on the Tampa, FL 33692, with First Republic residence. Bank J American Express/Ameriprise $33,802 Account opened on November Investment account #008 0456 7537 1 23, 2004. Account closed on 001 October 24, 2006. $100,000 transferred to American Express account #4001. Wife's value is the amount retained by Husband at time of the closing. J PNC Bank account #50-0469-3484 $1,058 Account was jointly titled but controlled by Husband. Only statement provided was for January 14, 2010. Need updated information. J PNC Bank account #50-490-7374 $36,644 Account: was jointly titled but controlled by Husband. Only statement provided was for January 14, 2010. Need updated information. $ 1 t Certificate of Service I hereby certify that a copy of the aforegoing Supplemental Pretrial Statement was served on Samuel L. Andes, Esquire, 525 North Twelfth Street, P.O. Box 168, Lemoyne, PA 17043, by first class mail on the 3rd day of March, 2011. Joanne Ross Wilder Brian E. McKinley Wilder & Mahood 10th Floor Koppers Building 436 Seventh Avenue Pittsburgh, Pa 15219-1827 (412) 261-4040 Attorneys for Linda Kuga Pikulin In the Court of Common Pleas of Cumberland County, Pennsylvania Civil Action - Divorce John N. Pikulin, Plaintiff VS. Linda Kuga Pikulin, Defendant No. 09-4002 Civil Term Petition to Establish Discovery Deadline < o ,-- j CD -?, Code: Filed on Behalf of: Linda Kuga Pikulin, Defendant Counsel of Record for This Party: Joanne Ross Wilder Pa. I.D. #15274 Brian E. McKinley Pa. I.D. #86974 Wilder & Mahood Firm #525 10th Floor, Koppers Building 436 Seventh Avenue Pittsburgh, PA 15219 (412) 261-4040 ORIGINAL In the Court of Common Pleas of Cumberland County, Pennsylvania John N. Pikulin, Plaintiff ) vs. ) No. 09-4002 Civil Term Linda Kuga Pikulin, ) Defendant Civil Action - Divorce Petition to Establish Discovery Deadline Linda Kuga Pikulin, Defendant, hereinafter "Wife," by her attorneys, Joanne Ross Wilder, Brian E. McKinley and Wilder & Mahood, respectfully represents that: 1. Wife and Plaintiff, John N. Pikulin, hereinafter "Husband," were married on May 12, 2001 and separated in January, 2007. The parties' marriage therefore lasted just over five years. No children were born of the marriage. 2. On June 15, 2009, Husband filed a complaint in divorce, which included ancillary economic claims. On March 8, 2010, Husband filed a praecipe withdrawing his claim for alimony. 3. By order of court dated September 9, 2010, E. Robert Elicker, IL, Esq., was appointed divorce master in this matter. 4. Upon the consent of Wife and Husband, an order of court was entered on December 20, 2010, providing for Wife to pay Husband alimony pendente lite in the amount of $10,000 per month until the parties reached a final resolution of the economic issues herein, or until November 30, 2011. 5. Wife has served multiple discovery requests upon Husband during the course of this proceeding. Husband's failure to fully and completely respond to Wife's discovery requests 1 resulted in the filing of multiple motions by Wife and the issuance of orders of court compelling Husband's discovery responses and document productions. 6. Wife voluntarily produced numerous documents requested by Husband's former counsel. Thereafter, Husband served his first his first set of interrogatories and first request for production of documents upon Wife on July 28, 2010, which was over a year after Husband's complaint for divorce had been filed. Wife provided Husband discovery responses in compliance with the Rules of Civil Procedure and provided nearly 1,700 pages of documents. 7. Despite Wife's significant document production, Husband would not certify that discovery was substantially complete in this matter, as his then counsel claimed that considerable discovery remained to be completed. 8. Husband never served any additional discovery requests following the appointment of Mr. Elicker as divorce master. 9. Husband retained new counsel at the end of October, 2010. Wife then provided additional information to Husband's new counsel. 10. Counsel for the parties participated in a status conference with the Master Elicker on January 24, 2011. At the conference, counsel for Husband stated that he had some questions for Wife's expert. Following the conference, Wife provided further information and explanations regarding the valuation of the marital estate. Moreover, counsel for Wife informed counsel for Husband on multiple occasions that he was authorized to speak directly with Wife's expert at any time regarding this matter. Copies of correspondences dated January 26 and 31, 2011 authorizing counsel for Husband's communications with Wife's expert are attached hereto as Exhibit A. To date, counsel for Husband has not contacted Wife's expert. 11. In compliance with Master Elicker's directive, Wife filed her pretrial statement on March 1, 2011. Wife filed a supplemental pretrial statement on March 7, 2011. Husband filed his 2 pretrial statement on or about March 9, 2011. As part of his pretrial statement, Husband asserted that additional discovery was necessary prior to any hearing in this matter. 12. By correspondence dated March 16, 2011, counsel for Wife wrote counsel for Husband, inquiring as to the discovery that Husband believed was outstanding and requesting that any discovery requests be immediately forwarded to avoid any further delay. A copy of the March 16, 2011 correspondence is attached hereto as Exhibit B. 13. To date, counsel for Husband has not responded to the March 16, 2011 correspondence. Moreover, Husband has never provided any additional discovery requests to Wife. 14. The parties and their counsel are scheduled to participate in a conference before Master Elicker on June 6, 2011. If a settlement is not reached, Master Flicker has indicated that an equitable distribution hearing would then be scheduled. 15. Husband's failure to complete his discovery prior to the settlement conference renders serious negotiations impossible and further delays the conclusion of this matter, prejudicing Wife. Husband has had nearly two years since filing his divorce action to complete discovery in this matter. Wherefore, Wife respectfully requests that this Honorable Court enter an order providing for the close of discovery on May 31, 2011. oanne Ross Wilder Brian E. McKinley Wilder & Mahood 10'h Floor Koppers Building 436 Seventh Avenue Pittsburgh, PA 15219-1827 (412) 261-4040 Attorneys for Linda Kuga Pikulin 3 Verification Pursuant to Pa. R.C.P. 1024(c) I VERIFY that the averments of fact contained in the foregoing Petition are true and correct to the best of my knowledge, information, and belief, based upon information known to me and/or provided to me by Linda Kuga Pikulin, who is outside the jurisdiction and whose verification cannot be obtained within the time allowed for filing. I understand that false statements herein are made subject to the penalties of 18 Pa. C.S. §4904 relating to unsworn falsification to authorities. Date: March 28, 2011 d? ".? F. /V-( Brian E. McKinley Wilder & Mahood Attorneys for Linda Kuga Pikulin +:R************* -COMM. J; - * **:*krxk:K*-++*:+.+* DATE JAN-26-2011 N?TIIIE C'3 '+.e****** MODE = MEMORY TRANSMISSION -TART=JAH-26 09:'1 END=JAN-?6 139:`2 FILE N0.=499 STH COMM. ONE-TOUCH/ STATION HAME/TEL HO. PAGES DURATION NO. ABBR NO. 001 OK <17> SAM ANDES 001;001 00.00 15 -iJ I LDER 6 MAHOOD - ************************************ -WILDER MAHOOD - ***41* - 412 261 2447- *+******* Lnw OFFICES WILDER & MAHOOD A PROVEWONAL CORPORATION TENTH FLOOR KOPPERS BUILDING 436 SEVENTH AVENUE PI'n-SBURGH, PENNSYLVANIA 15219-1827 TELEPHONE(412)261.4040 TELEFAx (412) 261.2447 JOANNE ROSS WILDER JAMES E. MAHOOD ELISABETH PRIDE, BRIAN MCKINLEy DARREN OGLESBY January 26, 2011 By Fax Only, 717-761-1435 Samuel L. Andes, Esquire 525 North Twelfth Street P.O. Box 168 Lemoyne, PA 17043 Re: Pikulin Dear Sam: OF COUNSEL BRUCE L. WILDER Richard Brabender will be happy to speak with you and answer your questions regarding his calculations. You can call him at 412-431-4460. He is expecting your call Just a reminder: we need John to execute part 5 on page 26 of the PBG Plan document waiving the Joint and Survivor Annuity option. As we discussed, this waiver is entirely without prejudice to John's equitable distribution claims. As time is of the essence, I look forward to your early reply. Yours very truly, Joanne Ross Wilder cc: Ms. Kuga EXHIBIT i LAw 0FrICES WILDER & MAIIOOD A PROFLSSIONAL CORPORA I ]ON TI,N H Fmol KOP1)1ats BINIA)IN(i 436 SfNIXIl1 AVENU[i PITTSBURGH, PENNSYLVANIA 15219-1827 Tr-.LEPHONE (412) 261-4040 T1:1-EIAX (412) 261-2447 JOANNE Ross Wll.nI;R J:%,Nns E. MAHOOD ELISABEF11 PRIDE BRIAN WKINLEY DARREN OGLUSBY January 31, 2011 By Fax Only: 717-761-1435 Samuel L. Andes, Esquire 525 North Twelfth Street P.O. Box 168 Lemoyne, PA 17043 Re: Pikulin Dear Mr. Andes: 1 OF COUNSEL BRucL. L. WILDER This will acknowledge receipt of your January 26, 2011 correspondence and serve as a response to the questions you have raised therein. With regards to Mr. Brabender's valuation of the stock options, the options listed on document #1860 became the options listed on document #1870 after the merger and conversion by Pepsi. Mr. Brabender valued the 2004 and 2006 options as set forth in his Schedule 1, which was provided to you previously. Linda received funds for the 2005 options, which were included in her income for the support calculations. As for Linda's jewelry, it may be easier to have Linda forward her jewelry to our office to have it appraised by Maureen O'Brien, the appraiser who appraised John's jewelry. We would make the arrangements to have the jewelry delivered to Ms. O'Brien for her review. John would have to advance the costs for the appraisal, which would be approximately $500. Please advise whether this procedure would be acceptable. Linda will not be able to travel to your office for a deposition. However, she would be available by telephone. We will get in touch with Linda regarding her availability for the deposition. Any documents to be addressed as part of the deposition can be forwarded to our office in advance so that we can provide them to Linda. Lastly, as for communications with Mr. Brabender, you may contact him at anytime with your questions or comments. Yours very truly, l/ Brian E. McKinley cc: Ms. Kuga J -C0t9M. T -+L- + +++t+++++:«: +++rk« DATE HAP-16--2011 * TIME 14:'4 x*:+:K**** [NODE = HEMORY TPAHSMISSIC111 5TART=MAR-16 1.1:33 END=MAR-16 14:34 FILE N0.=597 STN C011M. CHE-TOUCH/ STATION IlAt9E-TEL 110. PAGES DURATION N0. ABBR 140. 001 OK <17> SAM ANDES 001/001 00:00:16 -WILDER a MAHOOD - ***-x******************* ***-x+ :xn* -WILDER MAHOOD - ***** - 412 261 2447- M**M***** LAW OFFTCPS WILDER & MAHOOD AFR mSSIONALCORPORATION TENTH FLOOR KOPPERS BUILDING 436 SEVENTH AVENUE Pn7S31)RGH,PENNSYLVANIA 15219-1827 TELEPHONE (412) 261-4040 TELEAAx(412)261-2447 JOANNE Ross WILOER JAMES E. M.utoon ELISABETH PRIG BRIAN MCKjNLCY DARREN OGLESBY By Fax Only: Samuel L. Andes, Esquire 525 Worth Twelfth Street P.O. Box 168 Lemoyne, PA 17043 Re: Pikulin Dear Sam: March 16, 2011 OFCOVNSEL BmxlasL WmDER You indicated in your March 9, 2011 letter to the Master that you believe there is outstanding discovery. We have no outstanding discovery requests from you. If you require additional information, you should request it now. We intend to object to discovery requests that further delay the proceedings. We do not need a conference with the Master to discuss discovery At the last conference you indicated that you had some questions for Mr. Brabender. I wrote to you on January 26, 2011 to confirm that I had authorized Mr. Brabender to speak with you and answer any questions regarding his calculations. He tells me that you have never called him. We are still waiting to hear from you retarding the scheduling of the conference with the Master. As we are lookins at the third week in April, your client has sufficient time to plan his schedule to make himself available for the conference. Let's get this show on the road! I look forward to hearing from you, Yours very traly, Joanne Ross Wilder cc: Ms. Kuga EXHIBIT Certificate of Service I hereby certify that a copy of the aforegoing Petition to Establish Discovery Deadline was served on Samuel L. Andes, Esquire, 525 North Twelfth Street, P.O. Box 168, Lemoyne, PA 17043, by first class mail on the 28th day of March, 2011. Joanne Ross Wilder Brian E. McKinley Wilder & Mahood 10th Floor Koppers Building 436 Seventh Avenue Pittsburgh, Pa 15219-1827 (412) 261-4040 Attorneys for Linda Kuga Pikulin JOHN N. PIKULIN, IN THE COURT OF COMMON PLEAS OF PLAINTIFF CUMBERLAND COUNTY, PENNSYLVANIA V. LINDA KUGA PIKULIN, C") C= -+ DEFENDANT NO. 09-4002 CIVIL MW rrnr C V ) 4C) ORDER OF COURT a, h day of April, 2011, upon consideration AND NOW, this 4t of Linda PiRgn'P. .. rn _ Petition to Establish Discovery Deadline; IT IS HEREBY ORDERED AND DIRECTED that: 1. A Rule shall issue upon John N. Pikulin, to show cause why the relief requested in the Petition to Establish Discovery Deadline should not be granted; 2. John N. Pikulin shall file an Answer to the Petition with this Court on or before Monday, April 11, 2011; 3. Argument, if required, will be held on Thursday, April 21, 2011, at 8:30 a.m. in Courtroom No. 2 of the Cumberland County Courthouse, Carlisle, Pennsylvania. By the Court, M. L. Ebert, Jr., Samuel Andes, Esquire 525 North 12th Street P. O. Box 168 Lemoyne, PA 17043 n lei Fax: 717-761-1435 1( ? Ip ? Joanne Ross Wilder, Esquire Brian E. McKinley, Esquire Counsel for Defendant 10th Floor Koppers building 436 Seventh Avenue Pittsburgh, PA 15219-1827 Fax: 412-261-2447 bas J. JOHN N. PIKULIN, IN THE COURT OF COMMON PLEAS OF PLAINTIFF CUMBERLAND COUNTY, PENNSYLVANIA V. LINDA KUGA PIKULIN, , DEFENDANT NO. 09-4002 CIVIL o AMENDED ORDER OF COURT ,- this 5th day of April 2011 upon consideration of L AND NOW inda PikuliQ' , , , yrCn Petition to Establish Discovery Deadline; v IT IS HEREBY ORDERED AND DIRECTED that: 1. A Rule shall issue upon John N. Pikulin, to show cause why the relief requested in the Petition to Establish Discovery Deadline should not be granted; 2. John N. Pikulin shall file an Answer to the Petition with this Court on or before Friday, April 15, 2011; 3. Argument, if required, will be held on Thursday, April 21, 2011, at 8:30 a.m. in Courtroom No. 2 of the Cumberland County Courthouse, Carlisle, Pennsylvania. By the Court, ? Samuel Andes, Esquire 525 North 12th Street P. O. Box 168 Lemoyne, PA 17043 Fax: 717-761-1435 Joanne Ross Wilder, Esquire Brian E. McKinley, Esquire Counsel for Defendant 10th Floor Koppers building 436 Seventh Avenue Pittsburgh, PA 15219-1827 Fax: 412-261-2447 M. L. Ebert, r., J. 0 '(eJ C iPg M ?( o I10113Kb bas Fj! F i9E l' R0! UTAi `f 2011 AF - 5 Phi 10: 5 2 ',?ii?SERLAIID COUdPI, ENNSY1_VANIA JOHN N. PIKULIN, Plaintiff ) VS. ) LINDA KUGA PIKULIN, ) Defendant ) IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 09-4002 Civil Term IN DIVORCE ANSWER TO DEFENDANT'S PETITION TO ESTABLISH DISCOVERY DEADLINE AND NOW comes the above-named Plaintiff by his attorney, Samuel L. Andes, and makes the following Answer to Defendant's Petition: 1. Admitted. 2. Admitted. 3. Admitted. 4. Admitted, with clarification. The agreement of the parties provided that the order for alimony pendente lite would be extended, terminated, or otherwise modified after November 2011 if the case had not been resolved. 5. Denied. Plaintiff has fully answered, to the best of his ability and to the extent that the information and documents requested are available, all of Defendant's discovery requests. Although it is acknowledged that Defendant has filed "multiple motions" it is averred that those motions were largely unnecessary as the discovery documents and information was in the process of being provided by Plaintiff. 6. Admitted, with clarification. The assets in this exceed $5.0 million dollars in value and the proper identification and valuation of those assets requires the examination of documents that are now ten years old and the appraisal of assets in Florida. Although it is acknowledged that Defendant provided documents voluntarily, the sheer volume of those documents, and the time taken to review and analyze them, is not unreasonable in a cash of this complexity. Moreover, Plaintiff had to change attorneys in 2010, after the first discovery documents were provided, because his prior attorney, Charles Friedman, Esquire, became ill and had to withdraw from the case. That further complicated and delayed the progress of the case, without any fault of Plaintiff. 7. Admitted. By way of further answer, Plaintiff states that Defendant still has not provided complete documentation about the assets she owned or controlled at the time of marriage. It is acknowledged that those documents may not be available, but the parties need to find some way to calculate the increase in value of each party's pre-martial asset. The parties have scheduled a settlement conference with the Master at which time this very issue will be addressed. 8. Denied. Plaintiff learned, for the first time, at a status conference with the Master held in January of 2011, that Defendant's employment was changing and that Defendant claimed she would be unemployed for some period of time. Plaintiff has responded with formal discovery requests to obtain information about the cause of her employment, any severance pay, her prospects for future employment, and the identity and valuation of some remaining assets. 9. Admitted. 10. Admitted. By way of further answer, Plaintiff states, through counsel, that Plaintiff has decided to engage his own expert to assess the accuracy of Defendant's expert's opinions. 11. Admitted. 12. Admitted. By way of further answer, Plaintiff states, through counsel, that his formal discovery requests were provided to Plaintiffs counsel, within two weeks of that letter. 13. Denied for the reasons set forth in Paragraph 12 above. In addition, Plaintiff s counsel has indicated several times to Defendant's counsel that he wishes to depose Defendant. He wishes to do so, however, only after he receives Defendant's answer to his most recent discovery requests and proposes to do it when Defendant is scheduled to be in Carlisle for the settlement conference with the Master on 6 June 2011. 14. Admitted. 15. Denied. The negotiation of this case has been delayed by Defendant and her recent loss of or change in employment. Plaintiff has made two settlement offers to Defendant and has not received even the courtesy of a response. Defendant's counsel advised Plaintiff s counsel that a response would be forthcoming when Plaintiff signed and delivered a waiver of his rights to participate in Defendant's retirement plan. Those documents were delivered approximately one month ago and Defendant and her counsel have still not responded to Plaintiff s settlement proposal. There is still discovery required to learn the status of Defendant's employment and income, both of which are central issues to the resolution of this case. Plaintiff does not believe that that discovery can be properly completed before June of 2011, when Defendant will be in the area and available for proper deposition. WHEREFORE, Plaintiff prays this court to deny Defendant's Petition or, in the alternative, to set a discovery deadline of 30 June 2011 to give Plaintiff's counsel time to complete the deposition of Defendant. amuel L. Andes Attorney for Plaintiff Supreme Court ID # 17225 525 North 12' Street P.O. Box 168 Lemoyne, Pa 17043 (717) 761-5361 I verify that the statements made in this document are true and correct. I understand that any false statements in this document are subject to the penalties of 18 Pa. C. S. 4904 (unsworn falsification to authorities). Date: +? f ?d i AMUEL L. ANDES CERTIFICATE OF SERVICE I hereby certify that I served an original of the foregoing document upon counsel for the Defendant herein by regular mail, postage prepaid, addressed as follows: Brian E. McKinley, Esquire Joanne Ross Wilder, Esquire Law Offices of Wilder & Mahood 10" Floor, Koppers Building 436 Seventh Avenue Pittsburgh, PA 15219-1827 Date: 5 April 2011 Amy M. kins Secretary for Samuel L. Andes JOHN N. PIKULIN, IN THE COURT OF COMMON PLEAS OF PLAINTIFF CUMBERLAND COUNTY, PENNSYLVANIA V. LINDA KUGA PIKULIN, DEFENDANT NO. 09-4002 CIVIL ORDER OF COURT AND NOW, this 7th day of April, 2011, upon consideration of Defendant, Linda Pikulin's Petition to Establish Discovery Deadline and Plaintiff John Pikulin's Answer thereto and the Court noting that a conference has been scheduled before the Divorce Master on June 6, 2011, IT IS HEREBY ORDERED AND DIRECTED that Defendant's Petition to Establish Discovery Deadline is GRANTED. All Discovery in this case will be completed on or before May 31, 2011. Samuel Andes, Esquire 525 North 12th Street P. O. Box 168 Lemoyne, PA 17043 Joanne Ross Wilder, Esquire Brian E. McKinley, Esquire Counsel for Defendant 10th Floor Koppers building 436 Seventh Avenue Pittsburgh, PA 15219-1827 By the Court, N 11-? U M. L. Ebert, Jr., J. c m -a m ?o(J C ? v F -am oP ? 4/rr r> _j °o :z 1 C- ) D _y t: J Robert Elicker, Esquire 11 Divorce Master ` bas JOHN N. PIKULIN, Plaintiff VS. LINDA KUGA PIKULIN, Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA NO. 09 - 4002 CIVIL IN DIVORCE ORDER OF COURT AND NOW, this _q day of , 2011, counsel and the parties having entered into an agreement and stipulation resolving the economic issues on June 6, 2011, the date set for a four-party conference, the agreement and stipulation having been transcribed and signed by the parties, the appointment of the Master is vacated and counsel can conclude the proceedings by the filing of a praecipe to transmit the record with the affidavits of consent and waivers of the parties so that a final decree in divorce can be entered. BY THE COURT, cc: ,/Samuel L. Andes Attorney for Plaintiff Joanne Ross Wilder Attorney for Defendant Div. MaSier - in ?de K in A. Hess, P.. M CD I'd C Ma, - ce .a_ C? ra ? {?T JOHN N. PIKULIN, Plaintiff VS. LINDA KUGA PIKULIN, Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA NO. 09 - 4002 CIVIL IN DIVORCE THE MASTER: Today is Monday, June 6, 2011. This is the date set for a conference in the above-captioned divorce proceedings. Present in the hearing room are the Plaintiff, John N. Pikulin, and his attorney Samuel L. Andes, and the Defendant, Linda Kuga Pikulin, and her attorney Joanne Ross Wilder. This action was commenced by the filing of a complaint in divorce on June 15, 2009, raising grounds for divorce of irretrievable breakdown of the marriage. The Master has been advised that the parties will sign and file affidavits of consent within thirty (30) days of today's date. The agreement that is going to be placed on the record will state the arrangement with regard to the filing of the affidavits and waivers between the parties. The complaint also raised economic claims of equitable distribution, alimony, alimony pendente lite and counsel fees. The complaint was filed by Kristopher T. Smull. Mr. Andes has succeeded as counsel in this case on behalf of the Plaintiff. 1 The Master has been advised that the parties have reached an agreement with respect to the outstanding economic issues. The agreement is going to be placed on the record in the presence of counsel and the parties. The agreement as placed on the record will be considered the substantive agreement of the parties, not subject to any modifications or corrections except for correction of typographical errors which may be made during the transcription. Consequently, when the parties leave the hearing room today, they will be bound by the terms of the agreement even though there is not a subsequent signing of the agreement affirming the terms of settlement. However, the Master has been advised that the parties will return later today to review the transcribed agreement, make any corrections as necessary, and sign the agreement affirming the terms of settlement as stated on the record. The Master will prepare an order vacating his appointment upon receipt of the completed agreement. The parties were married on May 12, 2001, and separated in January 2007. There were no children born of this marriage. Mr. Andes. MR. ANDES: Thank you, Mr. Elicker. First of all, let me note that the parties have exchanged extensive discovery. We spent two hours here this morning reviewing claims and negotiating a settlement, and having done that, 2 the parties have agreed to resolve all the economic claims in this divorce action on the following terms: 1. The parties own a single-family residence at 4918 St. Croix Drive, Tampa, Florida, which they purchased and contructed during the marriage. The parties have agreed to the following terms and provisions regarding the disposition of that property: a) Husband will convey all his right, title and interest in the property by special warranty deed to wife. Wife will be responsible to prepare the deed and deliver it to husband for execution so that the deed can be executed and delivered within thirty (30) days. b) Wife shall refinance the existing mortgage which encumbers the property to obtain husband's unconditional release from that obligation. She will arrange his release within thirty (30) days of today's date. C) Until such time as she has obtained his release from the mortgage and the deed has been delivered pursuant to this paragraph, wife shall be responsible to pay the installments on the mortgage and any other expenses, including real estate taxes, homeowner's insurance, utilities, and the like, arising from the use, ownership, or occupancy of the property. She will be responsible to pay those expenses from today forward and shall indemnify and save husband harmless from any loss, cost, or expense caused to him by her failure to pay them. Husband shall be responsible to pay the utilities and operating expenses of the property through the 5th of June 2011, but not the installments or interest on the mortgage. The parties will cooperate so that they can promptly transfer all of the utility accounts and other expense accounts for the property from husband's name to wife's name as promptly after today as possible. 2. Wife shall pay husband 1.5 million dollars as equitable distribution of marital assets and not as alimony. That payment will be made as follows: a) Wife shall pay husband the sum of $500,000.00 in cash or cash equivalence at the date the of deed is delivered to the St. Croix Drive property pursuant to the preceding paragraph. b) Wife shall transfer One million dollars from one 3 or more of her retirement accounts into a tax deferred account designated by husband. c) The transfer of the retirement assets will be accomplished by a tax free roll over pursuant to a QDRO which wife or her attorney shall cause to be prepared consistent with husband's election regarding the account into which the funds are to be deposited. The amount transferred will be one million dollars regardless of investment results after today's date and will be made within thirty (30) days of today's date. 3. Husband shall retrieve from the St. Croix Drive residence the following items of household furnishings and tangible personal property: a) A 52" television set; b) Two bedroom suits; c) One sectional couch; d) A king size mattress set; e) Two end tables and a coffee table; f) All of his clothing and other personal effects now located at the St. Croix Drive home. Husband shall retrieve those items within thirty (30) days of today's date. When he does so, he will arrange to deliver to the St. Croix Drive address two lion statues which are currently located in the garage at his condominium at 5216 West Kennedy Boulevard, Tampa, Florida. Otherwise, each of the parties shall retain the other assets currently in their name and waive any claims to the assets held in the other parties' name. This specifically includes husband's condominium at 5216 West Kennedy Boulevard, Tampa, Florida. Husband will be responsible to pay the mortgage against that property and all other expenses arising out of or resulting from his ownership, use, or occupancy of the property. 4. The parties will execute and file with the Court within thirty (30) days affidavits of consent and waivers of notice. When the QDRO is prepared and approved by both parties pursuant to Paragraph 2 hereof, the original and copies of that will be delivered to husband's attorney who will file that and a motion to be executed by counsel for 4 both parties requesting that the QDRO be entered. At the same time husband's counsel shall file a praecipe to transmit the record so that the divorce decree can be entered. The parties expect to sign the consents and waivers and deliver them to husband's attorney today. 5. Wife is currently paying husband alimony pendente lite in the amount of $10,000.00 per month. That is paid to him directly and not through the Domestic Relations Office. The payment of alimony pendente lite by wife to husband shall continue until the final decree in divorce has been entered or until the 31 of July 2011, whichever is later. On the condition that wife has complied with the requirement of Paragraphs 1 and 2 and particularly with regard to the preparation of the QDRO, so that husband's counsel can file the documents with the Court by 31 July 2011, the alimony pendente lite will end at that. date. 6. The parties will make, execute, and deliver all other documents reasonably necessary to implement the terms of this settlement. They will do so promptly upon the request of either counsel. 7. All further economic claims, including, without limitation, claims for further equitable distribution of marital property, any claims for alimony, any claims for further or additional alimony pendente lite, and all counsel fees and expenses, are hereby waived by both parties. It is the intention of the parties to accept this as final settlement of all the economic claims which have been raised in the divorce action and to conclude all claims and litigation by this agreement. 8. Except as herein otherwise provided, each party may dispose of his or her property in any way and each party hereby waives and relinquishes any and all rights he or she may now have or hereafter acquire under the present or future laws of any jurisdiction to share in the property or the estate of the other as a result of the marital relationship including without limitation, statutory allowance, widow's allowance, right of intestacy, right to take against the will of the other, and right to act as administrator or executor in the other's estate. Each will at the request of the other execute, acknowledge, and deliver any and all instruments which may be necessary or 5 advisable to carry into effect this mutual waiver and relinquishment of all such interest, rights, and claims. MR. ANDES: Dr. Pikulin, you have heard what I just dictated? DR. PIKULIN: Yes. MR. ANDES: You've been here today for a little over two hours and we have met numerous times prior to this, are you satisfied that you are aware of the assets and the claims that are pending in this action? DR. PIKULIN: Yes. MR. ANDES: And you've heard the terms of the settlement, are you satisfied that you understand that? DR. PIKULIN: Yes. MR. ANDES: And you understand what you are going to receive by way of settlement and what you are going to give? DR. PIKULIN: Yes, sir. MR. ANDES: Being aware of that, are you willing to accept the terms and conditions as outlined here to settle all claims against your wife? DR. PIKULIN: Yes. MR. ANDES: Do you have any questions about the terms of settlement? DR. PIKULIN: No. 6 MS. WILDER: Ms. Kuga Pikulin, you have heard the terms of the settlement that have been placed upon the record? MS. KUGA PIKULIN: Yes. MS. WILDER: Are you satisfied that the terms of settlement are as agreed to by you? MS. KUGA PIKULIN: Yes. MS. WILDER: Do you have any questions regarding any matter that was placed on the record? MS. KUGA PIKULIN: No. MS. WILDER: Are you satisfied that full disclosure of assets and liabilities has been made between you and Dr. Pikulin? MS. KUGA PIKULIN: Yes. THE MASTER: Thank you for your efforts. I acknowledge that I have read the above stipulation and agreement, that I understand the terms of settlement as set forth herein, and that by signing below I ratify and affirm the agreement previously made and intend to bind myself to the settlement as a contract obligating myself to the terms of settlement and subjecting myself to 7 the methods and procedures of enforcement which may be imposed by law and in particular Section 3105 of the Domestic Relations Code. WITNESS: DATE: A ?y /;77 Samuel L. ndes ohn Pikulin Attorney for Plaintiff J ? /lot Joanne Ross Wilder ?-? inda Kuga kulin Attorney for Defendant 8 In the Court of Common Pleas of Cumberland County, Pennsylvania Civil Action - Divorce John N. Pikulin, Plaintiff vs. Linda Kuga Pikulin, Defendant No. 09-4002 Civil Term Praecipe to Transmit Record r' M CD Code: Filed on Behalf of: Linda Kuga Pikulin, Defendant Counsel of Record for This Party: Joanne Ross Wilder Pa. I.D. #15274 Brian E. McKinley Pa. I.D. #86974 Wilder & Mahood Firm #525 10th Floor, Koppers Building 436 Seventh Avenue Pittsburgh, PA 15219 (412) 261-4040 ORIGINAL In the Court of Common Pleas of Cumberland County, Pennsylvania John N. Pikulin, vs. Linda Kuga Pikulin, Plaintiff ) ) No. 09-4002 Civil Term Defendant ) Civil Action - Divorce Praecipe to Transmit Record TO THE PROTHONOTARY: Transmit the record, together with the following information, to the Court for entry of a Decree in Divorce: 1. The ground for divorce is irretrievable breakdown under Section 3301(c) of the Domestic Relations Act. 2. The Complaint was filed on June 15, 2009 and served on Defendant by an acceptance of service executed on June 23, 2009 and filed on June 26, 2009. 3. The Affidavit required by Section 3301(c) of the Domestic Relations Act was executed by Plaintiff on June 6, 2011 and by Defendant on June 6, 2011. 4. The following related claims are pending: none. 5. The Plaintiff's Waiver of Notice was executed and filed on Jun 6, 2011 and the Defendant's Waiver of Notice was executed and filed on June 6, 2011. Date ? j 0 Joartr Ross Wilder Wilder & Mahood Attorneys for Linda Kuga Pikulin, Defendant Certificate of Service I hereby certify that a copy of aforegoing Praeceipe to Transmit was served on Samuel L. Andes, Esquire, 525 North Twelfth Street, P.O. Box 168, Lemoyne, PA 17043, by first class mail on the 13th day of July, 2011. Joanne Ross Wilder Brian E. McKinley Wilder & Mahood I Otn Floor Koppers Building 436 Seventh Avenue Pittsburgh, Pa 15219-1827 (412) 261-4040 Attorneys for Linda Kuga Pikulin IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA John N. Pikulin V. Linda Kuga Pikulin NO. 09-4002 Civil Term DIVORCE DECREE AND NOW, -SV L Y l9 1-011 , it is ordered and decreed that John N. Pikulin , plaintiff, and Linda Kuga Pikulin , defendant, are divorced from the bonds of matrimony. Any existing spousal support order shall hereafter be deemed an order for alimony pendente lite if any economic claims remain pending. The court retains jurisdiction of any claims raised by the parties to this action for which a final order has not yet been entered. Those claims are as follows: (If no claims remain indicate "None.") None. By the Court, go6'ce COP ^9116Y' 4v Aq'Y ma,lie toff j4*4e5 W,' loser In the Court of Common Pleas of Cumberland County, Pennsylvania John N. Pikulin, Plaintiff ) ) vs. ) ) Linda Kuga Pikulin, ) ) Defendant ) C) N No. 09-4002 Civil Term „ 7' -t, x M r`1r c!? T fV Civil Action - Divorce W- ? Qualified Domestic Relations Order t1% AND NOW, this day of S e. , 2011, the foregoing is hereby ORDERED AND DECREED: WHEREAS, the Court has by Decree dated July 19, 2011, granted Plaintiff and Defendant a Divorce Decree, and the parties, by agreement dated June 6, 2011, have divided their marital estate, including the assignment to Plaintiff of a portion of Defendant's accrued benefit under the Plan (as defined herein); and WHEREAS, the parties hereby submit to the Plan Administrator an Order that satisfies the requirements of a Qualified Domestic Relations Order. NOW, THEREFORE, in consideration of the foregoing premises hereunder specified, Plaintiff and Defendant do agree, and the Court does order, as follows: 1) The parties and the Court intend this Order to constitute a "qualified domestic 12, relations order" as defined in Section 414(p) of the Internal Revenue Code of 1986, as Tw s h amended (the "Code"), and Section 206(d)(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). 2) This Order applies to the following qualified plan (hereinafter the "Plan"): PepsiCo Salaried Employees Retirement Plan. Unless otherwise defined in this Order, capitalized words shall have the meaning assigned under the Plan. 3) Plaintiff is hereby deemed an "Alternate Payee" within the meaning of Section 414(p)(8) of the Code and Section 206(d)(3)(K) of ERISA. Defendant is a participant in the Plan. 4) The name, mailing address, social security number and date of birth of Defendant, hereinafter referred to as "Plan Participant," are Linda Kuga Pikulin, 1410 Mississauga Road, Mississauga, Ontario, Canada L51-12J4, SS #205-46-0297; DOB: 5/5/1955. The name, mailing address, social security number and date of birth of Plaintiff, hereinafter referred to as "Alternate Payee," are John N. Pikulin, 221 Bridge Street, New Cumberland, PA 17070, SS #194-30-1158; DOB: 5/4/1941. 5) The Alternate Payee shall receive a benefit equal to $1,000,000.00 of the Participant's vested account balance determined as of the date of the transfer and such account shall be deemed a separate benefit upon commencement of payment to the Alternate Payee at the Alternate Payee's Annuity Starting Date. Alternate Payee's Benefit is subject to the following: a) The Alternate Payee's Benefit shall be distributed to the Alternate Payee in the form of a lump sum payment payable as soon as practical after the Plan Administrator determines this Order to be a Qualified Domestic Relations Order. b) If the Plan Participant dies before distribution of the Alternate Payee's Benefit, the Alternate Payee shall be deemed to be a "surviving spouse" (within the meaning of Section 414(p)(5) of the Code and Section 206(d)(3)(F) of ERISA) with respect to the portion of the Plan Participant's accrued benefit assigned to the Alternate Payee under this Order. C) If the Alternate Payee dies before payment of the Alternate Payee's Benefit, the Alternate Payee's Benefit shall be paid to the Alternate Payee's estate. 6) The benefits awarded to the Plan Participant and the Alternate Payee shall otherwise be paid pursuant to the terms and conditions of the Plan and applicable law at the time payments commence. 7) Upon the last payment of any distribution to Alternate Payee pursuant to this Order, the Alternate Payee shall have no further right, claim or interest in or upon the Plan or the Plan Participant's accrued benefit under the Plan. 8) Notwithstanding anything in this Order to the contrary, in no event shall the Plan be required to (a) provide any type or form of benefit or any option not otherwise provided under the Plan, nor (b) to provide increased benefits (determined on the basis of actuarial value by the Plan's actuary), nor (c) to pay any benefits to Alternate Payee which are required to be paid to another alternate payee under another order previously determined to be a qualified domestic relations order. 9) Because it is intended that this Order will qualify as a Qualified Domestic Relations Order, the provisions hereof shall be administered and interpreted in conformity with ERISA and the Code. The Court shall retain limited jurisdiction to amend this Order only for the purpose of meeting any requirements to create, conform, and maintain this Order as a ti t qualified domestic relations order under ERISA and the Code, and either party may apply to the Court for such an amendment. The Court's jurisdiction shall also extend to authority to enforce and implement the Order. 10) The Plan, its sponsors, contributing employer, fiduciaries and administrators shall not be responsible for any costs and expenses, including attorney's fees, incurred by the Plan Participant or Alternate Payee in connection with obtaining or enforcing a determination that this Order is a Qualified Domestic Relations Order. BY THE COURT: CONSENTED TO: John N. P i , Plaintiff in Kuga Pikulin, efendant Surnuel L. Andes, AscL es-- d JOftnn Wi Wer , &9_ 0*M NOV-09-2011(WED) 08;37 Samuel Andes, Esq. (FAX)717 761 1435 P.003/003 FILED-OFFICE F THE PROTHONOTARY 2011 NOV 10 PM 1: 03 CU POEM SYLVANIA Tl' JOHN N. PIKULIN, Plaintiff ) } VS. ) } )4 LINDA KUGA PIKULIN, ) Defendant IN TIfF COURT Or COMMON PLEAS Or CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 09-4002 Civil Term IN DIVORCE STIPULATION AND NOW come the above-named parties, by their attorneys who represent to the court that they are authorized to enter into this Stipulation on behalf of their clients, and stipulate and agree that the Qualified Domestic Relations Order previously entered by this court on 26 September 21101. 1, be vacated because the plan administrator to whom the order was directed has advised counsel for the prtrties that the order cannot be implemented as intended. The parties have agreed to make other arrangements for the transfer of retirement funds to Plaintiff from one or more of the Defendant's tax-deferred accounts. Neither party waives any rights they have arising out of the term of the Property Settlement Agreement they reached in June of 2011. uel L. Andes Attorney for Plaintiff Joanx? Ross Wilder e i o n L. ?1c\ 1 • \? Attorney for Defendant . FILED-CFFICE C1C THE f'Rtl i tiDtdOTAR'Y 20i iRt3v 10 PH f: 05 cuMsERLANa cOUrir Y PENNSYLVANlA JOHN N. PIKULIN, ) IN THE COURT OF COMMON Plaintiff ) PLEAS OF CUMBERLAND ) COUNTY, PENNSYLVANIA ) vs. ) CIVIL ACTION - LAW ' ) NO. 09-4002 Civil Term ; LINDA KUGA PIKULIN, ) i , Defendant ) IN DIVORCE ~ PETITION TO ENFORCE TERMS OF PROPERTY SETTLEMENT AGREEMENT ~ AND NOW comes the above-named Plaintiff, by his attorney, Samuel L. Andes, and petitions the court to enforce one of the terms of the settlement agreement reached by the parties on 6 June 2011, all based upon the following: , 1. The Petitioner herein is the Plaintiff. The Respondent herein is the Defendant. 2. The parties were married and Plaintiff commenced this action by filing a Complaint in ' Divorce in June of 2009. Following extensive discovery, exchange of information, and negotiations, the parties appeared before the Divorce Master on 6 June 2011. At that meeting, ' the parties were able to reach agreement to resolve all of the economic issues in the case. 3. The parties reduced their agreement to a stipulation which they reached before the ' Divorce Master. The stipulation was transcribed at the Master's office and the parties signed i; copies of that transcription to confirm the settlement arrangements they had agreed upon. Attached hereto and marked as EXHIBIT A is a copy of the stipulation transcript signed by the I parties. 4. Pursuant to Paragraph 2 of the Settlement Stipulation (hereinafter the "Stipulation"), i, Defendant/Wife was to transfer assets having a total value of $1,000,000.00 from one or more of I her retirement accounts into a tax-deferred account designated by Plaintiff/Husband. S. Pursuant to Paragraph 2(c) of the Stipulation, the transfer of retirement assets was to ' be made pursuant to a Qualified Domestic Relations Order to be prepared by Wife and her ~1 I attorney and the transfer was to be made within thirty (30) days of the date of the Stipulation. 6. There was some delay between the parties getting the Qualified Domestic Relations i Order prepared. The delay resulted from a proposal made by Wife to alter the terms of the ! agreement to provide an annuity rather than a rollover of retirement assets. The parties, ; however, resolved those matters and ended the delay by August of 2011. ~ 7. In August of 2011, Wife's counsel prepared and submitted to Husband's counsel a proposed Qualified Domestic Relations Order. After reviewing the proposed Order, Husband's counsel raised questions about its accuracy and suggested that the Order be submitted to the administrator of the retirement plan from which Wife proposed to make the transfer of funds. A copy of Husband's counsel's letter to Wife's counsel, dated 29 August 2011, raising those questions and objections, is attached hereto and marked as EXHIBIT B. 8. Wife's counsel rejected the request made by Husband's counsel and insisted that the Order be submitted to the court for entry. As a result, the Qualified Domestic Relations Order was subsequently entered by this court, and specifically by the Honorable M.L. Ebert. A copy of the Qualified Domestic Relations Order, as entered, is attached hereto and marked as EXHIBIT C. 9. Following the entry of the said Order, Wife's counsel served a copy upon the ' administration of the pension plan involved. In response, the administrator of the plan notified Wife's counsel that the order was not satisfactory and that the transfer proposed by Wife, as set i' forth in the order, could not be made pursuant to that Order. A copy of the letter from the ~ pension plan administrator, dated 20 October 2011, is attached hereto and marked as EXHIBIT D. I 10. Since receiving notification from the plan administrator, Wife's counsel has I, attempted to resolve this matter through a series of discussions and negotiations with the plan ~ administrator. However, as of the date of this Petition, the matter had not been resolved to the satisfaction of the plan administrator or the satisfaction of Husband. As a result, five months after the Stipulation, and four months after the transfer was to have been completed, the retirement assets have still not been transfe~ rred to Husband s account as required by the ll I . Ii ~ Stipulation. ' ~ ; ~ 11. Plaintiff/Husband is severely prejudiced by the delay in making the transfer several I ways, which include: A. He has been deprived of the interest, dividends, or other earnings or growth in value of the retirement assets that should have been transferred into his account. B. He has encountered the risk of loss of the retirement funds that would be caused by his death prior to the time that the transfer is made and the possibility that no transfer would be made following his death. C. He has incurred, and continues to incur, legal fees to protect his rights with regard to the transfer of the retirement assets and the enforcement of his rights under the Stipulation. 