they are not required for 403(b) plans with annuities only, correct?

Greetings,

I have only basic knowledge about the IRA's.

I already have a Tradirtional IRA, but I want to open up an Roth IRA too.

Should I keep my Traditional and open up a Roth and just continue to put money into the Roth IRA?

In other words, my current Traditional IRA would continue accrue with the funds already in it. But then I would open a new Roth, and begin to contribute only to it.

Or should I convert the traditional into the Roth and start from there?

Make sense?

That way I wouldn't lose the money to taxes by converting the traditional to a Roth.

Am I overlooking anything?

Thoughts please?

Thanks!,

Hairfarmer

trying to determine correct procedure on the following: a 401(k) had two participants with outstanding loans. they received hardships in may 2005 and discontinued making payments on their loans as well. the tpa at that time nor the financial manager advised the client of the deemed distribution that would occur. in dec 05, the plan changed tpa's and it was discovered in march when doing the 2005 py admin, the participants had deemed distributions on their loans. should the plan sponsor issue 2005 1099-r's to the participants and have them refile their tax returns or what would be the consequences of issuing 2006 1099's?

client is a law firm where each partner has his own PA which also adopts the plan. in the past (before we were hired) the sponsor allowed each PA to fund their PS contributions during the year but the corp funded the contribution for the law firm at the end of the year. the IRS is auditing the plan and they are requesting support for this position... to me it sounds discrminatory as well but if anyone thinks it is ok and knows of some legal basis, please post. thanks.

I am a Benefits Manager at a large employer. My background is nearly 100% retirement with a heavy slant toward Defined Contribution Plans.

I am exploring the HSA portion of our 1/1/2007 H&W Plans Design. The strawman I'm working today includes us supporting pre-tax payroll deductions with some extra "match" or employer contributions on a monthly basis. Given this we'll be selecting the pre-tax provider for the Savings portion of the design. I find this to be an overwhelming task given the accounts are individual accounts. If we ever want to change providers we will leave our employees in the lurch. This means getting this right is so very important. We need someone with flexibility and strength in order to meet our needs - now and in the future. I don't believe our current health providers nor their "partner" banks get it. Or, maybe I don't get it.

I believe the majority of utilization of our HSA will be highly paid, healthy individuals. This will result in money flowing in but rarely flowing out. I've seen studies that state we should expect 20% to use this like a Flex account but the rest will not tap it for years to come. Given this theory I believe we must deliver a product which allows much more investment flexibility than what I've seen thus far.

I find the delivery and design of the current HSA environment troubling to say the least.

1. Banks - The heavy fee environment and lack of vision many players have displayed concern me.

2. TPA - would love to find a TPA with a shell bank to run cash in/out of same or similiar instituational funds (or other low cost Mutual Funds) our K Plan offers. I would really like to find a mutual fund window option given the demographic of this goup.

3. I realize this is a start up plan with no assets so I will not be able to delivery the same level of low cost fund options I can in our jumbo K plan today, but I'd like to think we can keep the total fees south of 100 basis pts for our employees in year one.

Any tips, hints or otherwise?

Company A (which employs about 95 people) sponsors a qualified retirement plan (the plan uses the calendar year as the plan year). On January 15, 2005, Company A acquired 100% of the stock of Company B (which employs about 35 people). Company B does not sponsor a qualified retirement plan. I know that Code Sec. 410(b)(6)© provides a coverage transition period for Company A's plan through 2006. On February 6, 2006, Company B acquired 100% of the stock of Company C (which employes about 150 people). Company C does not sponsor a qualified retirement plan. On April 13, 2006, Company B sells 100% of Company C to an unrelated entity. Does Company A's plan now get another extension under Code Sec. 410(b)(6)© through 2007? As I read Code Sec. 410(b)(6)©, Company A's plan gets an extension through 2007 if (1) it passes 410(b) on February 5, 2006 (the date immediately before the change--which it barely does) and (2) coverage under Company A's plan is not significantly changed during the transition period (other than by reason of the change).

