I have an insurance agent trying to tell me that at age 70 1/2 I will owe taxes on the 401K assets I have, whether or not I have distributed them.

Having been in the industry many years and pretty familiar with 72t, I am disputing this with him. I maintain you pay taxes as you distribute the funds (paying penalties if you don't take your MRD after 701/2).

Any idea where he got this idea? Is any portion of it correct?

Employer has two plans

MPP with 10% contribution for employees met eligibility of 1000 hours and quarterly entry date and requires hired on last day to recieve each years contribution

MPP has immediate entry for ee eligible for Davis Bacon contributions. Davis Bacon offsets 10%. This plan has no HCE's

PS with 10% contribution no hour requirement (all eligible ees are salaried) enter on first day next plan year.

Contribution also requires employed on last day. This plan has HCE's.

Employer wants to aggregate for Top Heavy, so probably need agg for coverage. Can anyone help me on how I deal with employees who have less than 10% contribution for coverage purposes?

If a plan's year end in 10/31/05 and they are failing the ADP test, is the catch up for the testing that can be removed the $3,000 for 2004 or $4,000 for 2005?

Just a discussion with some administrators here.

Thanks!

Ill make this as short and to the point as possible.

My wife and I DO want to start contributing to a Roth IRA and our current circumstances are as follows:

-I currently have a traditional IRA through Idex which is a "rollover" from a previous employers 401K plan. I have not contributed to it for years and all money in the plan is from pretax dollars. I have a decent amount of money in it but not a whole lot...less than $30,000

-I am currently enrolled in my employers 401K plan (recently enrolled).

-My wife currently has a Roth IRA that she wants out of. The balance is small....less than $2000

Questions:

1. Should I roll my current traditional IRA into a Roth? No, I dont think I would need to "dip" into it to pay any taxes on the rollover. Would the taxes be around 30%? I have read up on the subject a little and kept reading about if my contributions made to the IRA were deductable and how this would affect my decision??

2. Maybe we should just start a new Roth from scratch? Is it ok for me to have an existing IRA, a 401K through my employer AND a Roth IRA? Or, should we start the new Roth in my wifes name?

Any guidance on this matter is greatly appreciated!

Thank you!

If Company B (a wholly owned subsidiary of Company A) has Company A's stock as an investment fund (Company B's participants cannot purchase Company A stock, only sell within Company B's 401(k) plan) in Company B's 401(k) plan, is a 11-k filing required for Company B's 401(k) plan? I tried to locate the SEC regulations on the SEC website but was unsuccessful. Thanks.

I am curious as to whether I can transfer a mutual fund from a regular brokerage account to a Roth IRA. I can' seem to find a straight answer anywhere... I was hoping I could find some help here.

Thanks.

Hi - appreciate some guidance.

Background: Company A spun off from Company B third quarter 2005 (stock sale). Company A was a wholly owned subsidiary of Company B prior to the spin off. Company A's employees participated in Company B's 401(k) plan prior to the spin off. Company A established a new 401(k) plan effective with the spin off and assets and liabilities of Company A's employees were transferred to the new plan immediately after the spin-off date. Subsequent to the spin off, Company A and Company B are no longer related employers. Company A is the same corporate entity after the spin off as before the spin off and Company A's employees before and after the spin off continued with the same employer. Company A's Plan Year in the document is defined as calendar year (same as Company B's plan year).

What period of compensation and contributions is used for:

ADP/ACP & 415 testing for 2005? Partial (effective date of plan to 12/31/2005) or full year (1/1/2005 - 12/31/2005)?

What period of compenation for the lookback year (2004) is used for determining who is an HCE for 2005 testing? Partial or full year?

What period of compensation is used for determining who is an HCE in 2005 for 2006 test?

Thanks.

When I am able to start withdrawing from my Regular IRA without penalty (in about 2 years) I am considering putting the distributions into a Roth IRA and so avoid taxes on any further growth of this money. Am I permitted to do this?

I have two scenarios to pitch.

First, my wife is in a small company where they would like to set up a SIMPLE IRA. Only her and her two brothers (the owners) would participate in the SIMPLE. They would like to set up the plan and contribute the maximum amounts for the 2005 tax year, via bonus checks backdated to DEC 31st. Is this possible? I know the IRS requires the program to be in place before OCT 1st of 2005 in order to notifying all employees of the plan. IS there a way around this, (for example, could they create a form dated earlier in the year and have each employee decline participation?) (FYI: they have maybe 15 other employees none of which would participate when asked, as many of them make so little, and may very well be illegal aliens, this issue is a constant battle for my wife, since they supply fake ssn, and the social security administration takes their payments till the end of the year, then informs her that the numbers are not valid, and do not return the money. (Whole other topic, sorry!))

Second, if they cannot create the plan in the previous year(by dubious means I know!), can they elect 100% employee deferral and each receive a bonus check of $10,828.37 which after taxes would meet their 2006 contribution limits for the year? Afterwards, would the company still match their payroll checks throughout the year by 3% since the $10,000 will work out to be much more than 3% of their overall compensation?

Finally, they are trying to use Ameritrade to be the designated financial institution. Has anyone tried to use them? They aren't set up to receive payments electronically, and I'm not sure they would even track employee vs. employer contributions. Although, I do believe they must file with the IRS the total contributions made for each person in each year, is this correct?