12. Husband, through his attorney, has attempted to resolve this matter with Wife and her counsel. To date, however, Wife and her counsel have not been willing to agree to provisions that would protect Husband's right to receive the funds and assets in accordance with the Stipulation. ' , 13. Prior orders in this matter have been entered by the Honorable M.L. Ebert. 14. Wife and her counsel do not concur in the request for relief set forth in this Petition. I WHEREFORE, Plaintiff prays this court to take the following steps and actions to protect his rights under the settlement reached with Defendant/Wife: ' A. Require Wife to, immediately upon receipt of a copy of this Court's Order, transfer assets having a value of $1,000,000.00, plus interest on that sum at the rate of 6% per annum after 31 August 2011, from one or more of Plaintiff s numerous tax-deferred retirement accounts into the retir ement account designated b Plainti y ff/Husband; B. Direct Defendant/Wife and her counsel to immediatelY PrePare and present to the court for entry, a Qualified Domestic Relations Order and any other I!, document necessary to ma.ke the transfer required by the order entered in accordance with Sub Paragraph A above; ~ n i C. If not included in the funds transferred from Defendant/Wife's tax deferred retirement account, awa'rd Plaintiff/Husband interest on the $1,000,000.00 transfer, at the rate of 6% per annum, from 31 August 2011, until the said transfer is completed; ' D. Award Plaintiff/Husband the attorneys fees actually incurred b y him ~ to enforce his rights under the Stipulation; and i i E. Such other actions as the court deems necessary or advisable to protect j ~ Plaintiff/Husband's rights under the Stipulation. ~ Samuel L. Andes Attorney for Plaintiff Supreme Court ID # 17225 525 North 12t' Street P.O. Box 168 ~ Lemoyne, Pa 17043 (717) 761-5361 i i ~ I , ~ i , ~ i I verify that the statements made in this document are true and correct. I understand that any false statements in this document are subject to the penalties of 18 Pa. C.S. 4904 (unsworn falsification to authorities). Date: HN N. P iTLIN n i CERTIFICATE OF SERVICE I hereby certify that I served an original of the foregoing document upon the Defendant ' l herein by regular mail, postage prepaid, addressed as follows: ~I ~ , Joanne Wilder, Esquire ~ Law Offices of Wilder & Mahood i 10`hFloor, Koppers Building ~ 436 Seventh Avenue Pittsburgh, PA 15219-1827 ; ~ Brian E. McKinley, Esquire Law Offices of Wilder & Mahood 10' Floor, Koppers Building 436 Seventh Avenue ' Pittsburgh, PA 15219-1827 Date: Amy . Harkins ' Secretary for Samuel L. Andes ~ i. II I i ~i i ~ i i i ~ ~ ~ I ~ I i ~ ~ EXHIBIT A I ~ . JOHN N. PIKULIN, . IN THE COURT OF COMMON PLEAS OF Plaintiff . CUMBERLAND COUNTY, PENNSYLVANIA VS. . N0. 09 - 4002 CIVIL LINDA KUGA PIKULIN, , Defendant . IN DIVORCE THE MASTER: Today is Monday, June 6, 2011. This is the date set for a conference in the above-captioned divorce proceedings. i Present in the hearing room are the I!, Plaintiff, John N. Pikulin, and his attorney Samuel L. I Andes, and the Defendant, Linda Kuga Pikulin, and her attorney Joanne Ross Wilder. This action was commenced by the filing of a complaint in divorce on June 15, 2009, raising grounds for divorce of irretrievable breakdown of the marriage. The Master has been advised that the parties will sign and file affidavits of consent within thirty (30) days of today's date. The agreement that is going to be placed on the record will state the arrangement with regard to the filing of the affidavits and waivers between the parties. 'I The complaint also raised economic claims of equitable distribution, alimony, alimony pendente lite and , counsel fees. The complaint was filed by Kristopher T. Smull. Mr. Andes has succeeded as counsel in this case on behalf of the Plaintiff. 1 . The Master has been advised that the parties have reached an agreement with respect to the outstanding economic issues. The agreement is going to be placed on the record in the presence of counsel and the parties. The agreement as placed on the record will be considered the substantive agreement of the parties, not subject to any modifications or corrections except for correction of typographical errors which may be made during the transcription. Consequently, when the parties leave the hearing room today, they will be bound by the terms of the agreement even though there is not a subsequent signing of the agreement affirming the terms of settlement. However, the Master has been advised that the parties will return later today to review the transcribed agreement, make any corrections as necessary, and sign the agreement affirming the terms of settlement as stated on the record. The Master will prepare an order vacating his appointment upon receipt of the completed agreement. The parties were married on May 12, 2001, and separated in January 2007. There were no children born of this marriage. Mr. Andes. MR. ANDES: Thank you, Mr. Elicker. First of all, let me note that the parties have exchanged extensive discovery. We spent two hours here this morning reviewing claims and negotiating a settlement, and having done that, 2 . the parties have agreed to resolve all the economic claims in this divorce action on the following terms: l. The parties own a single-family residence at 4918 St. Croix Drive, Tampa, Florida, which they purchased and contructed during the marriage. The parties have agreed to the following terms and provisions regarding the disposition of that property: a) Husband will convey all his right, title and interest in the property by special warranty deed to wife. Wife will be responsible to prepare the deed and deliver it to husband for execution so that the deed can be executed and delivered within thirty (30) days. b) Wife shall refinance the existing mortgage which encumbers the property to obtain husband's unconditional release from that obligation. She will arrange his release within thirty (30) days of today's date. c) Until such time as she has obtained his release from the mortgage and the deed has been delivered pursuant to this paragraph, wife shall be responsible to pay the installments on the mortgage and any other expenses, including real estate taxes, homeowner's insurance, utilities, and the like, arisinq from the use, ownership, or occupancy of the property. She will be responsible to pay those expenses from today forward and shall indemnify and save husband harmless from any loss, cost, or expense caused to him by her failure to pay them. Husband shall be responsible to pay the utilities and operating expenses of the property through the Sth of June 2011, but not the installments or interest on the mortgage. The parties will cooperate so that they can promptly transfer all of the utility accounts and other expense accounts for the property from husband's name to wife's name as promptly after today as possible. 2. Wife shall pay husband 1.5 million dollars as equitable distribution of marital assets and not as alimony. That ; payment will be made as follows: a) Wife shall pay husband the sum of $500,000.00 in cash or cash equivalence at the date the of deed is delivered to the St. Croix Drive property pursuant to the preceding paragraph. b) Wife shall transfer One million dollars from one 3 • or more of her retirement accounts into a tax deferred account designated by husband. c) The transfer of the retirement assets will be accomplished by a tax free roll over pursuant to a QDRO which wife or her attorney shall cause to be prepared consistent with husband's election regarding the account into which the funds are to be deposited. The amount transferred will be one million dollars regardless of investment results after today's date and will be made within thirty (30) days of today's date. 3. Husband shall retrieve from the St. Croix Drive residence the following items of household furnishings and tangible personal property: a) A 52" television set; b) Two bedroom suits; c) One sectional couch; d) A king size mattress set; e) Two end tables and a coffee table; f) All of his clothing and other personal effects now located at the St. Croix Drive home. Husband shall retrieve those items within thirty (30) days of today's date. When he does so, he will arrange to deliver to the St. Croix Drive address two lion statues which are currently located in the garage at his condominium at 5216 West Kennedy Boulevard, Tampa, Florida. Otherwise, each of the parties shall retain the other assets currently in their name and waive any claims to the assets held in the other parties' name. This specifically includes husband's condominium at 5216 West Kennedy Boulevard, Tampa, Florida. Husband will be responsible to pay the mortgage against that property and all other expenses arising out of or resulting from his ownership, use, or occupancy of the property. 4. The parties will execute and file with the Court within thirty (30) days affidavits of consent and waivers of notice. When the QDRO is prepared and approved by both parties pursuant to Paragraph 2 hereof, the original and copies of that will be delivered to husband's attorney who will file that and a motion to be executed by counsel for 4 • both parties requesting that the QDRO be entered. At the same time husband's counsel shall file a praecipe to transmit the record so that the divorce decree can be entered. The parties expect to sign the consents and waivers and deliver them to husband's attorney today. 5. Wife is currently paying husband alimony pendente lite in the amount of $10,000.00 per month. That is paid to him directly and not through the Domestic Relations Office. The payment of alimony pendente lite by wife to husband shall continue until the final decree in divorce has been entered or until the 31 of July 2011, whichever is later. On the condition that wife has complied with the requirement of Paragraphs 1 and 2 and particularly with regard to the preparation of the QDRO, so that husband's counsel can file the documents with the Court by 31 July 2011, the alimony pendente lite will end at that date. 6. The parties will make, execute, and deliver all other documents reasonably necessary to implement the terms of this settlement. They will do so promptly upon the request of either counsel. 7. All further economic claims, including, without limitation, claims for further equitable distribution of marital property, any claims for alimony, any claims for further or additional alimony pendente lite, and all counsel fees and expenses, are hereby waived by both parties. It is the intention of the parties to accept this as final settlement of all the economic claims which have been raised in the divorce action and to conclude all claims and litigation by this agreement. 8. Except as herein otherwise provided, each party may dispose of his or her property in any way and each party hereby waives and relinquishes any and all rights he or she may now have or hereafter acquire under the present or future laws of any jurisdiction to share in the property or the estate of the other as a result of the marital relationship including without limitation, statutory allowance, widow's allowance, right of intestacy, right to take against the will of the other, and right to act as administrator or executor in the other's estate. Each will at the request of the other execute, acknowledge, and deliver any and all instruments which may be necessary or 5 , advisable to carry into effect this mutual waiver and relinquishment of all such interest, rights, and claims. MR. ANDES: Dr. Pikulin, you have heard what I just dictated? DR. PIKULIN: Yes. MR. ANDES: You've been here today for a little over two hours and we have met numerous times prior to this, are you satisfied that you are aware of the assets and the claims that are pending in this action? DR. PIKULIN: Yes. MR. ANDES: And you've heard the terms of the settlement, are you satisfied that you understand that? DR. PIKULIN: Yes. MR. ANDES: And you understand what you are going to receive by way of settlement and what you are going to give? DR. PIKULIN: Yes, sir. MR. ANDES: Being aware of that, are you willing to accept the terms and conditions as outlined here to settle all claims against your wife? I ~i DR. PIKULIN: Yes. MR. ANDES: Do you have any questions about the terms of settlement? DR. PIKULIN: No. 6 • MS. WILDER: Ms. Kuga Pikulin, you have heard II the terms of the settlement that have been placed upon the record? MS. KUGA PIKULIN: Yes. MS. WILDER: Are you satisfied that the terms of settlement are as agreed to by you? MS. KUGA PIKULIN: Yes. MS. WILDER: Do you have any questions regarding any matter that was placed on the record? MS. KUGA PIKULIN: No. MS. WILDER: Are you satisfied that full disclosure of assets and liabilities has been made between you and Dr. Pikulin? MS. KUGA PIKULIN: Yes. THE MASTER: Thank you for your efforts. I I acknowledge that I have read the above stipulation and agreement, that I understand the terms of settlement as set forth herein, and that by signing below I ratify and affirm the agreement previously made and intend , to bind myself to the settlement as a contract obligating myself to the terms of settlement and subjecting myself to 7 • the methods and procedures of enforcement which may be imposed by law and in particular Section 3105 of the Domestic Relations Code. WITNESS: DATE: ~ el L. des ' ohn N. Pikulin Attorney for Plaintiff - et~ Joanne Ross Wilder inda Kuga ikulin Attorney for Defendant t III 8 - I I~ i ii i i I ~I i t ~ , ~ , ~ ; ~ i ~ , , EXHIBIT B ' SAMUEL L. ANDES ATTOENEY AT LAW : 525 NORTH TWELPTFI STREET P. O. BOX 168 ateiLixo annasss: LEMOYNE, PENNSYLVANIA 17043 P. O. BOX 188 THLEPHONH (717) 781-3361 LEMOYNE, PA 17 043-0168 FAX E-MAIl: LewAndee$Daol.com 29 August 2011 761-1433 SENT BY FAX & REGULAR MAIL (412-261-2447~ Joanne Wilder, Esquire Law Offices of Wilder & Mahood lOt' Floor, Koppers Building 436 Seventh Avenue Pittsburgh, PA 15219-1827 RE: Pikulin I' i Dear Joanne: I had my pension expert look at the QDRO you prepared. He tells me that the PepsiCo Salaried Employees Retirement Plan is a defined benefit plan and he is not certain that the plan permits a lump sum distribution as contemplated by your order. He believes that, before we have the order entered and run afoul of the terms of the plan, we submit the proposed order to the plan administrator for preliminary review, comments, and approval. That is what we commonly do here with QDROs, to avoid a problem having to amend them if the plan administraxors will not accept them as written. Hopefully the plan administrator can conduct a quick review and give us their comments ~ before it is entered by the court. That will speed up the process of implementation once the order is entered. I Please let me know if you are satisfied to do that. If not, give me a ca11 so we can discuss the matter further. I know both of our clients are anxious to get this distribution made and the case completed, but I would rather do it right the first time than spend a lot of time and effort correcting problems created by the QDRO not being acceptable to the plan administrator. Sincerely, Samuel L. Andes arnh cc: Dr. John N. Pikulin i I i , ' i i i ~ i ~ ~ i i ~ i I ~ ~ ~ EXHIBIT C In the Court of Common Pleas of Cumberland County, Pennsylvania John N. Pikulin, ~ } Plaintiff ) ) vs. ) No. 09-4002 Civil Term ) Linda Kuga Pikulin, ~ ) Defendant } Civil Action - Divorce Qualified Domestic Relations Order AND NOW this ~ III , day of 2a*Mhe-r1 2011, the foregoing is hereby ORDERED AND DECREED: WHEREAS, the Court has by Decree dated July 19, 2011, granted plainriff and Defendant a Divorce Decree, and the parties, by agreement dated June 6, 2011, have divided their marital estate, including the assignment to Plaintiff of a portion of DefendanYs accrued benefit under the Plan (as defined herein); and WHEREAS, the parties hereby submit to the Plan Administrator an Order that satisfies the requirements of a Qualified Domestic Relations Order. NOW, THEREFORE, in consideration of the foregoing premises hereunder specified, Plaintiff and Defendant do agree, and the Court dces order, as follows: 1) The parties and the Court intend this Order to constitute a"qualified domestic relations order" as defined in Section 414(p) of the Internal Revenue Code of 1986, as amended (the "Code"), and Section 206(d)(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). 2) This Order applies to the following qualified plan (hereinafter the "Plan"): PepsiCo Salaried Employees Retirement Plan. Unless otherwise defined in this Order, capitalized words shall have the meaning assigned under the Plan. 3) Plaintiff is hereby deemed an "Alternate Payee" within the meaning of Section 414(p)(8) of the Code and Section 206(d)(3)(K) of ERISA. Defen3ant is a participant in the Plan. 4) The name, mailing address, social security number and date of birth of Defendant, hereinafter referred to as "Plan Participant," are Linda Kuga Pikulin, 1410 Mississauga Road, Mississauga, Ontario, Canada L5H2J4, SS #j205-46-0297; DOB: 51511955. The name, mailing address, social security number and date of birth of Plaintiff, hereinafter referred to as "Alternate Payee," are John N. Pikulin, 221 Bridge Street, New Cumberland, PA 17070, SS #194-30-1158; DOB: 5/4/1941. 5) The Alternate Payee shall receive a benefit equal to $1,000,000.00 of the Participant's vested account balance determined as of the date of the transfer and such account shall be deemed a separate benefit upon commencement of payment to the Alternate Payee at the Alternate Payee's Annuity Starting Date. Alternate Payee's Benefit is subject to the following: a) The Alternate Payee's Benefit shall be distributed to the Alternate Payee in the form of a lump sum payment payable as soon as practical after the Plan Administrator determines this Order to be a Qualified Domestic Relations Order. b) If the Plan Participant dies before distriburion of the Alternate Payee's Benefit, the Alternate Payee shall be deemed to be a"surviving spouse" (within the meaning of Section 414(p)(5) of the Code and Section 206(d)(3)(F) of ERISA) with respect to the portion of the Plan Participant's accrued benefit assigned to the Altemate Payee under this Order. c) If the Alternate Payee dies before payment of the Alternate Payee's Benefit, the Alternate Payee's Benefit shall be paid to the Alternate Payee's estate. 6) The benefits awarded to the Plan Participant and the Alternate Payee shall otherwise be paid pursuant to the terms and conditions of the Plan and applicable law at the tune payments commence. 7) Upon the last payment of any distribution to Alternate Payee pursuant to this Order, the Altemate Payee shall have no fixrther right, claim or interest in or upon the Plan or the Plan Participant's accrued benefit under the Plan. 8) Notwithstanding anything in this Order to the contrary, in no event shall the Plan be required to (a) provide any rype or form of benefit or any option not otherwise provided under the Plan, nor (b) to provide increased benefits (determined on the basis of actuarial value by the Plan's actuary), nor (c) to pay any benefits to Alternate Payee which are required to be paid to another altemate payee under another order previously determined to be I, a qualified domestic relations order. 9) Because it is intended that this Order will qualify as a Qualified Domestic Relarions Order, the provisions hereof shall be administered and interpreted in confomuty with ERISA and the Code. The Court shall retain limited jurisdiction to amend this Order only for the purpose of ineeting any requirements to create, conform, and maintain this Order as a qualified domestic relations order under ERISA and the Code, and either parry may apply to the Court for such an amendment. The Court's jurisdiction shall also extend to authority to enforce and implement the Order. _ 10) The Plan, its sponsors, contributing employer, fiduciaries and administrators shall not be responsible for any costs and expenses, including attomey's fees, incurred by the Plan Participant or Alternate Payee in connecrion with obtaining or enforcing a determination that this Order is a Qualified Domestic Reladons Order. BY THE COURT: J. , r CONSENTED TO: ~ TRUE COP'Y RROM RECORD In T*WkWW w1Wi We uMO td ny twnd John N. P Plamdff s~+d ~ sNi asrd t:auat Car~. Pa. . Thfs-pf,~~ d:yC , 20 1I . ~ in Kuga Pikulin, efendant . i I I ~ ; ~ i i ; ~ EXHIBIT D ~ ~ ~ .2:2a i,~ I LDER - -T e.,. ~ ~~-~2412 261 2447 P.02 -r"-- - e - - MAHOOD • ~ OPEPSICO e ow OCEDber 20, 2011 WNdet 8 Asho~ody, ESq. ~A Teb Floor Kopp.rs gu!ldlnp 438 Sevepih Avanue Pittaburgh, PA 16218-1827 RE; Quaiiflod Danestlo RelaElons Order Pmmmipant Unde Kugs Plkupn Phn: PepslCo 9alatl~ed Employees Retlrernert Pfan (the'Plan') oeer Mr. Mdtlydey: 1Ne have reviowed the ader You reCenNy submltted bo 1MIe offlom. 9wd on cur revkW, and for tho reesone OUM1id balow. wa hevs tleWmined that the otder would rat bs a quallfiad domwde raioeiehs order as dofhed in Sactbn 414(P) ot the Internal Rwvenum Gode or 19ee. a smended, arfd secdon 206(c) ot the Ernplopee Retlmment Inoorns Security Act of 1974, ea emended. • Under the terms of the Plan, If fhe Abrnaba Pam dies prlor to comnrmoomr+a+t of the benafit aS0W9d undor the otder. ft bena wIU rrv~rt b tF» pAitldMt Tha~e~ Item 6(c) dihe or+dor s10uid be revisW to read; Kthe AkennUb Pkm a~s8 b9fOm oaWmramnent of lbe AaeritLle Peyea "s Bsnw% no berton stieN bs PaYiD1o &1d AWMis Peppeis eeneaehall be oanoiled na»C pro luna • Itam 6 otV* ordW a*Aao that the AlGemeEe Pilyee ohell reoah+e a benefit gqual tD $1.000-000.00 of the ParOdpont's "aecount balwoe debarminad as of the " of the traneW. Ur,dkr a deAned benafit PlaN euch as the Pepeco $gkrW Em*ym ft&.nwt Plsn, a PartlolpmE does not havs an "accourit bolanoe•. Inemmd. the perticlpent awum o bwat bemed olt. 21rOnu other thbtps, hk Or h!1' Y6811 d 9sroim ond sobry. tn ader 1er tFw Pkltt Ac~nblet&Ior b Pracbely detwmtna tha berWit bekV to the gl*mebe pay" R wIU be nmmmY for You ta nvft !!em of tl» a+derto re@cf: pioun Elw pien P&ft"N-S WNW 6erNN p1 the Pkn DO af June t, 2011, lhe Pren is hweby aa1asd b eaetu tb the AftMre PayN 92 696 of Ms Plan pa*OW$ sccrrW benNft b be psld lh the Slrr& Ltrrnp Svm Payment CPbbn, but not fo sxwad 14.000,0Q0. Pbm know that O1oe the Plen Is not a cW balance plan, the lump sum oPtlam b@wflt amount cannot be assipnrd diredy nor can A bo pod to anym ather bm s Pemdpm cr abemAla pqysa. . We encounge yau to submh a t+svked draft to thre omce prlor to subrrdlting !t to the Court Ibr lasuanca. J1s auch, you wE bs almed that the Aian AdministraEcr wUl approve the Order .s a OORO onm it ls (ssuqd by the Coun The revised orcer sbould atste dwt It wlp em to reptan shd apgrsede the pmbusly issued order. If you have eny quesponc, Plom cvhtcot thre oi~ce dlwiy et 814,253,2908. a .or or Legei oc: MQ. Linda iGuge Mr. John N, Pjkulln I . , ~ TOTAL P.02 JOHN N. PIKULIN, IN THE COURT OF COMMON PLEAS OF PLAINTIFF CUMBERLAND COUNTY, PENNSYLVANIA V. = LINDA KUGA PIKULIN, DEFENDANT NO. 09-4002 CIVIL ? i r ORDER OF COURT yam{. _ AND NOW, this 15th da y of November, 2011, upon consideration 4jovp _c ?- Pikulin's Petition to Enforce Terms of Property Settlement Agreement; IT IS HEREBY ORDERED AND DIRECTED that: 1. A Rule shall issue upon the Defendant to show cause why the relief requested by the Plaintiff's Petition should not be granted; 2. Defendant shall file an Answer to the Petition to Enforce Terms of Property Settlement Agreement on or before December 2, 2011; 3. Hearing/argument on the matter will be held on Wednesday, January 11, 2012, at 1:30 p.m. in Courtroom No. 5 of the Cumberland County Courthouse, Carlisle, Pennsylvania. ? Samuel Andes, Esquire 525 North 12th Street P. O. Box 168 Lemoyne, PA 17043 Joanne Ross Wilder, Esquire Brian E. McKinley, Esquire Counsel for Defendant 10th Floor Koppers building 436 Seventh Avenue Pittsburgh, PA 15219-1827 ttIIS't'? l A bas By the Court, In the Court of Common Pleas of Cumberland County, Pennsylvania Civil Action - Divorce John N. Pikulin, Plaintiff VS. Linda Kuga Pikulin, Defendant No. 09-4002 Civil Term ` ' - Answer and New Matter Wm' Petition to Enforce Terms of Property Settlement Agreement Code: Filed on Behalf of: Linda Kuga Pikulin, Defendant Counsel of Record for This Party: Joanne Ross Wilder Pa. I.D. #15274 Brian E. McKinley Pa. I.D. #86974 Wilder & Mahood Firm #525 10th Floor, Koppers Building 436 Seventh Avenue Pittsburgh, PA 15219 (412) 261-4040 ORIGINAL T 7 In the Court of Common Pleas of Cumberland County, Pennsylvania John N. Pikulin, Plaintiff ) vs. ) No. 09-4002 Civil Term Linda Kuga Pikulin, ) Defendant ) Civil Action - Divorce Answer and New Matter to Petition to Enforce Terms of Property Settlement Agreement Linda Kuga Pikulin, Defendant, hereinafter "Wife," by her attorneys, Joanne Ross Wilder, Brian E. McKinley and Wilder & Mahood, respectfully represents that: 1. Admitted. 2. It is admitted that the parties were married on May 12, 2001 and separated in January, 2007. It is further admitted that on June 15, 2009, Husband filed a complaint in divorce, which included ancillary economic claims that were resolved by a settlement agreement reached by the parties at the June 6, 2011 conference before the Divorce Master. By way of further answer, despite filing for divorce, Husband refused to move the matter forward, failing to file an inventory, affidavit or proceed with his claims.' Furthermore, Husband's failure to fully and completely respond to Wife's discovery requests required the filing of multiple motions by Wife and the issuance of orders of court compelling Husband's discovery responses and For example, after the parties' January, 2011 status conference before the Divorce Master, Husband had questions regarding the valuation completed by Wife's expert. Wife authorized counsel for Husband to speak directly with Wife's expert regarding the valuation questions. However, counsel for Husband never contacted Wife's expert regarding the matter. 1 document production.2 See November 30, 2009, April 14, 2010 and May 11, 2010 Orders. Husband's delays continued after the parties reached their settlement agreement, as Husband waited to respond to Wife's proposal regarding the transfer of retirement assets, prolonged the execution and filing of a qualified domestic relations order, and hindered the resolution of the revised qualified domestic relations order. See discussion, infra. 3. Admitted. 4. Admitted. 5. Admitted. 6. Denied as stated. After entering their settlement agreement, Wife was informed by her financial advisors that the retirement benefits due Husband could be paid by way of an annuity, which would result in Husband receiving more than the $1 million provided for in the parties' agreement. Wife proposed such an annuity to Husband through her counsel's June 15, 2011 correspondence. A copy of the June 15, 2011 correspondence is attached hereto as Exhibit A. At the request of counsel for Husband, counsel for Wife provided further detail regarding the annuity by correspondence dated June 16, 2011. A copy of the June 16, 2011 correspondence is attached hereto as Exhibit B. Counsel for Wife sent counsel for Husband two follow-up letters (June 29, 2011 and July 12, 2011), inquiring as to Husband's response to the proposal for an annuity and reminders that the thirty day period provided for in the parties' agreement was expiring. Copies of the June 29 and July 12, 2011 correspondences are attached hereto as Exhibits C and D, respectively. Nearly a month after the proposal was made regarding the annuity, counsel for Husband responded by correspondence dated July 14, 2011, stating that 2 Wife, in contrast, voluntarily produced numerous documents requested by Husband's former counsel. Thereafter, Husband served his first set of interrogatories and request for production of documents upon Wife on July 28, 2010, which was over a year after Husband's complaint for divorce had been filed. Wife provided Husband discovery responses in compliance with the Rule of Civil Procedure and provided nearly 1,700 pages of documents. 2 Husband had rejected the proposal and that a qualified domestic relations order should be entered to effectuate the transfer provided for in the parties' agreement. A copy of counsel for Husband's July 14, 2011 correspondence is attached hereto as Exhibit E. Counsel for Wife then prepared the qualified domestic relations order, including language requested by counsel for Husband, providing a final version to counsel for Husband for his final approval on August 18, 2011. Husband did not immediately provide his approval for the qualified domestic relations order, stating that his pension expert would have to review the matter prior to Husband approving the order. Moreover, after receiving the signed qualified domestic relations order in early September, 2011, Husband waited nearly three weeks to have it entered by the Court on September 26, 2011. 7. Denied as stated. On August 16, 2011, an initial draft of the qualified domestic relations order was provided to counsel for Husband. Counsel for Husband requested the inclusion of language regarding the reversion of the alternate benefit to Husband's estate in the event of Husband's death, which language was added, with the order being provided to counsel for Husband on August 18, 2011. By correspondence dated August 18, 2011, counsel for Husband confirmed receipt of the revised qualified domestic relations order and informed counsel for Wife that his pension expert wanted to review the matter. A copy of the August 18, 2011 correspondence is attached hereto as Exhibit F. By correspondence dated August 29, 2011, which was nearly two weeks after receiving the qualified domestic relations order, counsel for Husband requested that the order be sent to Pepsico prior to it being entered by the Court. By correspondence dated August 29, 2011, counsel for Wife informed counsel for Husband that the proposed qualified domestic relations order had been prepared using the guidelines and forms provided by Pepsico, and that the order should be signed by the parties. A copy of the August 3 29, 2011 correspondence is attached hereto as Exhibit G. By correspondence dated September 8, 2011, counsel for Husband was provided the qualified domestic relations order signed by Wife. Husband then waited nearly three weeks to have the qualified domestic relations order entered by the Court. 8. Denied as stated. Counsel for Wife initially provided counsel for Husband a draft of the qualified domestic relations order on August 16, 2011. Counsel for Wife then provided counsel for Husband a revised qualified domestic relations order on August 18, 2011, which included the language requested by counsel for Husband. Counsel for Husband then informed counsel for Wife that the qualified domestic relations order had to be reviewed by his pension expert prior to Husband's approval. After delaying the process for nearly two weeks, counsel for Husband requested that the qualified domestic relations order be sent to Pepsico prior to it being signed by the Court. By correspondence dated August 29, 2011, counsel for Wife informed counsel for Husband that the proposed qualified domestic relations order had been prepared using the guidelines and forms provided by Pepsico, and that the order should be signed by the parties.3 See Exhibit G. In early September, 2011, the qualified domestic relations signed by Wife was provided to counsel for Husband, who then waited nearly three weeks to have the order entered by the Court. 9. Denied as stated. Husband waited nearly three weeks to enter the qualified domestic relations order with the Court after receiving such order from Wife. Thereafter, Wife provided Pepsico a copy of the qualified domestic relations order entered by this Court on September 26, 2011. By correspondence dated October 4, 2011, Pepsico informed counsel for Husband takes issue with Wife not having the qualified domestic relations order reviewed by Pepsico prior to its entry by this Court. However, Pepsico did not follow its own guidelines when it initially reviewed the qualified domestic relations order, later agreeing with Wife that a lump sum transfer could occur from her defined benefit plan. Moreover, Husband refused to agree to execute a modified qualified domestic relations order containing the revisions proposed by Pepsico. 4 Wife that the qualified domestic relations order could not be implemented, asserting that Wife's defined benefit plan did not provide for a lump sum payment option, and that Wife did not have more than $1 million in her defined benefit plan. A copy of the October 4, 2011 correspondence is attached hereto as Exhibit H. By correspondence dated October 5, 2011, counsel for Wife wrote counsel for Husband informing him of counsel's belief that the monies could be transferred to Husband from Wife's defined benefit plan and that such monies were available in the plan. A copy of counsel for Wife's October 5, 2011 correspondence attached hereto as Exhibit I. On that same day, counsel for Wife telephoned Pepsico, informing them that Wife had more than $1 million in her defined benefit plan and that such plan provided a lump sum payment option. Pepsico then informed counsel for Wife that they would review Wife's account balance and their own procedures as to the defined benefit plan. On October 7, 2011, counsel for Wife left Pepsico a telephone message regarding the qualified domestic relations order. Pepsico did not return counsel for Wife's call. On October 12, 2011, counsel for Wife again spoke with Pepsico regarding the qualified domestic relations order, and was informed that Pepsico had not obtained the information from their benefits department to respond to counsel for Wife. By correspondence dated October 13, 2011, counsel for Wife provided counsel for Husband information regarding the telephone call with Pepsico and invited counsel for Husband to contact Pepsico directly to confirm the details provided in counsel for Wife's correspondence. A copy of counsel for Wife's October 13, 2011 correspondence is attached hereto as Exhibit J. Counsel for Husband never contacted Pepsico. By correspondence dated October 19, 2011, counsel for Wife again requested a response from Pepsico regarding the qualified domestic relations order. A copy of the October 19, 2011 correspondence is attached hereto as Exhibit K. Additionally, Wife contacted Pepsico directly to obtain assistance in the processing of the qualified domestic 5 relations order. Thereafter, Pepsico wrote counsel for Wife confirming that a lump sum payment option was available to transfer Husband's share of the defined benefit plan. Pepsico also made suggestions for revisions to the qualified domestic relations order to effectuate the transfer. A copy of the October 20, 2011 correspondence is attached hereto as Exhibit L. Upon receipt of the October 20, 2011 correspondence from Pepsico, counsel for Wife made revisions to the qualified domestic relations order, sending such revisions to counsel by correspondences dated October 24 and 26, 2011. Copies of the October 24 and 26, 2011 correspondences are attached hereto as Exhibit M. Husband rejected the revised qualified domestic relations order, requesting that Wife enter into an additional agreement providing further requirements and obligations for Wife relating to the transfer of the retirement funds. By correspondence dated October 27, 2011, counsel for Wife informed counsel for Husband that Husband was fully protected with the revised qualified domestic relations order and that Wife would not sign off on the additional agreement. Counsel for Wife also informed counsel for Husband that Wife was investigating the possibility of a series of rollover transactions to transfer the retirement funds to Husband. A copy of the October 27, 2011 correspondence is attached hereto as Exhibit N. On November 4, 2011, counsel for Wife was informed by Wife's financial advisor that a series of rollover transactions could be executed to transfer the retirement funds. Counsel for Wife immediately telephoned counsel for Husband; however, counsel for Husband was out of the office for the day. On November 7, 2011, counsel for Husband did not return counsel for Wife's telephone call; instead, he wrote counsel for Wife, continuing to blame Wife for the delay and threatening further court action. Counsel for Wife then attempted to reach counsel for Husband by telephone. Again, counsel for Husband was not available. Consequently, counsel for Wife wrote counsel for Husband, providing details on the rollover transaction. A copy of the 6 November 7, 2011 correspondence is attached hereto as Exhibit O. Counsel for Husband still did not respond to counsel for Wife. As a result, Wife contacted Husband directly, requesting that Husband instruct his attorney to contact Wife's counsel to resolve this matter. Immediately thereafter, counsel for Husband contacted counsel for Wife. Subsequently, the parties agreed to vacate the qualified domestic relations order and complete the transfer by way of rollover transactions. 10. Denied. Husband has refused to sign the revised qualified domestic relations order, containing the revisions proposed by Pepsico. As a result of Husband's refusal to execute the revised qualified domestic relations order, Wife proposed that the transfer of the $1 million be completed by way of rollover transactions. After further delay by Husband, he subsequently agreed to such a transfer, with the parties now taking steps to complete the rollover transactions. By way of further answer, Husband delayed this transfer of the $1 million from the outset. He refused to respond to Wife's proposal for an annuity for more than thirty days. Furthermore, he delayed the entry of the qualified domestic relations order for more than a month after receiving the order. Additionally, Husband refused to execute the revised qualified domestic relations order containing the modifications requested by Pepsico. Husband's own actions have delayed the transfer of the retirement funds by nearly three months. 11. Denied. By way of further answer, Husband has delayed the transfer of the retirement funds by initially not responding to Wife's proposal for an annuity, by delaying the entry of the qualified domestic relations order, and by refusing to execute the revised qualified domestic relations order. Any loss in growth, dividends or interest are the result of Husband's own actions. Furthermore, any counsel fees incurred by Husband are the result of his own improper conduct. Moreover, Husband has been fully protected during the process in the event 7 of his death, as the funds were segregated and set aside by Pepsico upon the receipt of the qualified domestic relations order pursuant to ERISA, and Husband's estate could seek enforcement under the parties' June 6, 2011 agreement in the event of Husband's death. 12. Denied. As detailed supra, Husband has refused to move this matter forward, including failing to execute a revised qualified domestic relations order. As a result of Husband's inaction, Wife proposed and Husband accepted the transfer of the funds by way of rollover transactions. Such rollover transactions will be completed in the near future once the parties have signed and submitted the necessary paperwork for the rollover transfers. 13. Admitted. By way of further answer, such orders have related to Husband's failure to fully respond to Wife's discovery requests. 14. Admitted. Husband is not entitled to the relief requested in his petition, as the delay in the transfer the retirement funds is not the fault of Wife but instead the result of Husband and his counsel's own actions and those of Pepsico. Consequently, Husband is not entitled to an award of interest or counsel fees in this matter. Wherefore, Wife respectfully requests that this Honorable Court enter an order denying Husband's Petition. New Matter 15. The averments of paragraph 1 through 14 are incorporated herein by reference as if the same had been fully set forth at length. 16. Husband has made numerous averments that are false, not supported by the facts of this case or Pennsylvania law. Husband, not Wife, has delayed the transfer of the retirement funds. Specifically, Husband waited a month to respond to Wife's proposal for an annuity that would have provided Husband more than the $1 million set forth in the parties' agreement. 8 Husband also waited nearly a month to have the qualified domestic relations order entered by the Court. Additionally, Husband has refused to enter a revised qualified domestic relations order, containing modifications requested by Pepsico, which has delayed the transfer by another month. 17. Husband's conduct as to the transfer of the $1 million is consistent with his conduct throughout this case, as Husband delayed in moving the matter forward, refusing to file his inventory and affidavit, opposing the appointment of a Divorce Master, and failing to respond to Wife's discovery. As a result, multiple orders were entered against Husband in this matter. 18. Section 2503 of the Judicial Code provides that: The following participants shall be entitled to a reasonable counsel fee as part of the taxable costs of the matter:... (7) Any participant who is awarded counsel fees as a sanction against another participant for dilatory, obdurate or vexatious conduct during the pendency of a matter... (9) Any participant who is awarded counsel fees because the conduct of another party in commencing the matter or otherwise was arbitrary, vexatious or in bad faith. 42 Pa.C.S.A. §§ 2503(7) & (9). 19. The Superior Court has explained sanctionable conduct in this way: An opponent's conduct has been deemed to be "arbitrary" within the meaning of the statute if such conduct is based on random or convenient selection or choice rather than on reason or nature. An opponent also can be deemed to have brought suit "vexatiously" if he filed the suit without sufficient grounds in either law or in fact and if the suit served the sole purpose of causing annoyance. Finally, an opponent can be charged with filing a lawsuit in "bad faith" if he filed the suit for purposes of fraud, dishonesty, or corruption. Thunberg v. Strause, 545 Pa. 607, 682 A.2d 295, 299 (1996) (internal citations omitted). Section 2503(7) prohibits similar conduct, described as "dilatory, obdurate or vexatious." Generally speaking, "obdurate" conduct may be defined in this context as "stubbornly persistent in wrongdoing." WEBSTER'S NINTH NEW COLLEGIATE DICTIONARY 815 (1987). Conduct is "dilatory" where the record demonstrates that counsel displayed a lack of diligence that delayed proceedings unnecessarily and caused additional legal work. See Gertz v. Temple Univ., 443 Pa.Super. 177, 661 A.2d 13, 17 n. 2 (1995). Although disposition of claims under either section generally requires an 9 evidentiary hearing, no hearing is necessary where the facts are undisputed. See Kulp v. Hrivnak, 765 A.2d 796, 800 (Pa.Super. 2000). In re Estate of Burger, 852 A.2d 385, 391 (Pa.Super. 2004). 20. The conduct of Husband is arbitrary because it is based upon convenient selection rather than reason. Husband has attempted to mislead the Court, blaming Wife for the delay in the transfer of the retirement funds, even though such delay is the result of Husband's own actions and those of Pepsico. 21. The conduct of Husband is vexatious because he made claims without basis in law or fact. Wife and her counsel have done everything in their power to effectuate the transfer provided by the parties' settlement agreement. However, Husband has delayed and refused to take the steps necessary to complete this transfer. 22. Husband's conduct is in bad faith because he is pursing this matter even though the parties have agreed to complete the transfer by way of rollover transactions. Furthermore, Husband's petition is designed to mislead the Court and prejudice Wife. 23. Because 42 Pa.C.S.A. § 2503 reads in the disjunctive, the conduct of Husband need only have been arbitrary, or vexatious, or brought in bad faith, to merit the imposition of counsel fees. Thunberg, at 619, 682 A.2d at 301, n. 7; see also Lundy v. Manchel, 865 A.2d 850 (Pa.Super. 2004). 24. This Court "has great latitude and discretion with respect to an award of attorney's fees pursuant to a statute [42 Pa.C.S. § 2503]." Scalia v. Erie Ins. Exchange, 2005 WL 1413276 (Pa.Super. 2005), citing Cummins v. Atlas R.R. Construction Co., 814 A.2d 742 (Pa.Super. 2002). 25. Husband's conduct is arbitrary, vexatious and in bad faith, warranting an award of counsel fees pursuant to the judicial code. 42 Pa.C.S.A. § 2503(7) & (9). 10 Wherefore, Wife respectfully requests that this Honorable Court enter an order sanctioning Husband and awarding Wife counsel fees and costs. ' (? Joanne Ross Wilder Brian E. McKinley Wilder & Mahood 10th Floor Koppers Building 436 Seventh Avenue Pittsburgh, PA 15219-1827 (412) 261-4040 Attorneys for Linda Kuga Pikulin 11 Verification Pursuant to Pa. R.C.P. 1024(c) I VERIFY that the averments of fact contained in the foregoing Answer and New Matter are true and correct to the best of my knowledge, information, and belief, based upon information known to me and/or provided to me by Linda Kuga Pikulin, who is outside the jurisdiction and whose verification cannot be obtained within the time allowed for filing. I understand that false statements herein are made subject to the penalties of 18 Pa. C.S. §4904 relating to unsworn falsification to authorities. Date: November 16, 2011 L--- ?- Brian E. McKinley Wilder & Mahood Attorneys for Linda Kuga Pikulin ************** -ComP NAL- ***************** * DATE JUN-15-2d ** TIME 14:11 ******** MODE = MEMORY TRANSMISSION START=JUN-15 14:10 END=JUN-15 14:11 FILE NO.