I am trying to verify the following for 2007:

Coverdell Accounts got no changes.

Roth IRA

Married phase-out range $156,000 - $166,000

Single and Head of Household phase-out range $99,000 - $114,000

Traditional IRA (Active Participant)

Joint phase-out range $83,000 - $93,000

Single and Head of Household phase-out range $52,000 - $62,000

Joint filers (with only 1 active participant) phase-out range $156,000 - $166,000

Thanks

Let's suppose you have a sole prop who makes a $30,000 contribution to a PS plan. He has life insurance in the plan, TTC of $1,000.00. In this situation, he just deducts $29,000 on his 1040 when he files it. So far, so good.

Now suppose that in a given year, he makes no contribution to the plan. There's still TTC, since premium paid from the fund. How does he report this on his 1040, since there's no otherwise normally deductible contribution from which to subtract it? As miscellaneous income on line (well, I don't have the form handy, but whatever line you use to report miscellaneous income?) I guess that's what I'd do in lieu of anything more concrete...

Other?

A participant in a 409(A) plan is seeking distribution from the plan under the unforeseeable emergency definition. He's bankrupt, has tax liens and numerous health problems. He's still collecting his pay check.

It seems to us that the bankruptcy and tax liens satisfies the definition, but I would like to get some input from others who deal with this on a regular basis.

I have to get a handle on DB DC combination plans. Is Sal Tripodi's ERISA outline book the best source?Anybody recommend anything else?

this is a repeat of last year's puzzle, but now there are 21 new pictures to identify. (last year had 80, and #80 has changed)

in all fairness (who me?) I have included the answers on sheet 3 of the excel sheet for the first 79. those didn't change from last year (or at least as quick an eyeball I gave them.

a list of 180 Christmas songs from which to make your selection.

100 'pictures' to identify.

ho ho ho.

Our HDHP plan has separate deductibles for network and non-network providers ($4000 vs $8000 for family coverage). Which deductible would be used for determining the maximum HSA contribution? ($4000 or $5450 for '06)

Additionally, the max out-of-pocket for non-network coverage ($16000) appears to violate the out-of-pocket limit for '06 - would this affect which deductible gets used for the contribution calculation? Thanks in advance.

Retirement law professionals:

After spending hours of research to locate any precedents or case law relating to "Accelerated" Breaks In Service to no avail, I thought I would also reach out to other experts in that community to see if anyone is familiar with this issue.

As we know, ERISA provides an "incentive" to former employees (EEs) of a company whereby the code requires pension plans rules allow formerly accrued balances of EEs to be "restored" as long as the EE becomes reemployed prior to reaching the "Five Year Break In Service" time frame.

We also know that whenever a company decides to amend their pension plan, such as in this case, to revise the plan year from one 12 month period to a new 12 month period, they must notify the plan participants within a reasonable time frame. For the pension plan in question, the plan year was adjusted from ending each year on 8/31 to ending each year on 12/31. The point at which that amendment took place (9/01)effectively created an additional "Short Plan Year" that was only 4 months long. For active participants in the plan, I gather the short plan year is an advantage that accelerates the EEs vesting and/or service credit time frame- obviously a good thing.

However, for the rehired EE that plans on returning to the company prior to the former plan's Five Year Break In Service schedule is realized, such an amendment would effectively "accelerate" the Break In Service time frame (e.g. an EE with only 4+ years of separation could potentially be deemed as exceeding the Five Year Break In Service because a Short Plan Year was squeezed into that period). Since any amendments need only be conveyed to active participants or retirees, any former EE that has plans to return to work prior to the Five Year Break In Service could still potentially forfeit their former balances and be treated as a new EE if they base their deadline for re-application and re-hire on the last known plan year schedule information. This circumstance does not seem to be addressed in the Code, but I suspect it has come up in prior litigation. I say this because although a Short Plan Year can benefit an active EE, it potentially can be a detriment to a returning EE- something I suspect ERISA did not intend when providing the incentive to EEs for returning to the company.

One could argue, it is either incumbant on the former EE to research with their former ER whether there has been any changes to the retirement plans prior to becoming a rehire or incumbant on the ER to notify a potential re-hire that is returning with the Five Year Break In Service time frame, that changes have occured and thereby may affect the decision by the re-hire applicant as to whether he or she should continue to persue being re-hired.

I would appreciate any professional insight or references that might clarify the government's position on this one...

Regards,

Brooke James

My wife is self-employed. We, have been using the SEP, but if she Nets less than 50K in a year it works out better for her to use a simple since we can contribute the 10,000 limit right away. So we have several questions.

First,

can a self-employed person / sole proprietor pay themselves as an employee, create a Jan 1'st "Bonus" check such that after SS&MC taxes the remaining $10,000 could be contributed to a simple plan? Of course her employer self would also have to do a 3% match on top of that. for a total of 10,300 to the simple account. And a payroll check of roughly: (10,000/(1.00-0.0765)= 10,828.37(what I'm not taking into account is that the money not sent in to the Simple i.e. 10,828.37-10,000 the SS&MC taxes themselves would be subject to federal witholding. so the "bonus" check would need to be about $11,000 or so.)

Second,

Can she hire me as employee and do the same as above?

Third,

Since, I have a 401K at work, am I limited to 15,500 for the year in Total Contributions to all my IRAs?

Finally,

If she paid out these "Bonus" checks to both of us on Jan 1st, equaling about 23,000 in expenses to her business, putting her company in the red for the beginning few months of the year. Would it be a problem if she ended the year at a loss, when in fact she paid herself? (although it comes off our joint tax return because we both made the maximum contributions we could to our separate IRA's). Also, if her businesss needs to "make" the money it pays to her and I, could I pay her business for some bogus service with our personal money to make up for the shortfall, at least on paper?

