My wife created a ROTH IRA account at Ameritrade for 2005, and deposited the maximum amount $4,000, In the meantime it has grown to $6,500. However, for tax purposes, I would like to have that contribution go towards a Traditional IRA in 2005 so that we may deduct the contribution from our gross income. This is the last year we can use the Traditional to qualify for a deduction for her since 2006 is the first year she will have a retirement plan available to her at work and from now on we will simply send the maximum to her ROTH. So, the question is: can we withdraw just the contribution without any tax consequences, and then use the funds to max out a Traditional for 2005? This will leave the 2500 in earnings in the ROTH, which if we wait till her retirement age will never be taxed. Is this correct?

We have a missing participant who should have received her first minimum required distribution last year. We have not had any luck locating the individual through the suggested search methods (certified mail, letter forwarding programs etc...). The failure to distribute a MRD seems to be an operational failure. Then again we are technically following the terms of the plan in attempting to locate this individual so that we can make the distributions. If we do have a failure how can we possibly correct it while the individual is still missing in action?

There are no plans to terminate the plan any time soon. Any suggestions on how to deal with this (other than suggesting additional search methods)? Thanks.

Kind of a simple question but we have a difference of opinion on the following allocation method:

Normal Retirement Age is defined as "the date the Participant attains age 65" and the allocation conditions have a last day requirement except if the "Participant incurs a Separation from Service during the Plan Year on account of Normal Retirement Age"

If a participant turns 65 on 07/01/05 and terminates 04/30/05, would they receive a contribution for 2005?

Thanks!

I am doing coverage and ADP/ACP testing for a Plan that has 60 day eligibility for full time employees and 1 year (1,000 hrs) of service for part-timers. I reviewed previous posts and see that this is a fairly common Plan Design. I did the coverage test using the 60 day requirements and considered part-timers with more than 60 days but less than 1 year of service as not benefitting. If the Plan failed using this method is it OK to disaggregate into otherwise excludible testing? That would guarantee passing. Is any other testing necessary? Benefits Rights and Features? Sorry for my ignorance - it just seems too easy and I want to make sure I am not missing something.

Sorry, but I didn't mean to post this message.

Plan terminates and there are deferred sales charges applied to participant accounts. Is there any way the employer can make the particpants whole without the money being counted as a "contribution" subject to allocation formula which would not be allocated to each participant in the same amount as the deferred sales charge.

Is it true that dividends passed through a qualified plan are no longer qualified or eligible for rollover to another qualified plan?

Employer has a Simple IRA. Now wants to establish a 401(k). No employee or employer contributions have been deposited into the Simple IRA so far in 2006.

If the employer failed to provide the 60 day 'EE Notice in Nov. '05, could the employer decide to discontinue/terminate the Simple IRA for 2006?

What if the Simple IRA was using the 2% nonelective? Would the employer still be required to make that contribution thereby precluding the employer from establishing the 401(k) for 2006?

Under ERISA Section 4203(b), a building and construction industry employer incurs withdrawal liability only if it both ceases to have an obligation to contribute to the multiemployer pension plan and continues to perform, in the jurisdiction of the cba that required contributions to the plan, work of the type for which contributions were previosuly required. The requirement that the employer continues to perform work of the type covered by the plan in the geographical jurisdiction of the cba seems to me to pose a problem when there is a difference between the jurisdiction of the cba requiring contributions to the plan and the jurisdiction of the plan itself. Assuming that the jurisdiction of the plan is wider, an employer arguably has a withdrawal when it leaves the jurisdiction of the cba but remains in the jurisdiction of the plan without making contributions. Any thoughts on what the geographical scope should be would be helpful. More particularly, if the cba at issue is a project labor agreement that only covers a particular project in one location this should seem to control so that the employer can perform non-union work 1 mile away at a different project without incurring withdrawal liability. However, the legislative history contains a phrase that says that the mere expansion of the plan's jurisdiction after the obligation to contribute ends should not create a withdrawal. This seems to imply that it is the plan's jurisdiction (covered by all its cbas) controls. Any further thoughts? Thanks!