-728 STN COMM. ONE-TOUCH/ STATION NAME/TEL NO. PAGES DURATION No. ABBR NO. 001 OK <17> SAM ANDES 001/001 00:00116 -WILDER a MAHOOD - K*** I I I'*'k'K I *** K********************* -WILDER MAHOOD - ***** - 412 261 2447- ***?K?It»» Hok LAW O?Fwu WILDER & MAHOOD A PRMSSIONAL CORPORATION TENTH FLOOR KOPPERS BUILDING 436 ScvENTti AvENuc PITTSBURGH, PENNSYLVANIA 15219-1827 TELEPHONE(412)261-4040 TELGFAx(412)261-2447 JOANMi ROSS WILDER OF COUNSEL JAMES E. MAHOOD BRUCE L. WILDER ELISABRM PRIDE BRIAN MCKNLEY DARREN OaLuRY June 15, 2011 By Fax Only: Samuel L. Andes, Esquire 525 North Twelfth Street P.O. Box 168 Lemoyne, PA 17043 Re: Pikulin Dear Sam: We have your letter of June 14, 2011 with John's IRA information. However, in talking with Linda's financial people, I have learned of an option that would benefit John without costing Linda anything additional. Instead of a rollover, John could opt for a 51,000,000 annuity that will pay him approximately 5100,000 a year for his lifetime. It is my understanding that the annuity can be set up immediately and John could start receiving monthly payments right away without waiting for the plan administrator to implement a QDRO. There is still another option: in lieu of an annuity, John could opt for a lump suns payment of $1,000,000. I have attempted unsuccessfully to reach you by telephone to discuss these options. Please call me if you would like additional details. The deed to the Florida property is being prepared; I will have it out to you within a few days. Yours very truly, Joanne Ross Wilder cc: Ms. Kuga E XHIBIT E *************** -COMM. ? OL- ******************* DATE JUN-16-2017{ * TIME 10:03 ******** MODE - MEMORY TRANSMISSION START=JUN-16 1002 END-JUN-16 10:03 FILE N0.-729 STN COMM. ONE-TOUCH/ STATION NAME/TEL NO. PAGES DURATION NO. ABBR NO. 001 OE< <17> SAM ANDES 001/001 00:00:15 -WILDER a MAHOOD - **********»****************KKkKkk*** -WILDER MAHOOD - ***** - 412 261 2447- **k****Nc* LAw Omcss • WILDER & MAHOOD A PROFESSMAL CORPORATM TENTH FLOQR KorraRs BUIIAING 436 SEvENm AVENt1E PIrr$8URGH,PENNSYLVANIA 15219-1827 TELBFHONB (412) 261-4040 TELEFAx (412) 261-2447 JOA.YNERoss WILDER OFCOUNSEL JAMB E. MAH000 BitucE L WBDER ftnABETII PRIDE . ERIAN VtcKMEY DARRBN OCLmaY By Fax Only: Samuel L. Andes, Esquire 525 North Twelfth Street P.O. Box 168 Lemoyne, PA 17043 Re: Pikulin Dear Sam: June 16, 2011 The following is in response to your letter of June 16, 2011 regarding the above entitled • matter. The tax consequences of the three options for payment of $1 million are identical. Ordinary income tax is due on draws from an IRA rollover, monthly annuity payments, or u lump sum payment. Assuming tax rates remain the same, the aggregate taxes on the annuity payments will be lower because the funds will be paid out over John's lifetime rather than in required installments or a lump sum. The annuity (as well as the other options) is issued by Fidelity (PEG Savings and Retirement Center at Fidelity). All of the relevant paperwork has been supplied in discovery. I will be in the office today so please feel free to call if you have additional questions. Yours very truly, Joanne Ross Wilder Enclosure EXHIBIT cc: Ms. Kuga a ************** -CON 1 - **?k*N*I************ DATE JUN-29-e TIME 14:36 ******** MODE = MEMORY TRANSMISSION START=JUN-29 14:35 END=JUN-29 14:36 FILE NO.=761 STN COMM. ONE-TOUCH/ STATION NAME/TEL NO. PAGES DURATION NO, ABBR NO. 001 OK <17> SAM ANDES 001/001 00:00:14 -WILDER a MAHOOD - ****'?k'kK*kkk*Kk*kkk**************** -WILDER MAHOOD - ***** - 412 261 2447- kk***»?»ok LAW OFFICES WILDER & MAHOOD A PROFESSIONAL CORPORATLON TENTH FLooR KopNam B=iNo 436 SEVENTH AVENUE PnTSBURGA,PENNSYLVANIA 15219.1827 TaLzrHon (412) 261-4040 TELEFAx(412)261-2447 JOANNEROSs WILAI:R OF COUNSEL JAMES & MAHOOD Baca L wuDFx ELISABETH PROC BRM MCKrgm DARKEN OGLESBY June 29, 2011 By Fax Only: Samuel L. Andes, Esquire 525 North Twelfth Street P.O. Box 168 Lemoyne, PA 17043 Re: Pikulin Dear Sam: Our thirty day deadline in the above entitled matter is fast approaching. Please advise as to the status of the deed, the exchange of personalty by John, and his preference regarding the $1 million in retirement funds. Yours very truly, (SCJA..4? • Joanne Ross Wilder cc; Ms. Kuga EXHIBIT . *************** -COMM. Jq' - ******************* DATE JLL-12-2011 -y'l k TIME 10:15 ******** MODE - MEMORY TRANSMISSION START-JUL-12 10:14 END-JUL-12 10:15 FILE NO.-777 STN COMM. ONE-TOUCH/ STATION NAME/TEL NO. PAGES DURATION NO. ABBR NO. 001 OK <17> SAM ANDES 001/001 00:00:14 -WILDER 6 MAHOOD - ************************************ -WILDER MAHOOD - ***** - 412 261 2447- ********* LAw OFnCRS WILDER & MAHOOD A PROPM10NAL C09MRAMm TENTH FLOOR KoPPeRS BUB.DRNo 436 SEVENTR AVENUE PITCSBURGH,PENNSYLVANIA 15219-1827 TELEMNE (412) 261-4040 TELEFAx(412)261.2447 JoANNERoss WE.DEit JAMES E. MAI FOOD EL93AMN PRIDE BMN MCKNEZY DARREN OOLESlY July 12, 2011 By Fax Only: Samuel L. Andes, Esquire 525 North Twelfth Street P.O. Box 168 Lemoyne, PA 17043 Re: Pikulin Dear Sam: OP COUNSEL BRumL Wa.DER Our mutually imposed deadline to conclude this matter has come and gone. Please advise as to the status of the deed that I sent to you on Juno 21, the disposition of the personal property, and John's preference regarding the retirement funds. You will recall that his options are a lump sum payment, a lifetime annuity, or a rollover. I look forward to hearing from you. Yours very truly, ?_T*01+t? Joanne Ross Wilder cc: Ms. Kuga E EXHIBIT SAMUEL L. ANDES ATTORNEY AT LAW 523 NORTH TWELFTH STREET P. O. BOX 168 MAILING ADDRESS: LEMOYNE, PENNSYLVANIA 17043 P. O. BOX 168 TELEPHONE LF.MOYNE, PA 17043-0168 (717) 761-3361 E-MAIL: LawAndespaol.com PAX 14 July 2011 """g'-"'mod SENT BY FAX & REGULAR MAIL 12-2741-74471 Joanne Wilder, Esquire Law Offices of Wilder & Mahood 10`x' Floor, Koppers Building 436 Seventh Avenue Pittsburgh, PA 15219-1827 RE: Pikulin Dear Joanne: I assume that your letter of 12 July 2011 passed my last letter to you in the mail. In case it did not, I will tell you the following: I . My client wants a rollover into his IRA. He does not wish to have the annuity or the other option offered. 2. He has removed his personal property from the St. Croix Drive property and returned the stone lions to that property. 3. I mailed you the Deed to the Florida property which he had executed. Please be certain that you send me your check, or some certified funds, for the $500,000.00 he is owed before you release that Deed. 4. You filed the documents to conclude the divorce and, with a little luck, the divorce action will be concluded shortly. In the meantime, you are going to prepare the proposed QDRO for the $1,000,000.00 pension fund transfer and send it to me for review. If you can see anything else we need to do to conclude the case, let me know. If you do not rec,? ive my letter, with the Deed enclosed, let me know that right away. Sincerely, amh cc: Dr. John N. Pikulin u 6 Z __? el L. Andes :EXHIBIT F E HIIG-18-2011(THU) 10:37 Samuel Andes, Esq. (FAX)717 761 1435 P.001/003 SAmuEL L. ANDES ATTORNEY AT LAW 3 *13 WORTH T1v7mrryr STR7i7i'T r. 0. BOX lea MAIMNO "014%VS; LE.MOYNE. PENNSYLVANIA 17043 P. O. IIO= lea TL'LL PTICO f 1.nX0YYCa, rw I7o.jo-01fM (1171 761-6 -,"1 $-HAM LrW.al tr,Yw.l.n•..n OAX 18 August 201,1 1713') 701-140n fax 412-261-2447 Brian E. McKinley, Esquire Law Offices of Wilder & Mahood 101" Floor, Koppers Building 436 Seventh Avenue Pittsburgh, PA 15219-1.827 RE: Pikulin / Kuga Dear Brian: I have your revised QDRO and my pension expert is reviewing it. Hopefully it will be satisfactory and we can get it signed and entered by the court shortly. John wants to deposit the funds received under the order into an IRA he has with Lincoln Financial Advisors, Lincoln tells me that the transfer can be made directly from her account into his but, to do that, they need a Transfer of Assets Form signed by both parties. 1 enclose a copy of that which John's advisor has completed, as to his information. If you will have Linda's financial advisor complete the balance of the form and get Linda to sign it and have her signature guaranteed, we can simplify the transfer so it goes directly from her account into his. If you have any questions on this or if there is any problem completing the transfer of assets form, please let me know. Otherwise, I will be back in contact with you shortly regarding the QDRO so we can get it entered and processed. Sincerely, amh / Enclosure cc: Dr. John N. Pikulin Samuel L. Andes E EXHIBIT S LAW OFFICES WILDER & MAHOOD A PROFESSIONAL CORPORATION TENTH FLOOR KOPPERS BUILDING 436 SEVENTH AVENUE PITTSBURGH, PENNSYLVANIA 15219-1827 TELEPHONE (412) 261-4040 TELEFAx(412)261-2447 JOANNE ROSS WILDER JAMES E. MAHOOD ELISABETH PRIDE BRIAN MCKINLEY DARREN OGLESBY August 29, 2011 By Fax Only: Samuel L. Andes, Esquire 525 North Twelfth Street P.O. Box 168 Lemoyne, PA 17043 Re: Pikulin Dear Mr. Andes: OF COUNSEL BRUCE L. WILDER We are in receipt of your August 29, 2011 facsimile. Please be advised that we drafterd the QDRO to comply with the requirements and forms provided by Pepsico and its plan administrator. Therefore, we believe the QDRO will be accepted. Accordingly, we have forwarded it to Linda for her execution. Yours very truly, Brian E. McKinley cc: Ms. Kuga EXHIBIT *,? PEPSICO `J& October 4, 2011 Sent Via Facsimile: 412-261-2447 Brian E. McKinley, Esq. Law Offices of Wilder & Mahood 436 Seventh Avenue Pittsburgh, PA 15219-1827 RE: Qualified Domestic Relations Order Participant: Linda Kuga Pikulin Dear Mr. McKinley: 14 We are in receipt of the order you submitted in regard to the assignment to Mr. John N. Pikulin of a portion of Ms. Pikulin's retirement benefits. Based on our review, we have determined that the submitted order would not be a qualified domestic relations order as defined in Section 414(p) of the Internal Revenue Code of 1986, as amended, and Section 206(d) of the Employee Retirement Income Security Act of 1974, as amended, for the following reasons. • The Plan name referenced in Item 2 of the order is a defined benefit plan however the remainder of the order includes language applicable to assigning a portion of a defined contribution plan. If it is the intent of the parties to assign a portion of Ms. Pikulin's 401(k) account balance to Mr. Pikulin, Item 2 of the order should be revised to reference the PepsiCo Savings Plan. Item 5 of the order instructs the Plan to assign a benefit equal to $1,000,000.00 of the Participant's account balance to the Alternate Payee. Our records indicate that as of September 30, 2011, Ms. Pikulin's account balance was less than $1,000,000.00. Therefore, it will be necessary for you to revise Item 5 read: From the Plan Participant's account balance in the Plan, the Plan shall distribute to the Alternate Payee an amount equal to $1, 000, 000. 00, or if the account balance is less than this amount, 100% of the Plan Participant's account balance. Pursuant to our procedures, a hold has been placed on Ms. Pikulin's 401(k) account pending the submission of an amended order. This hold will prohibit Ms. Pikulin from taking a distribution of her account. The hold will not prohibit Ms. Pikulin from changing the direction of her investments at any time. Once the Court has issued an amended order, please forward a certified copy of the order to this office for processing. The amended order should state that it will serve to replace and supersede the previously issues order. Please contact this office directly with any questions you may have. I can be reached at 914- 253-2908, or by facsimile at 914-249-8035. n erely, Oe r rga for Le al Assista cc: Ms. Linda A. Kuga Pikulin Mr. John N. Pikulin EXHIBIT LAW OFFICES WILDER & MAHOOD A PROFESSIONAL CORPORATION TENTH FLOOR KOPPERS BUILDING 436 SEVENTH AVENUE PITTSBURGH, PENNSYLVANIA 15219-1827 TELEPHONE(412)261-4040 TELEFAx (412) 261-2447 JOANNE ROSS WILDER JAMES E. MAHOOD BRIAN MCKINLEY DARREN OGLESBY October 5, 2011 Via Facsimile Samuel L. Andes, Esquire 525 North Twelfth Street P.O. Box 168 Lemoyne, PA 17043 Re: Pikulin Dear Mr. Andes: OF COUNSEL BRUCE L. WILDER Enclosed please find a copy of the October 4, 2011 correspondence from the plan administrator of the Pepsi QDRO Department. As you will see, the plan administrator has refused to qualify the order we submitted. However, we believe the plan administrator's statements are inaccurate, as the order submitted followed the model language provided by the QDRO Department. Furthermore, Linda's financial advisor has informed us that there is more than $1 million in the fund. Accordingly, we intend to call the plan administrator to discuss the order. I will keep you posted. Yours very truly, 13 Brian E. McKinley Enclosure cc: Ms. Kuga t f LAW OFFICFS WILDER & MAHOOD A PROFESSIONAL CORPOR A-I ION TENTH FLOOR KOPPI.Rs BOILDING 436 SFVF.NTH AVFNIJF PITTSBURGH, PENNSYLVANIA 15219-1827 TELFPIIONE (412) 261-4040 TELEFAX (412) 261-2447 JOANNE ROSS WILDER JAMFS G. MAHOOD BRIAN McKINLEY DARREN OGLESBY OF COUNSEL BRUCE L. WILDER October 13, 2011 Via Facsimile Samuel L. Andes, Esquire 525 North Twelfth Street P.O. Box 168 Lemoyne, PA 17043 Re: Pikulin Dear Mr. Andes: I am in receipt of your October 12, 2011 letter. Please be advised that I spoke with Geri Prendergast of the Pepsi QDRO Department yesterday, and once again informed her that Linda has more than $1 million dollars in her defined benefit plan and that the model QDRO provides for a lump sum transfer from a defined benefit plan. Ms. Prendergast informed me that she is waiting to receive confirmation from Fidelity that my statements regarding the value of the defined benefit plan are accurate. Therefore, she intends to call me after Fidelity returns her call. Once I receive further information, I will be in touch. In the meantime, I would invite you to contact Ms. Predergast to verify the information I have provided. Her number is 914-249-8035. cc: Ms. Kuga Yours very truly, Brian E. McKinley EXHIBIT LAW OFFICES WILDER & MAHOOD A PROFESSIONAL CORPORATION TEN'rH FLOOR KOPPERS BUILDING 436 SEVENTH AVENUE PITTSBURGH, PENNSYLVANIA 15219-1827 TELEPHONE (412) 261-4040 TELEFAX (412) 261-2447 JOANNE Ross WILDER JAMES E. MAHOOD BRIAN MCKINLEY DARREN OGLESBY October 19, 2011 By Fax Only: 914-249-8035 Geri A. Prendergast Pepsico 700 Anderson Hill Road Purchase, New York 10577 Re: Linda Kuga Pikulin QDRO Dear Ms. Prendergast: OF COUNSEL BRUCE L. WILDER I have yet to hear back from you regarding the qualified domestic relations order submitted on behalf of Linda Kuga Pikulin. You will recall from our previous conversations that I believe Linda has the ability to receive a lump sum payment from her defined benefit in excess of $1 million. For your reference, I am enclosing a copy of Linda's benefit statement showing the lump sum option exceeding a $1 million as of September, 2011. Additionally, I would direct your attention to the sample qualified domestic relations orders provided by Pepsico, which demonstrate that a lump sum amount may be transferred from a defined benefit plan with a vested balance. Accordingly, we believe the QDRO submitted in this matter is proper. Please advise whether Pepsico will implement the Order. Yours very truly, Brian E. McKinley Enclosure cc: Mr. Andes (via facsimile) Ms. Kuga EXHIBIT 1 'Oct-20-2011 05.43 PM PepsiCo 91 498035 1!1 PEPSICO OO October 20, 2011 Brian E. McKinley, Esq. Wilder & Mahood Tenth Floor Koppers Building 438 Seventh Avenue Pittsburgh, PA 18219-1827 RE: Qualified Domestic Relations Order Participant: Linda Kuga Plkulln Plan: PepsiCo Salaried Employees Retirement plan (the "Plan") Dear Mr. McKinley: We have reviewed the order you recently submitted to this office. Based on our review, and for the reasons outlined below, we have determined that the order would not be a qualified domestic relations order as defined in Section 414(p) of the Internal Revenue code of 1988, as amended, and Section 2013(d) of the Employee Retirement Income Security Act of 1974, as amended. • Under the terms of the Plan, If the Alternate Payee dies prior to commencement of the benefit assigned under the order, the benefit will revert to the participant. Therefore, item 3(c) of the order should be revised to read: If the Alternate Payee dles before commencement of the Altemete Payee's Benefit, no benefit shall be payable and Alternate Psyse's Benefit shall be canceled nunc pro tuna Item 5 of the order states that the Alternate Payee shall receive a benefit equal to $1,000,000.00 of the Participant's "account balance determined as of the date of the transfer" Under a defined benefit plan, such as the PepsiCo Salaried Employees Retirement Plan, a participant does not have an "account balance". Instead, the participant accruee a benefit based on, among other things, his or her years of service and salary. In order br the Plan Administrator to precisely determine the benefit being to the alternate payee it will be necessary for you to revise Item of the order to read: From the Plan PsrNcfpant's accrued benefit In the Plan as of June 1, 2011, the Plan is hereby ordered to assign to the Altemate Payee 92.8% of the Plan Participant's accrued benefit to be paid In the Single Lump Sum Payment Option, but not to exceed $1,000,000. Please know that since the Plan is not a cash balance plan, the lump sum optional benefit amount cannot be assigned directly nor can it be paid to anyone other than a participant or alternate payee. We encourage you to submit a revised draft to this office prior to submitting It to the Court for issuance. As such, you will be assured that the Plan Administrator will approve the Order as a aDRO once It is issued by the Court. The revised order should state that it will serve to replace and supersede the previously issued order. If you have any questions, please contact this office directly at 914-253-2908. Sin rely, *'nlor rend rgast gal ss lstant co. Me. Linda Kuga Mr. John N. Pikulin EXHIBIT l___ t • LAW OFFICES WILDER & MAHOOD A PROFESSIONAL CORPORATION TFiM,ii FLOOR KOPPERS BUILDING 436 SEVENTH AVENUE PITTSBURGH, PENNSYLVANIA 15219-1827 TELEPHONE (412) 261-4040 TELEF-Ax (412) 261-2447 JOANNE ROSS WILDER JAMEs E. MAHOOD 13RIAN MCKINLEY DARREN OGLESBY October 24, 2011 Via Facsimile Samuel L. Andes, Esquire 525 North Twelfth Street P.O. Box 168 Lemoyne, PA 17043 Re: Pikulin Dear Mr. Andes: OF COUNSEL BRUCE L. WILDER Please be advised that I sent you a fax on Friday regarding the status of the QDRO. As I indicated therein, the Pepsi QDRO Department suggested two revisions to the QDRO previously submitted. I have made the suggestions revisions to QDRO, which I am enclosing herein for your review. If acceptable, I will have Linda sign off on the Amended QDRO and forward it to you for presentation to the Court. The delay in the acceptance of the QDRO is not Linda's fault nor the result of any inaction on her part. Moreover, contrary to the assertions in your latest letter, progress is being made towards the implementation of the QDRO by Pepsi. Therefore, we do not believe John has any basis to proceed with a Petition. Yours very truly, 0 .--111 , F, - Brian E. McKinley Enclosure cc: Ms. Kuga EXHIBIT I M E LAW OFFICES WILDER & MAHOOD A PROFESSIONAL CORPORATION TENTH FLOOR KOPPERS BUILDING 436 SEVENTH AVENUE PITTSBURGH, PENNSYLVANIA 15219-1827 TELEPHONE (412) 261-4040 TELEFAX (412) 261-2447 JOANNE ROSS WILDER .JAMES E. MAHOOD BRIAN MCKINLEY DARREN OGLESBY OF COUNSEL BRUCE L. WILDER October 26, 2011 Via Facsimile Samuel L. Andes, Esquire 525 North Twelfth Street P.O. Box 168 Lemoyne, PA 17043 Re: Pikulin Dear Mr. Andes: I have made a further revision to paragraph 5(c) of the QDRO to clarify that in the event that John died prior to the transfer of the benefit, that such benefit would revert back to Linda and not go to Pepsi. Please review the revision and advise whether it is acceptable. Yours very truly, Brian E. McKinley Enclosure cc: Ms. Kuga LAW OFFICES WILDER & MAHOOD A PROFESSIONAL CORPORATION TENTH FLOOR KOPPERS BUILDING 436 SEVENTH AVENUE PITTSBURGH, PENNSYLVANIA 15219-1827 TELEPHONE (412) 261-4040 TELEFAX (412) 261-2447 JOANNE ROSS WILDER JAMES E. MAHOOD BRIAN MCKINLEY DARREN OGLESBY OF COUNSEL BRUCE L. WILDER October 27, 2011 Via Facsimile Samuel L. Andes, Esquire 525 North Twelfth Street P.O. Box 168 Lemoyne, PA 17043 Re: Pikulin Dear Mr. Andes: I am in receipt of your October 27, 2011 correspondence. Please be advised that the revision to the QDRO that I forwarded to you yesterday was made to clarify to Pepsi that the benefit would revert back to Linda and not the Plan in the event of John's death prior to the payment of the benefit. Such revision in no way prejudices the claim of John's estate to obtain the $1 million provided for in the parties' agreement in the event that John was deceased. We cannot accept the agreement that you provided. Such agreement places additional financial burdens on Linda if there is a delay in Pepsi's implementation of the QDRO. Furthermore, the agreement seems to assert that Linda is to blame for the delay in Pepsi's implementation of the QDRO. Lastly, we do not believe that a tax-free rollover transaction to a deceased spouse can occur. Therefore, Linda will not execute the proposed agreement. While we continue to attempt to finalize this matter, please be advised that we are looking into the possibility of completing two rollover transactions that could possibly expedite this process and eliminate the need for the QDRO. Once we confirm that such transactions are possible, we will provide you further details. Yours very truly, cc: Ms. Kuga Brian E. McKinley EXHIBIT EN r y\ • LAW OFFICES WILDER & MAHOOD A PROFESSIONAL CORPORATION TENTH FLOOR KOPPERS BUILDING 436 SEVENTH AVENUE PITTSBURGH, PENNSYLVANIA 15219-1827 TELEPHONE (412) 261-4040 TELEFAX (412) 261-2447 JOANNE ROSS WILDER JAMES E. MAHOOD BRIAN MCKINLEY DARREN OGLESBY November 7, 2011 Via Facsimile Samuel L. Andes, Esquire 525 North Twelfth Street P.O. Box 168 Lemoyne, PA 17043 Re: Pikulin Dear Mr. Andes: OF COUNSEL BRUCE L. WILDER I was unsuccessful in my attempt to reach you by telephone on Friday. I did leave a message with your receptionist requesting that you contact me this morning to discuss a possible resolution of the QDRO issue. Unfortunately, you did not return my call but instead sent a letter continuing your inaccurate criticism of Linda and my office regarding the implementation of the QDRO. Moreover, your letter again threatens further court action if your proposed agreement is not executed by Linda. Upon my receipt of your letter, I left another message with your office for you to contact me regarding this matter. As of the drafting of this letter, I have received no response from you. As I had intended to inform you by telephone, Linda has a proposal that would resolve this situation in the quickest time frame possible. Specifically, Linda would receive the proceeds from her defined benefit plan by way of a rollover transaction to an IRA. She would then transfer $1 million to John's IRA by way of a rollover transaction. This proposal would alleviate the need for the QDRO and permit the transfer of funds in the most time efficient manner. Please advise whether John is willing to agree to this transaction. If acceptable, we will need to submit a joint letter or statement to the Plan Administrator at Pepsi withdrawing the QDRO. If John will not agree to the rollover transactions, the revised QDRO must be submitted and accepted by Pepsi. The revised QDRO provides for the transfer of the funds to John as agreed by the parties. The revisions to the QDRO do not prejudice John's estate in the event of his death, as his estate is not precluded from seeking enforcement of the terms of the parties' divorce agreement. EXHIBIT . J Please consider Linda's proposal and contact me at your earliest convenience so that we may reach a resolution of this matter. Yours very truly, Brian E. McKinlev cc: Ms. Kuga S Certificate of Service I hereby certify that a copy of aforegoing Answer and New Matter to Petition to Enforce Terms of Property Settlement Agreement was served on Samuel L. Andes, Esquire, 525 North Twelfth Street, P.O. Box 168, Lemoyne, PA 17043, by overnight on the 16th day of November, 2011. - 6 L--.._ 2. /t/U Joanne Ross Wilder Brian E. McKinley Wilder & Mahood 10"` Floor Koppers Building 436 Seventh Avenue Pittsburgh, Pa 15219-1827 (412) 261-4040 Attorneys for Linda Kuga Pikulin V !,` V In the Court of Common Pleas of Cumberland County, Pennsylvania John N. Pikulin, Plaintiff ) ) vs. ) No. 09-4002 Civil Term Linda Kuga Pikulin, ) Defendant ) Civil Action - Divorce Order of Court And Now, this day of , 2011, upon consideration of the aforegoing Petition to Enforce Terms of Property Settlement Agreement and Answer and New Matter thereto, it is hereby Ordered that Husband's Petition be and hereby is denied. It is Further Ordered that Wife is awarded counsel fees and costs for Husband's conduct herein. Wife shall submit a summary of fees and costs relating to this matter for review by the Court. BY THE COURT: T4 i°1L _jTH 2011140V 22 PM 12: r 3 CUMBERLAND CUtf1dTY PENNSYLVANIA JOHN N. PIKULIN, ) Plaintiff ) VS. ) ) LINDA KUGA PIKULIN, ) Defendant ) IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW M-00a NO. x'?? IN DIVORCE REPLY TO DEFENDANT'S NEW MATTER TO PLAINTIFF'S PETITION TO ENFORCE TERMS OF PROPERTY SETTLEMENT AGREEMENT AND NOW comes the above-named Plaintiff, by his attorney, Samuel L. Andes, and makes the following Reply to Defendant's New Matter in this action: 15. No answer required beyond the averments set forth in Plaintiff s original Petition, which averments are incorporated herein by reference. 16. Denied. Plaintiff has not made averments that are false or not supported by the facts or contrary to the law of Pennsylvania. Specifically: A. Husband replied in a timely fashion to Defendant's proposal to change the terms of the parties settlement agreement by substituting an annuity for the retirement account rollover. Husband requested additional information about the annuity which Defendant failed to provide in a timely fashion. As a result, Plaintiff had to consult with his own financial advisor to investigate the proposal so he could determine not to accept it. B. Plaintiff waited before filing the Qualified Domestic Relations Order so that he could have it reviewed by a pension expert of his own. As a result of that review, he proposed changes to the order which Defendant and her counsel refused to make. As it turned out, the changes which Plaintiff and his counsel suggested would have avoided the problem which has now delayed the transfer of retirement funds. Defendant's counsel refused to make those changes and that has caused the present problem. C. It is true that Plaintiff refused to accept the revised Qualified Domestic Relations Order prepared by Defendant's counsel, but he did so for good reasons. First, there was no assurance that that the revised order would assure him the $1,000,000.00 transfer to which the parties agreed. In addition, the revised order contained a provision which would cause Plaintiff's funds to revert to Defendant if the transfer was not completed prior to Plaintiff's death. Both of those provisions in the order were not acceptable to Plaintiff. Plaintiff prepared and submitted to Defendant an agreement to correct those problems and Defendant and her counsel refused to sign that agreement. 17. Denied. Plaintiff proceeded in a reasonable and prompt fashion throughout this case. Preparation of the case after the Master was appointed was delayed by an illness to Plaintiff's counsel which required Plaintiff to change counsel at a critical stage in the case. However, once Plaintiff had new counsel, Plaintiff and his attorney proceeded in a prompt fashion to prepare this case for trial or settlement. Defendant sought to take advantage of this change by repeatedly filing premature motions and petitions which were not necessary and which did nothing to advance the resolution of the case. 18. No answer required as this Paragraph makes no averment of fact but simply sets forth a conclusion of law. 19. No answer required because the statements in this Paragraph are merely conclusions of law without any averment of fact. 20. Denied. Plaintiff acted in a reasonable and prudent fashion throughout this matter. Plaintiff has not attempted to mislead this court but has simply sought redress for the long delay in receiving his portion of the marital estate pursuant to the terms of the agreement the parties negotiated. He acknowledged in his petition that some portion of the delay resulted from his action or inaction, but accurately and truthfully identified the rest of the delay as being caused by Defendant's refusal to heed Plaintiff s attorney's advice and respond to a reasonable request that the Qualified Domestic Relations Order be properly reviewed before being entered. 21. Denied. All of the claims made by Plaintiff are supported by the facts in the case. Plaintiff denies that Defendant and her counsel have done everything in their power to complete the transfer of retirement assets in accordance with the parties settlement agreement and denies that Husband has delayed or refused to take the steps necessary to complete the transfer. 22. Denied. The arrangements the parties agreed upon for the alternate method of making the transfer was reached after Plaintiff's petition was prepared. Moreover, Plaintiff has suffered significant financial loss as a result of the delay that took place before Defendant proposed the alternate rollover procedure. As a result, Plaintiff is entitled to the relief he sought and his effort to obtain it is not in bad faith. Plaintiff's counsel advised Defendant's counsel that Plaintiff would cooperate in the implementation of the alternate procedure proposed by Defendant but that Plaintiff would proceed with his Petition, which had already been prepared and was ready to be filed, even if the alternate procedure worked, because of the delay in Plaintiff receiving the transfer funds pursuant to the agreement of the parties made in June of 2011. 23. Denied. Plaintiff's conduct has not been arbitrary, vexatious, or brought in bad faith. As such, it does not merit the imposition of counsel fees or any other sanction. However, the action of Defendant and her attorney has been dilatory and has caused Plaintiff financial loss for which he is entitled to redress. 24. No answer required as the statements in this Paragraph merely recite Defendant's interpretation of the law and there are no factual averments set forth therein. 25. Denied. Plaintiff's conduct is not arbitrary, vexatious, or in bad faith and does not justify an award of counsel fees. To the contrary, Plaintiff is entitled to the relief requested in his Petition to Enforce because of Defendant's delay in completing the transfer of retirement funds. WHEREFORE, Plaintiff prays this court to order the relief requested in his Petition to Enforce and to take such other action as the court deems necessary to protect Plaintiff's rights regarding the terms of the settlement agreement between the parties. Samuel L. Andes Attorney for Plaintiff Supreme Court ID # 17225 525 North 12' Street P.O. Box 168 Lemoyne, Pa 17043 (717) 761-5361 CERTIFICATE OF SERVICE I hereby certify that l served an original of the foregoing document upon counsel for the Defendant herein by regular mail, postage prepaid, addressed as follows: Joanne Ross Wilder, Esquire Wilder & Mahood Firm # 525 10th Floor, Koppers Building 436 Seventh Avenue Pittsburgh, PA 15219 Brian E. McKinley, Esquire Wilder & Mahood Firm # 525 10th Floor, Koppers Building 436 Seventh Avenue Pittsburgh, PA 15219 Date: 21 November 2011 a6utm, Amy . arkins cretary for Samuel L. Andes In the Court of Common Pleas of Cumberland County, Pennsylvania John N. Pikulin, Plaintiff ) ) vs. ) No. 09-4002 Civil Term Linda Kuga Pikulin, ) PACSES No. 222111703 Defendant ) Civil Action - Divorce Order of Court 1ti And Now, this day of aw 2012, upon consideration of the Defendant" s Motion to Permit Telephone Testimony, it is hereby Ordered that the Motion be and hereby is granted. Defendant may participate in the January 1 l , 2012 enforcement argument/hearing by telephone. BY THE COURT: J. c ?' _, x? r , ter- .ra ?+c.:? S&m?el L. Andes, _ ?` -`? `? y? ?,, 6ria.n E . PeVi nler , tit °PM ,? _' 3 JOHN N. PIKULIN, VS Plaintiff LINDA KUGA PIKULIN, Defendant : IN THE COURT OF COMMON PLEAS OF : CUMBERLAND COUNTY, PENNSYLVANIA NO. 09-4002 CIVIL IN DIVORCE IN RE: FINDINGS OF FACT; PROPOSED FINAL ORDER ORDER OF COURT AND NOW, this 11th day of January, 2012 after hearing and argument in the above-captioned matter, it is hereby ORDERED AND DIRECTED that the parties shall submit proposed findings of fact and a proposed final order in this case on or before January 20, 2012. By the Court, 11? _? ?_d M.L. Ebert, Jr., ? Samuel L. Andes, Esquire For the Plaintiff ? Brian E. McKinley, Esquire For the Defendant _ C-) ev :mlc MCD wr- C-zt v x. C It ;t' cn i> =ell I * L In the Court of Common Pleas of Cumberland County, Pennsylvania Civil Action - Divorce n Pikulin N h J ' , n . o t? Plaintiff No. 09-4002 Civil Term vs. w rn - j C 71 Linda Kuga Pikulin, Proposed Findings of Fact and Conclusions of Law Defendant Code: Filed on Behalf of: Linda Kuga Pikulin, Defendant Counsel of Record for This Party: Brian E. McKinley Pa. I.D. #86974 Wilder & Mahood Firm #525 10th Floor, Koppers Building 436 Seventh Avenue Pittsburgh, PA 15219 (412) 261-4040 ORIGINAL JAWI@120 I all L In the Court of Common Pleas of Cumberland County, Pennsylvania John N. Pikulin, Plaintiff ) c_ c ? -rt vs. ) No. 09-4002 Civil Ter ca rn- m Z N - o Linda Kuga Pikulin, ° s -?, Defendant ) Civil Action - Divorce ? c © o zr .? ? 3? Proposed Findings of Fact and Conclusions of Law Linda Kuga Pikulin, Defendant, hereinafter "Wife," by her attorneys, Brian E. McKinley and Wilder & Mahood, respectfully sets forth the following proposed findings of fact and conclusions of law: 1. Wife and Plaintiff, John N. Pikulin, hereinafter "Husband," were married on May 12, 2001, separated in January, 2007 and were divorced by decree dated July 19, 2011. 2. On June 6, 2011, the parties reached a settlement of their pending economic claims. See June 6, 2011 Agreement. 3. The June 6, 2011 Agreement provided, inter alia, for Wife to "transfer one million dollars from one or more of her retirement accounts into a tax deferred account designated by Husband." The transfer was to be "accomplished by a tax free roll over pursuant to a QDRO," which QDRO was to be prepared by counsel for Wife. See ¶T 2(b) & (c) of June 6, 2011 Agreement. 4. After reaching the settlement agreement, Wife learned that the easiest and quickest means to transfer the monies to Husband was by way of annuity, which would result in Husband receiving more than the $1 million provided for in the parties' settlement agreement. 1 , N 6 Through her counsel, Wife proposed the annuity to Husband by correspondence dated June 15, 2011. See Exhibit A (June 15, 2011 correspondence). Counsel for Wife wrote three other letters regarding the annuity and the completion of the transfer in the time provided for in the parties' agreement. See Exhibit A (June 16, June 29 and July 12, 2011 correspondence). 5. By correspondence dated June 22, 2011, Husband's counsel informed counsel for Wife that Husband, his accountant and financial advisor were considering the annuity proposal. See Exhibit 3. 6. In total, Husband took 29 days to respond to Wife's proposal, rejecting the annuity option by his counsel's correspondence dated July 14, 2011, and requesting that Wife prepare the QDRO to effectuate the transfer of the retirement assets. See Exhibit A (July 14, 2011 correspondence). 7. Husband's failure to respond to Wife's annuity proposal delayed the preparation of the QDRO and the transfer of funds by a month. 8. On August 16, 2011, Wife provided a proposed QDRO to distribute the $1 million from her defined benefit plan at Pepsico to Husband. See Exhibit B (August 16, 2011 correspondence). Wife's counsel prepared the QDRO in accord with the forms and guidelines provided by Pepsico. 9. At Husband's request, revisions were made to the proposed QDRO, and it was provided to counsel for Husband on August 17, 2011. See Exhibit B (August 17, 2011 correspondence and facsimile transmission) and Exhibit 8. 10. Instead of immediately approving the QDRO, Husband elected to have his pension expert review the matter. See Exhibit B (August 18, 2011 correspondence). This resulted in further delay in the implementation of the parties' settlement agreement and the transfer of the retirement funds to Husband. 2 a a 11. On August 29, 2011, counsel for Husband requested that the QDRO be submitted to Pepsico for a preliminary review. See Exhibit B (August 29, 2011 correspondence) and Exhibit 9. Counsel for Wife informed counsel for Husband that a preliminary review was unnecessary, as the QDRO had been prepared in compliance with the requirements and forms provided by Pepsico.1 See Exhibit G of Wife's Answer and New Matter to Petition to Enforce Terms of Property Settlement Agreement. 12. By correspondence dated September 8, 2011, counsel for Wife provided counsel for Husband the QDRO signed by Wife. See Exhibit B (September 8, 2011 correspondence). Husband waited nearly three weeks to have the QDRO processed: the QDRO was signed by this Court on September 27, 2011. See September 27, 2011 Qualified Domestic Relations Order. 13. Delays by Husband in agreeing to, executing and filing the QDRO resulted in a second 30-day lull in effectuating the transfer of the retirement funds from Wife to Husband. 14. On September 28, 2011, counsel for Husband provided counsel for Wife a copy of the QDRO signed by this Court. See Exhibit C (September 28, 2010 correspondence) and Exhibit 10. Counsel for Wife immediately forwarded the QDRO to Pepsico for implementation. See Exhibit C (September 29, 2011 correspondence) and Exhibit 11. Additionally, counsel for Wife provided the contact information for the plan administrator at Pepsico to counsel for Husband so that he could obtain any desired information relating to the implementation of the QDRO directly from Pepsico. See Exhibit C (September 30, 2011 correspondence). 15. Initially, Pepsico refused to qualify the QDRO, asserting that Wife's defined benefit plan did not have a value in excess of $1 million and that a lump sum option was not provided by the plan. See Exhibit C (October 4, 2011 correspondence). ' The refusal to submit the QDRO to Pepsico for preliminary review did not delay this matter, as Husband refused to execute a revised QDRO containing the modifications requested by Pepsico. See discussion, infra. 3 20, Husband refused to sign the revised QDRO, insisting that Wife execute an additional agreement that placed the blame for the delay on Wife, subjected her to additional expenses and liabilities, and required transfers that were not permitted by the Internal Revenue Code. See Exhibit D, Exhibit 18 and Exhibit 20. 21. Husband's dispute regarding the revised QDRO related to the reversion of the benefits in the event of Husband's death prior to the transfer of funds. See Exhibit D (October 27, 2011 correspondences). Pepsico would not permit the funds to revert to Husband's estate in the event of Husband's death prior to the transfer of the funds. See Exhibit C (October 20, 2011 correspondence) and Exhibit D (October 27, 2011 correspondence). Therefore, the revised QDRO had to state that the funds would revert back to Wife in the event of Husband's death prior to the transfer. See Exhibit D. If this language was not included in the revised QDRO, Wife would be subject to the loss of $2 million, $1 million in her benefits from the defined benefit plan reverting to Pepscio as a result of Husband's death and $1 million being transferred to Husband's estate to satisfy the terms of the parties' June 6, 2011 settlement agreement. See Exhibit D. 22. Wife would not agree to the additional agreement proposed by Husband. However, her counsel informed counsel for Husband that Husband was fully protected by the parties' settlement agreement and that a revised QDRO could be entered without prejudice to Husband. See Exhibit D (October 27, November 3 and November 7, 2011 correspondence) and Exhibit 19. 23. Husband still refused to the sign the revised QDRO. See Exhibit D (November 7, 2011 correspondence). 24. Husband's refusal to execute the revised QDRO was his third delay of the transfer of the retirement assets. 5 25. After Husband refused to execute the revised QDRO, Wife proposed transferring the retirement assets by way of a series of rollover transactions, with Wife rolling over the funds from her defined benefit plan into her IRA account and then rolling over $1 million in funds from her IRA account to Husband's IRA account. See Exhibit D (November 7 and November 9, 2011 correspondence). Husband finally accepted the rollover proposal. See Exhibit D (November 9, 2011 correspondence) and Exhibit F. 26. On November 14, 2011, this Court entered an Order vacating the QDRO. See Exhibit F. Wife then submitted information to Pepsico to vacate the QDRO and initiate the rollover transactions. See Exhibit D (November 10, 2011 correspondence). 27. Fidelity is the plan manager for Pepsico. They are in charge of distributing the funds from the Pepsico defined benefit plan. Wife has completed the required paperwork to finalize the rollover transaction from her defined benefit plan to her IRA. However, Fidelity has not completed processing the forms or the transfer of funds. Such transfer is expected to be finalized in the next few weeks. Thereafter, Wife will complete the rollover to Husband's IRA account. However, Goldman Sachs, where Wife's IRA is held, has informed Wife that an order specifying that the company is to transfer the funds to Husband's IRA is necessary to assist in expediting the process and confirming that such transfer is part of the parties' divorce agreement. 28. The delay in the transfer of the retirement funds to Husband was initially Husband's fault, as he delayed in responding to the proposal for an annuity, delayed in signing and filing the QDRO, and further delayed by refusing to execute the revised QDRO. 29. The current delay in the rollover transactions is the result of the procedures and requirements of Fidelity and Pepsico. 30. Wife is not at fault for the delay in transferring the retirement assets to Husband, as she and her counsel have done everything in their power to complete the transfer. 6 31. Husband has claimed that the delay in the transfer of assets has resulted in a loss of the growth on the $1 million retirement funds. 32. Husband provided no evidence of the investments he would have made with the retirements funds or that such investments would have increased in value. 33. Contrary to Husband's assertions, the markets declined in value since July, 2011. See Exhibit G. Specifically, the Dow Jones Industrial Average has decreased by 1.8% during this period; the NASDAQ Composite Average has decreased by 1.2% during this period; the NASDAQ 100 Composite has decreased by 5.7% during this period; and the S & P 500 has decreased by 4.3% during this period. See Exhibit G. Husband would not have experienced any growth on the retirement funds. 34. Even if Husband could prove growth in the market or in his prospective investment, he is not entitled to such growth pursuant to the terms of the parties' agreement. Specifically, the June 6, 2011 Agreement states that the amount transferred to Husband "will be one million dollars regardless of investment results after today's date [June 6, 2011]. See ¶ 2(c) of June 6, 2011 Agreement (emphasis added). The parties' agreement, alone, defeats Husband's claim. 35. Husband has also requested an award of $30,000 for interest on the $1 million from August 31, 2011 to the present. 36. The statutory rate of interest in Pennsylvania is 6% per annum. 41 P.S. § 202. 37. Prejudgment interest is available where there is a breach of the contract by a party. Portside Investors, L.P. v. Northern Ins. Co. of New York, 2011 WL 5866235 (Pa.Super. 2011); Pittsburgh Const. Co. v. Griffith, 834 A.2d 572 (Pa.Super. 2003); Somerset Comm. Hosp. v. Allan B. Mitchell & Assocciates, 454 Pa.Super. 188, 685 A.2d 141 (1996). "The basic premise underlying the award of prejudgment interest to a party centers on the fact that the breaching 7 r r party has deprived the injured party of using interest accrued on money which was rightfully due and owing to the injured party." Widmer Engineering, Inc. v. Dufalla, 837 A.2d 459, 469 (Pa.Super. 2003). 38. "Where, after a contract is made, a party's performance is made impracticable without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his duty to render that performance is discharged, unless the language or the circumstances indicate the contrary." Ragnar Benson, Inc. v. Hempfield Twp. Mun. Authority, 916 A.2d 1183, 1190 (Pa.Super. 2007); see also Felix v. Giuseppe Kitchens & Baths, Inc., 848 A.2d 943 (Pa.Super. 2004). "Thus, a court can excuse performance under a contract upon the occurrence of a truly unexpected event that thwarts the purpose or performance of a contract." Step Plan Servivice, Inc. v. Koresko, 12 A.M. 401, 412 (Pa. Super. 2010). 39. "Conduct of one party that prevents the other from performing is an excuse for nonperformance." Liddle v. Scholze, 768 A.2d 1183, 1185 (Pa.Super. 2001). "A party may not insist upon performance of the contract when he himself is guilty of a material breach of contract." Ott v. Buehler Lumber Co., 373 Pa.Super. 515, 518, 541 A.2d 1143, 1145 (1988). "A party may not complain of a breach caused by his own default." Kolbe v. Aegis Ins. Co., 370 Pa.Super. 539, 543, 537 A.2d 7, 8 (1987), appeal denied 549 A.2d 136 1988). 40. "It is well established that a party who suffers a loss due to the breach of a contract has the duty to make reasonable efforts to mitigate losses." Somerset, supra, at 204, 685 A.2d at 150. 41. Wife has not breached the June 6, 2011 Agreement, as she prepared and submitted the QDRO to Pepsico to effectuate the $1 million transfer. 8 42. Pepsico would not qualify the initial QDRO. Husband would not execute a revised QDRO. 43. Fidelity has also delayed the processing of Wife's request to complete the transfer by way of rollover transactions. 44. Pepsico's refusal to qualify the initial QDRO, Husband's refusal to execute the revised QDRO and Fidelity's delay in processing the rollover transactions are all events that render Wife's performance of the transfer of retirement assets impossible and excuses the inability to perform under the parties' agreement. Step Plan, Ragnar, Felix, Liddle, Ott, and Kolbe, supra. Furthermore, Husband has taken no steps to mitigate the losses further excusing the lack of transfer. Somerset, supra. 45. Husband is not entitled to an award of interest in this matter. 