Hello,

What I want to do....

I would like to move IRA money from an AG Edwards account that my wife and I have. We each have a Roth Ira and a Traditional Ira.

I would like to move the money to the Vanguard, specifically the Vanguard Target Retirement 2040 fund.

What I'd like to know from you....

Will AG Edwards charge me a fee for the money leaving them?

Does it make sense for us to open four(4) Vanguard Target Retirement 2040 funds?(A Roth and Traditional for me and a Roth and Traditional for my wife). That doesnt seem very diversified!!

I would eventually like to convert the traditionals to Roth's but haven't pulled the trigger due to the taxable gain I'll have to pay.

Any insight would be greatly appreciated.

Merry Christmas!

Can someone provide me a cite that will convince a new client that he can deduct the contribution for 2006 eventhouugh the contribution is paid in 2007?

Confession up front -- I have not done any research on this yet, so I apologize if the answer is obvious!

We have a cafeteria plan that includes health, dental, FSA and dependant care. An employee recently asked to drop her family health coverage for a reason that is not a qualifying status change (e.g. marriage/divorce/job change etc.). The coverage was started in July, so there are approximately 6 months to go before the end of the 12 month commitment. Our TPA has advised us that allowing this employee to drop health coverage prior to the conclusion of the 12 month period would jeopardize the qualified status of the entire cafeteria plan, and if it was caught, all of the pre-tax contributions ever made to the plan, by any employee would become taxable.

I understand that if the plan loses its qualified status, it affects the entire plan and all participants. And I know that an employee cannot get into the plan, absent a qualifying status change, in the middle of the year. But is it correct that allowing an employee to discontinue health ins. coverage in the middle of the year would throw the entire plan out of compliance?

Thanks!

I HAVE A CLIENT WHO HAS CONTRIBUTED 12% AS A PROFIT SHARING AND 3% AS A SAFE HARBOR FOR THE HCES WHICH TOTAL $33,000.00 FOR EACH. THE HCES HAVE ALSO DEFERRED $16,000. AT THIS P0INT THEY ARE AT THE 415 MAX. IS IT POSSIBLE TO RECLASSIFY $5,000 OF THE DEFERRAL AS CATCH UP EVEN THOUGH ONLY $1000 IS CATCHUP ELIGIBLE?

I thought the IRS said that all adopting employers had to sign the 401(k) amendments, but it looks like some prototype sponsors are just adopting them for all adopting employers automatically if there are no special effective dates or election of optional provision.

Can anyone clear this up?

A partner in my firm came to me yesterday with the following concern:

Owner employee turned age 70 1/2 in 2005. 1st distribution was made in March 2006. As he was preparing the 2006 distribution to be made by December 31, the owner employee informed him of a TEFRA 242(b) election that he signed back in 1982.

Question: If the owner puts back in the 2005 distribution that he took in March, could the 242(b) election be considered "not broken"? The owner is even of the mind to consider the distribution as a "prohibited transaction" between the plan and the corporation, which will be corrected before December 31, with the appropriate Form 5330 to be filed reporting the PT and paying the excise tax.

Any replies would be appreciated.

It has been my understanding that in doing accrued to date testing one should factor in the ebar associated with the dc account balance if one exists. Is there a correct technique when a dc plan has been previously terminated and cashed out? Moreover, if such balance should be included, would it be brought forward with or without interest? If with interest, then what rate;a 401(a)(4) standard rate or perhaps the experience rate under a replacement dc plan if one exists?

Divorced in Feb of 2004. Briefly, after close to three years, my ex-wife, impatient with her last two attorney's failed attempts to get a domestic relations order qualified against my 401K, decided to take matters in her own hands. She personally drafted a DRO using Fidelity's website, but instead of specifying the valuation of ~ $4,000 agreed upon in our divorce decree, she specified a valuation of ~ $18,000. Subsequently, without consulting with her attorney or informing my attorney - she went before a judge (asleep at the wheel with judicial immunity) and had him sign this draft order - under the pretense that the order had been drafted and approved by both party's respective counsel. She then send the order to Fidelity - who qualified it, segregated the accounts and executed a complete disbursement in less than two weeks...

Since no one knew what she was doing, I didn't become aware of this until I saw the account segregation. (Mail notification from Fidelity lagged behind a few days after this.) Within days, my attorney had the judge issue a TRO against Fidelity disputing the QDRO and barring any further processing; however, Fidelity advised that the disbursement had already occured and any relief would have to be obtained from my ex spouse.

Although another TRO has been served on her - barring her from spending the funds, this is a grim situation. I suspect that I have been deprived of about half of my 401K without any due process or recourse - unless one considers an un-enforceable civil judgement a remedy. My ex wife already has $17,000 worth of unsatisfied civil judgements - she will never comply with an order from the court - contempt or not.

Any thought about how this might be salvaged would be welcome.