Help!!!

I am 22, been at my current job for just over a year.

I enrolled in their 401k when I started because they match 3,000 a year, I currently have about $8,000 in my 401k.

My question is, since I am so young, should I simply continue contributing the 9% I do to the 401k, which comes out to me contributing just over the 3,000 they match a year (9% x 38500 = 3465) or knock it down so I just contribute 3,000 and put the difference in a Roth IRA?

I could afford to contribute more, but should it go to the 401k or an IRA?

I am also looking for a broker/bank that will allow an IRA with no minimum, so I could perhaps just do a few hundred $ a year into it, is that possible?

2005 5500ez instructions say...

"Effective for calendar plan year 2005, filers of Form 5500-EZ will not be required to file any schedules or attachments (including the Schedule B (Form 5500)). Filers, however, will be required to collect and retain completed and signed Schedules B and P, if applicable."

I also saw a reference to an Asspa asap that stated.. "Also, IRS sources have confirmed to ASPPA that filing a Form 5500-EZ without a Schedule P will nonetheless start the statute of limitation running on the plan filing."

So it seems that one does not have to file the B and P anymore. However, sometimes you guys and gals out there come up with compelling reasons why you think it should be filed anyway.

So what are you people doing with your clients? Are you having them file the B & P with the EZ? If yes, then why?

Is it mathetically impossible that an FSA would ever have to offer COBRA in a termination of employment situation if the employer makes no contributions - only salary reduction contributions go to the plan and only the amount of the salary reduction can come out? Assume all the other requirements for the FSA not offering COBRA are met. What I'm getting at is that if the COBRA premium is 102% but the most the employee can get is 100%, then it would never be possible for such an FSA to have to offer COBRA.

As I am writing this question, it now seems to me that it is a mathematical possibility - if the employee has submitted no claims for the year - but I'm confused so thought I would post it anyway. Thanks for the insights.

Revenue Ruling 2003-43 states that one way to recover an improper charge on a debit card is to offset the improper payment against a proper charge "during the same coverage period." What if the improper payment was in late 2005, and it is not discovered until 2006. (Assume no grace period.) Can the plan offset the improper payment against a properly substantiated charge in 2006? If this is done, the overall effect in the two year period seems right, but the result is that (1) the employee was able to exclude from income an improper expense in 2005, and (2) the employee was able to use money that was pre-tax in 2006 to repay an indebtedness to the plan which arose in 2005.

Section 115 trusts are being touted as the solution for GASB 43 and 45 funding by several mutual fund and insurance providers. Will these trusts be usable for reduction of accrued liabilty for GASB purposes? I have issues with these trusts, primarily since little seems to be know about them except the claims made. Any help or sources?

We would like to amend our (k) Plan to increase the population that is eligible to receive the 2005 profit sharing contribution. Revenue Procedure 2005-66 (generally deals with EGTRRA amendment timing) says a "discretionary amendment" must be adopted before the end of the plan year in which the plan amendment is effective. A discretionary amendment is defined as an amendment that is not required by EGTRRA. Rev Proc Part II, Section 5.05(3) is definition of discretionary amendment). This provision would prevent us from amending the plan in 2006 effective back to 2005.

Does anyone think Revenue Proc. 2005-66 requires all "discretionary amendments" to be adopted prior to the end of the year in which effective ? (regardless of the amendment timing provision of 401(b))

I spoke with an IRS agent on this issue and he claimed the Rev Proc "discretionary amendment" definition was only meant to apply to amendments optional under EGTRRA, not any plan amendment that was not required by law. The Rev Proc. is not clear.

Any insite is apprecitated. Thanks.

We are trying to assist a bankrupt company with the last few distributions from their terminated DC plan.

They have a few participants with balances under $1,000 that cannot be located and the custodian of their current funds does not have an auto rollover program, even for the $1000+ range and the IRS forwarding program has been tried without success.

Would it be best to forfeit the small balances and have the employer use the forfeitures to pay fees or just have the trustee hold onto the balances in case the missing participants ever show up?