I know this is very convoluted, I am just a nut about finding ways of using things like this to our advantage. The net effect is we can put up to 2*$10,300=20,600 into a SIMPLE IRA for each of us, at the beginning of the year, just by her having her own business, all completely tax deductable(for the moment). And in a few years, we could convert each account to ROTHs So.... I'm basically increasing the amount I can contribute to ROTHs because we have passed the AGI limits to use the standard ROTH account, but even if we hadn't this would still be a lot more than the 4,000 currently allowed for each year!

I started to invest in a Roth IRA in 2006 with a maximum of $4000 per year. My question is, am I also allowed to own a traditional IRA in the same year?

I have a 401k at work to which I'm contributing 6% of my pay to get the employee match. I just turned 41 and I feel that time is closing in on me. Any info would be highly appreciated

When determing if the annual safe harbor notice was made within the proper timeframe, when is it deemed to have be made? For instance, if it is mailed, is it the postmark or actual date of receipt?

I have a client that has a 401 K and matches 100% up to a 6% deferral. They have started a new company that is owned 85% by them and 15% outside investors. They want to offer a 50% match to 6% for those employees with a max contribution amount of $1,200. Can they do this? My logic says that we have a control group and the two plans must match and the testing must be done as if it was one plan.

I would love some help here. Thanks.

Client purchased company (stock sale) that had 401k that offered lump sum, partial, and installment payments as forms of benefit. client's document has single sum distributions and interprets this as requiring 100% distribution only unless inservice/hardship.

2 years later, takeover plan is merged into employer plan by amendment (not voluntary transfer). Terminated participant in old plan is requesting partial distribution. Client says no - must take 100%. Should partial distribution been protected under 411(d)(6)?

Does anyone know the amount of the Central States Pension Fund's UVB's for withdrawal liability purposes as of December 31, 2005? December 31, 2004? Any insights as to how to estimate the withdrawal liability without a formal request to the Fund?

ok.

so let's just assume that an ER (mistakenly) relied on the 15 days following the month... as a safe harbor for remitting 401(k) contributions for the past TEN years.

how far back do you have to correct it????

hello...

if a self employed over 60 years old has schedule c item 31 income for 2006 of 23K, is the max he can put into a 401(k) profit sharing for 2006 calculated as

$15K deferral

$5K catchup

$3k profit sharing (limited so that total is 100% of item 31)

------

for a total of $23K deposit

or is it

$15K deferral

$3K profit sharing

$2K catchup

---------

for a total of $20K deposit

because i would need to take the ($23k minus $3K ps) to get the 100% of pay number?

thanks for your help

chris

The DOL regs say that 401(k) contributions have to be remitted as soon as is administratively feasible but not later than 15 days of the month following the month in which contributions were made. i understand that the DOL reg is not a safe harbor.

could you pls confirm the following:

1) assume that an employer COULD HAVE remitted the contributions earlier but did not until the 15th of the following month. that would be a "prohibited" transaction under the code and the employer would be assessed excise taxes after filing form 5500, even though the ER is still withing the DOL's 15 days timeframe.

2) suspend your disbelief and assume that an ER could NOT have remitted the contributions anytime earlier than the 15th day of the following month, the ER would NOT be considered to have been engaged in a prohibited trnxn and would not be assessed the excise tax.

yes? no?

thanks.

hello

i have been seeing a lot about adding a cash balance plan to an existing 401(k) plan

i was just curious what the downside is to this when comparing to the option of adding a traditional defined benefit plan instead to the existing 401(k) plan

what are the pros and cons of the traditional db add-on over the cash balance add-on?

thank you

chris

Am curious if anybody has seen any guidance regarding the potential for a plan sponsor to self-correct something that is clearly a violation of 409A (e.g., allowing bonus deferrals without proper elections) without imposing excise taxes / penalties, etc. I seem to recall some commentators on the regulations suggesting that the IRS consider developing a self-correction program for minor violations of 409A similar to EPCRS but have not heard much about that or seen anybody discuss what, if anything, can be done under current guidance. In this case, violation all happened in 2006 calendar year so I would like to think things could simply be reversed without having to self-assess excise taxes. All thoughts appreciated.

Our municipal government has changed its health plan in the middle of its fiscal year, and notified employees that they may change their FSA allocation, presumably because this change constitutes a qualifying event for all employees.

It is quite clear that an employee may leave service and not owe any sort of refund on claims paid to them by the FSA in excess of the employee's contribution. After a qualifying event which does not involve the employee leaving service, may they elect to discontinue participation in the FSA, however?

That is, Jane has a $5000 annual election to her medical FSA. Four months into the fiscal year, Jane has received $5000 in reimbursements for qualified expenses. Upon experiencing a qualifying event, is she entitled to stop contributions to the FSA? Does it matter if the qualifying event is employer initiated (the employer changes health insurance) or personal (marriage, birth, death, divorce, etc.)?

Inherited a new plan which passes the smoothly increasing allocation rates under a replacement DB formula. Have Det. Ltr on the formula. Current plan requires only 1 hour of service for allocation conditions.

Am I correct in thinking that as long as the plan passes coverage under 410(b), that the plan can add a 1,000 hours, last day rule prior to 1/1/07? Plan will have to be resubmitted anyway when their cycle comes up.

Or, am I missing something in the avoidance of the minimum gateway?

Thanks...