A doctor (an only employee of his own practice) would like to set a retirement plan for himself. He also teaches at a hospital where he contributes to their 403B.

Can he have contribute to 2 plans simultaneouly, 403 B and SEP or Simple ?

If the answer is yes, are his contribution limits restricted in EITHER plan, due to participation in BOTH plans?

We recently took over a plan with a difference between the SPD and the plan document for accrual requirements. The SPD has the safe harbor last day or 501 hours if terminated allocation conditions. The plan document has last day and 1000 hours allocation conditions. Normally I'd say the plan document rules, but the SPD indicates a more generous allocation requirement and is what the participant actually received about the plan. Any suggestions on how I would resolve the difference in allocation conditions?

A friend's mother failed to recieve her RMD in 2005 with respect to her IRA. On page 50 of Publication 590, the IRS provides that in order to request a waiver, Form 5329 should be filed with Form 1040, that the excise tax be paid, and that a letter of explanation be attached. However, Reg. section 54-4974-2 Q&A-7 does not require that such tax be paid in order to request a waiver.

I have the following questions:

1. Should the 50% excise tax be self-imposed and paid with mom's 2005 Form 1040?

2. As a practical matter, how lenient has the IRS been in waiving this tax (In past years, mom has always taken the RMD, but in 2005, she misplaced and forgot about the inquiry she received from the IRA trustee).

Thanks.

This is probably a dumb question but I have not seen much direct discussion of this topic and am hoping somebody can direct me to guidance in the proposed regulations.

If a terminating employee receives accelerated vesting of stock options or similar non-cash enhancements as part of a severance package, should the value of such accelerated vesting be calculated basically the same as accelerated vesting be calculated under 280G in the event of a change in control? Is there any argument that such accelerated vesting benefits should be excluded for purposes of determining whether the individual is within the 2 times comp or 2 times the 401(a)(17) limit?

Also, am I reading the "in addition to" provision in the proposed regulations correctly that the $5,000 de minimis payment provision in 1.409A-1(b)(9)(iv)© would be in addition to all the other severance benefit and reimbursement calculations? For example, could a terminating employee get 2 times 401(a)(17), continued health care coverage for 6 months, PLUS up to $5,000 in value related to accelerated stock option vesting and still come within the safe harbor? Seems to me the de minimis rule should be that notwithstanding any of the above exceptions any separation pay or benefits that are not more than $5,000 per year would be excluded from 409A regardless whether they are covered by one of the standard exceptions.

I would like to know if the ERISA Plan Asset Regulations requiring timely deposits to a participants account would also apply to timely transmittal of insurance premiums to the carrier for my Universal Life Plan.

Thanks in advance.

I keep reading about 401k and roth ira but I am still confused what I should be doing. I am married and have a 401k, but I am wondering if you can have a roth ira as well. I don't really see the difference in benefits other than you either pay taxes now or later. Should I have both or roll over my 401k into a roth ira? Please help me understand!

ive always been curious about retirement and setting myself up. I actually stumbled onto an older article that caught my attention. You guys were talking about investing in the S&P(index) fund. Do you feel that this article is accurate? Would this be the S&P you are talking about?

Q. Awhile ago, you mentioned an IRA that was good for young people. My daughter is 18 and would like to open the IRA with her summer earnings. What was it?

— D.W., Woodbury

A.

It's a Roth IRA — a dream come true for a young person's future.

Once your daughter puts her money into a Roth IRA, she will never have to pay a penny in taxes on the money if she follows the rules. That means it can grow much more effectively than any other account, and especially better than a bank savings account. And as long as your daughter doesn't remove the earnings until she's 59½, she won't have to share a cent with Uncle Sam.

If your daughter starts investing money at age 18 and contributes about $2,000 a year throughout her working years, she can become a millionaire if the stock market acts like it has historically.

But to get there, she will need to invest in the stock market. The easiest way is to invest the Roth IRA money in what's called a total stock market index fund.

If she does that, she will own a tiny, tiny piece of about 5,000 different stocks that will be in her mutual fund.

Tell her not to pay attention to her fund if the market goes down for a while. There have been years when the market has gone down 50 percent. But over time, it recovers, because the U.S. economy keeps growing. If a person had put $1 into the stock market in 1925, it would have grown to $2,533 at the end of 2004.

The key is to find an index fund that will accept your daughter as a client. If she can invest $1,000, she can open a Roth IRA at one of the lowest-cost mutual fund companies, Vanguard (1-800-997-2798), and invest in the Vanguard Total Stock Market Index fund. Keeping costs down is a tremendous plus in the long run. It can leave her with almost twice the nest egg after a lifetime of investing as she would have with a high-cost fund.

Another attractive choice would be T. Rowe Price Total Equity Market Index (1-800-638-5660). The firm will allow an investor to open a Roth IRA with no money, as long as she will commit to investing $50 automatically each month.

If your daughter doesn't have $1,000 or the ability to invest $50 monthly, there are hundreds of other choices. She can open a Roth IRA at a bank, for example, and deposit small amounts of money. But beware of mutual funds at banks. Many charge you loads, or large sales charges. And the bank mutual funds often are expensive day in and day out, too.

If your daughter puts money in an index fund, the broker at the bank should not charge a load either up front or years later. And the "expense ratio," or what she will pay for the privilege of using the fund, should be no more than 0.50 percent of the assets she will have in the fund.

Vanguard, for example, charges only 0.18 percent for its total stock market fund, which is an excellent price. T. Rowe Price charges 0.40 percent — still good, but not as good. But it beats the 1.5 percent charged by the average mutual fund.

