We are looking for a vendor of plan management software. What we need is a system where we can input all of the various features of our client plans, and then run reports based on one or more fields, for example, plans with fiscal year plan years, plans that offer loans, plans that have adopted the 401(k) safe harbor, etc. Is anyone aware of anything like this that is available for purchase? Thanks.

I got an unexpected bonus this year that will put me well above the $95,000 max for contributing the full $4000 to a Roth IRA, but I have already contributed $3200, more than will be allowed. The best remedy that I think is available and legal, according to the 2004 IRS Form 590 (page 57 and 58) http://www.irs.gov/pub/irs-pdf/p590.pdf, is to withdraw the excess contributions and associated net earnings before April 15, 2006 and pay tax on the earnings as regular income for 2005. By withdrawing before April 15, "the contributions are treated as if never made them" according to 590.

Basically, this rule would seem to allow anyone who contributes to a Roth IRA during a year to decide the following April 14 that they need to liquidate, and as long as contributions and all earnings are redeemed, and regular income tax is paid on the earnings, there is no penalty.

The problem is, my mutual fund firm won't acknowledge this rule and says I will have to pay a 10% penalty on the earnings because I am not 59 1/2 but am making a withdrawal. I am worried that even if I am right, how they characterize the withdrawal could impact how the IRS views the transaction.

Any comments? Thanks.

Is there a way to find out at what rate your non-deductible contributions to an Traditional IRA will be taxed at upon distribution? My assumption is that 100% of my contributions will be non-deductible due to income restrictions and that they will have to be filed on the FORM 8606. Also, I'm assuming that the distribution will occur after I'm 60 without early withdrawal penalty.

In general, I'd like to have an idea as to the benefits of contributing non-tax deductible funds to an IRA vs. just contributing to a brokerage account, but it is tough to quantify without knowing the back-end tax implications of the Traditional IRA.

Thanks again for your assistance. I'm very pleased to have found this forum.

A client that has previously filed a standard termination with the PBGC has now decided they can't make the plan sufficient and is planning on filing a distress termination. The employer is also going through bankruptcy. Until the plan officially files for the distress termination and the PBGC takes the plan over, should distributions to participants entitled to distributions be made from the plan in accordance with the terms of the plan or should distributions (except for annuities) cease?? Thanks.

A client is looking into setting up a cafeteria plan for himself. He is the only non-bargained employee of 15 person company. He would like to set up a Health Care Reimbursement account to pay for the uninsured medical expenses. As the others are bargained, they would be excludable from discrimination testing leaving only himself. Is this ok? What reporting requirements are there? Is it something he could administer himself easily enough? any pitfalls?

Company X maintains a defined benefit plan and a 401(k) plan for its employees and for the employees of a number of subsidiaries. Two other subsidiaries, Y and Z, (which are both subs of X) maintain their own plans and do not participate in X's plans. Company H is the parent organization and is merely a holding company with no employees. Section 10.06 permits the parent of a parent-sub controlled group to elect to file all of the plans under the remedial amendment period cycle determined by the last digit of the parent's EIN. Can X, Y and Z treat X as the parent for this purpose and have X make this election?

How do most companies handle pay increases while an employee is on a Short-Term Disability Leave ? For example, our company grants pay increases on 1/1. If someone is on STD on 1/1, do most companies wait until the employee returns to work to process the pay increase. Secondly, if the employee returns to work, is the comp change retro-active ?

I am wanting to take advantage of this new Roth 401(k). I am self-employed and have no employees. Up until now, I have used a SIMPLE IRA for retirment funding. I pay myself a small salary and take the rest as dividends. My thought is that the Solo Roth 401(k) would be perfect. I am under 40 years old, and have never been able to do the Roth because of income limitations. As I understand it, I can pay myself $15,000 and differ all $15,000 into this plan (under the dollar for dollar rules). Anyone know of a company that will rollout the Roth Solo 401(k) without many expenses?

Does anyone know if I can rollover my 457 Plan to an IRA while I'm still working for the city. I am under 59 1/2 years old (actually 40). I want to do this because I don't like the limited fund options available. I also want to roll to an IRA so I can then in turn roll this into a Roth IRA. Thanks!

Need clarification, please. Welfare benefit plan is funded through a VEBA. There are more than 100 participants so now we are "large welfare plan". Because the funding is through the VEBA we are no longer exempt from the audit requirement. We now need to file Schedule H. The audit is going to cover the Welfare Benefit Plan and not just the VEBA, correct?

Are all of these statements correct?

I wondered what other TPA's out there are doing about force payouts above $1,000. We cannot find an institution willing to open an IRA without the IRA owner signature, so unfortunately if the amount is more than $1000, they've not been done. Many of our plans amended for force outs for < $1000, but those that didn't will continue to be a problem. What are you all doing?

Participant reaches normal retirement age and retires.

Wants to roll his account balance under qualified plan to a SEP IRA.