46. Assuming arguendo that Husband is entitled to an award of interest, Husband would only be entitled to 3 months interest, as the delays prior to November were Husband's fault. Three months of interest at the statutory rate equals $15,000. 47. Husband has asserted that the delay in the transfer has resulted in him incurring taxes when he withdraws monies from his IRA. Husband has further claimed that since he is now 70 '/2 years old, he is subject to a tax on any IRA distributions. Husband has requested that Wife be responsible for the taxes on his IRA distributions. 48. Husband's assertions are contrary to the parties' Agreement and federal law. 49. The June 6, 2011 Agreement provides that the transfer of the retirement assets is to be completed by a rollover transaction into a "tax deferred account" designated by Husband. See ¶¶ 2(b) & (c) of June 6, 2011 Agreement. The June 6, 2011 Agreement therefore specifically provides that the transfer from Wife to Husband is tax free, but also that Husband will be subject to taxes when he removes the funds from his designated tax deferred account, and that Wife is 9 not responsible for taxes incurred when Husband accesses the retirement funds from his tax deferred account. See ¶¶ 2(b) & (c) of June 6, 2011 Agreement. 50. The Internal Revenue Code provides for the tax-free transfer of the retirement funds from Wife to Husband by way of the rollover transactions implemented by the parties. 26 U.S.C.A. § 408(d)(6); I.R.C. 408(d)(6) (the transfer of an individual retirement account to a former spouse under a divorce or separation instrument is not considered a taxable transfer). 51. The Internal Revenue Code provides that distributions or withdraws from an IRA account (tax deferred account) are subject to tax. 26 U.S.C.A. § 408(d); I.R.C. 408(d) (amounts paid or distributed out of an individual retirement account are taxable as gross income); see also IRS Publication 590 (2011) (distributions from a traditional IRA are taxable in the year the distributions are received).2 The tax is incurred no matter the age of the recipient or when the distributions or withdraws are made from the IRA account. 26 U.S.C.A. § 408(d); I.R.C. 408(d); IRS Publication 590 (2011). 52. Husband was and is subject to the tax whenever he withdraws money or takes distributions from his IRA, regardless of whether he made such withdraws or distributions prior to age 70 % or after such age.' 26 U.S.C.A. § 408(d); I.R.C. 408(d); IRS Publication 590 (2011). 53. Husband's tax liability has not increased as a result of the delay in the transfer of retirement assets, and he has therefore not been prejudiced by such delay. 54. Wife is not subject to or responsible for the tax incurred by Husband in withdrawing funds from his IRA pursuant to the terms of the parties' June 6, 2011 Agreement. Moreover, the Internal Revenue Code provides that Husband is responsible for the taxes on any withdraws or distributions made from his IRA no matter what Husband's age is at the time of the z A copy of IRS Publication 590 (2011) is attached hereto as Appendix A. Contrary to the assertions of Husband, age 70 '/z is only relevant to the extent that after such age, individuals must make mandatory distributions from their IRA pursuant to the requirements of the Internal Revenue Code. 26 U.S.C.A. §§ 401(a)(9)(c) and 408(a)(6); IRS Publication 590 (2011). 10 withdraw or distribution. Husband's claim for indemnification from Wife must therefore be dismissed. 55. Husband delayed and impeded Wife's ability to complete the transfer of the retirement assets pursuant to the June 6, 2011 Agreement. 56. Husband's conduct as to the transfer of the $1 million is consistent with his conduct throughout this case, as Husband delayed in moving the matter forward, refusing to file his inventory and affidavit, opposing the appointment of a Divorce Master, and failing to respond to Wife's discovery. As a result, multiple orders were entered against Husband in this matter. See December 2, 2009, April 14, 2010 and May 11, 2010 Orders. 57. Wife has incurred unnecessary legal fees and expenses as a result of Husband's conduct. Wife incurred $5,816.62 in legal fees after Husband refused to execute the revised QDRO. Wife also incurred legal fees for her counsel to prepare for the January 11, 2011 argument and to participate in such argument. 58. Section 2503 of the Judicial Code provides that The following participants shall be entitled to a reasonable counsel fee as part of the taxable costs of the matter:... (7) Any participant who is awarded counsel fees as a sanction against another participant for dilatory, obdurate or vexatious conduct during the pendency of a matter... (9) Any participant who is awarded counsel fees because the conduct of another party in commencing the matter or otherwise was arbitrary, vexatious or in bad faith. 42 Pa.C.S.A. §§ 2503(7) & (9). 59. The Superior Court has explained sanctionable conduct in this way: An opponent's conduct has been deemed to be "arbitrary" within the meaning of the statute if such conduct is based on random or convenient selection or choice rather than on reason or nature. An opponent also can be deemed to have brought suit "vexatiously" if he filed the suit without sufficient grounds in either law or in fact and if the suit served the sole purpose of causing annoyance. Finally, an opponent can be charged with filing a lawsuit in "bad faith" if he filed 11 the suit for purposes of fraud, dishonesty, or corruption. Thunberg v. Strause, 545 Pa. 607, 682 A.2d 295, 299 (1996) (internal citations omitted). Section 2503(7) prohibits similar conduct, described as "dilatory, obdurate or vexatious." Generally speaking, "obdurate" conduct may be defined in this context as "stubbornly persistent in wrongdoing." WEBSTER'S NINTH NEW COLLEGIATE DICTIONARY 815 (1987). Conduct is "dilatory" where the record demonstrates that counsel displayed a lack of diligence that delayed proceedings unnecessarily and caused additional legal work. See Gertz v. Temple Univ., 443 Pa.Super. 177, 661 A.2d 13, 17 n. 2 (1995). Although disposition of claims under either section generally requires an evidentiary hearing, no hearing is necessary where the facts are undisputed. See Kulp v. Hrivnak, 765 A.2d 796, 800 (Pa.Super. 2000). In re Estate of Burger, 852 A.2d 385, 391 (Pa.Super. 2004). 60. The conduct of Husband is arbitrary because it is based upon convenient selection rather than reason. Husband has attempted to mislead the Court, blaming Wife for the delay in the transfer of the retirement funds, even though such delay is the result of Husband's own actions and those of Pepsico and Fidelity. 61. The conduct of Husband is vexatious because he made claims without basis in law or fact. Wife and her counsel have done everything in their power to effectuate the transfer provided by the parties' settlement agreement. However, Husband has delayed and refused to take the steps necessary to complete this transfer. Moreover, Husband has sought to improperly burden Wife with his tax obligation upon his withdraws or distributions from his IRA account. 62. Husband's conduct is in bad faith because he is pursing this matter even though the parties have agreed to complete the transfer by way of rollover transactions. Husband has attempted to mislead the Court and prejudice Wife. 63. Because 42 Pa.C.S.A. § 2503 reads in the disjunctive, the conduct of Husband need only have been arbitrary, or vexatious, or brought in bad faith, to merit the imposition of counsel fees. Thunberg, at 619, 682 A.2d at 301, n. 7; see also Lundy v. Manchel, 865 A.2d 850 (Pa.Super. 2004). 12 64. This Court "has great latitude and discretion with respect to an award of attorney's fees pursuant to a statute [42 Pa.C.S. § 2503]." Scalia v. Erie Ins. Exchange, 2005 WL 1413276 (Pa.Super. 2005), citing Cummins v. Atlas R.R. Construction Co., 814 A.2d 742 (Pa.Super. 2002). 65. Husband's conduct is arbitrary, vexatious and in bad faith, warranting an award of counsel fees pursuant to the Judicial Code. 42 Pa.C.S.A. § 2503(7) & (9). 66. Wife is entitled to an award of her counsel fees for Husband's improper conduct herein. 67. Wife's conduct herein is neither arbitrary, vexatious or in bad faith. 68. Husband is not entitled an award of counsel fees pursuant to the Judicial Code. 42 Pa.C.S.A. § 2503. Cc Brian E. McKinley " Wilder & Mahood 10th Floor Koppers Building 436 Seventh Avenue Pittsburgh, PA 15219-1827 (412) 261-4040 Attorneys for Linda Kuga Pikulin 13 Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 1 of 41 1. Traditional IRAs Table of Contents • What's New for 201 • What's New for 201 • Intrortuctiixl • wnn Can Ooen a 7ratlitional IRA? o What is Compensation? • When Can a Tradhional IRA Be Opened? • How Can a Traditional IRA Be Opened? o Individual Retirement Account o Individual Retirement Annuity o Ind Ividual Retirement Bonds p Simoldied Emolavee Pension (SEP) o Employer and Employee Association Trust Accounts O RRea ilred Disclosures • How Much Can Be Contributed? o I.im' o When repayment contributions can be made. o No deduction. o Reserve component. o Flounnuyour IRAdedu lion. o Reporting the repayment. o Example. o General Umit 0 §2QUjA tRA limit o Hina Status o Less Than Maximum Contributions o More Than Maximum Contributions • When Can Contributions Be Made? ? • How Much Can You Deduct o SorusatIRA, o Transfers incident To Dtvores o Conve no From Any Traditicx+al IRA Into a Roth IRA 0 Recharactenzabons • When Can You Withdraw or Use Assets? o Contributions Returned Before Due Date of Return • When Must You Withdraw Assets? (Required Minimum Distributions) o IRA Owners o (QA Battefidaries o A N& Table Do You Use To Determine Your Require Minimum Distribution? o What Age( l Do You Use With the'Tablefs)? 0 Misceltanews Rules f Required Minimum Distributions • Are Distributions Taxable? p January 2011 QCDs treated as made in 2010. o 2011 Reporting. o Additional re.,ortino r aUrement it you made the election to treat a January 2011 Q CD as made in 2010 o One-time transjg( What's New for 2011 Due daft for contri dioris and wtthdrawaft. Contributions can be made to your traditional IRA for a year at any time during the year or by the due date for filing your return for that year, not including extensions. Because April 15, 2012, falls on a Sunday and Emancipation Day, a legal holiday in the District d Columbia, falls on Monday, April 18, 2012, the due date for making contributions for 2011 to your IRA is April 17, 2012. See When . n Gontrtbutions Be - Made? in this chapter.There is a 6% excise tax on excess contributions not withdrawn by the due date (including extensions) for your return. You will not have to pay the 8% tax if any 2011 excess contributions are withdrawn by April 17, 2012 (including extensions). See Excess Contributions under What Ads Result in Pena/des or Additional Taxes? In this chapter. Moddled AGI limit for traditional IRA contributions Increased. For 2011, if you were covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified A31 is: Appendix A I p Excess Accumulations (insufficient Distributions) o Reportma Additional Taxes Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 2 of 41 • More than $56,000 but less than $66,000 fora single individual or head of household, or • Less than $10,000 for a married individual filing a separate return. For 2011, N you either lived with your spouse or file a joint return, and your spouse was covered by a retirement plan at work, but you were not, your deduction is phased out if your modified AGI is more than $169,000 but less than $179,000. If your modified AGI is $179,000 or more, you cannot take a deduction for contributions to a traditional IRA. See How Much Can You Deduct9 in this chapter. What's New for 2012 Modified AGI limb for traditional IRA contributions Increased. For 2012, if you are covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI is: • More than $92,000 but less than $112,000 for a married couple filing a joint return or a qualifying widow(er), • More than $58,000 but less than $68,000 for a single individual or head of household, or • Less than $10,000 for a married individual filing a separate return. If you either live with your spouse or file a joint return, and your spouse is covered by a retirement plan at work, but you are not, your deduction is phased out if your modified AGI is more than $173,000 but less than $183,000. If your modified AGI is $183,000 or more, you cannot take a deduction for contributions to a traditional IRA. Introduction This chapter discusses the original IRA. In this publication the original IRA (sometimes called an ordinary or regular IRA) is referred to as a "traditional IRA." A traditional IRA is any IRA that is not a Roth IRA or a SIMPLE IRA. The following are two advantages of a traditional IRA: • You may be able to deduct some or all of your contributions to it, depending on your circumstances. • Generally, amounts in your IRA, including earnings and gains, are not taxed until they are distributed. Who Can Open a Traditional IRA? You can open and make contributions to a traditional IRA if: • You (or, if you file a joint return, your spouse) received taxable compensation during the year, and • You were not age 7016 by the end of the year. You can have a traditional IRA whether or not you are covered by any other retirement plan. However, you may not be able to deduct all of your contributions if you or your spouse is covered by an employer retirement plan. See How Much (an You Deduct, later. Both spouses have compensation. If both you and your spouse have compensation and are under age 7WI, each of you can open an IRA. You cannot both participate in the same IRA. If you file a joint return, only one of you needs to have compensation. What Is Compensation? Generally, compensation is what you earn from working. For a summary of what compensation does and does not include, see Table 1.1. Compensation includes all of the items discussed next (even it you have more than one type). Wages, salaries, etc. Wages, salaries, tips, professional fees, bonuses, and other amounts you receive for providing personal services are compensation. The IRS treats as compensation any amount properly shown in box 1 (Wages, tips, other compensation) of Form W-2, Wage and Tax Statement, provided that amount is reduced by any amount property shown in box 11 (Nonqualffied plans). Scholarship and fellowship payments are compensation for IRA purposes only if shown in box 1 of Form W-2. Commiselons. An amount you receive that is a percentage of profits or sales price is compensation. Self-employment Income. If you are self-employed (a sole proprietor or a partner), compensation is the net earnings from your trade or business (provided your personal services are a material income-producing factor) reduced by the total of: • The deduction for contributions made on your behalf to retirement plans, and • The deduction allowed for the deductible part of your self-employment taxes. Compensation includes earnings from self-employment even if they are not subject to self-employment tax because of your religious beliefs. SON-employment loss. If you have a net loss from self-employment, do not subtract the loss from your salaries or wages when figuring your total compensation. Alimony and separate maintenance. For IRA purposes, compensation includes any taxable alimony and separate maintenance payments you receive under a decree of divorce or separate maintenance. Nontaxable combat pay. If you were a member of the U.S. Armed Forces, compensation includes any nontaxable combat pay you received. This amount should be reported in box 12 of your 2011 Form W-2 with code 0. Table 1-1. Compensation for Purposes of an IRA Includes ... Does not Include ... _ earnings and profits from property. wages, salaries, etc. interest and dividend income. commissions. http://www.ir?,i.gov/publications/P590/chOl.html 1/19/2012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 3 of 41 pension or annuity income. self-employment income. - deferred compensation. alimony and separate maintenance. 1 income from certain partnerships. nontaxable combat pay. I any amounts you exclude nom income. What Is Not Compensation? Compensation does not include any at the following items. • Earnings and profits from property, such as rental income, interest income, and dividend income. • Pension or annuity income. • Deferred compensation received (compensation payments postponed from a past year). • Income from a partnership for which you do not provide services that are a material income-producing factor. • Conservation Reserve Program (CRP) payments reported on Schedule SE (Form 1040), line 1b. • Any amounts (other than combat pay) you exclude from income, such as foreign earned income and housing costs. When Can a Traditional IRA Be Opened? You can open a traditional IRA at any time. However, the time for making contributions for any year is limited. See When Can Contributions 8e Made, later. How Can a Traditional IRA Be Opened? You can open different kinds of IRAs with a variety of organizations. You can open an IRA at a bank or other financial institution or with a mutual fund or life insurance comparry. You can also open an IRA through your stockbroker. Any IRA must meet Internal Revenue Code requirements. The requirements for the various arrangements are discussed below. Kinds of traditional IRAs. Your traditional IRA can bean individual retirement account or annuity. It can be part of either a simplified employee pension (SEP) or an employer or employee association trust account. Individual Retirement Account An individual retirement account is a trust or custodial account set up in the United States for the exclusive benefit of you or your beneficiaries. The account is created by a written document. The document must show that the account meets all of the following requirements. • The trustee or custodian must be a bank, a federally insured credit union, a savings and loan association, Oran entity approved by the IRS to act as trustee or custodian. • The trustee or custodian generally cannot accept contributions of more than the deductible amount for the year. However, rollover contributions and employer contributions to a simplified employee pension (SEP) can be more than this amount. • Contributions, except for rollover contributions, must be in cash. See Rollovers , later. • You must have a nonforfeRable right to the amount at all times. • Money in your account cannot be used to buy a life insurance policy. • Assets in your account cannot be combined with other property, except in a common trust fund or common investment fund. • You must start receiving distributions by April 1 of the year following the year in which you reach age 701h. See When Must You Withdraw Assets ? (Reou?red Minimum Distributions), later. Individual Retirement Annuity You can open an individual retirement annuity by purchasing an annuity contract or an endowment contract from a life insurance company. An individual retirement annuity must be issued in your name as the owner, and either you or your beneficiaries who survive you are the only ones who can receive the benefits or payments. An individual retirement annuity must meet all the following requirements. • Your entire interest in the contract must be nonforfeitable. • The contract must provide that you cannot transfer any portion of it to any person other than the issuer. • There must be flexible premiums so that if your compensation changes, your payment can also change. This provision applies to contracts issued after November 8, 1978. • The contract must provide that contributions cannot be more than the deductible amount for an IRA for the year, and that you must use any refunded premiums to pay for future premiums or to buy more benefits before the end of the calendar year after the year in which you receive the refund. http://www.ir4 .gov/publications/P590/chOl.html 1/19/2012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 4 of 41 • Distributions must begin by April 1 of the year following the year in which you reach age 701/2. See When Must You Withdraw Assets (Required Minimum Distributions) , later. Individual Retirement Bonds The sale of individual retirement bonds issued by the federal government was suspended after April 30, 1982. The bonds have the following features. • They stop earning interest when you reach age 7014. If you die, interest will stop 5 years after your death, or on the date you would have reached age 701/2, whichever is earlier. • You cannot transfer the bonds. If you cash (redeem) the bonds before the year in which you reach age 591%, you may be subject to a 10% additional tax. See Ace 59!t Rule under Early Distributions, later. You can roll over redemption proceeds into IRAs. Simplilled Employee Pension (SEP) A simplified employee pension (SEP) is a written arrangement that allows your employer to make deductible contributions to a traditional IRA (a SEP IRA) set up for you to receive such contributions. Generally, distributions from SEP IRAs are subject to the withdrawal and tax rules that apply to traditional IRAs. See Publication 580 for more information about SEPs. Employer and Employes Association Trust Accounts Your employer or your labor union or other employee association can set up a trust to provide individual retirement accounts for employees or members. The requirements for individual retirement accounts apply to these traditional IRAs. Required Disclosures The trustee or issuer (sometimes called the sponsor) of your traditional IRA generally must give you a disclosure statement at least 7 days before you open your IRA. However, the sponsor does not have to give you the statement until the date you open (or purchase, if earlier) your IRA, provided you are given at least 7 days from that date to revoke the IRA. The disclosure statement must explain certain items in plain language. For example, the statement should explain when and how you can revoke the IRA, and include the name, address, and telephone number of the person to receive the notice of cancellation. This explanation must appear at the beginning of the disclosure statement. If you revoke your IRA within the revocation period, the sponsor must return to you the entire amount you paid. The sponsor must report on the appropriate IRS forms both your contribution to the IRA (unless it was made by a trustee-to-trustee transfer) and the amount returned to you. These requirements apply to all sponsors. How Much Can Be Contributed? There are limits and other rules that affect the amount that can be contributed to a traditional IRA. These limits and rules are explained below. Community property laws. Except as discussed later under Spousal IRA Limit, each spouse figures his or her limit separately, using his or her own compensation. This is the rule even in states with community property laws. Brokers' conmisslons. Brokers' commissions paid in connection with your traditional IRA are subject to the contribution limit. For information about whether you can deduct brokers' commissions, see Brokers' commissions , later, under How Much Can You Deduct. Trustees' fees. Trustees' administrative fees are not subject to the contribution limit. For information about whether you can deduct trustees' fees, see Trustees' tees , later, under How Much Can You Deduct. Qualified reservist repayments. If you were a member of a reserve component and you were ordered or called to active duty after September 11, 2001, you may be able to contribute (repay) to an IRA amounts equal to any qualified reservist distributions (defined later under Early Distributions) you received. You can make these repayment contributions even If they would cause your total contributions to the IRA to be more than the general limit on contributions. To be eligible to make these repayment contributions, you must have received a qualified reservist distribution from an IRA or from a section 401(k) or 403(b) plan or a similar arrangement. Limit. Your qualified reservist repayments cannot be more than your qualified reservist distributions, explained under Early Distributions, later. When repayment contributions can be made. You cannot make these repayment contributions later than the date that is 2 years after your active duty period ends. No deduction. You cannot deduct qualified reservist repayments. Reserve component. The tern "reserve component" means the: • Army National Guard of the United States, • Army Reserve, • Naval Reserve, • Marine Corps Reserve, • Air National Guard of the United States, • Air Force Reserve, • Coast Guard Reserve, or • Reserve Corps of the Public Health Service. Figuring your IRA deduction. The repayment of qualified reservist distributions does no affect the amount you can deduct as an IRA contribution. http://www.ir,.gov/publications/p590/chOl.html 1/19/2012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 5 of 41 Reporting the repayment. If you repay a qualified reservist distribution, include the amount of the repayment with nondeductible contributions on line 1 of Form 8606. Example. In 2011, your IRA contribution limit is $5,000. However, because of your filing status and AGI, the limit on the amount you can deduct is $3,500. You can make a nondeductible contribution of $1,500 ($5,000 - $3,500). In an earlier year you received a $3,000 qualified reservist distribution, which you would like to repay this year. For 2011, you can contribute a total of $8,000 to your IRA This is made up at the maximum deductible contribution of $3,500; a nondeductible contribution of $1,500; and a $3,000 qualified reservist repayment. You contribute the maximum allowable for the year. Since you are making a nondeductible contribution ($1,500) and a qualified reservist repayment ($3,000), you must file Form 8606 with your return and include $4,500 ($1,500+ $3,000) on line 1 of Forth 8606. The qualified reservist repayment is not deductible. M Contributions on your behalf to a traditional IRA reduce your limit for contributions to a Roth IRA. See chapter 2 for information about Roth IRAs. General Limit For 2011, the most that can be contributed to your traditional IRA generally is the smaller of the following amounts: . $5,000 ($8,000 if you are age 50 or older), or • Your taxable compensation (defined earlier) for the year. Note. This limit is reduced by any contributions to a section 501(c)(18) plan (generally, a pension plan created before June 25, 1959, that is funded entirely by employee contributions). This is the most that can be contributed regardless of whether the contributions are to one or more traditional IRAs or whether all or pan of the contributions are nondeductible. (See Nondeductible Contributions, later.) Qualified reservist repayments do not affect this limit. Examples. George, who is 34 years old and single, eams $24,000 in 2011. His IRA contributions for 2011 are limited to $5,000. Danny, an unmarried college student working pan time, eams $3,500 in 2011. His IRA contributions for 2011 are limited to $3,500, the amount of his compensation. Moro titan one IRA. If you have more than one IRA, the limit applies to the total contributions made on your behalf to all your traditional IRAs for the year. Annuity or endowment contracts. If you invest in an annuity or endowment contract under an individual retirement annuity, no more than $5,000 ($8,000 if you are age 50 or older) can be contributed toward its cost for the tax year, including the cost of life insurance coverage. If more than this amount is contributed, the annuity or endowment contract is disqualified. Spousal IRA Umft For 2011, if you file a joint return and your taxable compensation is less than that ol your spouse, the most that can be contributed for the year to your IRA is the smaller of the following two amounts: 1. $5,000 ($8,000 if you are age 50 or older), or 2. The total compensation includible in the gross income of both you and your spouse for the year, reduced by the following two amounts. a. Your spouse's IRA contribution for the year to a traditional IRA. b. Any contributions for the year to a Roth IRA on behalf of your spouse. This means that the total combined contributions that can be made for the year to your IRA and your spouse's IRA can be as much as $10,000 ($11,000 if only one at you is age 50 or older or $12,000 if both of you are age 50 or older). Note. This traditional IRA limit is reduced by any contributions to a section 501(c)(18) plan (generally, a pension plan created before June 25, 1959, that is funded entirely by employee contributions). Example. Kristin, a full-lime student with no taxable compensation, marries Carl during the year. Neither was age 50 by the end of 2011. For the year, Carl has taxable compensation of $30,000. He plans to contribute (and deduct) $5,000 to a traditional IRA If he and Kristin file a joint return, each can contribute $5,000 to a traditional IRA. This is because Kristin, who has no compensation, can add Cad's compensation, reduced by the amount of his IRA contribution ($30,000 - $5,000 = $25,000), to her own compensation (-0-) to figure her maximum contribution to a traditional IRA. In her case, $5,000 is her contribution limit, because $5,000 is less than $25,000 (her compensation for purposes of figuring her contritution limit). Filing Status Generally, except as discussed above under Spousal IRA Limit, your filing status has no effect on the amount of allowable contributions to your traditional IRA. However, if during the year either you or your spouse was covered by a retirement plan at work, your deduction may be reduced or eliminated, depending on your filing status and income. See How Much Can You Deducr, later. Example. Tom and Darcy are married and both are 53. They both work and each has a traditional IRA. Tom earned $3,800 and Darcy earned $48,000 in 2011. httu://www.irs .gov/publications/p590/chOl.html 1/1912012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 6 of 41 joint return. They can contribute up to $6,000 to Darcy's IRA. If they file separate returns, the amount that can be contributed to Tom's IRA is limited to $3,800. Less Than Maximum Contributions If contributions to your traditional IRA for a year were less than the limit, you cannot contribute more after the due date of your return for that year to make up the difference. Example. Rafael, who is 40, earns $30,000 in 2011. Although he can contribute up to $5,000 for 2011, he contributes only $3,000. After April 17, 2012, Rafael cannot make up the difference between his actual contributions for 2011 ($3,000) and his 2011 limit ($5,000). He cannot contribute $2,000 more than the limit for any later year. Moro Than Maximum Contributions If contributions to your IRA for a year were more than the limit, you can apply the excess contribution in one year to a later year if the contributions for that later year are less than the maximum allowed for that year. However, a penalty or additional tax may apply. See Excess Contributions, later, under What Ads Result in Penalties orAdddional Taxes. When Can Contributions Be Made? As soon as you open your traditional IRA, contributions can be made to it through your chosen sponsor (trustee or other administrator). Contributions must be in the form of money (cash, check, or money order). Property cannot be contributed. Although property cannot be contributed, your IRA may invest in certain property. For example, your IRA may purchase shares of stock. For other restrictions on the use of funds in your IRA, see Prohibited Transactions, later, in this chapter. You may be able to transfer or roll over certain property from one retirement plan to another. See the discussion of rollovers and other transfers later in this chapter under Can You Move Retirement Plan Assets . TIP You can make a contribution to your IRA by having your income tax refund (or a portion of your refund), 4 any, paid directly to your traditional IRA, Roth IRA, or SEP IRA. For details, see the instructions for your income tax return or Form 8888, Direct Deposit of Refund to More Than One Account. Contributions can be made to your traditional IRA for each year that you receive compensation and have not reached age 70%. For any year in which you do not work, contributions cannot be made to your IRA unless you receive alimony, nontaxable combat pay, military differential pay, or file a joint return with a spouse who has compensation. See Who Can Open a Traditional IRA, earlier. Even if contributions cannot be made for the current year, the amounts contributed for years in which you did quality can remain in your IRA. Contributions can resume for any years that you qualify. Contributions must be made by due date. Contributions can be made to your traditional IRA for a year at anytime during the year or by the due date for filing your return for that year, not including extensions. For most people, this means that contributions for 2011 must be made by April 17, 2012, and contributions for 2012 must be made by April 15, 2013. Age 70% rule. Contributions cannot be made to your traditional IRA for the year in which you reach age 70% or for any later year. You attain age 70% on the date that is 6 calendar months after the 70th anniversary of your birth. If you were bom on or before June 30, 1941, you cannot contribute for 2011 or any later year. Designating year for which contribution Is made. If an amount is contributed to your traditional IRA between January 1 and April 17, you should tell the sponsor which year (the current year or the previous year) the contribution is for. If you do not tell the sponsor which year it is for, the sponsor can assume, and report to the IRS, that the contribution is for the current year (the year the sponsor received it). Filing before a contribution is made. You can file your return claiming a traditional IRA contribution before the contribution is actually made. Generally, the contribution must be made by the due date of your return, not including extensions. Contributions not required. You do not have to contribute to your traditional IRA for every tax year, even if you can. How Much Can You Deduct? Generally, you can deduct the lesser of: • The contributions to your traditional IRA for the year, or • The general limit (or the spousal IRA limit, if applicable) explained earlier under How Much an 8 Contributed. However, if you or your spouse was covered by an employer retirement plan, you may not be able to deduct this amount. See Limit if Covered by Employer Plan, later. TIP You may be able to claim a credit for contributions to your traditional IRA. For more information, see chapter . Trustess' fees. Trustees' administrative fees that are billed separately and paid in connection with your traditional IRA are not deducible as IRA contributions. However, they may be deductible as a miscellaneous itemized deduction on Schedule A (Form 1040). For information about miscellaneous itemized deductions, see Publication 529, Miscellaneous Deductions. Brokers' commissions. These commissions are part of your IRA contribution and, as such, are deductible subject to the limits. Full deduction. If neither you nor your spouse was covered for any part of the year by an employer retirement plan, you can take a deduction for total contributions to one or more of your traditional IRAs of up to the lesser of: • $5.000 ($6.000 N you are ace 50 or older), or http://www.ir,,,.gov/publications/P590/chOl.html 1/19/2012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 7 of 41 • 100% of your compensation. This limit is reduced by any contributions made to a 501(c)(18) plan on your behalf. SpousellRA. In the case of a married couple with unequal compensation who file a joint return, the deduction for contributions to the traditional IRA of the spouse with less compensation is limited to the lesser of: 1. $5,000 ($6,000 if the spouse with the lower compensation is age 50 or older), or 2. The total compensation includible in the gross income of both spouses for the year reduced by the following three amounts. a. The IRA deduction for the year of the spouse with the greater compensation. b. Any designated nondeductible contribution for the year made on behalf of the spouse with the greater compensation. c. Any contributions for the year to a Roth IRA on behalf of the spouse with the greater compensation. This limit is reduced by any contributions to a section 501(c)(18) plan on behalf of the spouse with the lesser compensation. Note. If you were divorced or legally separated (and did not remarry) before the end of the year, you cannot deduct any contributions to your spouse's IRA After a divorce or legal separation, you can deduct only the contributions to your own IRA Your deductions are subject to the rules for single individuals. Covered by an employer retirement plan. If you or your spouse was covered by an employer retirement plan at anytime during the year for which contributions were made, your deduction may be further limited. This is discussed later under Limit if Covered by Emnioyer Plan. Limits on the amount you can deduct do not affect the amount that can be contributed. Are You Covered by an Employer Plan? The Form W-2 you receive from your employer has a box used to indicate whether you were covered for the year. The "Retirement Plan" box should be checked if you were covered. Reservists and volunteer firefighters should also see Si(ations in Which You Are Not Cowed, later. If you are not certain whether you were covered by your employer's retirement plan, you should ask your employer. Federal judges. For purposes of the IRA deduction, federal judges are covered by an employer plan. For Which Year(s) Are You Covered? Special rules apply to determine the tax years for which you are covered by an employer plan. These rules differ depending on whether the plan is a defined contribution plan or a defined benefit plan. Tax year. Your tax year is the annual accounting period you use to keep records and report income and expenses on your income tax return. For almost all people, the tax year is the calendar year. Defined contribution plan. Generally, you are covered by a defined contribution plan for a tax year if amounts are contributed or allocated to your account for the plan year that ends with or within that tax year. However, also see Situations in Which You Are Not Covered, later. A defined contribution plan is a plan that provides for a separate account for each person covered by the plan. In a defined contribution plan, the amount to be contributed to each participant's account is spelled out in the plan. The level of benefits actually provided to a participant depends on the total amount contributed to that participant's account and any earnings and losses on those contributions. Types of defined contribution plans include profit-sharing plans, stock bonus plans, and money purchase pension plans. Example. Company A has a money purchase pension plan. Its plan year is from July 1 to June 30. The plan provides that contributions must be allocated as of June 30. Bob, an employee, leaves Company A on December 31, 2010. The contribution for the plan year ending on June 30, 2011, is made February 15, 2012. Because an amount is contributed to Bob's account for the plan year, Bob is covered by the plan for his 2011 tax year. A special rule applies to certain plans in which it is not possible to determine ii an amount will be contributed to your account for a given plan year. If, for a plan year, no amounts have been allocated to your account that are attributable to employer contributions, employee contributions, or forfeitures, by the last day of the plan year, and contributions are discretionary for the plan year, you are not covered for the tax year in which the plan year ends. If, after the plan year ends, the employer makes a contribution for that plan year, you are covered for the tax year in which the contribution is made. Example. Mickey was covered by a profit-sharing plan and left the company on December 31, 2010. The plan year runs from July 1 to June 30. Under the terms of the plan, employer contributions do not have to be made, but if they are made, they are contributed to the plan before the due date for filing the company's tax return. Such contributions are allocated as of the last day of the plan year, and allocations are made to the accounts of individuals who have any service during the plan year. As of June 30, 2011, no contributions were made that were allocated to the June 30, 2011, plan year, and no forfeitures had been allocated within the plan year. In addition, as of that date, the company was not obligated to make a contribution for such plan year and it was impossible to determine whether or not a contribution would be made for the plan year. On December 31, 2011, the company decided to contribute to the plan for the plan year ending June 30, 2011. That contribution was made on February 15, 2012. Mickey is an active participant in the plan for his 2012 tax year but not for his 2011 tax year. No vested brterost. If an amount is allocated to your account for a plan year, you are covered by that plan even if you have no vested interest in (legal right to) the account. Defined benefit plan. If you are eligible to participate in your employer's defined benefit plan for the plan year that ends within your tax year, you are covered by the plan. This rule applies even if you: • Declined to participate in the plan, http://www.irs.gov/publications/P590/chOl.html 1/19/2012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 8 of 41 • Did not make a required contribution, or • Did not perform the minimum service required to accrue a benefit for the year. A defined benefit plan is any plan that is not a defined contribution plan. In a defined benefit plan, the level of benefits to be provided to each participant is spelled out in the plan. The plan administrator figures the amount needed to provide those benefits and those amounts are contributed to the plan. Defined benefit plans include pension plans and annuity plans. Example. Nick, an employee of Company B, is eligible to participate in Company B's defined benefit plan, which has a July 1 to June 30 plan year. Nick leaves Company B on December 31, 2010. Because Nick is eligible to participate in the plan for its year ending June 30, 2011, he is covered by the plan for his 2011 tax year. No vested Interest If you accrue a benefit for a plan year, you are covered by that plan even if you have no vested interest in (legal right to) the accrual. Situations in Which You Are Not Covered Unless you are covered by another employer plan, you are not covered by an employer plan if you are in one of the situations described below. Social security or railroad retirement. Coverage under social security or railroad retirement is not coverage under an employer retirement plan. Benefits from previous employer's plan. If you receive retirement benefits from a previous employer's plan, you are not covered by that plan. Reservists. If the only reason you participate in a plan is because you area member of a reserve unit of the armed fords, you may not be covered by the plan. You are not covered by the plan if both of the following conditions are met. 1. The plan you participate in is established for its employees by: a. The United States, b. A state or political subdivision of a state, or c. An instrumentality of either (a) or (b) above. 2. You did not serve more than 90 days on active duty during the year (not counting duty for training). Volunteer firefighters. If the only reason you participate in a plan is because you area volunteer firefighter, you may not be covered by the plan. You are not covered by the plan if both of the following conditions are met. 1. The plan you participate in is established for its employees by: a. The United States, b. A state or political subdivision of a state, or c. An instrumentality of either (a) or (b) above. 2. Your accrued retirement benefits at the beginning of the year will not provide more than $1,1100 per year at retirement. Limit N Covered by Employer Plan As discussed earlier, the deduction you can take for contributions made to your traditional IRA depends on whether you or your spouse was covered for any part of the year by an employer retirement plan. Your deduction is also affected by how much Income you had and by your filing status. Your deduction may also be affected by social security benefits you received. Reduced or no deduction. If either you or your spouse was covered by an employer refirement plan, you may be entitled to only a partial (reduced) deduction or no deduction at all, depending on your income and your filing status. Your deduction begins to decrease (phase out) when your income rises above a certain amount and is eliminated altogether when it reaches a higher amount. These amounts vary depending on your filing status. To determine it your deduction is subject to the phaseout, you must determine your modified adjusted gross income (AGI) and your filing status, as explained later under Deduction Phaseout. Once you have determined your modified AGI and your filing status, you can use Table 1.2 or Table 1-3 to determine if the phaseout applies. Social Security Recipients Instead of using Table 1-2 or Table 1-3 and Worksheet 1-2, Figuring Your Reduced IRA Deduction for 2011, later, complete the worksheets in Appendix B of this publication if, for the year, all of the following apply. • You received social security benefits. • You received taxable compensation. • Contributions were made to your traditional IRA. • You or your spouse was covered by an employer retirement plan. Use the worksheets in Appendix B to figure your IRA deduction, your nondeductible contribution, and the taxable portion, if any, of your social security benefits. Appendix B includes an example with filled-in worksheets to assist you. Table 1-2. Effect of Mocifffed AGII on Deduction if You Are Covered by a Retirement Plan at Work http://www.irs .gov/publications/p590/chOl.html 1/19/2012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 9 of 41 If you are covered b a retirement plan at work, use this table to determine jf our modified AGI aflact IF your filing status is .. . AND your modified adjusted gross income (modified AG I) is .. - HEN you can take ... $56,000 or less a full deduction. Ingle or head of household more than $56,000 but less than $66,000 a partial deduction. $66,000 or more no deduction. $90,000 or less a full deduction. married filing jointly or qualifying widow(or) more than $90,000 but less than $110,000 a partial deduction. $110,000 or more no deduction. married filing separstely2 less than $10,000 $10,000 or more s a partial deduction. no deduction. the amount of our deduction. J ' Modified AGI (adjusted gross income). See Modified adiusted oross income IAGI), later. 