I noted a couple of the previous strings on Automatic Rollovers and After-tax contributions but they are not real clear on the final result. Are after-tax contributions subject to the automatic rollover rules?

Does anyone know the Wage limits for 2006?

125 Plan established.

7 nonhighly employees who participate

1 highly who participants.

Is there a limit the highly can put away, based on discrimination testing, wage limits, etc.?

Very basic question:

What are a plan sponsor's options 1/1/2006 for a min distrib due where a complete lump sum is not being taken.

Clearly,

1 Allow participant to select full, final, retirement benefit (with spousal consent, etc), if plan permits in-service distributions.

What about:

2. Allow participant to select full , final, retirement benefit, (with spousal consent, etc.) even if plan does not otherwise permit in-service distributions?

How about, somewhat analagous to the account balance method:

3. Allow participant to elect to receive one year of payments based upon the relevant accrued benefit, in the life annuity amount, without having such election affect death benefits if he dies while such election is in effect.

Or

4. Allow participant to elect to receive one year of payments based upon the relevant accrued benefit, but with the reduced amount based upon a J&100 (subject to MIDB), but without having such election affect death benefits if he dies while such election is in effect.

Interpretations please?

Plan document provides that forfeitures be used towards plan expenses, then to reduce match, then reallocated. Client stopped matching mid-year and paid plan expenses from the corp. We have about $7,000 in unallocated forfeitures at year end. Would it be appropriate to reimburse the corporation for the plan expenses that were inadvertently paid from the corp? Or must we reallocate? Reallocation is difficult because the match formula was 50% up to 6% per pay period. I guess I could treat the $7,000 as a discretionary match at year end somehow. But it sure would be a lot easier if we could just apply the forfeitures towards a fee reimbursement to the corp. All thoughts, experiences and advice appreciated!

When Employer stock is taken from a qualified plan as in kind distribution, the participant only pays taxes on the basis value of the stock until the stock is cashed by the participant. Do the same rules apply if ER stock is held in a SEP IRA?

Interesting:

http://benefitsattorney.com/modules.php?na...=article&sid=34

As stated before, one hopes the drafter of the QDRO will remember to address all cases involving death:

- if the participant dies first and before any benefit commencement,

- if the AP dies first and before any benefit commencement,

- if the participant dies first after benefit commencement, and

- if the AP dies first after benefit commencement.

Husband and wife own a family business. They pay their 10-year old twins compensation of less than $10,000 (sure beats my paper route as a kid!!!). Company will establish a 401(k) plan with no minimum age or service requirements. Can these kids also defer 100% of their compensation? I'm guessing the answer is yes, provided the compensation is justified. Any thoughts are greatly appreciated. Ed

From 1978 - 2004, some lawyers were completely unaware of Sec. 457(f)'s existence. These individuals would create nonqualified arrangements for their tax-exempt clients, using the same documents and language as they would for taxable clients (i.e. no substantial risk of forfeiture).

Thanks to Sec. 409A, people are now becoming educated about Sec. 457(f). That's at least one good result of the new law. Anyone else who's ever discovered or had to clean up a Sec. 457(f) mess would probably agree.

If an employer timely provides a safe harbor notice but does not amend the plan until after the begining of the safe harbor plan year, what do you think the chances are that the IRS may in EPCRS permit the retroactive amendment? The IRS did see the amendment and issued a determination letter on it already.

Expenses must be incurred after account is established?

Does the account have to actually be set up on HSA custodian's records or can a signed application and check count? HSA custodian will take at least 10 days to set up and activate account, but participant is going to incur otherwise eligible expenses this week.

Will a signed and dated application and check work?

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