Now that I've given you the warning on fees, however, let me backtrack just a little. If you can't get into a low-cost fund at a place like Vanguard, and think you should give up, don't do that. A fund that charges 1.5 percent in fees is better than not investing at all.

Just wanting additional input.

What is a good Roth Ira to start out with?

Can it be taken automatically each week

from my paycheck?

An error was made and a rollover distribution was processed as a cashout . The Custodian sent the IRS $12,789 for the 20 % taxes and cut a check to the participant for the remainder.

Participant gets the check and calls about the error and to get the 20% withholding returned for the rollover.. Custodian says that amount aleady sent to the IRS and can not get it back. Participant does not have $12,789 to make up the difference and cannot use the tax credit for the distribution.

What can be done.

Is a grandfathered governmental 401(k) plan subject to the Sarbanes-Oxley rules regarding blackout notices?

The plan document states that the employer may use compensations from the date an employee became a participant in the 401(k) portion of the plan.

Plan effective date is January 1, 2004. Plan is signed May 15, 2004. Deferrals actually started on August 1, 2004. There is NO special effective date for deferrals in the document.

It is a fact that deferrals cannot begin before the document is executed, so a valid 414(s) pay would be from May 15th. The question is, since no one could defer prior to 8/1/2004, is compensation from 8/1/2004 also valid under 414(s)? The arguement is that this is the earliest anyone could actually be eligible to defer.

Opinions?

Participant is no longer working for employer, but has accrued unused leave .

Is this participant considered ‘separated from service”? , or will he not be considered ‘separated from service’ until his leave is used-up?

Can an employer who currently has a simple 401(k) plan amend the plan to a 401(k) safe harbor plan (match) with a 2 year eligibility requirement for participation? The amendment would be effective 01/01/2007.

I seem to remember this q on previous posts but couldn't find it.

Participant terminates from 3% SH 401k plan 12/27/2004.

Final paycheck (for services performed in 2004) is paid to him on 1/3/2005. This is not severance or vacation pay.

Is this participant eligible for a 3% safe harbor contribution for 2005 plan year?

Thank you

We are beginning the plan termination of a DB plan, and wonder how long it takes the IRS to issue a favorable determination letter on the termination. For those of you out there who recently (past 3 years) terminated a straight-forward DB plan, how long has the IRS taken to approve? I recall past terminations taking 7 to 12 months for approval. Is that still the expectation?

Can IRA or Roth IRA be place in a Government I bonds? Is it a good ideal? At this time I bonds

are 6.?? percent which I think are not too bad? Maybe you have a better Ideal on where to put

an Roth or Traditional IRA in a safe investment?

thank you,

I did a partical conversion for a traditional IRA to a Roth IRA sometime in December of

2005 for may 2005 taxes. I now find that I would have been better off to convert a larger

amount money during December of 2005 but now we are in 2006 and I have not filed my 2005

taxes. Is it possable to convert some more money from my traditional IRA to my Roth

IRA and add it to my 2005 taxes instead of my 2006 taxes even though we are in 2006?

I don't think I can do that because it would be considered a 2006 Roth Conversion instead

of a 2005 Roth conversion but can anyone tell me so I am sure since it is before the 2005

filing deadline?

thank you,

A staffing agency has a 401(k) plan which excludes hourly employees - (their temps) from participation in the plan. The hourly employees make up over 95% of the workforce.

The plan's eligiblity requirements are age 21 - no service & monthly entry.

I have disaggregated the plan into two groups - moving the otherwise excludable NHCE's - both salary and hourly into one group - which passes coverage becuase no HCE's are in the otherwise excludable group.

However, for the employes who met the statutory minimum requirements - both salaried and hourly - the plan does not pass coverage - the only contributions they make are 401(k) contributions.

40 employees in the the group who meet max age and service

9 salaried employees are HCE's and all are elgible - 100%

18 of 31 NHCE's are salaried = 58.06%

In the otherwise excludable group

0 salaried employees are HCE's

32 of 889 NHCE's are salaried employees = 3.60%

In reading the ERISA outline book (chapter 8- correcting the failure) I find two options to amend the plan for 2005:

Option 1 - provide a QNEC to enough hourly employees eqaul to the ADP of the NHCE's who were eligible to defer for that plan year to get the ratio percentage up to 70% - can I assume I have to use the ADP of the statutory eligible NHCE salaried employees, or do I have to use the ADP of all the eligible salaried NHCE's (including those disaggregated as otherwise excludable)

Option 2 - the plan does not use the failsafe language so I can use Average Benefit Testing and provide a QNEC to the statutory eligible salaried NHCE's to get the average benefit percent up to 70% as the plan passes the non-discriminatory classification test for the statutory employees.

I would prefer to use option #1 as it would be less costly but just want to be sure my logic is ok. Any thoughts would be appreciated.

If you start up a Simple in mid year (July 1), do you have to use compensation for the full year? or can you just use the half years comp?

For example, if you have an individual who earns $10k the first six mo's and $10k the second six mo's, and the Simple is started 7/1...if that person defers 6% that equals $600 for the year. should the employer match up to 3% of $10,000 or 3% of $20,000? thanks for your help

I am over 60 y.o. I just withdrew $3000 from my traditional IRA in December of 2005. As well as transferring $3300 to my ROTH IRA. After making that withdrawal can I still put another $3000 into my ROTH IRA for 2005 or for that matter 2006? I have already made a $2000 contributions last year to my 2005 ROTH IRA before that withdrawal.

So in other words. Once you start to make withdrawals (traditional IRA) can you make a deposit (ROTH) after that?

Contributions for 2005 over 50 is $4500 or $5000?