2 if you did not live with your spouse at any time during the year, your filing status is considered Single for this purpose (therefore, your IRA deduction is determined under the "Single" filing status). Table 1-3. Effect of Modified AGI, on Deduction If You Are NOT Covered by a Retirement Plan at Work H you are not covered by a retirement plan at work, use this table to determine if your modified AGI affects the amount of your deduction. IF your filing AND your modified adjusted gross income (modified HEN you can tatus is ... AGI is ... take ... Ingle, d of household, or any amount a full deduction. justifying w er married filing jointly or separately with a spouse who is not covered a plan any amount a full deduction. at work $169,000 or less a full deduction. married filing jointly with a spouse who is covered by a plan more than $169,000 at work but less than $179,000 a partial deduction. $179,000 or more no deduction. married filing separately, with a spouse who is covered by a plan less than $10,000 a ar ial deduction. at work' $10,000 or more no deduction. Modified Aw (adjusted gross income). See Modified adjusted cross income (AGO later. 2 You are entitled to the full deduction if you did not live with your spouse at any time during the year. TIP For 2012, if you are not covered by a retirement plan at work and you are married filing jointly with a spouse who is covered by a plan at work, your deduction is phased out if your modified AGI is more than $173,000 but less than $183,000. If your AGI is $183,000 or more, you cannot take a deduction for a contribution to a traditional IRA. Deduction Phaseout The amount of any reduction in the limit on your IRA deduction (phaseout) depends on whether you or your spouse was covered by an employer retirement plan. Covered by a retirement plan. If you are covered by an employer retirement plan and you did not receive any social security retirement benefits, your IRA deduction may be reduced or eliminated depending on your filing status and modified AGI, as shown in Table 1-2. El For 2012, 4 you are covered by a retirement plan at work, your IRA deduction will not be reduced (phased out) unless your modified AGI is: • More than $58,000 but less than $68,000 for a single individual (or head of household), e More than $92,000 but less than $112,000 for a married couple filing a joint return (or a qualifying widow(er)), or • Less than $10,000 for a married individual filing a separate return. If your spouse is covered. If you are not covered by an employer retirement plan, but your spouse is, and you did not receive any social security benefits, your IRA deduction may be reduced or eliminated entirely depending on your filing status and modified AGI as shown in Table 1-3. Filing status. Your filing status depends primarily on your marital status. For this purpose, you need to know if your filing status is single or head of household, married filing jointly or qualifying widow(er), or married filing separately. If you need more information on filing status, see Publication 501, Exemptions, Standard Deduction, and Filing Information. Lived apart from spouse. If you did not live with your spouse at anytime during the year and you file a separate return, your filing status, for this purpose, is single. Modified adjusted gross Income (AGI). You can use Worksheet 1-1 to figure your modified AGI. If you made contributions to your IRA for 2011 and received a distribution from your IRA in 2011, see Both, contributions for 201 land distributions in 7011, later. El Do not assume that your modified AGI is the same as your compensation. Your modified AGI may include income in addition to your compensation such as interest, dividends, and income from IRA distributions. http://www.irs.gov/publications/P590/chOl.html 1/19/2012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 10 of 41 amounts. • IRA deduction. • Student loan interest deduction. • Tuition and fees deduction. • Domestic production activities deduction. • Foreign earned income exclusion. • Foreign housing exclusion or deduction. • Exclusion of qualified savings bond interest shown on Form 8815. • Exclusion of employer-provided adoption benefits shown on Form 8839. This is your modified AGI. Form 1040A. If you file Form 1040A, refigure the amount on the page 1 "adjusted gross income" line without taking into account any of the following amounts. • IRA deduction. • Student loan interest deduction. • Tuition and fees deduction. • Exclusion of qualified savings bond interest shown on Form 8815. This is your modified AGI. Form 1040NR. If you file Form 1040NR, refigure the amount on the page 1 "adjusted gross income" line without taking into account any of the following amounts. • IRA deduction • Student loan interest deduction. • Domestic production activities deduction. • Exclusion of qualified savings bond interest shown on Form 8815. • Exclusion of employer-provided adoption benefits shown on Forth 8839. This is your modified AGI. Incoms from IRA distributions. If you received distributions in 2011 from one or more traditional IRAs and your traditional IRAs include only deductible contributions, the distributions are fully taxable and are included in your modified AGI. Both contributions for 2011 and distributions In 2011. If all three of the following apply, any IRA distributions you received in 2011 may be partly tax free and partly taxable. • You received distributions in 2011 from one or more traditional IRAs, • You made contributions to a traditional IRA for 2011, and • Some of those contributions may be nondeductible contributions. (See Nondeductible Contributions and Worksheet 1-2, later.) If this is your situation, you must figure the taxable part of the traditional IRA distribution before you can figure your modified AGI. To do this, you can use Worksheet 1-5, later. If at least one of the above does not apply, figure your modified AGI using Worksheet 1-1. How To Figure Your Reduced IRA Deduction If you or your spouse is covered by an employer retirement plan and you did not receive any social security benefits, you can figure your reduced IRA deduction by using Worksheet 1-2, Figuring Your Reduced IRA Deduction for 2011. The instructions for Form 1040, Form 1040A, and Form 104ONR include similar worksheets that you can use instead of the worksheet in this publication. If you or your spouse is covered by an employer retirement plan, and you received any social security benefits, see Sarhl 3 ;rrty Recipients , earlier. Note. If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. Worksheet 1-1. Figuring Your Modified AGI Use this worksheet to figure your modified AGI for traditional IRA purposes. your adjusted gross income (AGI) from Form 1040, line 38; Forth 1040A, line 22; or Form 1040NR, line 37, figured without taking into nt the amount from Fort 1040, line 32; Forth 1040A, line 17; or Form 1040NR, line 32 ,..........a..... ?..-............. a .............. b..... c..... -- ,...., 11. r,,..- -A- -- - „- c,,..., . -.1o -., 00 http://www.irs.gov/publications/P590/chOl.html 1/19/2012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 11 of 41 Enter an tuition and fees deduction from Form 1040, line 34, or Form 1040A, line 19 3.11 Enter an domestic production activities deduction from Form 1040, line 35, or Form 1040NR, line 34 4.11 Enter an forei n earned income exclusion and/or housing exclusion from Form 2555, line 45, or Form 2555-EZ, line 18 5. Enter an foreign housing deduction from Form 2555, line 50 8, Enter any excludable savings bond interest from Form 8815, line 14 7, Enter an excluded employer-provided adoption benefits from Form 8839, line 24 8, Add lines 1 through 8. This is our Modified AGI for traditional IRA purposes Reporting Deductible Contributions If you file Form 1040, enter your IRA deduction on line 32 of that form. If you file Form 1040A, enter your IRA deduction on line 17 of that form. If you file Form 1040NR, enter your IRA deduction on line 32 of that form. You cannot deduct IRA contributions on Form 1040EZ or Form 1040NR-EZ. Self-employed. 8 you are self-employed (a sole proprietor or partner) and have a SIMPLE IRA, enter your deduction for allowable plan contributions on Form 1040, line 28. If you file Form 1040NR, enter your deduction on line 28 of that form. Nondeductible Contributions Although your deduction for IRA contributions may be reduced or eliminated, contributions can be made to your IRA of up to the general limit or, if it applies, the spousal IRA limit. The difference between your total permitted contributions and your IRA deduction, if any, is your nondeductible contribution. Example. Tony is 29 years rid and single. In 2011, he was covered by a retirement plan at work. His salary is $57,312. His modified AGI is $68,000. Tony makes a $5,000 IRA contribution for 2011. Because he was covered by a retirement plan and his modified AGI is above $88,000, he cannot deduct his $5,000 IRA contribution. He must designate this contribution as a nondeductible contribution by reporting it on Form 8606. Repayment of reservist, disaster recovery assistance, and recovery assistance distributions. Nondeductible contributions may include repayments of qualified reservist, disaster recovery assistance, and recovery assistance distributions. For more information, see Qualified reservist repayments under How Much Can Be Contributed, earlier, and, in chapter 4, Disaster-Related Relief. Form 8606. To designate contributions as nondeductible, you must file Form 8806. (See the filled-in Forms 8606 in this chapter.) You do not have to designate a contribution as nondeductible until you file your tax return. When you file, you can even designate otherwise deductible contributions as nondeductible contributions. You must file Form 8606 to report nondeductible contributions even if you do not have to file a tax return for the year. E3 A Form 8808 is not used for the year that you make a rollover from a qualified retirement plan to a traditional IRA and the rollover includes nontaxable amounts. In those situations, a Form 8606 is completed for the year you take a distribution from that IRA See Form 8606 under Distributions Fully or Partly Taxable, later. Failure to report nondeductible contributions. If you do not report nondeductible contributions, all of the contributions to your traditional IRA will be treated like deductible contributions when withdrawn. All distributions from your IRA will be taxed unless you can show, with satisfactory evidence, that nondeductible contributions were made. Penalty for overstatement. If you overstate the amount of nondeductible contributions on your Form 8806 for any tax year, you must pay a penalty of $100 for each overstatement, unless it was due to reasonable cause. Penalty for failure to file Fort SIM. You will have to pay a $50 penalty if you do not file a required Form 8606, unless you can prove that the failure was due to reasonable cause. Tax on earnings on nondeductible contributions. As long as contributions are within the contribution limits, none of the earnings or gains on contributions (deductible or nondeductible) will be taxed until they are distributed. Cost basis. You will have a cost basis in your traditional IRA if you made any nondeductible contributions. Your cost basis is the sum of the nondeductible contributions to your IRA minus any withdrawals or distributions of nondeductible contributions. El Commonly, distributions from your traditional IRAs will include both taxable and nontaxable (cost basis) amounts. See Are Distributions Taxable, later, for more information. 0 Reco?dk *ping. There is a recordkeeping worksheet, Appendix A Summary Record of Tradifonal IRA( ) 'or 2011 , that you can use to keep a record of deductible and nondeductible IRA contributions. Examples - Worksheet for Reduced IRA Deduction for 2011 The following examples illustrate the use of Worksheet 1-2, Figuring Your Reduced IRA Deduction for 2011. Example 1. For 2011, Tom and Betty file a joint return on Form 1040. They are both 39 years dd. They are both employed and Tom is covered by his employer's retirement plan. Tom's salary is $59,000 and Betty's is $32,555. They each have a traditional IRA and their combined modified AGI, which includes $2,000 interest and dividend income, is $93,555. Because their modified AGI is between $90,000 and $110,000 and Tom is covered by an employer plan, Tom is subject to the deduction phaseout discussed earlier under Limit if Covered by Employer Ptan. http://www.ir,,.gov/publications/p590/chOl.html 1/19/2012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 12 of 41 For 2011, Tom contributed $5,000 to his IRA and Betty contributed $5,000 to hers. Even though they file a joint return, they must use separate worksheets to figure the IRA deduction for each of them. Tom can take a deduction of only $4,120. He can choose to treat the $4,120 as either deductible or nondeductible contributions. He can either leave the $880 ($5,000 - $4,120) of nondeductible contributions in his IRA or withdraw them by April 17, 2012. He decides to treat the $4,120 as deductible contributions and leave the $880 of nondeductible contributions in his IRA. Using Worksheet 1-2, Figuring Your Reduced IRA Deduction for 2011. Tom figures his deductible and nondeductible amounts as shown on Worksheet 1.2 Fiourra Your Reduced IRA Deduction tar 011 Example 1 Illustrated. Betty figures her IRA deduction as follows. Betty can treat all or part of her contributions as either deductible or nondeductible. This is because her $5,000 contribution for 2011 is not subject to the deduction phaseout discussed earlier under Limit if Covered by Emblover Plan. She does not need to use Worksheet 1-2, Figuring Your Reduced IRA Deduction for 2011, because their modified AGI is not within the phaseout range that applies. Betty decides to treat her $5,000 IRA contributions as deductible. The IRA deductions ol $4,120 and $5,000 on the joint return for Tom and Betty total $9,120. Example 2. For 2011, Ed and Sue file a joint return on Forth 1040. They are bath 39 years old. Ed is covered by his employer's retirement plan. Ed's salary is $45,000. Sue had no compensation for the year and did not contribute to an IRA. Sue is not covered by an employer plan. Ed contributed $5,000 to his traditional IRA and $5,000 to a traditional IRA for Sue (a spousal IRA). Their combined modified AGI, which includes $2,000 interest and dividend income and a large capital gain from the sale of stock, is $171,555. Because the combined modified AGI is $110,000 or more, Ed cannot deduct any of the contribution to his traditional IRA. He can either leave the $5,000 of nondeductible contributions in his IRA or withdraw them by April 17, 2012. Sue figures her IRA deduction as shown on Worksheet 1-2 Ficurina Your Reduced IRA Deduction for 2011 xamDl 2 III ictr Worksheet 1-2. Figuring Your Reduced IRA Deduction for 2011 (Use only it you or your spouse is covered by an employer plan and your modified AGI falls between the two amounts shown below for your coverage situation and filing status.) Note. If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction separately. AND your AND your moditled AGI THEN enter on IF you ... III status Is... Is over ... line 1 below ... are c v r d b single or head of household $56,000 $66,000 o e e y an employer plan married filing jointly or qualifying widow er $90,000 $110,000 married filing separately $0 $10 000 are not covered by an employer plan, married filing jointly $169,000 $179,000 but your spouse is covered married filing separately $0 $10,000 1. Enter applicable amount from table above 1. Enter your modified AGI (that of both spouses, it married filing jointly) 2. Note. If line 2 is equal to or more than the amount on line 1, stop hero. Your IRA contributions are not deductible. See Nondeductible Contributions. Subtract line 2 from line 1. If line 3 is $10,000 or more ($20,000 or more H married filing jointly or qualifying widow(or) and you are covered by an employer plan), stop here. You can take a full IRA deduction for contributions of up to $5,000 ($8,000 if you are age 50 or older) or 100% of your (and if married filing jointly, your spouse's) compensation, whichever is less 3. Multiply line 3 by the percentage below that applies to you. If the result is not a multiple of $10, round it to the next highest multiple of $10. (For example, $611.40 is rounded to $620.) However, if the result is less than $200, enter $200. • Married filing jointly or qualifying widow(er) and you are covered by an employer plan, multiply line 3 by 25% (.25) (by 30% (.30) if you are age 50 or older). 4 • All others, multiply line 3 by 50% (.50) (by 60% (.60) it you are age 50 or older). 5. Enter your compensation minus any deductions on Forth 1040 or Form 1040NR, line 27 (deductible part of self-employment tax) and line 28 (self-employed SEP, SIMPLE, and qualified plans). If you are filing a joint return and your compensation is less than your spouse's, include your spouse's compensation reduced by his or her traditional IRA and Roth IRA contributions for this year. 0 you file Form 1040 or Form 1040NR, do not reduce your compensation by any losses from self- employment 5. 6. Enter contributions made, or to be made, to your IRA for 2011, but do not enter more than $5,000 ($6,000 if you are age 50 or older). If contributions are more than $5,000 ($6,000 if you are age 50 or older), see Excess Contributions, later. 6. IRA deduction. Compare lines 4, 5, and 6. Enter the smallest amount (or a smaller amount if you choose) here and on the Form 1040, 1040A, or 104ONR line for your IRA, whichever applies. If line 6 is more than line 7 and you want to make a nondeductible contribution, go to line 8 7 8 Nondeductible contribution. Subtract line 7 from line 5 or 6, whichever is smaller. Enter the result here and on line 1 of our Form 8606 8 What If You Inherit an IRA? If you inherit a traditional IRA, you are called a beneficiary. A beneficiary can be any person or entity the owner chooses to receive the benefits of the IRA after he or she dies. Beneficiaries of a traditional IRA must include in their gross income any taxable distributions they receive. Inherited from spouse. If you inherit a traditional IRA from your spouse, you generally have the following three choices. You can: 1. Treat it as your own IRA by designating yourself as the account owner. 2. Treat it as your own by rolling it over into your IRA, or to the extent it is taxable, into a: a. Qualified emplover plan, http://www.irs,,gov/publications/p590/chOl.html 1/19/2012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) b. Qualified employee annuity plan (section 403(a) plan), c. Tax-sheltered annuity plan (section 403(b) plan), d. Deferred compensation plan of a state or local government (section 457 plan), or Page 13 of 41 3. Treat yourself as the beneficiary rather than treating the IRA as your own. Treating N as your own. You will be considered to have chosen to treat the IRA as your own if: • Contributions (including rollover contributions) are made to the inherited IRA, or • You do not take the required minimum distribution for a year as a beneficiary of the IRA. You will only be considered to have chosen to treat the IRA as your own if: • You are the sole beneficiary of the IRA, and • You have an unlimited right to withdraw amounts from it. However, if you receive a distribution from your deceased spouse's IRA, you can roll that distribution over into your own IRA within the 60-day time limit, as long as the distribution is not a required distribution, even if you are not the sole beneficiary of your deceased spouse's IRA. For more information, see When Must You Withdraw Assets lRea ired Minimum Distributions), later. Inherited from someone other than spouse. If you inherit a traditional IRA from anyone other than your deceased spouse, you cannot treat the inherited IRA as your own. This means that you cannot make any contributions to the IRA. It also means you cannot roll over any amounts into or out of the inherited IRA However, you can make a trustee-to-trustes transfer as long as the IRA into which amounts are being moved is set up and maintained in the name of the deceased IRA owner for the benefit of you as beneficiary. Like the original owner, you generally will not owe tax on the assets in the IRA until you receive distributions from it. You must begin receiving distributions from the IRA under the rules for distributions that apply to beneficiaries. IRA with bads. If you inherit a traditional IRA from a person who had a basis in the IRA because of nondeductible contributions, that basis remains with the IRA. Unless you are the decedent's spouse and choose to treat the IRA as your own, you cannot combine this basis with any basis you have in your own traditional IRA(s) or any basis in traditional IRA(s) you inherited from other decedents. H you take distributions from both an inherited IRA and your IRA, and each has basis, you must complete separate Forms 6606 to determine the taxable and nontaxable portions of those distributions. Federal estate tax deduction. A beneficiary may be able to claim a deduction for estate tax resulting from certain distributions from a traditional IRA. The beneficiary can deduct the estate tax paid on any part of a distribution that is income in respect of a decedent. He or she can take the deduction for the tax year the income is reported. For information on claiming this deduction, see Estate Tax Deduction under Other Tax Information in Publication 559, Survivors, Executors, and Administrators. Any taxable part of a distribution that is not income in respect of a decedent is a payment the beneficiary must include in income. However, the beneficiary cannot take any estate tax deduction for this part. A surviving spouse can roll over the distribution to another traditional IRA and avoid including it in income for the year received. More Information. For more information about rollovers, required distributions, and inherited IRAs, see: • Rollovers, later, under Can You Move Retirement Plan Assets, • When Must You Withdraw Assets? lReouired Minimum Dist bution •1, later, and • The discussion of IRA beneficiaries, later, under When Must You Withdraw Assets? (Required Minimum Distributions). Worksheet 1-2. Figuring Your Reduced IRA Deduction for 2011-Example 1 Illustrated (Use only if you or your spouse is covered by an employer plan and your modified AGI falls between the two amounts shown below for your coverage situation and filing status.) Note. If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction ANO your modified AGI THEN enter on IF you ... filing status is ... is over ... line 1 below ... single or head of household $56,000 $66,000 are covered by an employer plan married filing 'cinti or qualifying widow er $90,000 $110,000 married filing separately $0 $10,000 are not covered by an employer plan, married filing jointly $169,000 $179,000 but your spouse is covered married filing separately $0 $10,000 1. Enter applicable amount from table above 2. Enter your modified AGI (that of both spouses, if married filing jointly) Note. If line 2 is equal to or more than the amount on line 1, stop here. Your IRA contributions are not deductible. See Nondeductible Contributton,. 3. Subtract line 2 from line 1. If line 3 Is $10,000 or more ($20,000 or more M married filing jointly or qualifying widow(er) and you are covered by an employer pion), stop here. You can take a full IRA deduction for contributions of up to $5,000 ($6,000 H you are age 50 or older) or 100% of your (and if married filing jointly, your spouse's) compensation, whichever is less 4. Multiply line 3 by the percentage below that applies to you. If the result is not a multiple of $10, round it to the next highest multiple of $10. (For example, $611.40 is rounded to $620.) However, if the result is less than $200, enter $200. • Married filing jointly or qualifying widow(er) and you are covered by an employer plan, multiply line 3 by 25% (.25) (by 30% (.30) if you are age 50 or older). I • All others, multiply line 3 by 50% (.50) (by 60% (.60) if you are age 50 or older). S 1.11 2. 5 3. 4. 4, http://www.ir,,.gov/publications/p590/chOI.html 1/19/2012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) employment tax) and line 28 (self-employed SEP, SIMPLE, and qualified plans). If you are filing a joint return and your compensation is less than your spouse's, include your spouse's compensation reduced by his or her traditional IRA and Roth IRA contributions for this year. If you file Form 1040 or Form 1040NR, do not reduce your compensation by any losses from self-employment 5. 59, Enter contributions made, or to be made, to your IRA for 2011, but do not enter more than $5,000 ($6,000 if you are age 50 or older). it contributions are more than $5,000 ($6,000 if you are age 50 or older), see Excess Contributions, later. 6. 5 IRA deduction. Compare lines 4, 5, and 6. Enter the smallest amount (or a smaller amount if you choose) here and on the Form 1040, 1040A, or 104ONR line for your IRA, whichever applies. lf line 6 is more than line 7 and you want to make a nondeductible contribution, go to line 8 7, 4, Nondeductible contribution. Subtract line 7 from line 5 or 6, whichever is smaller. Enter the result here and on line 1 of your Form 8606 g Worksheet 1-2. Figuring Your Reduced IRA Deduction for 2011-Example 2 Illustrated (Use only if you or your spouse is covered by an employer plan and your modified AGI falls between the two amounts shown below for your coverage situation and filing status.) Note. If you were married and both you and your spouse contributed to IRAs, figure your deduction and your spouse's deduction AND your modified AGI THEN enter on YOU ... filing status is ... is over ... line 1 below ... D covered by an single or head of household $56,000 $66,000 ployer plan married filing joint or qualifying widow(er) $90,000 $110,000 married filing separately $0 $10,000 i not covered by married filing jointly $169,000 $179,000 employer plan, your spouse is verod married filing separately $0 $10,000 Enter applicable amount from table above 1,179. Enter your modified AGI (that of both spouses, if married filing jointly) 2,171 Note. If line 2 is equal to or more than the amount on line 1, stop hero. Your IRA contributions are not deductible. See Nondeductible Contributions. Subtract line 2 from line 1. H line 31s $10,000 or more ($20,000 or more M married filing jointly or qualifying widow(w) and you are covered by an employer plan), stop here. You can take a full IRA deduction for contributions of up to $5,000 ($6,000 if you are age 50 or older) or 100% of your (and if married filing jointly, your spouse's) compensation, whichever is less 3. 7 Multiply line 3 by the percentage below that applies to you. If the result is not a multiple of $10, round lf to the next highest multiple of $10. (For example, $611.40 is rounded to $620.) However, if the result is less than $200, enter $200. • Married filing jointly or qualifying widow(er) and you are covered by an employer plan, multiply line 3 by 25% (.25) (by 30% (.30) if you are age 50 or older). 4. 3, • All others, multiply line 3 by 50% (.50) (by 60% (.60) if you are age 50 or older). Enter your compensation minus any deductions on Form 1040 or Form 1040NR, line 27 (deductible part of self- employment tax) and line 28 (self-employed SEP, SIMPLE, and qualified plans). If you are filing a joint return and your compensation is less than your spouse's, include your spouse's compensation reduced by his or her traditional IRA and Roth IRA contributions for this year. If you file Form 1040 or Form 1040NR, do not reduce your compensation by any losses from self-employment 5. 40, Enter contributions made, or to be made, to your IRA for 2011, but do not enter more than $5,000 ($6,000 if you are age 50 or older). If contributions are more than $5,000 ($6,000 if you are age 50 or older), see Excess Contributions, later. 6. 5, IRA deduction. Compare lines 4, 5, and 6. Enter the smallest amount (or a smaller amount if you choose) here and on the Form 1040, 1040A, or 104ONR line for your IRA, whichever applies. If line 6 is more than line 7 and you want to make a nondeductible contribution, go to line 8 7. 3, Nondeductible contribution. Subtract line 7 from line 5 or 6, whichever is smaller. Enter the result here and on line 1 of your Form 8606 a Can You Move Retirement Plan Assets? You can transfer, tax free, assets (money or property) from other retirement programs (including traditional IRAs) to a traditional IRA. You can make the following kinds of transfers. • Transfers from one trustee to another. • Rollovers. • Transfers incident to a divorce. This chapter discusses all three kinds of transfers. Transfersto Roth IRAs. Under certain conditions, you can move assets from a traditional IRA or from a designated Roth account to a Roth IRA. For more information about these transfers, see Convening From Any Traditional IRA Into a Roth IRA, later in this chapter, and Can You Move Amounts Into a Roth IRA? in chapter 2. Transfers to Roth IRAs from other retirement plans. Under certain conditions, you can move assets from a qualified retirement plan to a Roth IRA. For more information, see Can You Move Amounts Into a Rolh IRA7 in chapter 2. Trustee-to-Trustee Transfer A transfer of funds in your traditional IRA from one trustee directly to another, either at your request or at the trustee's request, is not a rollover. Because there is no distribution to you, the transfer is tax free. Because it is not a rollover, it is not affected by the 1-year waiting period required between rollovers. This waiting period is discussed later under Rollover From One IRA Into Another. For information about direct transfers from retirement programs other than traditional IRAs, see Direct rollover action , later. Rollovers Page 14 of 41 http://www.ir?.gov/publications/P590/chOl.htnd 1/19/2012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 15 of 41 Generally, a rollover is a tax-free distribution to you of cash or other assets from one retirement plan that you contribute to another retirement plan. The contribution to the second retirement plan is called a -rollover contribution.- Note. An amount rolled over tax free from one retirement plan to another is generally includible in income when it is distributed from the second plan. Kinds of rollovers to a traditional IRA. You can roll over amounts from the following plans into a traditional IRA: • A traditional IRA, • An employer's qualified retirement plan for its employees, • A deferred compensation plan of a state or local government (section 457 plan), or • A tax-sheltered annuity plan (section 403 plan). Also, see Table 1.4, earlier. Table 1-4. Rollover Chart The following chart indicates the rollovers that are permitted between various tvow of clans. Roll To Roth IRA IRA Traditional SIMPLE SEP IRA PIOun anM? Pb) Designated Roth Account Plan tax re-tax (401 (k? 403(b) or 457(b)') Roth IRA Yes No No No No No No No Traditional IRA Yes' Yes No Yes es4 Yes Yes No SIMPLE IRA Yes', after es, after 2 Yes es, after es4, after Yes, after 2 es, after N 2 ears ears 2 ears ears ears ears o SEP IRA Yes' es No Yes Yes' Yes Yes 11 NO 467(b) Plan es3 Yes No Yes Yes Yes es Yes,' ,$ after 12/31/10 Rol From Qualified Plan' uz Yes3 Yes No es es4 Yes Yes Yes,3. ° after 9/27/10 403(b) Plan tax Yes' Yes No Yes Yes4 Yes es es,'. 8 after 9/27/10 Designated Roth Account Yes, if a direct trustee-to- (401(11), 403(b) or 457(b? Yes No No No No No No rensfer 'Qualfied plans include, for example, profit-sharing, 401(k), money purchase, and defined benefit plans. overnmental 457(b) plans, after December 31, 2010. 'Must indude in income. Must have separate accounts. Must be an in- plan rollover. • •-.•,.o••• -• • •••.-. • ..•. ,,, u,w-, uur yw mus[ repon me rouover aismoumon on your tax return as oiscussed later under Reponino rollovers from IRAs and Rwortina rollovers from emplover plans. Rollover notice. A written explanation of rollover treatment must be given to you by the plan (other than an IRA) making the distribution Kinds of rollovers from a traditional IRA. You maybe able to rollover, tax free, a distribution from your traditional IRA into a qualified plan. These plans include the Federal Thrift Savings Fund (for federal employees), deferred compensation plans of state or local governments (section 457 plans), and tax-sheltered annuity plans (section 403(b) plans). The part of the distribution that you can roll over is the part that would otherwise be taxable (includible in your income). Qualified plans may, but are not required to, accept such rollovers. Tax freatment of a rollover from a traditional IRA to an eligible redrarnent plan other Man an IRA. Ordinarily, when you have basis in your IRAs, any distribution is considered to indude both nontaxable and taxable amounts. Without a special rule, the nontaxable portion of such a distribution could not be rolled over. However, a special rule treats a distribution you roll over into an eligible retirement plan as including only otherwise taxable amounts if the amount you either leave in your IRAs or do not roll over is at least equal to your basis. The effect of this special rule is to make the amount in your traditional IRAs that you can roll over to an eligible retirement plan as large as possible. Eligible retirement plane. The following are considered eligible retirement plans. • Individual retirement arrangements (IRAs). • Qualified trusts. • Qualified employee annuity plans under section 403(a). • Deferred compensation plans of state and local governments (section 457 plans). • Tax-sheltered annuities (section 403(b) annuities). Time Limit for Making a Rollover Contribution You generally must make the rollover contribution by the 50th day after the day you receive the distribution from your traditional IRA or your employer's plan. Example. You received an eligible rollover distribution from your traditional IRA on June 30, 2011, that you intend to roll over to your 403(b) plan. To postpone including the distribution in your income, you must complete the rollover by August 29, 2011, the 60th day following June 30. The IRS may waive the 60-day requirement where the failure to do so would be against equity or good conscience, such as in the event of a casualty, disaster, or other event beyond your reasonable control. For exceptions to the 60-day period, see Automatic waiver, Other waiver, and Extension of rollover period, later. http://www.ir, .gov/publications/p590/chOl.html 1/19/2012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 16 of 41 Rollovers completed after the 60-day period. In the absence of a waiver, amounts not rolled over within the 60-day period do not qualify for tax- free rollover treatment. You must treat them as a taxable distribution from either your IRA or your employer's plan. These amounts are taxable in the year distributed, even if the 60-day period expires in the next year. You may also have to pay a 10% additional tax on early distributions as discussed later under Early Oistn0utions. Unless there is a waiver or an extension of the 60-day rollover period, any contribution you make to your IRA more than 60 days after the distribution is a regular contribution, not a rollover contribution. Example. You received a distribution in late December 2011 from a traditional IRA that you do not roll over into another traditional IRA within the 60-day limit. You do not qualify for a waiver. This distribution is taxable in 2011 even though the 60-day limit was not up until 2012. Automatic waiver. The 60-day rollover requirement is waived automatically only if all of the following apply. • The financial institution receives the funds on your behalf before the end of the 60-day rollover period. • You followed all the procedures set by the financial institution for depositing the funds into an eligible retirement plan within the 60-day period (including giving instructions to deposit the funds into an eligible retirement plan). • The funds are not deposited into an eligible retirement plan within the 60-day rollover period solely because of an error on the part of the financial institution. • The funds are deposited into an eligible retirement plan within 1 year from the beginning of the 60-day rollover period. • It would have been a valid rollover if the financial institution had deposited the funds as instructed. Otherwalvers. If you do not qualify for an automatic waiver, you can apply to the IRS for a waiver of the 60-day rollover requirement. To apply for a waiver, you must submit a request for a letter ruling under the appropriate IRS revenue procedure. This revenue procedure Is generally published in the first Internal Revenue Bulletin of the year. You must also pay a user fee with the application. The information is in Revenue Procedure 2011-4 in Internal Revenue Bulletin 2011.1 available at www.irs.aov/irb/2011.01 IRB/ar09.htm1. In determining whether to grant a waiver, the IRS will consider all relevant facts and circumstances, including: • Whether errors were made by the financial institution (other than those described under Automatic waiver, earlier), • Whether you were unable to complete the rollover due to death, disability, hospitalization, incarceration, restrictions imposed by a foreign country, or postal error, • Whether you used the amount distributed (for example, in the case of payment by check, whether you cashed the check), and • How much time has passed since the date of distribution. Amount. The rules regarding the amount that can be rolled over within the 60-day time period also apply to the amount that can be deposited due to a waiver. For example, if you received $6,000 from your IRA, the most that you can deposit into an eligible retirement plan due to a waiver is $6,000. Extension of rollover period. If an amount distributed to you from a traditional IRA or a qualified employer retirement plan is a frozen deposit at any time during the 60-day period allowed for a rollover, two special rules extend the rollover period. • The period during which the amount is a frozen deposit is not counted in the 60-day period. • The 60-day period cannot end earlier than 10 days after the deposit is no longer frozen. Frozen deposit. This is any deposit that cannot be withdrawn from a financial institution because of either of the following reasons. • The financial institution is bankrupt or insolvent. • The state where the institution is located restricts withdrawals because one or more financial institutions in the state are (or are about to be) bankrupt or insolvent. Rollover From One IRA Into Another You can withdraw, tax free, all or part of the assets from one traditional IRA if you reinvest them within 60 days in the same or another traditional IRA. Because this is a rollover, you cannot deduct the amount that you reinvest in an IRA. TIP. You may be able to treat a contribution made to one type of IRA as having been made to a different type of IRA This is called recharacterizing the contribution. See Recharacterizations in this chapter for more information. Wafting period between rollovers. Generally, if you make a tax-free rollover of any part of a distribution from a traditional IRA, you cannot, within a 1-year period, make a tax-free rollover of any later distribution from that same IRA You also cannot make a tax-free rollover of any amount distributed, within the same 1-year period, from the IRA into which you made the tax-free rollover. The 1-year period begins on the date you receive the IRA distribution, not on the date you roll it over into an IRA. Example. You have two traditional IRAs, IRA-1 and IRA-2. You make a tax-free rollover of a distribution from IRA-1 into a new traditional IRA (IRA-3). You cannot, within 1 year of the distribution from IRA-1, make a tax-free rollover of any distribution from either IRA-1 or IRA-3 into another traditional IRA. However, the rollover from IRA-1 into IRA-3 does not prevent you from making a tax-free rollover from IRA-2 into any other traditional IRA. This is because you have not, within the last year, rolled aver, tax free, any distribution from IRA-2 or made a tax-free rollover into IRA-2. http://www.irs.gov/publications/P590/chOl.html 1/19/2012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 17 of 41 Exception. There is an exception to the rule that amounts rolled overtax tree into an IRA cannot be rolled overtax free again within the 1-year period beginning on the date of the original distribution. The exception applies to a distribution that meets all three of the following requirements. 1. It is made from a failed financial institution by the Federal Deposit Insurance Corporation (FDIC) as receiver for the institution. 2. It was not initiated by either the custodial institution or the depositor. 3. it was made because: a. The custodial institution is insolvent, and b. The receiver is unable to find a buyer for the institution. The same property must be rolled over. If property is distributed to you from an IRA and you complete the rollover by contributing property to an IRA, your rollover is tax free only if the property you contribute is the same property that was distributed to you. Partial rollovers. If you withdraw assets from a traditional IRA, you can roll over part of the withdrawal tax free and keep the rest of R. The amount you keep will generally be taxable (except for the part that is a return of nondeductible contributions). The amount you keep may be subject to the 10% additional tax on early distributions discussed later under What Acts Result in Penalties or Additional Taxes . Required distributions. Amounts that must be distributed during a particular year under the required distribution rules (discussed later) are not eligible for rollover treatment. Inherited IRAs. If you inherit a traditional IRA from your spouse, you generally can roll it over, or you can choose to make the inherited IRA your own as discussed earlier under What it You Inherit an IRA. Not Inherited from spouse. If you inherit a traditional IRA from someone other than your spouse, you cannot roll it over or allow it to receive a rollover contribution. You must withdraw the IRA assets within a certain period. For more information, see When Must You Withdraw Assets? (Reouired Mm mum Distributions), later. Reporting rollovers from IRAs. Report any rollover from one traditional IRA to the same or another traditional IRA on Form 1040, lines 15a and 15b; Form 1040A, lines 11a and 11b; or Form 1040NR, lines 16a and 16b. Enter the total amount of the distribution on Form 1040, line 15a; Form 1040A, line 11a; or Form 1040NR, line 16a. If the total amount on Form 1040, line 15a; Form 1040A, line 11 a; or Form 1040NR, line 16a, was rolled over, enter zero on Form 1040, line 15b; Form 1040A, line 11 b; or Form 1040NR, line 16b. If the total distribution was not rolled over, enter the taxable portion of the part that was not rolled over on Form 1040, line 15b; Form 1040A, line 11 b; or Form 1040NR, line 16b. Put "Rollover" next to line 15b, Form 1040; line 11 b, Form 1040A; or line 16b, Form 1040NR. See the forms' instructions. If you rolled over the distribution into a qualified plan (other than an IRA) or you make the rollover in 2012, attach a statement explaining what you did. For information on how to figure the taxable portion, see Are Distributions Taxable , later. Rollover From Employer's Plan Into an IRA You can roll over into a traditional IRA all or part of an eligible rollover distribution you receive from your (or your deceased spouse's): • Employer's qualified pension, profit-sharing, or stock bonus plan; • Annuity plan; • Tax-sheltered annuity plan (section 403(b) plan); or • Governmental deferred compensation plan (section 457 plan). A qualified plan is one that meets the requirements of the Internal Revenue Code. Eligible rollover distribution. Generally, an eligible rollover distribution is any distribution of all or part of the balance to your credit in a qualified retirement plan except the following. 1. A required minimum distribution (explained later under When Must You Withdraw Assets lPeauired Minimum Distributions! ). 2. A hardship distribution. 3. Any of a series of substantially equal periodic distributions paid at least once a year over a. Your lifetime or life expectancy, b. The lifetimes or life expectancies of you and your beneficiary, or c. A period of 10 years or more. 4. Corrective distributions of excess contributions or excess deferrals, and any income allocable to the excess, or of excess annual additions and any allocable gains. 5. A loan treated as a distribution because it does not satisfy certain requirements either when made or later (such as upon default), unless the participant's accrued benefits are reduced (offset) to repay the loan. 6. Dividends on employer securities. 