Thanks

My wife and I are buying our 1st home (a condo in florida) In 2000 while living in NY my wife changed

employers and rolled her 401k into an established roth IRA (one year old at the time) The money was invested in a money market account at our savings bank. In March 2004 she transfered the money into a

five year fixed annuity. We now need to liquidate the majority of this investment to buy our condo. Can we

access this money? If so, at what cost(taxes fees etc). Does the calculation of the 5 year period start when she opened the original Roth IRA at the bank or when she switched to the annuity

Hello,

About a year ago I was looking around on this site and came up with what I want to invest in for my Roth. I believe it was with the help of John G so thank you.

I opened a roth with fidelity FCNTX I believe it is called Contrafund, I put $3000 in it in February and it is at $3604 as of today. I think that is great progress. I have also a roth with franklin templeton which is divided up between 4 funds and the initial investment was $2000 and after 3 years that is worth $2756 which is great. I pay no fees for any of these.

My question is this, I will have $4000 after I get my tax check back this year again and it is perfect for me to invest in roth's because I get the total investment taken off my income for child support that I pay and this way I get to invest it and give it to kids when older. Works great. Anyway....

My question is this, should I put the 4k into the contrafund or do you have any other ideas? The money I put in will stay there for 20 more years so this is long haul. I am 38 and single.

Thank you in advance for your ideas!

The DRO states that "Alternate Payee may elect to receive from the Plan the amount in the separate account in Alternate Payee's name in any form avaialable to Participant under the Plan at any time after the separate account has been established for the Alternate Payee's share."

I read this to say that since the Participant is still employed, the alt payees options would be for whatever the plan options are for an in-service withdrawal, which in this case is none.

Do you agree? Why or Why not?

My client is very concerned regarding a terminated employee who has just recently left employment and she is aware of a pending divorce. The plan does not have J&S, therefore, no spousal consent required. The attorney's for the spouse have called inquiring about insurance benefits, but nothing regarding the plan. I told her until the actual QDRO is presented,(it in fact one will be presented) she cannot hold back payment of the benefits to the employee(he elected to roll to an IRA). She wants to know if QDRO's can be paid from IRA's. Can they be? This client is 100% by the book and does not want to do anything incorrectly that would at a later date come back to them. Thanks.

Linda Michals

Would some kind soul tell me if I am over-thinking, over-testing this:

A owns 51% of C and 49% of D

B owns 49% of C and 51% of D.

A and C participate in one multiple employer plan.... Plan 1

B and D participate in a separate multiple employer plan.

In Plan 1:

The compensations/contributions/accounts of A must be tracked separately from C.

A and C must test minimum participation separate from each other

Coverage and discrimination testing must be run for A, separately for C within the plan, and then separately for C and D.

Our pension plan has an early retirement provision at age 55, with benefit reduction of 50%. NRA is age 65. We had a former employee with a grievance and went to court in 1995. The attorney of the former employee produced an agreement where, among other things, requires the plan to pay the NRA benefit at age 55 (without reduction). This is just a brief over view of the situation and the question is "can a US Federal Court Order mandate a pension plan to make payment not available or different from that in the document?"

I was wondering if anyone has ever looked at the issue as to whether or not a Canadian citizen can serve as a trustee of a pension plan established and maintained in the United States? This is a pension plan covering husband and wife. I'm guessing that maybe a US financial institution might haver some rules on this subject, but I was unable to find any authority on this issue. Thanks in advance for your assistence. Ed

IBM has announced that it will freeze accruals to its DB plan beginning 2008. Last year IBM closed participation in the plan to new employees. IBM had added 6B in assets in the last 4 yrs to fully fund the plan and has an exposure of up to 1.4B arising from a judgment involving its cash balance plan. IBM's pension plan with 48B in assets is the third largest in the US after GM and GEs plans. The DB plan will be replaced with a 401k plan which will provided fixed contributions to participants in addition to matching contributions. IBMs stated reasons for freezing the plan is that the low rate of return on long term interest rates added 100M to the cost of the US plan in 2005 and increases in life expectency created unexpected future costs.

IBM's trasurer said "These plans were never designed to cover obligations that run as long as people are now living. Its important for companies to take actions to deal with this before these plans drag them into trouble. "

Here is something I thought was interesting. A plan that uses prior year testing fails to correct by the end of the following year. Normally you can't use QNECs to correct for a plan that uses prior year testing. The EPCRS says you can use QNECs to correct the failure to correct the ADP failure. Am I missing anything?

If a 401k plan that uses the 3% NEC safe harbor terminates during the first month or two of the plan year, is it OK to base the 3% contribution on compensation for that short period, or are there a minimum number of months of compensation that must be used?

In general, what form of benefit is offered to participants who are starting to receive MRD's? Does the Plan Administrator choose, or is the participant given a choice? Is spousal consent required no matter what the form of benefit? Previously a plan was automatically giving participants the joint & survivor form, if married, as MRD, but it has been decided to now give Single Life to new MRD's. Also, if a participant decides to take the MRD, must the participant make that election? Or rather is the election required to defer benefits and none necessary to receive?