If we can find an administrator that will accept rollovers of low balances could the fees be charged to the plan?

Any help or suggestions would be greatly appreciated.

For years I've thought I understood the SEP coverage rules regarding service, but now I'm not so sure.

IRS Code Section 408(k)(2)(B) says that participation requirements are satisfied for a year if the employer contributes to the SEP of each employee who "has performed service for the employer during at least 3 of the immediately preceding 5 years"

I have always assumed that the year for which the contribution is being made is one of those five years. So, for example, if Employee A performed services during 2003, 2004 and 2005, the employer would have to cover him for the year ending 12/31/2005.

However, I noticed in an outdated version of IRS Publication 590 (which covers IRA's) the coverage requirement described as "has worked for the employer during at least 3 of the 5 years immediately preceding the tax year".

The current Publication 590 doesn't discuss SEPs, and the current Publication 560 (Retirement Plans for Small Businesses) uses the phrase "has worked for you in at least 3 of the last 5 years".

So does "immediatly preceding" mean before the start of the tax year for which a contribution is being made? Has anyone found anything else that clarifies when the 5 year period falls?

John Hancock used to process distributions with our (TPA) signature, or the sponsor's signature, but without the participant's signature, for up to $5,000. Now I'm being told that we need the participant's signature if over $1,000. The (new) rep was quoting something that referenced the direct rollover rules, eff 3/28/05, and I'm not sure if she was confusing the new law with John Hancock's requirements.

Can anyone confirm that Hancock changed their policy and dropped the max paid w/o participant sig to $1,000?

Is is possible for an HCE to opt out of a DB plan (without making it a CODA) and still participant in a DC plan? If not, what is the citing/authority. Thanks in advance.

I have a client that did not make the required 401(a)(9) distributions for the 2003 calendar year. The missed distribution amounts were $2,000 to NHCE’s and $6,600 to HCE’s (> 5% owner). The distributions ended up being made on January 26, 2004. To my knowledge, none of the participants reported the late distributions and paid the associated penalty tax. Also, no VCP filing was done.

The plan has received notice from the IRS that the 2004 plan year (calendar year) will be audited. I am sure the IRS will have questions about the distributions that were made in January and I am at wit’s end trying to figure what can be done, if anything.

Anybody have any suggestions on what we can be done at this point or do we just wait and see what the IRS says and go from there?

Thanks for any thoughts.

I wrote a seven-page paper, and I am planning to add a set of numerical examples, entitled "Theories of Dynamic Actuarial Optimization." It includes everything from Social Security, other entitlements, and long-term care insurance, to a specific Dynamic Programming mathematical model for optimal retirement (DB as well as DC) plan design.

I would like to submit this for the 2007 Gray Book for the 2007 EA meeting, as well as possibly get Core Credit for having done all of this. Does anyone out there know how I can go about doing this, and to whom I ought to send it for review and approval? Thanks! Carol Caruthers, MSPA, EA

Please review topic under the 401(k) board and respond - I'm trying to build a provider list.

Thanks.

401(k) Board Topic Link

Posted for a collegue:

QUESTION

"IF you have non-deductible carryovers from prior years that were the result of amounts necessary to meet 412 minimum funding (but greater than net compensation for those years), CAN you deduct these amounts in the current year IN ADDITION TO the 412 minimum funding amount for the current year (even if the total is greater than the otherwise determinable maximum under 404) AS LONG AS the current year's deduction is no greater than the current year's net compensation?"

COMMENT

We think the answer is YES, because of the language in 404(a) which says (emphasis added):

"contributions…..shall be deductible under this section, subject to the following limitations…in an amount determinated as follows:

404(a)(1)(A)(i) the amount necessary to satisfy the minimum funding standard provided by section 412(a) for plan years ending within or with such taxable year (or for any prior plan year), if such amount is greater than the amount determined under clause (ii) or (iii) (whichever is applicable with respect to the plan)"

Thanks for your comments.