7. The cost of life insurance coverage. Your rollover into a traditional IRA may include both amounts that would be taxable and amounts that would not be taxable if they were distributed to you, but not rolled over. To the extent the distribution is rolled over into a traditional IRA, it is not includible in your income. http://www.ir!;,gov/publications/p590/chOl.html 1/19/2012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 18 of 41 El Any nontaxable amounts that you roll over into your traditional IRA become part of your basis (cost) in your IRAs. To recover your basis when you take distributions from your IRA, you must complete Form 8606 for the year of the distribution. See Form 8606 under Distributions Fully or Partly Taxable, later. Rollover by nonspouse beneficiary. A direct transfer from a deceased employee's qualified pension, profit-sharing, or stock bonus plan; annuity plan; tax-sheltered annuity (section 403(b)) plan; or govemmental deferred compensation (section 457) plan to an IRA set up to receive the distribution on your behalf can be treated as an eligible rollover distribution if you are the designated beneficiary of the plan and not the employee's spouse. The IRA is treated as an inherited IRA. For more information about inherited IRAs, see 1Nhat rf You Inherit an IRA, earlier. Written explanation to recipients. Before making an eligible rollover distribution, the administrator of a qualified retirement plan must provide you with a written explanation. it must tell you about all of the following. • Your right to have the distribution paid tax free directly to a traditional IRA or another eligible retirement plan. e The requirement to withhold tax from the distribution if it is not paid directly to a traditional IRA or another eligible retirement plan. • The tax treatment of any part of the distribution that you roll over to a traditional IRA or another eligible retirement plan within 60 days after you receive the distribution. • Other qualified retirement plan rules, 'lf they apply, including those for lump-sum distributions, alternate payees, and cash or deterred arrangements. • How the plan receiving the distribution differs from the plan making the distribution in its restrictions and tax consequences. The plan administrator must provide you with this written explanation no earlier than 90 days and no later than 30 days before the distribution is made. However, you can choose to have a distribution made less than 30 days after the explanation is provided as long as both of the following requirements are met. • You are given at least 30 days after the notice is provided to consider whether you want to elect a direct rollover. • You are given information that dearly states that you have this 30-day period to make the decision. Contact the plan administrator if you have any questions regarding this information. Withholding requirement. Generally, if an eligible rollover distribution is paid directly to you, the payer must withhold 20% of it. This applies even if you plan to roll over the distribution to a traditional IRA. You can avoid withholding by choosing the direct rollover option, discussed later. Exceptions. The payer does not have to withhold from an eligible rollover distribution paid to you if either of the following conditions apply. • The distribution and all previous eligible rollover distributions you received during your tax year from the same plan (or, at the payer's option, from all your employer's plans) total less than $200. • The distribution consists solely of employer securities, plus cash of $200 or less in lieu of fractional shares. El The amount withheld is part of the distribution. If you roll over less than the full amount of the distribution, you may have to include in your income the amount you do not roll over. However, you can make up the amount withheld with funds from other sources. Other w1thholding rules. The 20% withholding requirement does no apply to distributions that are not eligible rollover distributions. However, other withholding rules apply to these distributions. The rules that apply depend on whether the distribution is a periodic distribution or a nonperiodic distribution. For either of these types of distributions, you can still choose not to have tax withheld. For more information, see Publication 575. Direct rollover option. Your employer's qualified plan must give you the option to have any part of an eligible rollover distribution paid directly to a traditional IRA. The plan is not required to give you this option if your eligible rollover distributions are expected to total less than $200 for the year. WNhholding. If you choose the direct rollover option, no tax is withheld from any part of the designated distribution that is directly paid to the trustee of the traditional IRA. If any part is paid to you, the payer must withhold 20% of that part's taxable amount. Choosing an option. Table 1.5 may help you decide which distribution option to choose. Carefully compare the effects of each option. Table 1-5. Comparison of Payment to You Versus Direct Rollover Affected Item Result of a payment to you Result of a direct rollover withholding The payer must withhold 20% of the taxable rt. There is no withholding. additional tax If you are under age 59%, a 10% additional tax may apply to the taxable part There is no 10% additional tax. See Earfv (including an amount equal to the tax withheld) that is not rolled over. Di t i t whento report Any taxable part (including the taxable part of any amount withheld) not rolled over is Any taxable part is not income to you until later as s income income to you in the year paid. distributed to you from the IRA. TlR If you decide to roll over any part of a distribution, the direct rollover option will generally be to your advantage. This is because you will not have 20% withholdinq or be subject to the 10% additional tax under that option. http://www.irs.gov/publications/P590/chOl.html 1/19/2012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 19 of 41 If you have a lump-sum distribution and do not plan to roll over any part of it, the distribution may be eligible for special tax treatment that could lower your tax for the distribution year. In that case, you may want to see Publication 575 and Form 4972, Tax on Lump-Sum Distributions, and its instructions to determine whether your distribution qualifies for special tax treatment and, if so, to figure your tax under the special methods. You can then compare any advantages from using Form 4972 to figure your tax on the lump-sum distribution with any advantages from rolling over all or part of the distribution. However, if you roll over any part of the lump-sum distribution, you cannot use the Form 4972 special tax treatment for any part of the distribution. Contributions you made to your employers plan. You can rollover a distribution of voluntary deductible employee contributions (DECs) you made to your employer's plan. Prior to January 1, 1987, employees could make and deduct these contributions to certain qualified employers' plans and government plans. These are not the same as an employee's elective contributions to a 401(k) plan, which are not deductible by the employee. If you receive a distribution from your employer's qualified plan of any part of the balance of your DECs and the earnings from them, you can roll over any part of the distribution. No wafting period between rollovers. The once-a-year limit on IRA-to-IRA rollovers does not apply to eligible rollover distributions from an employer plan. You can roll over more than one distribution from the same employer plan within a year. IRA as a holding account (conduit IRA) for rollovers to other eligible plans. If you receive an eligible rollover distribution from your employer's plan, you can roll over pan or all of it into one or more conduit IRAs. You can later roll over those assets into a new employer's plan. You can use a traditional IRA as a conduit IRA. You can roll over part or all of the conduit IRA to a qualified plan, even H you make regular contributions to it or add funds from sources other than your employer's plan. However, if you make regular contributions to the conduit IRA or add funds from other sources, the qualified plan into which you move funds will not be eligible for any optional tax treatment for which it might have otherwise qualified. Property and cash received In a distribution. If you receive both property and cash in an eligible rollover distribution, you can roll over part or all of the property, part or all of the cash, or any combination of the two that you choose. The same property (or sales procesds) must be rolled over. H you receive property in an eligible rollover distribution from a qualified retirement plan, you cannot keep the property and contribute cash to a traditional IRA in place of the property. You must either roll over the property or sell it and roll over the proceeds, as explained next. Sale of property received Ina distribution from a qualified plan. Instead of rolling over a distribution of property other than cash, you can sell all or part of the property and roll over the amount you receive from the sale (the proceeds) into a traditional IRA. You cannot keep the property and substitute your own funds for property you received. Example. You receive a total distribution from your employer's plan consisting of $10,000 cash and $15,000 worth of property. You decide to keep the property You can roll over to a traditional IRA the $10,000 cash received, but you cannot roll over an additional $15,000 representing the value of the property you choose not to sell. Trestmeid of gain or loss. If you sell the distributed property and rollover all the proceeds into a traditional IRA, no gain or loss is recognized. The sale proceeds (including any increase in value) are treated as part of the distribution and are not included in your gross income. Example. On September 8, Mike received a lump-sum distribution from his employer's retirement plan of $50,000 in cash and $50,000 in stock. The stock was not stock of his employer. On September 24, he sold the stock for $80,000. On October 8, he rolled over $110,000 in cash ($50,000 from the original distribution and $80,000 from the sale of stock). Mike does not include the $10,000 gain from the sale of stock as part of his income because he rolled over the entire amount into a traditional IRA. Note. Special rules may apply to distributions of employer securities. For more information, see Publication 575 Partial rollover. If you received both cash and property, or just property, but did not rollover the entire distribution, see Rollovers in Publication 575 Life Insurance contract. You cannot roll over a life insurance contract from a qualified plan into a traditional IRA Distributions received by a surviving spouse. If you receive an eligible rollover distribution (defined earlier) from your deceased spouse's eligible retirement plan (defined earlier), you can roll over part or all of it into a traditional IRA You can also roll over all or any part of a distribution of deductible employee contributions (DECs). Distributions under divorce or similar proceedings (alternate payees). H you are the spouse or former spouse of an employee and you receive a distribution from a qualified retirement plan as a result of divorce or similar proceedings, you may be able to roll over all or part of it into a traditional IRA. To quality, the distribution must be: • One that would have been an eligible rollover distribution (defined earlier) Hit had been made to the employee, and • Made under a qualified domestic relations order. Quall/bd domestic relations order. A domestic relations order is a judgment, decree, or order (including approval of a property settlement agreement) that is issued under the domestic relations law of a state. A "qualified domestic relations order" gives to an alternate payee (a spouse, former spouse, child, or dependent of a participant in a retirement plan) the right to receive all or part of the benefits that would be payable to a participant under the plan. The order requires certain specific information, and it cannot after the amount or form of the benefits of the plan. Tax treatment Hall of an eligible distribution is not rolled over. Any part of an eligible rollover distribution that you keep is taxable in the year you receive it. If you do not roll over any of it, special rules for lump-sum distributions may apply. See Publication 575. The 10% additional tax on early distributions, discussed later under What Acts Result in Penalties or Addit`wrat Taxes, does not apply. Keogh plans and rollovers. If you are self-employed, you are generally treated as an employee for rollover purposes. Consequently, if you receive an eligible rollover distribution from a Keogh plan (a qualified plan with at least one self-employed participant), you can roll over all or part of the distribution (including a lump-sum distribution) into a traditional IRA. For information on lump-sum distributions, see Publication 575. More Information. For more information about Keogh plans, see Publication 580. Distribution from a tax-sheftered annuity. If you receive an eligible rollover distribution from a tax-sheltered annuity plan (section 403(b) plan), you can roll it over into a traditional IRA. http://www.ir?;.gov/publications/P590/chOl.html 1/19/2012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 20 of 41 Receipt of property other than money. If you receive property other than money, you can sell the property and rollover the proceeds as discussed earlier. Rollover from bond purchase plan. If you redeem retirement bonds that were distributed to you under a qualified bond purchase plan, you can roll over tax free into a traditional IRA the part of the amount you receive that is more than your basis in the retirement bonds. Reporting rollovers from employer plans. Enter the total distribution (before income tax or other deductions were withheld) on Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a. This amount should be shown in box 1 of Form 1099-R. From this amount, subtract any contributions (usually shown in box 5 of Form 1099-R) that were taxable to you when made. From that result, subtract the amount that was rolled over either directly or within 60 days of receiving the distribution. Enter the remaining amount, even if zero, on Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. Also, enter 'Rollover" next to line 16b on Form 1040; line 12b of Form 1040A; or line 17b of Form 1040NR. Rollover of Exxon Valdez Settlement Income If you are a qualified taxpayer and you received qualified settlement income, you can contribute all or part of the amount received to an eligible retirement plan which includes a traditional IRA. The amount contributed cannot exceed $100,000 (reduced by the amount of qualified settlement income contributed to an eligible retirement plan in prior tax years) or the amount of qualified settlement intone received during the tax year. Contributions for the year can be made until the due date for filing your return, not including extensions. Qualified settlement income that you contribute to a traditional IRA will be treated as having been rolled over in a direct trustee-to-trustee transfer within 60 days of the distribution. The amount contributed is no included in your income at the time of the contributions and is not considered to be investment in the contract. Also, the 1-year waiting period between rollovers does no apply. Qualified taxpayer. You are a qualified taxpayer if you are: • A plaintiff in the civil action In re Exxon Valdez, No. 89-095-CV (HRH) (Consolidated) (D.Alaska), or • The beneficiary of the estate of a plaintiff who acquired the right to receive qualified settlement income and who is the sparse or immediate relative of that plaintiff. Qualified settlement Income. Qualified settlement income is any interest and punitive damage awards which are: • Otherwise includible in income, and • Received in connection with the civil action In re Exxon Valdez, No. 89.095-CV (HRH) (Consolidated) (D.Alaska) (whether pre- or post- judgment and whether related to a settlement or judgment). Qualified settlement income can be received as periodic payments or as a lump sum. See Publication 525, Taxable and Nontaxable Income, for information on how to report qualified settlement income. Transfers Incident To Divorce If an interest in a traditional IRA is transferred from your spouse or former spouse to you by a divorce or separate maintenance decree or a written document related to such a decree, the interest in the IRA, starting from the date of the transfer, is treated as your IRA. The transfer is tax free. For information about transfers of interests in employer plans, see Distributions under divorce or similar proceedings (alternate payees) under Rollover From Employers Plan Into an IRA, earlier. Transfer methods. There are two commonly used methods of transferring IRA assets to a spouse or former spouse. The methods are: • Changing the name on the IRA, and • Making a direct transfer of IRA assets. Changing the name on the IRA. Hall the assets are to be transferred, you can make the transfer by changing the name on the IRA from your name to the name of your spouse or former spouse. Direct transfer. Under this method, you direct the trustee of the traditional IRA to transfer the affected assets directly to the trustee of a new or existing traditional IRA set up in the name of your spouse or former spouse. If your spouse or former spouse is allowed to keep his or her portion of the IRA assets in your existing IRA, you can direct the trustee to transfer the assets you are permitted to keep directly to a new or existing traditional IRA set up in your name. The name on the IRA containing your spouse's or former spouse's portion of the assets would then be changed to show his or her ownership. M If the transfer results in a change in the basis of the traditional IRA of either spouse, both spouses must file Form 8606 and follow the directions in the instructions for that form. Converting From Any Traditional IRA Into a Roth IRA Allowable conversions. You can withdraw all or part of the assets from a traditional IRA and reinvest them (within 60 days) in a Roth IRA. The amount that you withdraw and timely contribute (convert) to the Roth IRA is called a conversion contribution. If properly (and timely) rolled over, the 10% additional tax on early distributions will not apply. You must roll over into the Roth IRA the same property you received from the traditional IRA You can roll over part of the withdrawal into a Roth IRA and keep the rest of it. The amount you keep will generally be taxable (except for the part that is a return of nondeductible contributions) and may be subject to the 10% additional tax on early distributions. See When Can You Withdraw or s ssets, later, for more information on distributions from traditional IRAs and Early Distributia s , later, for more information on the tax on early distributions. Periodic distributions. If you have started taking substantially equal periodic payments from a traditional IRA, you can convert the amounts in the traditional IRA to a Roth IRA and then continue the periodic payments. The 10% additional tax on early distributions will no apply even if the distributions are not qualified distributions (as long as they are part of a series of substantially equal periodic payments). Required distributions. You cannot convert amounts that must be distributed from your traditional IRA for a particular year (including the calendar year in which you reach age 70'k) under the required distribution rules (discussed in this chapter). http://www.irs.gov/publications/P590/chOl.html 1/19/2012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 21 of 41 converted them into a Roth IRA. These amounts are normally included in income on your return for the year that you converted them from a traditional IRA to a Roth IRA. However, for 2010 conversions, any amounts you must include in income are generally included in income in equal amounts in 2011 and 2012 unless you elected to include the amounts in income in 2010. See Special rules for 2010 conversions from traditional IRAs to Roth IRAs next. You do not include in gross income any part of a distribution from a traditional IRA that is a return of your basis, as discussed under Are Oistr;butlons Taxable, later in this chapter. Special rules for 2010 conversions from traditional IRAs to Roth IRAs. If you converted a traditional IRA to a Roth IRA in 2010 and did not elect to include the taxable amount in income for 2010, you must include the taxable amount in income for 2011 and 2012, generally half in 2011 and half in 2012. It you did not take a distribution from you Roth IRAs in 2010 or 2011, include the amount from line 20a of your 2010 Form 8606 on your 2011 Form 1040, line 15b; Form 1040A, line 11 b; or Form 1040NR, line 16b. For more information about reporting this amount, see your tax return instructions. You maybe required to include an amount other than half of the 2010 conversion from a traditional IRA to a Roth IRA 4 you took a Roth IRA distribution in 2010 or 2011. If you took a Roth IRA distribution in 2010 or 2011, see How to treat 2010 conversions to Roth IRAs, later in chapter 2, for more information, including how much of your 2010 conversion must be included in you income for 2011. Es If you must include any amount in your gross income, you may have to increase your withholding or make estimated tax payments. See Publication 505, Tax Withholding and Estimated Tax. Recharacter&atlons You may be able to treat a contribution made to one type of IRA as having been made to a different type of IRA. This is called recharacterizing the contribution. To recharaclerize a contribution, you generally must have the contribution transferred from the first IRA (the one to which it was made) to the second IRA in a trustee-to-trustee transfer. If the transfer is made by the due date (including extensions) for your tax return for the year during which the contribution was made, you can elect to treat the contribution as having been originally made to the second IRA instead of to the first IRA. If you redtaracterize your contribution, you must do all three of the following. • Include in the transfer any net income allocable to the contribution. If there was a loss, the net income you must transfer may be a negative amount. • Report the recharacterization on your tax return for the year during which the contribution was made. • Treat the contribution as having been made to the second IRA on the date that it was actually made to the first IRA. No deduction allowed You cannot deduct the contribution to the first IRA. Any net income you transfer with the recharactehzed contribution is treated as earned in the second IRA. The contribution will not be treated as having been made to the second IRA to the extent any deduction was allowed for the contribution to the first IRA. Conversion by rollover from traditional to Roth IRA. For recharacterization purposes, if you receive a distribution from a traditional IRA in one tax year and roll it over into a Roth IRA in the next year, but still within 60 days of the distribution from the traditional IRA, treat it as a contribution to the Roth IRA in the year of the distribution from the traditional IRA. Effect of previous tax-free transfers. If an amount has been moved from one IRA to another in a tax-free transfer, such as a rollover, you generally cannot recharacterize the amount that was transferred. However, see Traditional IRA mistakenly moved to SIMPLE IRA below. Recharactertzing to a SEP IRA or SIMPLE IRA. Roth IRA conversion contributions from a SEP IRA or SIMPLE IRA can be recharacterized to a SEP IRA or SIMPLE IRA (including the original SEP IRA or SIMPLE IRA). Traditional IRA mistakenly mowed to SIMPLE IRA. If you mistakenly rollover or transfer an amount from a traditional IRA to a SIMPLE IRA, you can later recharacterize the amount as a contribution to another traditional IRA. Recharacterizing excess contributions. You can recharacterize only actual contributions. If you are applying excess contributions for prior years as current contributions, you can recharacterize them only if the recharacterization would still be timely with respect to the tax year for which the applied contributions were actually made. Example. You contributed more than you were entitled to in 2011. You cannot recharacterize the excess contributions you made in 2011 after April 17, 2012, because contributions after that date are no longer timely for 2011. Recharecterizing employer contributions. You cannot recharacterize employer contributions (including elective deferrals) under a SEP or SIMPLE plan as contributions to another IRA. SEPs are discussed in Publication 560. SIMPLE plans are discussed in ch i r 3, Racharacterb atlon not counted as rollover. The recharacterization of a contribution is not treated as a rollover for purposes of the 1-year waiting period described earlier in this chapter under Rollover From One IRA Into Another. This is true even if the contribution would have been treated as a rollover contribution by the second IRA if it had been made directly to the second IRA rather than as a result of a recharacterization of a contribution to the first IRA. Reconverslons You cannot convert and reconvert an amount during the same tax year or, if later, during the 30-day period following a recharacterization. If you reconvert during either of these periods, it will be a failed conversion. Example. If you convert an amount from a traditional IRA to a Roth IRA and then transfer that amount back to a traditional IRA in a recharacterization in the same year, you may not reconvert that amount from the traditional IRA to a Roth IRA before: • The beginning of the year following the year in which the amount was converted to a Roth IRA or, if later, http://www.ir,.gov/publications/p590/chOl.html 1/19/2012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 22 of 41 • The end of the 30-day period beginning on the day on which you transfer the amount from the Roth IRA back to a traditional IRA in a recharacterization. How Do You Recharacterize a Contribution? To recharacterize a contribution, you must notify both the trustee of the first IRA (the one to which the contribution was actually made) and the trustee of the second IRA (the one to which the contribution is being moved) that you have elected to treat the contribution as having been made to the second IRA rather than the first. You must make the notifications by the date of the transfer. Only one notification is required if both IRAs are maintained by the same trustee. The notification(s) must include all of the following information. • The type and amount of the contribution to the first IRA that is to be recharacterized. • The date on which the contribution was made to the first IRA and the year for which it was made. • A direction to the trustee of the first IRA to transfer in a trustee-to-trustee transfer the amount of the contribution and any net income (or loss) allocable to the contribution to the trustee of the second IRA. • The name of the trustee of the first IRA and the name of the trustee of the second IRA • Any additional information needed to make the transfer. In most cases, the net income you must transfer is determined by your IRA trustee or custodian. It you need to determine the applicable net income on IRA contributions made after 2011 that are recharacterized, use Worksheet 1-3. See Regulations section 1.408A-5 for more information. Worksheet 1-3. Determining the Amount of Net Income Due To an IRA Contribution and Total Amount To Be Recharacterized 1. Enter the amount of our IRA contribution for 2012 to be recharacterized 1-11 Enter the fair market value of the IRA immediately prior to the recharacterization (include any distributions, transfers, or recharacterization made while the contribution was in the account 2. Enter the fair market value of the IRA immediately prior to the time the contribution being recharacterized was made, including the amount of such contribution and any other contributions, transfers, or recharacterizations made while the contribution was in the account 3. Subtract line 3 from line 2 4 . Divide line 4 line 3. Enter the result as a decimal rounded to at least three aces 5. Mufti line 1 line 5. T his is the net income attributable to the contribution to be recharacterized 6, dd lines 1 and 8. This is the amount of the IRA contribution plus the net income attributable to it to be recharaclerized 7. Example. On April 1, 2012, when her Roth IRA is worth $60,000, Allison makes a $160,000 conversion contribution to the Roth IRA. Subsequently, Allison requests that the $160,000 be recharacterized to a traditional IRA Pursuant to this request, on April 1, 2013, when the IRA is worth $225,000, the Roth IRA trustee transfers to a traditional IRA the $160,000 plus allocable net income. No other contributions have been made to the Roth IRA and no distributions have been made. The adjusted opening balance is $240,000 ($80,000 + $160,000) and the adjusted dosing balance is $225,000. Thus the net income allocable to the $160,000 is ($10,000) ($160,000 x (($225,000 - $240,000) + $240,000)). Therefore, in order to recharactedze the April 1, 2012, $160,000 conversion contribution on April 1, 2013, the Roth IRA trustee must transfer from Allison's Roth IRA to her traditional IRA $150,000 ($160,000 - $10,000). This is shown on the following worksheet. Timing. The election to recharacterize and the transfer must both take place on or before the due date (including extensions) for filing your tax return for the year for which the contribution was made to the first IRA. Worksheet 1-3. Example--Illustrated 1. Enter the amount of our IRA contribution for 2012 to be recharacterized 1. 160, Enter the fair market value of the IRA immediately prior to the recharacterization (include any distributions, transfers, or recharacterization made while the contribution was in the account 2. 225,000 Enter the fair market value of the IRA immediately prior to the time the contribution being redtaracterized was made, including the amount of such contribution and any other contributions, transfers, or recharacterizetions made while the contribution was in the amount 3. 240,000 Subtract line 3 from line 2 4. 15,000 . Divide line 4 line 3. Enter the result as a decimal rounded to at least three aces 5. .0625) Multi line 1 line 5. This is the net income attributable to the contribution to be recharecterized 6. 10,000 tF. Add lines i and 6. This is the amount of the IRA contribution us the net income attributable to it to be recharactedzed 7. 150,000 -•- ?• •• •_• r rw ,,,?? u,?we w ,au:a:a v-v a kaximuunon uy me aue sate or the return or the clue date plus extensions. However, if you miss this deadline, you can still recharacterize a contribution if: • Your return was timely filed for the year the choice should have been made, and • You take appropriate corrective action within 6 months from the due date of your return excluding extensions. For returns due April 17, 2012, this period ends on October 15, 2012. When the date for doing any act for tax purposes falls on a Saturday, Sunday, or legal holiday, the due date is delayed until the next business day. Appropriate corrective action consists of: • Notifying the trustee(s) of your intent to recharacterize, • Providing the trustee with all necessary information, and • Having the trustee transfer the contribution. Once this is done, you must amend your return to show the recharacterization. You have until the regular due date for amending a return to do this. Report the recharacterization on the amended return and write "Filed pursuant to section 301.9100.2" on the return. File the amended return at the same address you filed the original return. Decedent. The election to recharacterize can be made on behalf of a deceased IRA owner by the executor, administrator, or other person http://www.irk.gov/publications/p590/chOI.html 1/19/2012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 23 of 41 Election cannot be changed. After the transfer has taken place, you cannot change your election to recharacterize. Same trustee. Recharacterizations made with the same trustee can be made by redesignating the first IRA as the second IRA, rather than transferring the account balance. Reporting a Recharacterizatlon If you elect to recharacterize a contribution to one IRA as a contribution to another IRA, you must report the recharacterization on your tax return as directed by Form 8606 and its instructions. You must treat the contribution as having been made to the second IRA. Example. On June 1, 2011, Christine properly and timely converted her traditional IRA to a Roth IRA. In December, Christine decided to recharacterize the conversion and move the funds to a traditional IRA. In January 2012, to make the necessary adjustment to remove the conversion, Christine opened a traditional IRA with the same trustee. Also in January 2012, she instructed the trustee of the Roth IRA to make a trustee-to-irustee transfer of the conversion contribution made to the Roth IRA (including net income allocable to it since the conversion) to the new traditional IRA She also notified the trustee that she was electing to recharacterize the contribution to the Roth IRA and treat it as if it had been contributed to the new traditional IRA. Because of the recharacterization, Lyle and Christine have no taxable income from the conversion to report for 2011, and the resulting rollover to a traditional IRA is not treated as a rollover for purposes of the one-rollover-per-year rule. More than one IRA. If you have more than one IRA, figure the amount to be recharacterized only on the account from which you withdraw the contribution. When Can You Withdraw or Use Assets? You can withdraw or use your traditional IRA assets at any time. However, a 10% additional tax generally applies if you withdraw or use IRA assets before you are age 59%. This is explained under Age 591 Rune under Early Distributions, later. You generally can make a tax-free withdrawal of contributions if you do it before the due date for filing your tax return for the year in which you made them. This means that, even if you are under age 59%, the 10% additional tax may not apply. These withdrawals are explained next. Contributions Returned Before Due Date of Return If you made IRA contributions in 2011, you can withdraw them tax free by the due date of your return. If you have an extension of time to file you return, you can withdraw them tax free by the extended due date. You can do this If, for each contribution you withdraw, both of the following conditions apply. • You did not take a deduction for the contribution. • You withdraw any interest or other income earned on the contribution. You can take into account any loss on the contribution while 4 was in the IRA when calculating the amount that must be withdrawn. If there was a loss, the net income earned on the contribution may be a negative amount. Note. If you timely filed your 2011 tax return without withdrawing a contribution that you made in 2011, you can still have the contribution returned to you within 6 months of the due date of your 2011 tax return, excluding extensions. If you do, file an amended return with "Filed pursuant to section 301.9100.2" written at the top. Report any related earnings on the amended return and include an explanation of the withdrawal. Make any other necessary changes on the amended return (for example, if you reported the contributions as excess contributions on your original return, include an amended Form 5329 reflecting that the withdrawn contributions are no longer treated as having been contributed). In most cases, the net income you must withdraw is determined by the IRA trustee or custodian. If you need to determine the applicable net income on IRA contributions made after 2011 that are returned to you, use Worksheet 1-4. See Regulations section 1.408.11 for more information. Worksheet 1-4. Determining the Amount of Net Income Due To an IRA Contribution and Total Amount To Be Withdrawn From the IRA 1. Enter the amount of our IRA contribution for 2012 to be returned to you I-11 Enter the fair market value of the IRA immediately prior to the removal of the contribution, plus the amount of any distributions, transfers, and recharacterizations made while the contribution was in the IRA 2 11 Enter the fair market value of the IRA immediately before the contribution was made, plus the amount of such contribution and any other . contributions, transfers, and recharacterizations made while the contribution was in the IRA 3. Subtract line 3 from line 2 4 5. Divide line 4 line 3. Enter the result as a decimal rounded to at least three laces 5. 5. Mufti I e 1 line 5. This is the net income attributable to the contribution to be returned S. Add lines 1 and 8. This is the amount of the IRA contribution plus the net income attributable to it to be returned to you 7. Example. On May 2, 2012, when her IRA is worth $4,800, Cathy makes a $1,600 regular contribution to her IRA. Cathy requests that $400 of the May 2, 2012, contribution be returned to her. On February 2, 2013, when the IRA is worth $7,600, the IRA trustee distributes to Cathy the $400 plus net income attributable to the contribution. No other contributions have been made to the IRA for 2012 and no distributions have been made. The adjusted opening balance is $6,400 ($4,800 + $1,600) and the adjusted dosing balance is $7,600. The net income due to the May 2, 2012, contribution is $75 ($400 x ($7,600 - $6,400) : $6,400). Therefore, the total to be distributed on February 2, 2013, is $475. This is shown on the following worksheet. Worksheet 1-4. Example-11lustreted 1. Enter the amount of our IRA contribution for 2012 to be returned to you 1. 400 Enter the fair market value of the IRA immediately prior to the removal of the contribution, plus the amount of any distributions, transfers, and recharecterizations made while the contribution was in the IRA 2 7,6W Enter the fair market value of the IRA immediately before the contribution was made, plus the amount of such contribution and any other contributions, transfers, and recharacterizations made while the contribution was in the IRA 3.6,400 4. Subtract line 3 from line 2 4 1 200 • --...?•. a..-...a I---wan 1acmes oiacesr 15.1.18751 http://www.ir,,,.gov/publications/P590/chOl.html 1/19/2012 -7- Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 24 of 41 &IMuhiply line 1 by line 5. This is the net income attributable to the contribution to be returned 16.1 75I ?.JAdd lines 1 and 8. This is the amount of the IRA contribution plus the net income attributable to it to be returned to you 7 475 Last-In first-out rub. If you made more than one regular contribution for the year, your last contribution is considered to be the one that is returned to you first. Earnings Includible in Income You must include in income any earnings on the contributions you withdraw. Include the earnings in income for the year in which you made the contributions, not the year in which you withdraw them. al Generally, except for any part of a withdrawal that is a return of nondeductible contributions (basis), any withdrawal of your contributions after the due date (or extended due date) of your return will be treated as a taxable distribution. Excess contributions can also be recovered tax free as discussed under What Acts Result in Penalties or Additional Taxes, later. Early Distributions Tax The 10% additional tax on distributions made before you reach age 59% does not apply to these tax-free withdrawals of your contributions. However, the distribution of interest or other income must be reported on Form 5329 and, unless the distribution qualifies as an exception to the age 59'k rule, it will be subject to this tax. See Early Distributions under What Ads Result in Penalties or Additional Taxes, later. Excess Contributions Tax If any part of these contributions is an excess contribution for 2010, it is subject to a 8% excise tax. You will not have to pay the 8% tax if any 2010 excess contribution was withdrawn by April 18, 2011 (plus extensions), and if any 2011 excess contribution is withdrawn by April 17, 2012 (plus extensions). See Excess Contributions under What Acts Result in Penalties orAdahtlonel Taxes, later. B You may be able to treat a contribution made to one type of IRA as having been made to a different type of IRA. This is called recharacterizing the contribution. See Recharacterizations, earlier, for more information. When Must You Whhdraw Assets? (Required Minimum Distributions) You cannot keep funds in a traditional IRA indefinitely. Eventually they must be distributed. If there are no distributions, or if the distributions are not large enough, you may have to pay a 50% excise tax on the amount not distributed as required. See Excess Accumulations (Insufficient D stribution5) , later under What Ads Result in Penalties or Additional Taxes. The requirements for distributing IRA funds differ, depending on whether you are the IRA owner or the beneficiary of a decedent's IRA Required minimum distribution. The amount that must be distributed each year is referred to as the required minimum distribution Distributions not eligible for rollover. Amounts that must be distributed (required minimum distributions) during a particular year are not eligible for rollover treatment. IRA Owners If you are the owner of a traditional IRA, you must generally start receiving distributions from your IRA by April 1 of the year following the year in which you reach age 7034. April 1 of the year following the year in which you reach age 70% is referred to as the required beginning date. Distributions by the required beginning data. You must receive at least a minimum amount for each year starting with the year you reach age 70% (your 70% year). If you do not (or did not) receive that minimum amount in your 7035 year, then you must receive distributions for your 7034 year by April 1 of the next year. If an IRA owner dies after reaching age 701h, but before April 1 of the next year, no minimum distribution is required because death occurred before the required beginning date. El Even if you begin receiving distributions before you reach age 70%, you must begin calculating and receiving required minimum distributions by your required beginning date. More than minimum received if, in any year, you receive more than the required minimum distribution for that year, you will not receive credit for the additional amount when determining the minimum required distributions for future years. This does not mean that you do not reduce your IRA account balance. It means that if you receive more than your required minimum distribution in one year, you cannot treat the excess (the amount that is more than the required minimum distribution) as part of your required minimum distribution for any later year. However, any amount distributed in your 7034 year will be credited toward the amount that must be distributed by April 1 of the following year. Distributions after the required beginning date. The required minimum distribution for any year after the year you turn 70'h must be made by December 31 of that later year. Example. You reach age 701h on August 20, 2011. For 2011, you must receive the required minimum distribution from your IRA by April 1, 2012. You must receive the required minimum distribution for 2012 by December 31, 2012. El If you do not receive your required minimum distribution for 2011 until 2012, both your 2011 and your 2012 distributions will be included in income on your 2012 return. http://www.irs.gov/publications/P590/chOl.html 1/19/2012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 25 of 41 Distributions from Individual retirement account. M you are the owner of a traditional IRA that is an individual retirement account, you or your trustee must figure the required minimum distribution for each year. See Pr?urin0 the Owners Required Minimum Dis•rbutr017, later. Distributions from Individual retirement annuities. 0 your traditional IRA is an individual retirement annuity, special rules apply to figuring the required minimum distribution. For more information on rules for annuities, see Regulations section 1.401(a)(9)-6. These regulations can be read in many libraries and IRS offices. Change in marital status. For purposes of figuring your required minimum distribution, your marital status is determined as of January 1 of each year. If your spouse is a beneficiary of your IRA on January 1, he or she remains a beneficiary for the entire year even 0 you get divorced or your spouse dies during the year. For purposes of determining your distribution period, a change in beneficiary is effective in the year following the year of death or divorce. Change of benetklery. If your spouse is the sole beneficiary of your IRA, and he or she dies before you, your spouse will not fail to be your sole beneficiary for the year that he or she died solely because someone other than your spouse is named a beneficiary for the rest of that year. However, if you get divorced during the year and change the beneficiary designation on the IRA during that same year, your former spouse will not be treated as the sole beneficiary for that year. Figuring the Owner's Required Minimum Distribution Figure your required minimum distribution for each year by dividing the IRA account balance (defined next) as of the dose of business on December 31 of the preceding year by the applicable distribution period or life expectancy. Tables showing distribution periods and life expectancies are found in Appendix C and are discussed later. IRA account balance. The IRA account balance is the amount in the IRA at the end of the year preceding the year for which the required minimum distribution is being figured. Contributions. Contributions increase the account balance in the year they are made. If a contribution for last year is not made until after December 31 of last year, it increases the account balance for this year, but not for last year. Disregard contributions made after December 31 of last year in determining your required minimum distribution for this year. Outstanding rollovers and racharactertwlorrs. The IRA account balance is adjusted by outstanding rollovers and recharacterizations of Roth IRA conversions that are not in any account at the end of the preceding year. For a rollover from a qualified plan or another IRA that was not in any account at the end at the preceding year, increase the account balance of the receiving IRA by the rollover amount valued as of the date of receipt. 