Regards,

Bjorn

Does anyone whether an employer that has established a plan requiring a one-time irrevocable election as a condition of employment may establish another plan providing for elective deferrals?

If not, I don't understand the point of treating such an election as an election that isn't an elective deferral for 402(g) purposes (at least, in the case of public employers that can't establish 401(k)s).

OTOH, if such a second plan can be established, then why not permit the elective deferrals under the mandatory plan?

Or is that permissible?

TIA,

John

I have a terminated plan that wants to distribute all assets by 12/31/06. We have two terminated participants that are missing that we need to setup IRA accounts for. This was a pooled account with a provider that will not set up the IRAs.

I can not find anywhere that will set up the IRA accounts due to NASD compliance requirements.

Has anyone dealt with a company that will set them up?

As plan sponsor we use a prototype document sponsored by our TPA. They recently sent us the amendment that will need to be executed for final 401k regs. They also included IRS Form 8905, which they said will enable us to not have to restate our plan for 6 years? But, doesn't this only apply to them as the sponsor of the prototype document? It seems a little odd to me and I've never encountered this before. Please correct me if I'm wrong though.

We're actually in the process of transferring to a new provider effective 1/1/07 and they sent us a similar amendment, but no form 8905. So, who is correct in this situation?

Is the $95,000 compensation threshold during the look back year the only stipulation in determining an HCE for a TSA plan?

thanks and Merry Christmas

This client adopted a new cash balance plan 1-1-2003. Their EIN ends in 6.

Is January 31, 2007 the deadline for signing an EGTRRA restated document (I presume yes).

Is the Deadline for submitting the EGTRRA restated document for a determination letter also January 31, 2007 (I presume yes).

What is the retroactive effective date supposed to be for this restatement?

Employer of an existing 401(k) plan wants amend to the plan to provide for a 3% safe harbor for 2007 even though it is now late December, 2006. The answer is usually (always?) "No", but does the answer change to "Yes" if the plan currently uses a current year ADP testing method, in which case they would have until 12/31 to amend the plan?

Thanks

Co. X and Co. Y each maintain a 401(k) plan with exactly the same provisions -- eligibility/vesting/dist. options, etc. Co. X is to be merged into Co. Y as of 1/1/2007. There are 40+ participants in Co. Y's 401k and 6 participants in Co. X's 401k. Was considering at a minimum to have a short amendment to be signed off by both Co. X and Co. Y as well as trustees of each 401k reciting the merger of the two Co.'s and authorizing the merger of the Co. X 401k into the Co. Y 401k and the transfer of Co. X 401k assets into Co. Y 401k. Any additional issues? I have reviewed the protoype adoption agreements and they are mirror images of each other.

Some were educating, some were interesting, some were intense, some were funny.

What are your nominees: post the "Topic Title" of the best threads of 2006.

Are voluntary employee contributions to a 401k plan (made by both KEs and nonKEs) treated as employer contributions for both KEs and nonKEs, in calculating the maximum Top Heavy contribution under IRC 416©(2)(B)? Or, are they treated as employer contributions for only KEs and not for nonKEs? Or, are the ignored in the calculation?

Thank you for your help.

Here is the deal:

Owner Company #1 Company #2

AA 100% 50%

BB 0% 25%

CC 0% 25%

BB and CC are siblings (if that matters). AA is not related to anyone. Do I have a controlled group? Company #1 already has a retirement plan. Company #2 would like to set up their own retirement plan - is that possible? Is there anything else I should be aware of?

These rules are so complicated. I would appreciate any help!

I have a Top Heavy plan in which all the HCEs are over 50. The company does not want to make a minimum Top Heavy contribution to the plan, but the HCEs would like to make catch-up contributions to the plan.

I am looking for a nondiscriminatory plan provision, that would be considered a "Plan Imposed Limitation" on voluntary contributions under Reg. 1.414(v), that would allow the HCEs to make the full $5,000 contribution to the plan as catch-up contributions (which as catch-up contributions would be excluded from the minimum Top Heavy contribution calculation).

A provision that would work would be: "In any plan year in which there are NHCEs in the plan, HCEs are precluded from making and voluntary contributions to the plan." Since the HCEs are precluded from making voluntary contributions to the plan, any contribution they make (up to the limit) would be a catch-up contribution because it exceed a plan imposed limit.

Does this seem reasonable? Do you have a better "Plan Imposed Limitation" provision?

Thank you for your help.

We are terminating a defined benefit pension plan via a standard termination. On the plan termination date plan liabilities are in excess of plan assets. The plan sponsor will fund the plan as necessary by the distribution date in order to purchase annuities. For the purpose of the 6088 is this plan an underfunded plan requiring that information on distributable benefits be provided for all individuals (not just the top 25) or can the Form 5310 include a receivable contribution as part of plan assets, such receiveable being equal to the difference between plan liabilities and plan assets?