Does any one know if the Mental Health Parity Act has been renewed past 12/31/05? And, would it cover a case of a plan sponsor wanting to exclude prescription drug coverage for depression? Thank you.

I have a client who dissloved a business (corp) midway thru 2005. He then established a new business (sole prop) in another state. He had a profit sharing plan for the old business. He established a new plan for the new business. He is the sole owner of both. Can he maximize to the 415 under both? My initial thinking is no, but wanted to be sure.

Thanks for any help.

Hi,

I am 29 years old, married, and looking into starting a roth ira. My husband has a state retirement plan through his place of employment, and I am self employed working out of my home. I don't have any retirement savings . I was originally going to have my husband start one for himself and one for myself, but since our income does not afford for us to be able to contribute the maximum amount annually to both ira's, would it be better for me to open one for myself and contribute the maximum, instead of us both opening one and only be able to put 2,000 a year in each?

Thank you,

Mandy

If the match is deposited after the close of the year, is it reasonable for earnings for a failed ACP test to be 0? (pre-final regs)

I have been in the TPA business for a long time but I have always worked for someone else. Now I have started my own business and am looking to buy an existing TPA?

I am very experienced and am located in CA .....

Any Takers????

I have a client with numerous plans. 3 of them cover ONLY nonunion employees. Each plan covers a different union organization.

I know that when a single plan covers more than 1 union group, the employer has the option of ADP testing each union group separately or combining them in any way they choose.

Since this company has 3 separate plans, can I apply that same logic here? The company would like to run 1 ADP test for all 3 of the union plans. I know that normally you can't combine for ADP testing unless you are also combining for 410(b) but union are excluded from coverage anyway so that doesn't seem to be an issue. My concern, though, is that the employer would be combining the 3 union plans but keeping their other plans separate for testing purposes. Is this OK?

If a plan excludes bonuses, what issues arise in regards to 414(s)?

1. If the bonuses are for HCE's only, and we exclude them, the safe harbor definition of compensation remains intact, correct?

2. If the bonuses are for NHCE and we exclude them, are we subject to further testing?

3. If the bonuses are excluded for all, is this still considered a reasonable definition of compensation or are we still liable for futher testing based on facts and cirucmstances?

Thanks!!

I have a crosstested, SH Match plan. 2 HC, 4 NHC - must be employed last day and have 1000 hours to share in PS 2 HC meet this, only one NHC is employed at end of year with 1000 hours, 2 NHC are still employed and have less than 1000 hours, 1 NHC has 1000 hours and termed in November.

Ratio is 2HC share, 1NHC share. If this was a regular PS, I would have to bring in one of the ee's with less than 1000 hours in order to pass ratio and/or average benefits test. But it would have be a straight PS allocation.

If I bring in the the other ee with less than 1000 hours I can crosstest and get the HC a much bigger allocation.

My question, for a crosstested plan, can I bring in all the "active" employees even though the document calls for 1000 hrs. Do I need to amend the doc.

Can I even approach this like I would if I was failing 410B for a non-crosstested plan. thanks

A plan is put into place in October, 2005 with an effective date of 1-1-2005. An employee terminated in August, 2005 and would have entered the plan had they still been employed. A SHNEC is being made for 2005. Should this terminated employee be entitled to the contribution?

I have a multiple employer plan with a 7/1-6/30 plan year. Employer A is spinning off from the plan while Employer B is continuing. The spin off date is 6/30/06. I don't have much experience with spin-offs and was hopigng to get a little help. Must all contributions to the plan for the plan year ending 6/30/06 be allocated to each employer? If the assets are actually spun-off by say 12/31/06 and the contribution for the year ending 6/30/06 is made after 12/31/06, how is the contribution allocated to each employer or does the contribution have to be made prior to the actual asset spin-off? That's a good enough place to start. Thanks.

A 401k plan with 3 key employees (all family) is top heavy. The father turns age 60, which is also the plan's retirement age, and the plan allows for distribution upon attainment of NRA. If the father were to take all of his money out of the plan, but continue to work and accumulate additional benefits, the plan would no longer be top heavy (excluding his balance, which would be paid out). Can we exclude his pay out after 1 year, or do we have to maintain that as part of the t/h calculation, since he would still be working?

Thanks