SEP IRA not connected to qualified plan.

Any reason this can't be done?

Thanks

Been looking all around and can't find any evidence that the IRS has yet released the Nov 2005 30-year rate and the Dec 2005 CL rates. Looks like the prior release came in the early part of November, but nothing on Checkpoint in December. Anyone know these rates yet?

Has anyone ever encountered a 1 day plan year?

Plan year was 12/31 to 12/30. Amendement is changing the plan year to 1/1 effective 1/1/05. So there is a short plan year from 12/31/04 to 12/31/04.

Does anyone know what kind of things to look for to determine if nondiscrimination (ADP/ACP, Coverage) needs to be done?

12/31/04 is a Friday and there were some employees who worked and who earned compensation. It is a 401(k) plan.

The pay period end date that included 12/31/04 was in 2005 sometime and the contributions were posted to the members accounts in 2005.

So I think it's safe to say that there is no testing that needs to be done. There was nothing allocated on 12/31/04.

Anyone have any thoughts?

When a 401(k) Plan participant terminates employment and subsequently requests to roll over his/her 401(k) Plan vested balance to an Individual Retirement Account (IRA), what are the requirements related to spousal consent prior to the roll over being executed? At the time of the request to roll over the account balance, the former participant has legally separated from her spouse but the divorce has not yet been finalized.

Also, with respect to opening the IRA account, does the account beneficiary have to continue to be the spouse?

If you can provide cites I'm sure one or the other party will demand them.

Thanks

Trying to establish new plan effective 1/1/2006 with 401k effective 2/1/2006. The plan provides for --

1. 401k defls.

2. discretionary nonelective contributions with a cross-tested allocation scheme (each participant consituting a separate alloc. group).

3. The ability to elect to utilize the 401k safe harbor provisions and to make either 3% SHNECs or SH Matching contributions.

The sponsor has only been in business for a couple years and is not making a lot of money. The owner wants to do something for himself and his EEs, but doesn't want to commit to much expense. The thought was to offer 401k and to provide a contingent notice regarding SHNECs (plan uses current yr testing). If business does well, these SHNECs can be made and the owner and his wife can make $15,000 in defls. It's unlikely that he will be able to afford or pass the general test in order to provide himself with additional (9%) cross-tested allocations.

It now occurs to me that the ave. benefit prong of the general test (which takes into account 401k defls) may not be met to validate the 3% SHNECs even if these are not provided to the HCE/owner. My question is whether these SHNECs satisfy the designed based safe harbor provisions?

Thanks for the help.

Trying to establish new plan effective 1/12006 with 401k effective 2/12006. The plan provides for --

1. 401k defls.

2. discretionary nonelective contributions with a cross-tested allocation scheme (each participant consituting a separate alloc. group).

3. The ability to elect to utilize the 401k safe harbor provisions and to make either 3% SHNECs or SH Matching contributions.

The sponsor has only been in business for a couple years and is not making a lot of money. The owner wants to do something for himself and his EEs, but doesn't want to commit to much expense. The thought was to offer 401k and to provide a contingent notice regarding SHNECs (plan uses current yr testing). If business does well, these SHNECs can be made and the owner and his wife can make $15,000 in defls. It's unlikely that he will be able to afford or pass the general test in order to provide himself with additional (9%) allocations.

It now occurs to me that the ave. benefit prong of the general test (which takes into account 401k defls) may not be met to validate the 3% SHNECs even if these are not provided to the HCE/owner. My question is whether these SHNECs satisfy the designed based safe harbor provisions?

Thanks for the help.

I have a client that owns an s corp and gets both w-2 compensation and Schedule C income from the company. Can I use both W-2 and the schedule C as his gross compensation when calculating contribution amounts, etc. Or can only W-2 be used?

Does the requirement that a plan be amended to permit hardship withdrawals pertain to those plan sponsors not in the affected area (Katrina)? We have several plans that do not permit hardship distributions, but they are not in the affected areas. Thanks.

Hi,

I have a very basic question, but I've been unable to get a clear cut answer from my online brokerage source. My scenario is that I have a company sponsored 401k and I opened a Roth IRA about 2 years ago. I got married last year and found out that by filing jointly our combined income put me above the limit to contribute non-taxable funds to my Roth account. My question is now, can I still contribute the maximum yearly allowable to the account but just not deduct the contributions on my tax returns?

My second question is basically the same, but applies to a Traditional IRA. I just opened(last night) one up online and see that again, my joint filing income level puts me beyond the limit of being able to contribute tax-free. Can I still contribute the max yearly allowable?

If the answer is yes, I would have a traditional, roth and a brokerage account. I would imagine that it would make the most sense to use the traditional and roth accounts for more active trading than the brokerage account? I'm not a very active trader if that helps.

I hope my question is clear and there is a simple answer. I'm really interested in putting as much away as possible, but feel somewhat dettered by my lack of understanding at the moment. Thanks in advance for any clarity!