According to Rev Proc 2005-66, an employer is considered to have timely adopted a discretionary plan amendment if the amendment is adopted by the end of the plan year in which it is effective. However, for minimum funding, Code section 412©(8) permits a retroactive amendment up to 2-1/2 months after the end of the plan year. Has the IRS indicated whether an amendment made during the Code section 412©(8) period will be considered "timely adopted" for purposes of Rev Proc 2005-66?

I am drawing a blank.

The Co. AB plan covered employees of both Co. A & Co. B. Co. A & Co. B were part of a controlled group in 2005. No longer controlled in 2006. Co. B employees are spun off into the Co. B retirement plan. It is my understanding Co. B plan would be successor plan for ADP/ACP purposes, but is it the same for top heavy? Do I determine 2006 top heavy status for the Co. B plan by looking back to the 2005 results for Co. AB plan or this treated as a new plan & look to the end of the first plan year for Co. B plan? I really can't find any clear guidance.

Thanks in advance for any help.

Hi,

In 2005 I added 4000$ to my existing roth IRA in scottrade. My existing roth IRA has 8K all invested in mutual funds. I didn't do anything with the 4K and it just sat there, not earning anything. Now when filing the taxes I realized I can't contribute due to exceeding income limits. I requested withdrawal of the excess of 4K. Scottrade sent me a check for 4666 666 being the earnings. They said during the time the account had grown from 12K to 14K due to gains in mutual funds. So 2K*4/12 = 666 is the earnings on 4K.

I don't think this is right. The 8K would have earned 2K whether or not I had put in the 4K. The 4K didn't earn anything, so shouldnt I just be getting 4K?

I spoke to IRS on their phone line and they agreed, but scottrade is not convinced. What should I do? Who is right?

The kicker here is overall I am still at a loss of $100 in my IRA, so don't want to pay taxes on 666$ and accumulate 766$ loss in my IRA! I am thinking of just withdrawing everything so that I dont have to pay any taxes, but somehow think maybe thats not such a good idea, there has to be a better way. Such a huge penalty for being a dedicated investor setting aside a small amount for roth ira?

thanks

I converted a traditional IRA to a Roth in 1999, invested in tech stocks, and still have a paper loss of more than $5000. I want to take an un-qualified distribution, and subsequent tax loss. I understand that I must close out all Roth IRAs. Do I need to close my non Roth accounts? How do I close my Roth accounts so the statements reflect my loss, not an un-qualified taxable distribution? Thanks for your help, bob

I'm looking at a case that had a standard Safe Harbor Match (SHMAT) for 2005. That is, the plan was to match deferrals dollar for dollar up to 3%, and then, 50 cents on the dollar on the next two percent.

The sponsor misunderstood the match formula. They thought the formula was dollar for dollar up to 4% of pay.

Wouldn't you know it - almost all of the employees deferred exactly 4%. The employer made a 4% match, even though these participants should only have gotten a 3.5% match.

This kind of error must happen all of the time. Does any one know of (a) IRS sanctioned self - correction , or (b) practical suggestions?

Thanks very much.

If you have stocks in a roth ira and you sell them and make a profit how long do the proceeds have to remain in the account? Does the five year rule come into play?

I filed my tax returns and did not include my early withdrawl form of $10,500, which was sent to me after i had already filed my taxes for the year, what will happen now. I took the money out as a loan and it went into default, and didnt report it? what will happen please help, I though in the letter they sent me that i had to report it at the end of 2006, not 2005

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)