0 a conversion contribution is contributed to a Roth IRA and that amount (plus net income allocable to it) is transferred to another IRA in a subsequent year as a recharacterized contribution, increase the account balance of the receiving IRA by the recharaderized contribution (plus allocable net income) for the year in which the conversion occurred. Distribution. Distributions reduce the account balance in the year they are made. A distribution for last year made after December 31 of last year reduces the account balance for this year, but not for last year. Disregard distributions made after December 31 of last year in determining your required minimum distribution for this year. Example 1. Laura was born on October 1, 1940. She reaches age 70% in 2011. Her required beginning date is April 1, 2012. As of December 31, 2010, her IRA account balance was $26,500. No rollover or recharacterization amounts were outstanding. Using Table III in Appendix C, the applicable distribution period for someone her age (71) is 26.5 years. Her required minimum distribution for 2011 is $1,000 ($28,500 _ 28.5). That amount is distributed to her on April 1, 2012. Example 2. Joe, born October 1, 1940, reached 70% in 2011. His wife (his beneficiary) turned 56 in September 2011. He must begin receiving distributions by April 1, 2012. Joe's IRA account balance as of December 31, 2010, is $30,100. Because Joe's wife is more than 10 years younger than Joe and is the sole beneficiary of his IRA, Joe uses Table 11 in Appendix C. Based on their ages at year end (December 31, 2011), the joint life expectancy for Joe (age 71) and his wife (age 56) is 30.1 years. The required minimum distribution for 2011, Joe's first distribution year, is $1,000 ($30,100 _ 30.1). This amount is distributed to Joe on April t, 2012. Distribution period. This is the maximum number of years over which you are allowed to take distributions from the IRA. The period to use for 2011 is listed next to your age as of your birthday in 2011 in Table III in Appendix C. L fe expectancy. If you must use Table 1, your life expectancy for 2012 is listed in the table next to your age as of your birthday in 2012. If you use Table II, your life expectancy is listed where the row or column containing your age as of your birthday in 2012 intersects with the row or column containing your spouse's age as of his or her birthday in 2012. Both Table I and Table II are in Appendix C. Distributions during your lifetime. Required minimum distributions during your lifetime are based on a distribution period that generally is determined using Table III (Uniform Lifetime) in Appendix C. However, if the sole beneficiary of your IRA is your spouse who is more than 10 years younger than you, see Sale benef ciaryspouse who is more than 10 years younger below. To figure the required minimum distribution for 2012, divide your account balance at the end of 2011 by the distribution period from the table. This is the distribution period listed next to your age (as of your birthday in 2012) in Table III in Appendix C, unless the sole beneficiary of your IRA is your spouse who is more than 10 years younger than you. Example. You own a traditional IRA Your account balance at the end of 2011 was $100,000. You are married and your spouse, who is the sole beneficiary of your IRA, is 6 years younger than you. You turn 75 years old in 2012. You use Table 111. Your distribution period is 22.9. Your required minimum distribution for 2012 would be $4,367 ($100,000 a 22.9). Sole berieftery spouse who is more than 10 years younger. If the sole beneficiary of your IRA is your spouse and your spouse is more than 10 years younger than you, use the life expectancy from Table II (Joint Life and Last Survivor Expectancy). The life expectancy to use is the joint life and last survivor expectancy listed where the row or column containing your age as of your birthday in 2012 intersects with the row or column containing your spouse's age as of his or her birthday in 2012. You figure your required minimum distribution for 2012 by dividing your account balance at the end of 2011 by the life expectancy from Table II (Joint Life and Last Survivor Expectancy) in Appendix C. http://www.irs.gov/publications/P590/chOl.html 1/19/2012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 26 of 41 Example. You own a traditional IRA. Your account balance at the end of 2011 was $100,000. You are married and your spouse, who is the sole beneficiary of your IRA, is 11 years younger than you. You turn 75 in 2012 and your spouse turns 64. You use Table II. Your joint life and last survivor expectancy is 23.6. Your required minimum distribution for 2012 would be $4,237 ($100,000 : 23.6). Distributions in the year of the owner's death. The required minimum distribution for the year of the owner's death depends on whether the owner died before the required beginning date. If the owner died before the required beginning date, see Owner Died Before Required Beginning Date , later under IRA Beneficiaries. If the owner died on or after the required beginning date, the required minimum distribution for the year of death generally is based on Table III (Uniform Lifetime) in Appendix C. However, if the sole beneficiary of the IRA is the owner's spouse who is more than 10 years younger than the owner, use the life expectancy from Table II (Joint Life and Last Survivor Expectancy). Note. You figure the required minimum distribution for the year in which an IRA owner dies as if the owner lived for the entire year. IRA Beneficiaries The rules for determining required minimum distributions for beneficiaries depend on whether the beneficiary is an individual. The rules for individuals are explained below. If the owners beneficiary is not an individual (for example, ff the beneficiary is the owner's estate), see Beneficiary not an in ;vi l , later. Surviving spouse. It you are a surviving spouse who is the sole beneficiary of your deceased spouse's IRA, you may elect to be treated as the owner and not as the beneficiary. If you elect to be treated as the owner, you determine the required minimum distribution (if any) as N you were the owner beginning with the year you elect or are deemed to be the owner. However, 0 you become the owner in the year your deceased spouse died, you are not required to determine the required minimum distribution for that year using your life; rather, you can take the deceased owner's required minimum distribution for that year (to the extent it was not already distributed to the owner before his or her death). Taking balance within 5 years. A beneficiary who is an individual maybe required to take the entire account by the end of the fifth year following the year of the owners death. If this rule applies, no distribution is required for any year before that fifth year. Owner Died On or After Required Beginning Date If the owner died on or after his or her required beginning date, and you are the designated beneficiary, you generally must base required minimum distributions for years after the year of the owner's death on the longer of: • Your single life expectancy as shown on Table I, or • The owner's life expectancy as determined under Death on or after required beginning date, under Beneficiary not an individw a/, later. Owner Died Before Required Beginning Date M the owner died before his or her required beginning date, base required minimum distributions for years after the year of the owners death generally on your single life expectancy. If the owner's beneficiary is not an individual (tor example, if the beneficiary is the owner's estate), see Beneficiary not an individual, later Date the designated benef Tory is determined. Generally, the designated beneficiary is determined on September 30 of the calendar year following the calendar year of the IRA owners death. In order lobe a designated beneficiary, an individual must be a beneficiary as of the date of death. Any person who was a beneficiary on the date of the owners death, but is not a beneficiary on September 30 of the calendar year following the calendar year of the owners death (because, for example, he or she disclaimed entitlement or received his or her entire benefit), will not be taken into account in determining the designated beneficiary. An individual may be designated as a beneficiary either by the terms of the plan or, it the plan permits, by affirmative election by the employee specifying the beneficiary. Death of a beneficiary. If a person who is a beneficiary as of the owners date of death dies before September 30 of the year following the year of the owner's death without disclaiming entitlement to benefits, that individual, rather than his or her successor beneficiary, continues to be treated as a beneficiary for determining the distribution period. Death of surviving spouse. If the designated beneficiary is the owners surviving spouse, and he or she dies before he or she was required to begin receiving distributions, the surviving spouse will be treated as if he or she were the owner of the IRA. However, this rule does not apply to the surviving spouse of a surviving spouse. More than one beneficiary. Man IRA has more than one beneficiary or a trust is named as beneficiary, see Miscellaneous Rules for Reaurrod Minimum Distribubons, later. Figuring the Beneficiary's Required Minimum Distribution How you figure the required minimum distribution depends on whether the beneficiary is an individual or some other entity, such as a trust or estate. Beneficiary an Individual. If the beneficiary is an individual, to figure the required minimum distribution for 2012, divide the account balance at the end of 2011 by the appropriate life expectancy from Table I (Single Life Expectancy) in Appendix C. Determine the appropriate life expectancy as follows. • Spouse as sole designated beneficiary. Use the life expectancy listed in the table next to the spouse's age (as of the spouse's birthday in 2012). If the owner died before the year in which he or she reached age 701h, distributions to the spouse do not need to begin until the year in which the owner would have reached age 70%. • Other designated beneficiary. Use the life expectancy listed in the table next to the beneficiary's age as of his or her birthday in the year following the year of the owners death, reduced by one for each year since the year following the owners death. If the designated beneficiary dies after September 30 of the year following the year of the owner's death, continue to use the designated beneficiary's remaining life expectancy to determine the distribution period; do not use the life expectancy of any subsequent beneficiary. Example. http://www.ir!i.gov/publications/p590/chOl.html 1/19/2012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 27 of 41 that your life expectancy in 2012 is 31.4. If the IRA was worth $100,000 at the end of 2011, your required minimum distribution for 2012 would be $3,185($100,000+31.4). If the value of the IRA at the end of 2012 was again $100,000, your required minimum distribution for 2013 would be $3,289 ($100,000 ; 30.4). Instead of taking yearly distributions, you could choose to take the entire distribution in 2016 or earlier. Beneficiary not an Individual. If the beneficiary is not an individual, determine the required minimum distribution for 2012 as follows. • Death on or after required beginning date. Divide the account balance at the end of 2011 by the appropriate life expectancy from Table I (Single Life Expectancy) in Appendix C. Use the life expectancy listed next to the owners age as of his or her birthday in the year of death, reduced by one for each year after the year of death. • Death before required beginning date. The entire account must be distributed by the end of the fifth year following the year at the owner's death. No distribution is required for any year before that fifth year. Example. The owner died in 2011 at the age of 80. The owners traditional IRA went to his estate. The account balance at the end of 2011 was $100,000. In 2012, the required minimum distribution would be $10,870 ($100,000 _ 9.2). (The owners life expectancy in the year of death, 10.2, reduced by one.) If the owner had died in 2011 at the age of 70, the entire account would have to be distributed by the and of 2016. Which Table Do You Use To Determine Your Required Minimum Distribution? There are three different life expectancy tables. The tables are found in Appendix C of this publication. You use only one at them to determine your required minimum distribution for each traditional IRA Determine which one to use as follows. Reminder. In using the tables for lifetime distributions, marital status is determined as of January t each year. Divorce or death after January 1 is generally disregarded until the next year. However, H you divorce and change the beneficiary designation in the same year, your former spouse cannot be considered your sole beneficiary for that year. Table I (Single Life Expectancy). Use Table I for years after the year of the owners death if either of the following applies. • You are an individual and a designated beneficiary, but not both the owners surviving spouse and sole designated beneficiary. • You are not an individual and the owner died on or after the required beginning date Surviving ayouae. If you are the owner's surviving spouse and sole designated beneficiary, and the owner had not reached age 70'h when he or she died, and you do not elect to be treated as the owner of the IRA, you do not have to take distributions (and use Table 4 unlit the year in which the owner would have reached age 70'h. Table II (Joint LNe and Last Survivor Expectancy). Use Table II if you are the IRA owner and your spouse is both your sole designated beneficiary and more than 10 years younger than you. Note. Use this table in the year of the owner's death if the owner died after the required beginning date and this is the table that would have been used had he or she not died. Table III (Uniform Lifetime). Use Table 111 if you are the IRA owner and your spouse is not both the sole designated beneficiary of your IRA and more than 10 years younger than you. Note. Use this table in the year of the owners death if the owner died after the required beginning date and this is the table that would have been used had he or she not died. No table. Do not use any of the tables if the designated beneficiary is not an individual and the owner died before the required beginning date. In this case, the entire distribution must be made by the end of the fifth year following the year of the IRA owners death. This rule also applies if there is no designated beneficiary named by September 30 of the year following the year of the IRA owners death. 5-year rule. If you are an individual, you can elect to take the entire account by the end of the fifth year following the year of the owner's death. If you make this election, do not use a table. What Age(s) Do You Use With the Table(s)? The age or ages to use with each table are explained below. Table I (Single Life Expectancy). If you are a designated beneficiary figuring your first distribution, use your age as at your birthday in the year distributions must begin. This is usually the calendar year immediately following the calendar year of the owners death. After the first distribution year, reduce your Ida expectancy by one for each subsequent year. If you are the owners surviving spouse and the sole designated beneficiary, this is generally the year in which the owner would have reached age 7014. After the first distribution year, use your age as of your birthday in each subsequent year. Example. You are the owner's designated beneficiary figuring your first required minimum distribution. Distributions must begin in 2012. You become 57 years old in 2012. You use Table I. Your distribution period for 2013 is 26.9 (27.9 - 1) years. Your distribution period for 2014 is 25.9 (27.9 - 2). Example. You are the owners surviving spouse and the sole designated beneficiary. The owner would have turned age 701h in 2012. Distributions begin in 2012. You become 69 years old in 2012. You use Table 1. Your distribution period for 2012 is 17.8. For 2013, when you are 70 years old, your distribution period is 17.0. For 2014, when you are 71 years old, your distribution period is 16.3. Mo designated benshciary. In some cases, you need to use the owners life expectancy. You need to use it when the owner dies on or after the http://www.irs .gov/publications/p590/ch0l.htmI 1/19/2012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 28 of 41 use the owner's life expectancy for his or her age as of the owner's birthday in the year of death and reduce it by one for each subsequent year Table 11(Jolnt Life and Last Survivor Expectancy). For your first distribution by the required beginning date, use your age and the age of your designated beneficiary as of your birthdays in the year you become age 70W Your combined life expectancy is at the intersection of your ages. If you are figuring your required minimum distribution for 2012, use your ages as of your birthdays in 2012. For each subsequent year, use your and your spouse's ages as of your birthdays in the subsequent year. Table III (Uniform Lifetime). For your first distribution by your required beginning date, use your age as of your birthday in the year you become age 70%. If you are figuring your required minimum distribution for 2012, use your age as ol your birthday in 2012. For each subsequent year, use your age as of your birthday in the subsequent year. Miscellaneous Rules for Required Minimum Distributions The following rules may apply to you. Installments allowed. The yearly required minimum distribution can be taken in a series of installments (monthly, quarterly, etc.) as long as the total distributions for the year are at least as much as the minimum required amount. Moro than one IRA. If you have more than one traditional IRA, you must determine a separate required minimum distribution for each IRA. However, you can total these minimum amounts and take the total from any one or more of the IRAs. Example. Sara, born August 1, 1940, became 70Yz on February 1, 2011. She has two traditional IRAs. She must begin receiving her IRA distributions by April 1, 2012. On December 31, 2010, Sara's account balance from IRA A was $10,000; her account balance from IRA B was $20,000. Sara's brother, age 64 as of his birthday in 2011, is the beneficiary of IRA A. Her husband, age 78 as of his birthday in 2011, is the beneficiary of IRA B. Sara's required minimum distribution from IRA A is $377 ($10,000+26.5 (the distribution period for age 71 per Table III)). The amount of the required minimum distribution from IRA B is $755 ($20,000 + 26.5). The amount that must be withdrawn by Sara from her IRA accounts by April 1, 2012, is $1,132 ($377 + $755). More then minimum received. If, in any year, you receive more than the required minimum amount for that year, you will not receive credit for the additional amount when determining the minimum required amounts for future years. This does not mean that you do not reduce your IRA account balance. It means that if you receive more than your required minimum distribution in one year, you cannot treat the excess (the amount that is more than the required minimum distribution) as part of your required minimum distribution for any later year. However, any amount distributed in your 70% year will be credited toward the amount that must be distributed by April 1 of the following year. Example. Justin became 701A on December 15, 2011. Justin's IRA account balance on December 31, 2010, was $38,400. He figured his required minimum distribution for 2011 was $1,401 ($38,400 + 27.4). By December 31, 2011, he had actually received distributions totaling $3,600,$2,199 more than was required. Justin cannot use that $2,199 to reduce the amount he is required to withdraw for 2012, but his IRA account balance is reduced by the full $3,600 to figure his required minimum distribution for 2012. Justin's reduced IRA account balance on December 31, 2011, was $34,800. Justin figured his required minimum distribution for 2012 is $1,313 ($34,800+ 26.5). During 2012, he must receive distributions of at least that amount. Multiple Indlvldual berxHclarles. If as of September 30 of the year following the year in which the owner dies there is more than one beneficiary, the beneficiary with the shortest life expectancy will be the designated beneficiary if both of the following apply. • All of the beneficiaries are individuals, and • The account or benefit has not been divided into separate accounts or shares for each beneficiary. Separate accounts. A single IRA can be split into separate accounts or shares for each beneficiary. These separate accounts or shares can be established at any time, either before or after the owner's required beginning data. Generally, these separate accounts or shares are combined for purposes of determining the minimum required distribution. However, these separate accounts or shares will not be combined for required minimum distribution purposes after the death of the IRA owner N the separate accounts or shares are established by the end of the year following the year of the IRA owner's death. The separate account rules cannot be used by beneficiaries of a trust. Trust as beneficiary. A trust cannot be a designated beneficiary even if it is a named beneficiary. However, the beneficiaries of a trust will be treated as having been designated as beneficiaries if all of the following are true. 1. The trust is a valid trust under state law, or would be but for the fact that there is no corpus. 2. The trust is irrevocable or will, by its terms, become irrevocable upon the death of the owner. 3. The beneficiaries of the trust who are beneficiaries with respect to the trust's interest in the owner's benefit are identifiable from the trust instrument. 4. The IRA trustee, custodian, or issuer has been provided with either a copy of the trust instrument with the agreement that if the trust instrument is amended, the administrator will be provided with a copy of the amendment within a reasonable time, or all of the following. a. A list of all of the beneficiaries of the trust (including contingent and remaindermen beneficiaries with a description of the conditions on their entitlement). b. Certification that, to the best of the owner's knowledge, the list is cored and complete and that the requirements of (1), (2), and (3), earlier, are met. c. An agreement that, if the trust instrument is amended at any time in the future, the owner will, within a reasonable time, provide to the IRA trustee, custodian, or issuer corrected certifications to the extent that the amendment changes any information previously certified. d. An agreement to provide a copy of the trust instrument to the IRA trustee, custodian, or issuer upon demand. http://www.irs.gov/publications/P590/chOl.html 1/19/2012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 29 of 41 The deadline for providing the beneficiary documentation to the IRA trustee, custodian, or issuer is October 31 of the year following the year of the owner's death. If the beneficiary of the trust is another trust and the above requirements for both trusts are met, the beneficiaries of the other trust will be treated as having been designated as beneficiaries for purposes of determining the distribution period. The separate account rules cannot be used by beneficiaries of a trust. Annuity distributions from an Insurance company. Special rules apply if you receive distributions from your traditional IRA as an annuity purchased from an insurance company. See Regulations sections 1.401(a)(9)-6 and 54A974-2. These regulations can be found in many libraries and IRS offices. Are Distributions Taxable? In general, distributions from a traditional IRA are taxable in the year you receive them. Failed financial Institutions. Distributions from a traditional IRA are taxable in the year you receive them even if they are made without your consent by a state agency as receiver of an insolvent savings institution. This means you must include such distributions in your gross income unless you roll them over. For an exception to the 1-year waiting period rule for rollovers of certain distributions from failed financial institutions, see Exception under Rollover From One IRA Into Another, earlier. Exceptions. Exceptions to distributions from traditional IRAs being taxable in the year you receive them are: • Rollovers, • Qualified charitable distributions, discussed later, • Tax-free withdrawals of contributions, discussed earlier, and • The return of nondeductible contributions, discussed later under Distributions Fuliv or Part/V Taxable. M Although a conversion of a traditional IRA is considered a rollover for Roth IRA purposes, it is not an exception to the rule that distributions from a traditional IRA are taxable in the year you receive them. Conversion distributions are includible in your gross income subject to this rule and the special rules for conversions explained earlier and in chapter 2. Oualilled Charitable Distributions. A qualified charitable distribution (QCD) is generally a nontaxable distribution made directly by the trustee of your IRA (other than a SEP or SIMPLE IRA) to an organization eligible to receive tax-deductible contributions. You must be at least age 70% when the distribution was made. Also, you must have the same type of acknowledgement of your contribution that you would need to claim a deduction for a charitable contribution. See Records To Keep in Publication 526, Charitable Contributions. The maximum annual exclusion for QCDs is $100,000. Any QCD in excess at the $100,000 exclusion limit is included in income as any other distribution. If you file a joint return, your spouse can also have a QCD and exclude up to $100,000. The amount of the QCD is limited to the amount of the distribution that would otherwise be included in income. If your IRA includes nondeductible contributions, the distribution is first considered to be paid out of otherwise taxable income. TIP A QCD will count towards your required minimum distribution. Example. On November 1, 2011, Jeff, age 75, directed the trustee of his IRA to make a distribution of $25,000 directly to a qualified 601(c)(3) organization (a charitable organization eligible to receive tax-deductible contributions). The total value of Jeffs IRA is $30,000 and consists of $20,000 of deductible contributions and earnings and $10,000 of nondeductible contributions (basis). Since Jeff is at least age 70% and the distribution is made directly by the trustee to a qualified organization, the part of the distribution that would otherwise be includible in Jeffs income ($20,000) is a QCD. In this case, Jeff has made a QCD of $20,000 (his deductible contributions and earnings). Because Jeff made a distribution of nondeductible contributions from his IRA, he must file Form 5606, Nondeductible IRAs, with his return. Jeff includes the total distribution ($25,000) on line I Sa of Form 1040. He completes Form !1608 to determine the amount to enter on line 15b of Form 1040 and the remaining basis in his IRA Jeff enters -0- on line I6b. This is Jeff's only IRA and he took no other distributions in 2011. He also enters "QCD" next to line 15b to indicate a qualified charitable distribution. After the distribution, his basis in his IRA is $5,000. If Jeff itemizes his deductions and files Schedule A with Form 1040, the $5,000 portion of the distribution attributable to the nondeductible contributions can be deduced as a charitable contribution, subject to AGI limits. He cannot take a charitable contribution deduction for the $20,000 portion of the distribution that was not included in his income. M You cannot claim a charitable contribution deduction for any QCD not included in your income January 2011 QCDs ttwW as made In 2010. If you made a QCD in January 2011, you could have elected to have it treated as made in 2010. If you made this election, the full amount of the OCD counted towards your 2010 required minimum distribution and does not count towards your 2011 required minimum distribution. Even if you made this election, you must report the QCD on your 2011 tax return, as discussed below. 2011 Reporting, if you made a QCD in 2011, include the full amount of the QCD on your 2011 Form 1040, line 15a; Form 1040A, line 11 a; or Form 1040NR, line 16a. Any amount over the $100,100 limit must be included on your 2011 Form 1040, line 15b; Form 1040A, line 11 b; or Form 1040NR, line I ft Be sure to enter "QCD' next to Form 1040, line 15b; Form 1040A, line 11b; or Form 1040NR, line 16b. Additional reporting requirements H you made the election to treat a January 2011 QCD as made In 2010. If you made a QCD in January 2011 and you elected to treat it as made in 2010, this amount will be reported to you on a 2011 Form 1099-R in 2012. You will need to include this amount with any other 2011 distributions on your 2011 Form 1040, line 15a; Form 1040A, line 11 a; or Form 1040NR, line 16a, even though you already reported h on your 2010 tax return. Report this amount on your 2011 tax return even if it is the only IRA distribution that you are reporting. See 2011 Reporting above and follow the reporting instructions there and in your 2011 tax return. It the total of your QCDs made in 2011, including your January QCD that you elected to treat as made in 2010, exceeds $100,000, attach a statement to your return listing your OCDs for 2010 and 2011. If you are married filing a joint return, the $100,000 limit applies separately to each of 11-1 http://www.irs .gov/publications/p590/chOl.htmI 1/19/2012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 30 of 41 If you are required to file a 2011 Form 5329 because you failed to take your total required minimum distributions for 2011, do not include the amount of the January QCD that you elected to treat as made in 2010 on Form 5329, line 51. One-time quallfled HSA funding distribution. You maybe able to make a qualified HSA funding distribution from your traditional IRA or Roth IRA to your Health Savings Account (HSA). You cannot make this distribution from an ongoing SEP IRA or SIMPLE IRA. For this purpose, a SEP IRA or SIMPLE IRA is ongoing if an employer contribution is made for the plan year ending with or within your tax year in which the distribution would be made. The distribution must be less than or equal to your maximum annual HSA contribution. This distribution must be made directly by the trustee of the IRA to the trustee of the HSA The distribution is not included in your income, is not deductible, and reduces the amount that can be contributed to your HSA You must make the distribution by the end of the year; the special rule allowing contributions to your HSA for the previous year if made by your tax return filing deadline does not apply. The qualified HSA funding distribution is reported on Form 8889, Health Savings Accounts, for the year in which the distribution is made. One-time banslar. Generally, only one qualified HSA funding distribution is allowed during your lifetime. If you own two or more IRAs, and want to use amounts in multiple IRAs to make a qualified HSA funding distribution, you must first make an IRA-to-IRA transfer of the amounts to be distributed into a single IRA, and then make the one-time qualified HSA funding distribution from that IRA. Testing period rules apply. If at anytime during the testing period you cease to meet all requirements to bean eligible individual, the amount of the qualified HSA funding distribution is included in your gross income. The qualified HSA funding distribution is included in gross income in the taxable year you first fail to be an eligible individual. This amount is subject to the 10 percent additional tax (unless the failure is due to disability or death). Moro Information. See Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans, for additional information about this distribution. Ordinary Income. Distributions from traditional IRAs that you include in income are taxed as ordinary income. No special treatment. In figuring your tax, you cannot use the 10-year tax option or capital gain treatment that applies to lump-sum distributions from qualified retirement plans. Distributions Fully or Partly Taxable Distributions from your traditional IRA may be fully or partly taxable, depending on whether your IRA includes any nondeductible contributions. Fullytaxable. If only deductible contributions were made to your traditional IRA (or IRAs, if you have more than one), you have no basis in your IRA. Because you have no basis in your IRA, any distributions are fully taxable when received. See Reoonino and Withfrofdina Recuirements for Taxable Amounts, later. Partly taxable. If you made nondeductible contributions or rolled over any after-tax amounts to any of your traditional IRAs, you have a cost basis (investment in the contract) equal to the amount of those contributions. These nondeductible contributions are not taxed when they are distributed to you. They are a return of your investment in your IRA. Only the part of the distribution that represents nondeductible contributions and rolled over after-tax amounts (your cost basis) is tax free. If nondeductible contributions have been made or after-tax amounts have been rolled over to your IRA, distributions consist partly of nondeductible contributions (basis) and partly of deductible contributions, earnings, and gains (if there are any). Until all of your basis has been distributed, each distribution is partly nontaxable and partly taxable. Form 6608. You must complete Form 8606, and attach it to your return, if you receive a distribution from a traditional IRA and have ever made nondeductible contributions or rolled over after-tax amounts to any of your traditional IRAs. Using the form, you will figure the nontaxable distributions for 2011, and your total IRA basis for 2011 and earlier years. See the illustrated Forms 8606 in this chapter. Note. If you are required to file Form 8606, but you are not required to file an income tax return, you still must file Form 6606. Complete Form 8606, sign it, and send it to the IRS at the time and place you would otherwise file an income tax return. Figuring the Nontaxable and Taxable Amounts If your traditional IRA includes nondeductible contributions and you received a distribution from it in 2011, you must use Form 8606 to figure how much of your 2011 IRA distribution is tax free. Note. When figuring the nontaxable and taxable amounts of distributions made prior to death in the year the IRA account owner dies, the value of all traditional (including SEP) and SIMPLE IRAs should be figured as of the date of death instead of December 31. Contribution and distribution In the same year. If you received a distribution in 2011 from a traditional IRA and you also made contributions to a traditional IRA for 2011 that may not be fully deductible because of the income limits, you can use Worksheet 1-5 to figure how much of your 2011 IRA distribution is tax free and how much is taxable. Then you can figure the amount of nondeductible contributions to report on Form 8606. Follow the instructions under Reporting your nontaxable distribution on Form 8606, next, to figure your remaining basis after the distribution. Reporting your nontaxable distribution on Form 8808. To report your nontaxable distribution and to figure the remaining basis in your traditional IRA after distributions, you must complete Worksheet 1-5 before completing Form 8606. Then follow these steps to complete Form 8606. 1. Use Worksheet 1-2 or the IRA Deduction Worksheet in the Form 1040, 1040A, or 104ONR instructions to figure your deductible contributions to traditional IRAs to report on Form 1040, line 32; Form 1040A, line 17; or Form 1040NR, line 32. 2. After you complete Worksheet 1-2 or the IRA deduction worksheet in the form instructions, enter your nondeductible contributions to traditional IRAs on fine 1 of Form 8606. 3. Complete lines 2 through 5 of Form 8606. 4. If line 5 of Form 8606 is less than line 8 of Worksheet 1-5, complete lines 6 through 15 of Form 8606 and stop here. 5. If line 5 of Form 8606 is equal to or greater than line 8 of Worksheet 1.5, follow instructions 6 and 7, next. Do not complete lines 6 through 12 of Form 8606. 6. Enter the amount from line 8 of Worksheet 1.5 on lines 13 and 17 of Form 8606. http://www.irs.gov/publications/p590/chOl.html 1/19/2012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 31 of 41 7. Complete line 14 of Form 8606. 8. Enter the amount from line 9 of Worksheet 1-5 (or, if you entered an amount online 11, the amount from that line) online 15 of Form 8606. Worksheet 1-5. Figuring the Taxable Part of Your IRA Distribution Use only if you made contributions to a traditional IRA for 2011 that may not be fully deductible and have to figure the taxable part of your 2011 distributions to determine your modified AGI. See Limit it Covered by Employer Pian. Form 8606 and the related instructions will be needed when using this worksheet. Note. When used in this worksheet, the term outstanding rollover refers to an amount distributed from a traditional IRA as part of a rollover that, as of December 31, 2011, had not yet been reinvested in another traditional IRA, but was still eligible to be rolled over tax free. 1. Enter the basis in our traditional IRAs as of December 31, 2010 1. 2. Enter the total of all contributions made to your traditional IRAs during 2011 and all contributions made during 2012 that were for 2011, whether or not deductible. Do not include rollover contributions property rolled over into IRAs. Also, do not include certain returned contributions described in the instructions for line 7, Part I, of Form 8606. 2. 3. Add lines 1 and 2 3. 4. Enter the value of all your traditional IRAs as of December 31, 2011 (include any outstanding rollovers from traditional IRAs to other traditional IRAs). 4. 5. Enter the total distributions from traditional IRAs (including amounts converted to Roth IRAs that will be shown on line 16 of Form 8606) received in 2011. (Do not include outstanding rollovers included on line 4 or any rollovers between traditional IRAs completed by December 31, 2011. Also, do not include certain returned contributions described in the instructions for line 7, Part I, of Form 8608. 5.11 Add lines 4 and 5 8. 7. Divide line 3 by line 6. Enter the result as a decimal (rounded to at least three places). If the result is 1.000 or more, enter 1.000 7. B. Nontaxable portion of the distribution. Multiply line 5 line 7. Enter the result here and on lines 13 and 17 of Form 8605 8, Taxable portion of the distribution (bell "adjustment for conversions). 9. Subtract line 8 from line 5. Enter the result here and if there are no amounts converted to Roth IRAs, stop hero and enter the result on line 15 of Forth 8808 g 10 Enter the amount included on line 9 that is allocable to amounts converted to Roth IRAs by December 31, 2011. (See Note at the end of this worksheet. Enter here and on line 18 of Form 8808 10. 11 Taxable portion of the dieldbution (attar adjustments for conversions). Subtract line 10 from line 9. Enter the result here and on line 15 of Form 8608 11, Note. If the amount on line 5 of this worksheet includes an amount converted to a Roth IRA by December 31, 2011, you must determine the rcentage of the distribution allocable to the conversion. To figure the percentage, divide the amount converted (from line 16 of Form 8606) by the otal distributions shown on line 5. To figure the amounts to include on line 10 of this worksheet and on line 18, Part 11 of Form 8606, multiply line 9 of he worksheet the ercenta you figured. Example. Rose Green has made the following contributions to her traditional IRAs. 2005 2,000 -0- 2006 2,000 .0- 2007 1,000 .0- 2008 1,000 .0- 2009 1,000 .0- 2010 700 300 $9,700 1 $300 Rose needs to complete Worksheet 1-5, Figuring the Taxable Part of Your IRA Distribution, to determine if her IRA deduction for 2011 will be reduced or eliminated. In 2011, she makes a $2,000 contribution that may be partly nondeductible. She also receives a distribution of $5,000 for conversion to a Roth IRA. She completed the conversion before December 31, 2011, and did not recharacterize any contributions. At the end of 2011, the fair market values of her accounts, including earnings, total $20,000. She did not receive any tax-free distributions in earlier years. The amount she includes in income for 2011 is figured on Worksheet 1-5 Figuring' the Taxable Part of Your IRA Distribution-Illustrate d. The illustrated Form 8606 for Rose shows the information required when you need to use Worksheet 1-5 to figure your nontaxable distribution. Assume that the $500 entered an Form 8606, line 1, is the amount Rose figured using instructions 1 and 2 given earlier under Reporting your nontaxable distribution on Form 8606. Worksheet 1-5. Figuring the Taxable Part of Your IRA Distribution-Illustrated Use only if you made contributions to a traditional IRA for 2011 that may not be fully deductible and have to figure the taxable part ot your 2011 distributions to determine your modified AGI. See Lima it Covered by Emolover Man. Form 8606 and the related instructions will be needed when using this worksheet. Note. When used in this worksheet, the term outstanding rollover refers to an amount distributed from a traditional IRA as part of a rollover that, as of December 31, 2011, had not yet been reinvested in another traditional IRA, but was still eligible to be rolled over tax free. 1. Enter the basis in our traditional IRAs as of December 31, 2010 1 300 r 2. Enter the total of all contributions made to your traditional IRAs during 2011 and all contributions made during 2012 that were for 2011, whether or not deductible. Do not include rollover contributions property rolled over into IRAs. Also, do not include certain returned contributions described in the instructions for line 7. Part I. of Form 8606. the value of all your traditional IRAs as of December 31, 2011 (include any outstanding rollovers from traditional IRAs to other onal IRAs) the total distributions from traditional IRAs finciudina amounts converted to Roth IRAs that will be shown on line 16 of Form http://www.irs gov/publications/p590/chol.htmI 1/19/2012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) 8606) received in 2011. (Do not indude outstanding rollovers included on line 4 or any rollovers between traditional IRAs completed by December 31, 2011. Also, do not include certain returned contributions described in the instructions for line 7, Part I, of Form 8606. 5. 5,000 6. Add lines 4 and 5 6. 25,000 7. Divide line 3 by line 6. Enter the result as a decimal (rounded to at least three places). If the result is 1.000 or more, enter 1.000 7. .092 9. Nontaxable portion of the distribution. Multiply line 5 line 7. Enter the result here and on lines 13 and 17 of Form 8606 8. 460 Taxable portion of the distribution (before adjustment for conversions). 9. Subtract line 8 from line 5. Enter the result here and if there are no amounts converted to Roth IRAs, stop here and enter the result on line 15 of Form 8606 9. 4,540 10 Enter the amount included on line 9 that is allocable to amounts converted to Roth IRAs by December 31, 2011. (See Note at the end of this worksheet.) Enter here and on line 18 of Form 8606 10. 4,540 11 axable portion of the distribution (after adjustments for conversions). Subtract line 10 from line 9. Enter the result here and on line 15 of Form 8606 11. 0 Note. If the amount on line 5 of this worksheet includes an amount converted to a Roth IRA by December 31, 2011, you must determine the percentage of the distribution allocable to the conversion. To figure the percentage, divide the amount converted (from line 16 of Form 8606) by the total distributions shown on line 5. To figure the amounts to include on line 10 of this worksheet and on line 18, Part II of Form 8606, multiply line 9 of he worksheet the percentage you figured. This image is too large to be displayed in the current screen. Please click the link to view the imaae Form 8606 - Rose Green Recognizing Losses on Traditional IRA Investments If you have a loss on your traditional IRA investment, you can recognize (include) the loss on your income tax return, but only when all the amounts in all your traditional IRA accounts have been distributed to you and the total distributions are less than your unreoovered basis, if any. Your basis is the total amount of the nondeductible contributions in your traditional IRAs. You claim the loss as a miscellaneous itemized deduction, subject to the 296 of-adjusted-gross-income limit that applies to certain miscellaneous itemized deductions on Schedule A (Form 1040). Any such losses are added back to taxable income for purposes of calculating the alternative minimum tax. Example. Bill King has made nondeductible contributions to a traditional IRA totaling $2,000, giving him a basis at the end of 2010 of $2,000. By the end of 2011, his IRA eams $400 in interest income. In that year, Bill receives a distribution of $600 ($500 basis +$100 interest), reducing the value of his IRA to $1,800 ($2,000 + $400 - $600) at year's end. Bill figures the taxable part of the distribution and his remaining basis on Form 8606 (illustrated). In 2012, Bill's IRA has a loss of $500. At the end of that year, Bill's IRA balance is $1,300 ($1,800 - $500). Bill's remaining basis in his IRA is $1,500 ($2,000 - $500). Bill receives the $1,300 balance remaining in the IRA. He can claim a loss for 2012 of $200 (the $1,500 basis minus the $1,300 distribution of the IRA balance). This image is too large to be displayed in the current screen. Please click the link to view the image, Form 8606 - Bill King $100 Other Special IRA Distribution Situations Two other special IRA distribution situations are discussed next. Distribution of an annuity contract from your IRA account. You can tell the trustee or custodian of your traditional IRA account to use the amount in the account to buy an annuity contract for you. You are not taxed when you receive the annuity contract (unless the annuity contract is being converted to an annuity held by a Roth IRA). You are taxed when you start receiving payments under that annuity contract. Tax treatment If only deducible contributions were made to your traditional IRA since it was opened (this indudes all your traditional IRAs, if you have more than one), the annuity payments are fully taxable. If any of your traditional IRAs indude both deducible and nondeductible Contributions, the annuity payments are taxed as explained earlier under Distobutions Fully or Partly Taxable. Cashing in retirement bonds. When you cash in retirement bonds, you are taxed on the entire amount you receive. Unless you have already cashed them in, you will be taxed on the entire value of your bonds in the year in which you reach age 70'h. The value of the bands is the amount you would have received if you had cashed them in at the end of that year. When you later cash in the bonds, you will not be taxed again. Reporting and Withholding Requirements for Taxable Amounts If you receive a distribution from your traditional IRA, you will receive Form 1099-R, or a similar statement. IRA distributions are shown in boxes 1 and 2a of Form 1099-R. A number or letter code in box 7 tells you what type of distribution you received from your IRA. Number codes. Some of the number codes are explained below. All of the codes are explained in the instructions for recipients on Form 1099-R. 1-Early distribution, no known exception. 2-Early distribution, exception applies. 3-Disability. 4-Death. 5-Prohibited transaction. 7-Normal distribution. 8-Excess contributions plus earnings/ excess deferrals (and/or earnings) taxable in 2011. http://www.ir,,.gov/publications/p590/chOl.html Page 32 of 41 1/19/2012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 33 of 41 El If code 1, 5, or 8 appears on your Form 1099-R, you are probably subject to a penalty or additional tax. If code 1 appears, see Early Distributions, later. If code 5 appears, see Prohibited Transactions, later. If code 8 appears, see Excess Contributions, later. Letter codes. Some of the letter codes are explained below. All of the codes are explained in the instructions for recipients on Form 1090-R. B-Designated Roth account distribution. G-Direct rollover of a distribution (other than a designated Roth account distribution) to a qualified plan, a section 403(b) plan, a governmental section 457(b) plan, or an IRA. H-Direct rollover of a designated Roth account distribution to a Roth IRA. J-Early distribution from a Roth IRA N-Recharacterized IRA contribution made for 2011 and recharacterized in 2011. P-Excess contributions plus earnings/ excess deferrals taxable in 2010. Q-0ualffied distribution from a Roth IRA. R-Recharecterized IRA contribution made for 2010 and recharacterized in 2011. S-Early distribution from a SIMPLE IRA in the first 2 years, no known exception. T-Roth IRA distribution, exception applies. If the distribution shown on Form 1099-R is from your IRA, SEP IRA, or SIMPLE IRA, the small box in box 7 (labeled /RAISEP/SIMPLE) should be marked with an "X." H code J, P, or S appears on your Form 1099•R, you are probably subject to a penalty or additional tax. If code J appears, see Early Distributions, later. If code P appears, see Excess Contributions, later. lt code S appears, see Additional Tax on Early Distributions in chapter 3. Withholding. Federal income tax is withheld from distributions from traditional IRAs unless you choose not to have tax withheld The amount of tax withheld from an annuity or a similar periodic payment is based on your marital status and the number of withholding allowances you claim on your withholding certificate (Form W-4P). If you have not filed a certificate, tax will be withheld as If you are a married individual claiming three withholding allowances. Generally, tax will be withheld at a 10% rate on nonperiodic distributions. IRA d/sidbudons delivered outside the United States. In general, if you area U.S. citizen or resident alien and your hone address is outside the United States or its possessions, you cannot choose exemption from withholding on distributions from your traditional IRA. To choose exemption from withholding, you must certify to the payer under penalties of perjury that you are not a U.S. citizen, a resident alien of the United States, or a tax-avoidance expatriate. Even if this election is made, the payer must withhold tax at the rates prescribed for nonresident aliens. More Intormat/on. For more information on withholding on pensions and annuities, see Pensions and Annuities in chapter 1 of Publication 505, Tax Withholding and Estimated Tax. For more information on withholding on nonresident aliens and foreign entities, see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities. Reporting taxable distributions on your return. Repot fully taxable distributions, including early distributions, on Form 1040, line 15b (no entry is required on line 15a); Form 1040A, line 11 b (no entry is required on line 11 a); or Form 1040NR, line 16b (no entry is required on line 16a). If only part of the distribution is taxable, enter the total amount on Form 1040, line 15a; Form 1040A, line I Ia; or Form 1040NR, line 16a, and enter the taxable part on Form 1040, line 15b; Form 1040A, line 11 b; or Form 1040NR, line 16b. You cannot report distributions on Form 1040EZ or Form 1040NR-EZ. Estate tax. Generally, the value of an annuity or other payment receivable by any beneficiary of a decedent's traditional IRA that represents the part of the purchase price contributed by the decedent (or by his or her former employer(s)) must be included in the decedent's gross estate. For more information, see the instructions for Schedule I, Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return. What Acts Resuft In Penalties or Additional Taxes? The tax advantages at using traditional IRAs for retirement savings can be offset by additional taxes and penalties if you do not follow the rules. There are additions to the regular tax for using your IRA funds in prohibited transactions. There are also additional taxes for the following activities. • Investing in collectibles. • Making excess contributions. • Taking early distributions. • Allowing excess amounts to accumulate (failing to take required distributions). There are penalties for overstating the amount of nondeductible contributions and for failure to file Form 8506, if required. This chapter discusses those ads that you should avoid and the additional taxes and other casts, including loss of IRA status, that apply if you do not avoid those acts. Prohibited Transactions Generally, a prohibited transaction is any improper use of your traditional IRA account or annuity by you, your beneficiary, or any disqualified person http://www.ir, .gov/publications/p590/chOl.html 1/19/2012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) descendant). The following are examples of prohibited transactions with a traditional IRA. • Borrowing money from it. • Selling property to it. • Receiving unreasonable compensation for managing it. • Using it as security for a loan. • Buying property for personal use (present or future) with IRA funds. Fiduciary. For these purposes, a fiduciary includes anyone who does any of the following. • Exercises any discretionary authority or discretionary control in managing your IRA or exercises any authority or control in managing or disposing of its assets. • Provides investment advice to your IRA for a fee, or has any authority or responsibility to do so. • Has any discretionary authority or discretionary responsibility in administering your IRA. Effect on on IRA account. Generally, if you or your beneficiary engages in a prohibited transaction in connection with your traditional IRA account at any time during the year, the account stops being an IRA as of the first day of that year. Effect on you or your beneficiary. If your account stops being an IRA because you or your beneficiary engaged in a prohibited transaction, the account is treated as distributing all its assets to you at their fair market values on the first day of the year. it the total of those values is more than your basis in the IRA, you will have a taxable gain that is includible in your income. For information on figuring your gain and reporting it in income, see Are Distributions Taxable, earlier. The distribution may be subject to additional taxes or penalties. Borrowing on an annuity contract. If you borrow money against your traditional IRA annuity contract, you must include in your gross income the fair market value of the annuity contract as of the first day of your tax year. You may have to pay the 10% additional tax on early distributions, discussed later. Pledging an account so secuAty. If you use apart of your traditional IRA account as security for a loan, that part is treated as a distribution and is included in your gross income. You may have to pay the 10% additional tax on early distributions, discussed later. Trust account set up by an employer or an employee association. Your account or annuity does not lose its IRA treatment if you employer or the employee association with whom you have your traditional IRA engages in a prohibited transaction. Owner participation. If you participate in the prohibited transaction with your employer or the association, your account is no longer treated as an IRA. Taxes on prohibited transactions. If someone other than the owner or beneficiary of a traditional IRA engages in a prohibited transaction, that person maybe liable for certain taxes. In general, there is a 15% tax on the amount of the prohibited transaction and a 100% additional tax it the transaction is not corrected. Loss of IRA status. If the traditional IRA ceases to be an IRA because of a prohibited transaction by you or your beneficiary, you or your beneficiary are not liable for these excise taxes. However, you or your beneficiary may have to pay other taxes as discussed under Effect on you or your benefrclarv, earlier. Exempt Transactions The following two types of transactions are not prohibited transactions if they meet the requirements that follow. • Payments of cash, property, or other consideration by the sponsor of your traditional IRA to you (or members of your family). • Your receipt of services at reduced or no cost from the bank where your traditional IRA is established or maintained. Payments of cash, property, or other consideration. Even if a sponsor makes payments to you or your family, there is no prohibited transaction if all three of the following requirements are met. 1. The payments are for establishing a traditional IRA or for making additional contributions to it. 2. The IRA is established solely to benefit you, your spouse, and your or your spouse's beneficiaries 3. During the year, the total fair market value of the payments you receive is not more than: a. $10 for IRA deposits of less than $5,000, or b. $20 for IRA deposits of $5,000 or more. If the consideration is group term life insurance, requirements (1) and (3) do not apply it no more than $5,000 of the face value of the insurance is based on a dollar-for-dollar basis on the assets in your IRA Services received at reduced or no cost. Even it a sponsor provides services at reduced or no cost, there is no prohibited transaction if all of the following requirements are met. • The traditional IRA qualifying you to receive the services is established and maintained for the benefit of you, your spouse, and your or your spouse's beneficiaries. • The bank itself can legally offer the services. • The services are provided in the ordinary course of business by the bank (or a bank affiliate) to customers who quality but do not maintain an Ioa t- a se-h ni-% http://www.irs.gov/publications/P590/chOl.html Page 34 of 41 1/19/2012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 35 of 41 • The determination, for a traditional IRA, of who qualifies for these services is based on an IRA (or a Keogh plan) deposit balance equal to the lowest qualifying balance for any other type of account. • The rate of return on a traditional IRA investment that qualifies is not less than the return on an identical investment that could have been made at the same time at the same branch of the bank by a customer who is not eligible for (or does not receive) these services. Investment in Collectibles If your traditional IRA invests in collectibles, the amount invested is considered distributed to you in the year invested. You may have to pay the 10% additional tax on early distributions, discussed later. Any amounts that were considered to be distributed when the investment in the collectible was made, and which were included in your income at that time, are not included in your income when the collectible is actually distributed from your IRA. Collectibles. These include: • Artworks, • Rugs, • Antiques, • Metals, • Gems, • Stamps, • Coins, • Alcoholic beverages, and • Certain other tangible personal property. Exception. Your IRA can invest in one, one-half, one-quarter, or one-tenth ounce U.S. gold coins, or one•ounce silver coins minted by the Treasury Department. It can also invest in certain platinum cans and certain gold, silver, palladium, and platinum bullion. Excess Contributions Generally, an excess contribution is the amount contributed to your traditional IRAs for the year that is more than the smaller of: • $5,000 ($6,000 if you are age 50 or older), or • Your taxable compensation for the year. The taxable compensation limit applies whether your contributions are deductible or nondeductible. Contributions for the year you reach age 7014 and any later year are also excess contributions. An excess contribution could be the result of your contribution, your spouse's contribution, your employer's contribution, or an improper rollover contribution. lt your employer makes contributions on your behalf to a SEP IRA, see Publication 560. Tax on Excess Contributions In general, if the excess contributions for a year are not withdrawn by the date your return for the year is due (including extensions), you are subject to a 6% tax. You must pay the 6% tax each year on excess amounts that remain in your traditional IRA at the end of your tax year. The tax cannot be more than 6% of the combined value of all your IRAs as of the end of your tax year. The additional tax is figured on Form 5329. For information on filing Form 5329, see Reporting Additional Taxes , later. Example. For 2011, Paul Jones is 45 years old and single, his compensation is $31,000, and he contributed $5,500 to his traditional IRA. Paul has made an excess contribution to his IRA of $500 ($5,500 minus the $5,000 limit). The contribution earned $5 interest in 2011 and $6 interest in 2012 before the due date of the return, including extensions. He does not withdraw the $500 or the interest h earned by the due date of his return, including extensions. Paul figures his additional tax for 2011 by multiplying the excess contribution ($500) shown on Form 5329, line 16, by.06, giving him an additional tax liability of $30. He enters the tax on Forth 5329, line 17, and on Form 1040, line 56. See Paul's filled-in Form 5322. This image is too large to be displayed in the current screen. Please click the link to view the image Forth 5329, page 1 Paul Jones Excess Contributions Withdrawn by Due Date of Return You will not have to pay the 6% tax if you withdraw an excess contribution made during a tax year and you also withdraw any interest or other income earned on the excess contribution. You must complete your withdrawal by the date your tax return for that year is due, including extensions. How to treat withdrawn contributions. Do not include in your gross income an excess contribution that you withdraw from your traditional IRA before your tax return is due if both of the following conditions are met. • No deduction was allowed for the excess contribution. http://www.irs,gov/publications/p590/chOl.html 1/19/2012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 36 of 41 A You can take into account any loss on the contribution while it was in the IRA when calculating the amount that must be withdrawn. If there was a loss, the net income you must withdraw may be a negative amount. In most cases, the net income you must transfer will be determined by your IRA trustee or custodian. If you need to determine the applicable net income you need to withdraw, you can use the same method that was used in Worksheet 1-3, earlier. If you timely filed your 2011 tax return without withdrawing a contribution that you made in 2011, you can still have the contribution returned to you within 6 months at the due date of your 2011 tax return, excluding extensions. M you do, lite an amended return with Wiled pursuam to section 301.9100.2' written at the top. Report any related earnings on the amended return and include an explanation of the withdrawal. Make any other necessary changes on the amended return (for example, it you reported the contributions as excess contributions on your original return, include an amended Forth 5329 reflecting that the withdrawn contributions are no longer treated as having been contributed). How to treat withdrawn Interest or other Income. You must include in your gross income the interest or other income that was earned on the excess contribution. Report 4 on your return for the year in which the excess contribution was made. Your withdrawal of interest or other income may be subject to an additional 10% tax on early distributions, discussed later. Form 1099.8. You will receive Form 1099-R indicating the amount of the withdrawal. If the excess contribution was made in a previous tax year, the form will indicate the year in which the earnings are taxable. Example. Maria, age 35, made an excess contribution in 2011 of $1,000, which she withdrew by April 17, 2012, the due date of her return. At the same time, she also withdrew the $50 income that was earned on the $1,000. She must include the $50 in her gross income for 2011 (the year in which the excess contribution was made). She must also pay an additional tax of $5 (the 10% additional tax on early distributions because she is not yet 5916 years old), but she does not have to report the excess contribution as income or pay the 6% excise tax. Maria receives a Form 1099-R showing that the earnings are taxable for 2011. Excess Contributions Withdrawn After Due Date of Return In general, you must include all distributions (withdrawals) from your traditional IRA in your gross income. However, if the following conditions are met, you can withdraw excess contributions from your IRA and not include the amount withdrawn in your gross income. • Total contributions (other than rollover contributions) for 2011 to your IRA were not more than $5,000 ($6,000 if you are age 50 or older). • You did not take a deduction for the excess contribution being withdrawn. The withdrawal can take place at any time, even after the due date, including extensions, for filing your tax return for the year. Excess contribution dedlucted in an earlier year. If you deducted an excess contribution in an earlier year for which the total contributions were not more than the maximum deductible amount for that year ($2,000 for 2001 and earlier years, $3,000 for 2002 through 2004 ($3,500 if you were age 50 or older), $4,000 for 2005 ($4,500 0 you were age 50 or older), $4,000 for 2006 or 2007 ($5,000 if you were age 60 or older), $5,000 for 2008 through 2010 ($6,000 H you were age 60 or older)), you can still remove the excess from your traditional IRA and not include it in your gross income. To do this, file Form 1040X, Amended U.S. Individual Income Tax Return, for that year and do not deduct the excess contribution on the amended return. Generally, you can file an amended return within 3 years after you filed your return, or 2 years from the time the tax was paid, whichever is later. Excess due to Incorrect rollover Information. If an excess contribution in your traditional IRA is the result of a rollover and the excess occurred because the information the plan was required to give you was incorrect, you can withdraw the excess oontrtbution. The limits mentioned above are increased by the amount of the excess that is due to the incorrect information. You will have to amend your return for the year in which the excess occurred to correct the reporting of the rollover amounts in that year. Do not include in your gross income the part of the excess contribution caused by the incorrect information. Deducting an Excess Contribution in a Later Year You cannot apply an excess contribution to an earlier year even d you contributed less than the maximum amount allowable for the earlier year. However, you may be able to apply it to a later year it the contributions for that later year are less than the maximum allowed for that year. You can deduct excess contributions for previous years that are still in your traditional IRA The amount you can deduct this year is the lesser of the following two amounts. • Your maximum IRA deduction for this year minus any amounts contributed to your traditional IRAs for this year. • The total excess contributions in your IRAs at the beginning of this year. This method lets you avoid making a withdrawal. It does not, however, let you avoid the 6% tax on any excess contributions remaining at the end of a tax year. To figure the amount of excess contributions for previous years that you can deduct this year, see Worksheet 1-6. Worksheet 1-6. Excess Contributions Deductible This Year Usa thk wnrksheat to finure the amount of excess Contributions from DdOr Mars VOU Can deduct this Vear. 1. Maximum IRA deduction for the current year 1 IRA contributions for the current year 2. Subtract line 2 from line 1. If zero 0 or less, enter zero 3. Excess contributions in IRA at beginning ot year 4. Enter the lesser of line 3 or line 4. This is the amount of excess contributions for previous ears that you can deduct this year 5 Example. Teri was entitled to contribute to her traditional IRA and deduct $1,000 in 2010 and $1,500 in 2011 (the amounts of her taxable compensation for these years). For 2010, she actually contributed $1,400 but could deduct only $1,000. In 2010, $400 is an excess contribution subject to the 6% tax. 4irvua„r eh, u, AA - h-- - not„ N. R, - H eh, u,Nh.ir,u, Ih, -. A-4. Winn nnu a, i-) horns 1h, A,,, Ant, a h- on1 n -- n,nn„c, http://www.irs.gov/publications/P590/chOl.html 1/19/2012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 37 of 41 a Teri did not withdraw the excess, she owes excise tax of $24 for 2010. To avoid the excise tax for 2011, she can correct the $400 excess amount from 2010 in 2011 if her actual contributions are only $1,100 for 2011 (the allowable deductible contribution of $1,500 minus the $400 excess from 2010 she wants to treat as a deductible contribution in 2011). Teri can deduct $1,500 in 2011 (the $1,100 actually contributed plus the $400 excess contribution from 2010). This is shown on the following worksheet. Worksheet 1.6. Example-Illustrated Use this worksheet to figure the amount of excess contributions from Prior ears ou can deduct this ear. 1. Maximum IRA deduction for the current year 1. IRA contributions for the current year 2,1,1 Subtract line 2 from line 1. N zero 0 or less, enter zero 3. 4 Excess contributions in IRA at beginnin of year 4. 5. Enter the lesser of line 3 or line 4. This is the amount of excess contributions for previous ears that you can deduct this ear 5. Closed tax year. A special rule applies if you incorrectly deducted part of the excess contribution in a dosed tax year (one for which the period to assess a tax deficiency has expired). The amount allowable as a traditional IRA deduction for a later correction year (the year you contribute less than the allowable amount) must be reduced by the amount of the excess contribution deducted in the dosed year. To figure the amount of excess contributions for previous years that you can deduct this year if you incorrectly deducted part of the excess contribution in a dosed tax year, see Worksheet 1-7. Worksheet 1-7. Excess Contributions Deductible This Year If Any Were Deducted in a Closed Tax Year I Use this worksheet to figure the amount of excess contributions for prior years that you can deduct this year if you incorrectly deducted excess contributions in a dosed tar vaar Maximum IRA deduction for the current year 1. IRA contributions for the current year 2. N line 2 is less than line 1, enter an excess contributions that were deducted in a dosed tax year. Otherwise, enter zero 0 3. Subtract line 3 from line 1 4. Subtract line 2 from line 4. If zero 0 or less, enter zero 5. Excess contributions in IRA at beginning of year & Enter the lesser of line 5 or line 6. This is the amount of excess contributions for previous ears that you can deduct this year . Early Distributions You must indude early distributions of taxable amounts from your traditional IRA in your gross income. Early distributions are also subject to an additional 10°a tax, as discussed later. Early distributions defined. Early distributions generally are amounts distributed from your traditional IRA account or annuity before you are age 59%. or amounts you receive when you cash in retirement bonds before you are age 59%. Age 69% Rule Generally, it you are under age 591h, you must pay a 10% additional tax on the distribution of any assets (money or other property) from your traditional IRA. Distributions before you are age 59% are called early distributions. The 10% additional tax applies to the part of the distribution that you have to include in gross income. It is in addition to any regular income tax on that amount. A number of exceptions to this rule are discussed later under Exceptions. Also see ('ortrihutiors Rehir red Before Due Date of Return ,earlier. You may have to pay a 25%, rather than a 10%, additional tax if you receive distributions from a SIMPLE IRA before you are age 5911. See Additional Tax on Eanv Distributions under When Can You Withdraw or Use Assets, in chapter 3. After age 59% and before age 70%. After you reach age 5914, you can receive distributions without having to pay the 10% additional tax. Even though you can receive distributions after you reach age 5914, distributions are not required until you reach age 70%. See When Must You Withdraw Assets?Oeouired Maxmum Distributions), earlier. - Exceptions There are several exceptions to the age 5%y rule. Even if you receive a distribution before you are age 591h, you may not have to pay the 10% additional tax if you are in one of the following situations. • You have unreimbursed medical expenses that are more than 7.5% of your adjusted gross income. • The distributions are not more than the cost of your medical insurance. • You are disabled. • You are the beneficiary of a deceased IRA owner. • You are receiving distributions in the form of an annuity. • The distributions are not more than your qualified higher education expenses. • You use the distributions to buy, build, or rebuild a first hone. • The distribution is due to an IRS levy of the qualified plan. http://www.irs.gov/publications/P590/chOI.html 1/19/2012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 38 of 41 A • The distribution is a qualified reservist distribution. Most ol these exceptions are explained below. Note. Distributions that are timely and properly rolled over, as discussed earlier, are not subject to either regular income tax or the 10% additional tax. Certain withdrawals of excess contributions after the due data ol your return are also tax free and therefore not subject to the 10% additional tax. (See Excess Contribufigns Withdrawn After Due Date of Return, earlier.) This also applies to transfers incident to divorce, as discussed earlier under Can You Move Retirement Plan Assets . Receivership disMibutiuns. Early distributions (with or without your consent) from savings institutions placed in receivership are subject to this tax unless one of the above exceptions applies. This is true even if the distribution is from a receiver that is a state agency. Unrelmbursed medleat expenses. Even if you are underage 59%, you do not have to pay the 10% additional tax on distributions that are not more than: • The amount you paid for unreimbursed medical expenses during the year of the distribution, minus • 7.5% of your adjusted gross income (defined later) for the year of the distribution. You can only take into account unreimbursed medical expenses that you would be able to include in figuring a deduction for medical expenses on Schedule A (Form 1040). You do not have to itemize your deductions to take advantage of this exception to the 10% additional tax. Adjusted gross income. This is the amount on Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37. Medical Insurance. Even if you are underage 591h, you may not have to pay the 10% additional tax on distributions during the year that are not more than the amount you paid during the year for medical insurance for yourself, your spouse, and your dependents. You will not have to pay the tax on these amounts if all of the following conditions apply. • You lost your job. • You received unemployment compensation paid under any federal or state law for 12 consecutive weeks because you lost your job. • You receive the distributions during either the year you received the unemployment compensation or the following year. • You receive the distributions no later than 80 days after you have been reemployed. Disabled. If you become disabled before you reach age 59%, any distributions from your traditional IRA because of your disability are not subject to the 10% additional tax. You are considered disabled if you can furnish proof that you cannot do any substantial gainful activity because of your physical or mental condition. A physician must determine that your condition can be expected to result in death or to be of long, continued, and indefinite duration. Bertsf Clary. If you die before reaching age 59%, the assets in your traditional IRA can be distributed to your beneficiary or to your estate without either having to pay the 10% additional tax. However, if you inherit a traditional IRA from your deceased spouse and elect to treat it as your own (as discussed under What it You Inherit ar 13A, earlier), any distribution you later receive before you reach age 59% may be subject to the 10% additional tax. Annuity. You can receive distributions from your traditional IRA that are part of a series of substantially equal payments over your life (or your life expectancy), or over the lives (or the joint Ilfe expectandes) of you and your beneficiary, without having to pay the 10% additional tax, even if you receive such distributions before you are age 59th. You must use an IRS-approved distribution method and you must take at least one distribution annually for this exception to apply. The "required minimum distribution method," when used for this purpose, results in the exact amount required to be distributed, not the minimum amount. There are two other IRS-approved distribution methods that you can use. They are generally referred to as the "fixed amortization method and the "fixed annuitization method." These two methods are not discussed in this publication because they are more complex and generally require professional assistance. For information on these methods, see Revenue Ruling 2002-82, which is on page 710 of Internal Revenue Bulletin 2002-42 at www.irs,Qov/oul;?1r,, irbs'irb02.47 pd1. Recapture tax for changes In distribution method under equal payment exception. You may have to pay an early distribution recapture tax if, before you reach age 59th, the distribution method under the equal periodic payment exception changes (for reasons other than your death or disability). The tax applies if the method changes from the method requiring equal payments to a method that would not have qualified for the exception to the tax. The recapture tax applies to the first tax year to which the change applies. The amount of tax is the amount that would have been imposed had the exception not applied, plus interest for the deferral period. You may have to pay the recapture tax if you do not receive the payments for at least 5 years under a method that qualifies for the exception. You may have to pay it even if you modify your method of distribution after you reach age 591h. In that case, the tax applies only to payments distributed before you reach age 591h. Report the recapture tax and interest on line 4 of Form 5329. Attach an explanation to the form. Do not write the explanation next to the line or enter any amount for the recapture on lines 1 or 3 of the form. One-time switch. If you are receiving a series of substantially equal periodic payments, you can make a one-time switch to the required minimum distribution method at any time without incurring the additional tax. Once a change is made, you must follow the required minimum distribution method in all subsequent years. Higher education expenses. Even if you are under age 591/2, if you paid expenses for higher education during the year, part (or all) of any distribution may not be subject to the 10% additional tax. The part not subject to the tax is generally the amount that is not more than the qualified higher education expenses (defined later) for the year for education furnished at an eligible educational institution (defined later). The education must be for you, your spouse, or the children or grandchildren of you or your spouse. When determining the amount of the distribution that is not subject to the 10% additional tax, induce qualified higher education expenses paid with any of the following funds. • Payment for services, such as wages. http://www.irs.gov/publications/P590/chOl.html 1/19/2012 -7 Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 39 of 41 • A loan. • A gift. • An inheritance given to either the student or the individual making the withdrawal. • A withdrawal from personal savings (including savings from a qualified tuition program). Do not include expenses paid with any of the following funds. • Tax-free distributions from a Coverdell education savings account. • Tax-free pan of scholarships and fellowships. • Pell grants. • Employer-provided educational assistance. • Veterans' educational assistance. • Any other tax-free payment (other than a gift or inheritance) received as educational assistance. Oualhlsd highor educatlon expenses. Qualified higher education expenses are tuition, fees, books, supplies, and equipment required for the enrollment or attendance of a student at an eligible educational institution. They also include expenses for special needs services incurred by or for special needs students in connection with their enrollment or attendance. In addition, if the individual is at least a half-time student, room and board are qualified higher education expenses. Eligible educational Institution. This is any college, university, vocational school, or other postsecondary educational institution eligible to participate in the student aid programs administered by the U.S. Department of Education. It indudes virtually all accredited, public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. The educational institution should be able to tell you 0 it is an eligible educational institution. First home. Even 0 you are underage 59111, you do not have to pay the 10% additional tax on up to $10,000 of distributions you receive to buy, build, or rebuild a first home. To qualify for treatment as a first-time homebuyer distribution, the distribution must meet all the following requirements. 1. It must be used to pay qualified acquisition costs (defined later) before the dose of the 120th day after the day you received it. 2. It must be used to pay qualified acquisition costs for the main home of a first-time homebuyer (defined later) who is any of the following. a. Yourself. b. Your spouse. c. Your or your spouse's child. d. Your or your spouse's grandchild. e. Your or your spouse's parent or other ancestor. 3. When added to all your prior qualified first-time homebuyer distributions, if any, total qualifying distributions cannot be more than $10,000. If both you and your spouse are first-time homebuyers (defined later), each of you can receive distributions up to $10,000 for a first home without having to pay the 10% additional tax. Ousiffisd acquisition coats. Qualified acquisition costs include the following items. • Costs of buying, building, or rebuilding a home. • Any usual or reasonable settlement, financing, or other dosing costs. First-Urns homebuyer. Generally, you area first-time homebuyer if you had no present interest in amain home during the 2-year period ending on the date of acquisition of the home which the distribution is being used to buy, build, or rebuild. it you are married, your spouse must also meet this no-ownership requirement. Date of acqulaltlon. The date of acquisition is the date that: • You enter into a binding contract to buy the main home for which the distribution is being used, or • The building or rebuilding of the main home for which the distribution is being used begins. TIP If you received a distribution to buy, build, or rebuild a first home and the purchase or construction was canceled or delayed, you generally can contribute the amount of the distribution to an IRA within 120 days of the distribution. This contribution is treated as a rollover contribution to the IRA. Qualified reservist distributions. A qualified reservist distribution is not subject to the additional tax on early distributions. Definition. A distribution you receive is a qualified reservist distribution if the following requirements are met. http://www.irs gov/publications/p590/chOl.html 1/19/2012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 40 of 41 A • You were ordered or called to active duty after September 11, 2001. • You were ordered or called to active duty for a period of more than 179 days or for an indefinite period because you are a member of a reserve component. • The distribution is from an IRA or from amounts attributable to elective deferrals under a section 401(k) or 403(b) plan or a similar arrangement. • The distribution was made no earlier than the date of the order or call to active duty and no later than the dose of the active duty period. Reserve component The term -reserve component" means the: • Army National Guard of the United States, • Army Reserve, • Naval Reserve, • Marine Corps Reserve, • Air National Guard of the United States, • Air Force Reserve, • Coast Guard Reserve, Of • Reserve Corps of the Public Health Service. Additional 101/6 tax The additional tax on early distributions is 10% of the amount of the early distribution that you must include in your gross income. This tax is in addition to any regular income tax resulting from including the distribution in intone. Use Form 5329 to figure the tax. See the discussion of Form 5329, later, under Revorina Additional Taxes or information on filing the form. Example. Tom Jones, who is 35 years old, receives a $3,000 distribution from his traditional IRA account. Tom does not meet any of the exceptions to the 10% additional tax, so the $3,000 is an early distribution. Tom never made any nondeductible contributions to his IRA. He must include the $3,000 in his gross income for the year of the distribution and pay income tax on it. Tom must also pay an additional tax of $300 (10% x $3,000). He files Form 5329. See the filled-in Form 5329. This image is too large to be displayed in the current screen. Please click the link to view the image. Forth 5329, page 1 Tom Jones A7A Early distributions of funds from a SIMPLE retirement account made within 2 years of beginning participation in the SIMPLE are subject to a 25%, rather than a 10%, early distributions tax. Nondeductible contributions. The tax on early distributions does not apply to the pan of a distribution that represents a return of your nondeductible contributions (basis). Excess Accumulations (insufficient Distributions) You cannot keep amounts in your traditional IRA indefinitely. Generally, you must begin receiving distributions by April 1 of the year following the year in which you reach age 70%. The required minimum distribution for any year after the year in which you reach age 70% must be made by December 31 of that later year. Tax on excess. If distributions are less than the required minimum distribution for the year, discussed earlier under When Must You Withdraw AGsetsr tReouired Minimum Distributions) , you may have to pay a 50% excise tax for that year on the amount not distributed as required. Reporting the tax. Use Form 5329 to report the tax on excess accumulations. Seethe discussion of Form 5329, later, under Revortino Additional Taxes, for more information on filing the form. Request to walve the tax. If the excess accumulation is due to reasonable error, and you have taken, or are taking, steps to remedy the insufficient distribution, you can request that the tax be waived. It you believe you quality for this relief, attach a statement of explanation and complete Form 5329 as instructed under Waiver of tax in the Instructions for Form 5329. Exemption from tax. If you are unable to take required distributions because you have a traditional IRA invested in a contract issued by an insurance company that is in state insurer delinquency proceedings, the 50% excise tax does not apply it the conditions and requirements of Revenue Procedure 92.10 are satisfied. Those conditions and requirements are summarized below. Revenue Procedure 92-10 is in Cumulative Bulletin 1992-1. To obtain a copy of this revenue procedure, see it in chapter 6. You can also read the revenue procedure at most IRS offices and at many public libraries. Conditions. To qualify for exemption from the tax, the assets in your traditional IRA must include an affected investment. Also, the amount of your required distribution must be determined as discussed earlier under When Muct You Wamdr w Assets ? rReawred Mir`mum Vg tributionsl . Affected investment defined. Affected investment means an annuity contract or a guaranteed investment contract (with an insurance company) for which payments under the terms of the contract have been reduced or suspended because of state insurer delinquency proceedings against the contracting insurance company. Requirements. If your traditional IRA (or IRAs) includes assets other than your affected investment, all traditional IRA assets, including the http://www.irs.gov/publications/p590/chOl.htnd 1/19/2012 Publication 590 (2011), Individual Retirement Arrangements (IRAs) Page 41 of 41 investment is the only asset in your IRA, as much of the required distribution as possible must come from the available portion, if any, of your affected investment. Available portion. The available portion of your affected investment is the amount of payments remaining after they have been reduced or suspended because of state insurer delinquency proceedings. Mahe up o/shandall in distribution. If the payments to you under the contract increase because all or part of the reduction or suspension is canceled, you must make up the amount of any shortfall in a prior distribution because of the proceedings. You make up (reduce or eliminate) the shortfall with the increased payments you receive. You must make up the shortfall by December 31 of the calendar year following the year that you receive increased payments. Reporting Additional Taxes Generally, you must use Form 5329 to report the tax on excess contributions, early distributions, and excess accumulations. If you must file Form 5329, you cannot use Form 1040A, Form 1040EZ, or Form 1040NR-EZ. Filing a tax return. If you must file an individual income tax return, complete Form 5329 and attach it to your Form 1040 or Form 1040NR. Enter the total additional taxes due on Form 1040, line 58, or on Form 1040NR, line 58. Not filing a tax return. If you do not have to file a return, but do have to pay one of the additional taxes mentioned earlier, file the completed Form 5329 with the IRS at the time and place you would have filed Form 1040 or Form 1040NR. Be sure to include your address on page 1 and your signature and date on page 2. Enclose, but do not attach, a check or money order payable to the United States Treasury for the tax you owe, as shown on Form 5329. Write your social security number and "2011 Form 5329" on your check or money order. Form 5329 not required. You do not have to use Form 5329 if either of the following situations exists. • Distribution code 1 (early distribution) is correctly shown in box 7 of Form 1099-R. If you do not owe any other additional tax on a distribution, multiply the taxable part of the early distribution by 10% and enter the result on Form 1040, line 58, or on Form 1040NR, line 56. Put "No" to the left of the line to indicate that you do not have to file Form 5329. However, if you owe this tax and also owe any other additional tax on a distribution, do not enter this 10% additional tax directly on your Form 1040 or Form 1040NR. You must file Form 5329 to report your additional taxes. • If you rolled over part or all of a distribution from a qualified retirement plan, the part rolled over is not subject to the tax on early distributions. Prev V12 Next Home More Online Publications http://www.irs,gov/publications/P590/chOI.html 1/19/2012 r ' , ?4 Certificate of Service I hereby certify that a copy of aforegoing Proposed Findings of Fact and Conclusions of Law was served on Samuel L. Andes, Esquire, 525 North Twelfth Street, P.O. Box 168, Lemoyne, PA 17043, by overnight on the 19th day of January, 2012. Brian E. McKinley/ Wilder & Mahood 10`" Floor Koppers Building 436 Seventh Avenue Pittsburgh, Pa 15219-1827 (412) 261-4040 Attorneys for Linda Kuga Pikulin JOHN N. PIKULIN, IN THE COURT OF COMMON PLEAS OF PLAINTIFF CUMBERLAND COUNTY, PENNSYLVANIA V. LINDA KUGA PIKULIN, DEFENDANT : NO. 09-4002 CIVIL ORDER OF COURT AND NOW, this 3Id day of February, 2012, upon consideration of Plaintiff's Motion for Reconsideration; IT IS HEREBY ORDERED AND DIRECTED that the Motion for Reconsideration X is DENIED. By the Court, Samuel L. Andes, Esquire Attorney for Plaintiff Brian McKinley, Esquire Attorney for Defendant bas pr?s fua lP? ????/? J. M U0 ?fTJ re- C { ., In the Court of Common Pleas of Cumberland County, Pennsylvania John N. Pikulin, Plaintiff ) C-) ra '-11 c vs. ) No. 09-4002 Civil v w °`?) Linda Kuga Pikulin, ) co Defendant ) Civil Action - Div •' 4 {r Stipulation And Now, this j#day of _a , 2012, the undersigned, as counsel for the parties hereto, hereby stipulate and agree as follows: 1) As Husband wishes to complete the transfer of funds contemplated by this Court's January 24, 2012 Order in a manner other than set forth in the Order, an additional Order is necessary. 2) The proposed Order which is attached to this Stipulation satisfies the requirements of the parties to make the transfer in accordance with Court's previous Order. 3) Counsel for the parties are authorized to enter into this Stipulation on behalf of the parties. IN WITNESS WHEREOF counsel for the above-named parties have executed this Stipulation on their clients' behalf. Samuel L. And Attorney for Plaintiff L_ Brian E. McKinley Attorney for Defendant