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This message board has seen a recent surge of posts that seem to be a combination of promotional statements and some esoteric questions about commodity/futures/trading issues in Roths.

As one of the moderators of this message board, I have chosen to delete all of these message threads because: (1) narrow appeal of these topics, (2) misinformation and misleading information, (3) highly exagerated claims of performance, and (4) the "promotional" nature of some of the posts.

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Moderators have censuring powers. They are rarely used. Some of the reasons a post may be deleted or a message thread closed include: inappropriate language, psuedo expertise, self promotion, soliciting business or advertising, inaccurate information, spamming, etc. An author that persists in posting inappropriate material may be blocked from participating.

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The comments on tax code, retirement plans and investment options that are found here should not be your only source of information.

Think of these threads as a starting point in your research process. Many of the transactions (like rolling over a company plan, IRA conversion, distribution decisions and inheritance planning may involve thousands of dollars. Making a mistake or missing a deadline can have huge consequences. Buying a few hours of professional assistance from a tax preparer or tax lawyer is highly recommended by everyone here.

It is clear that a one-participant plan sponsor can be exempt from filing the 5500EZ if plan assets are and always have been under 100k.

However, such a sponsor always has the option to file.

The question is:

If say a plan sponsor files a 5500EZ in its first year, does that sponsor have to file the 5500EZ in the 2nd year if plan assets have always been < 100k?

That is, could the sponsor elect to not file the return in the 2nd year?

I do not see any explicit reason that would preclude a plan sponsor from choosing to NOT file, but wanted to get other thoughts and experiences.

Thanks.

We currently handle pension distributions in house. We have encouraged participants to permit us to do direct deposit of their monthly pension checks, so that we don't have to mail them. We have now engaged a vendor that will handle the pension distributions. The vendor will need employee data to continue the distributions. This would include the direct deposit and other info (bank, bank acct number, name, address, social security number, etc.).

I am hesitant to just transfer this data. Is it enough to notify participants this data will be transferred to the vendor? Or do we need to have the participants complete new direct deposit forms sent by the vendor/administrator?

Please help!

We have a client who just now noticed that their 2003 SEP contribution (paid 10/04) checks never cleared the bank. They contacted the investment company, and they have no record of receiving the contribution. The contribution was deducted on their 2003 tax returns.

I would expect that we should self-correct under the EPCRS (correction of insignificant operational failure) by making the contribution now and adjusting for earnings. If we do that, can we still deduct on 2003 tax return?

Thanks in advance for any and all input.

We have a DC Plan that is a collectively bargained for Multiple employer union plan. The document states the contribution is based on the CBA. For 5500 purposes, should this plan be called a PSP or a MPP? And, .....is this plan then subject to minimum funding standards whether it is a PSP(because the CBA states their is a specific dollar contribution per hour) or a MPP?

I think the DOL causes more problems with these notices than they are worth.

I have a Cash Balance with supplemental 401(k) plan to test. There is a certain individual who is eligilbe to defer, thus eligible for Safe Harbor. However, this person is not eligible for the Cash Balance plan or for a discretionary Profit Sharing contribution, b/c they didn't work 1000 hours.

What tests do I have to include this person in? (My main test of interest are: 1) 401(a)(26), although since they aren't eligible for the CB plan, I'm quite sure that I don't include them. 2) 410(b) 3) 25% deduction and 4) 401(a)(4).)

I appreciate any and all help that anyone is able to give me.

Hi All,

I was wondering if anyone has run into this situation and/or can advise the best way to handle regarding the Form 5500 filing:

I have a client with 2 H&W plans (one medical/dental and one for life). They do not have a document that wraps these two plans together, so they are required to file 2 Form 5500's.

For 2003 (initial year), the preparer combined both plans on one 5500 with a wrong pn (503).

both 2003 and 2004 should have/be filed with pn 501 for medical/dental and 502 for life.

I'm thinking an amended 2003 return would alert the IRS and the client would have a late filing for one of the returns.

If we correct going forward, we have a plan that just "appears" - the effective date would not correspond to the first plan year filing, essentially.

How would you correct in this situation - or, what is the favored correction method of the IRS?

Thanks for your help!

Vicki

Here is my situation:

I have two Roth IRA's(one just transferred to new instituiton).

1) The one I have with scottrade has contributions totalling $1500.

2) The other with Fidelity has about $2000 in contributions.

3) And the one I tranferred to Scottrade from USAA had about $1700 in contributions. By the end of the year I will have gone over my max contribution of $4000 by about $1500 dollars. I have already withdrawn $500 from one of them(scottrade) to try to offset this and keep doing my usual monthly contribution of $300. The reason I am over by so much is because I got overzealous and was doing stock purchases in between my monthly mutal fund purchases(to a total of about $1500).

I want to know how to withdrawal the excess. I read that the IRS considers premature distributions as coming from the contributions first then after that you are considered to be taking the money out of your earnings and that is taxable and penalized. I did this last year for a very small amount(<$500) but my bank was easier to do the withdrawals. Scottrade required I fill out a distribution form so I marked premature thinking it would still be considered part of my contributions to that account when I do my taxes.

A few more caveats:

1)I have excess medical bills to pay.

2)I am a student but recieve ed loans to help with tuition.

I understand these are exceptions that will allow early withdrawal as well. And both 1 & 2 are well over $1500. This is my second option if I mess(ed) up the excess contribution rule.

I am 27. Not a homeowner. Make under $15000 this year(not counting ed loans).

My first question is how to correctly do the withdrawals of excess contributions? Is this more a matter of filing my taxes correctly? Can I withdrawl the excess from either account even if it is more than my contributions to that particlar account(but not for all my accounts total of course)?

For example: Can I withdrawal another $1500 from scottrade even though that would be more than my contributions to that account(only $1500) Any help would be great.

I have a client who wants to start a safe harbor 401(k) for 2006. Can he incorporate the Roth 401(k) feature in a safe harbor 401(k) plan? If so, could you still do a safe harbor match on Roth deferrals?

And has anyone heard anything about whether the IRS will issue a good faith amendment for the Roth 401(k)?

Thanks.

Here is an email I received from a co-worker. I know nothing about these accounts. Hopefully I can get some input here.

"We have a potential client who has an Archer MSA plan. Proprietorship with Dr.'s wife as an employee. They funded MSA contributions in 2005 from their personal account. Their current accountant says they cannot deduct the contributions because they were paid out of their personal account rather than the proprietorship account. He also advised them that they need to distribute their 2004 contributions before October 15 to avoid problems.

I fail to see why it makes any difference which account you pay the contributions from. They have a qualified high deductible health plan. Contributions are within limits. From what I have read, I think they can deduct on Schedule C (if they meet rules for covering other employees) or on line 31 of Form 1040 if they can't deduct on Schedule C."

Are we missing something? Is there a particular citation you could refer me to? Thanks in advance for any assistance!!

Some of my physician group clients are asking if they can request patients to sign an assignment of HSA funds. I know HSAs are covered by the prohibited transactions rules, but I have been unable to find any guidance on whether such an assignment would be a prohibited transaction. The physicians want to increase their chances of getting paid for services which fall below the patient's deductible. They understand that there is no guarantee that the patient will have sufficient funds in their HSA to cover the expenses. Any ideas? Thanks.

I rec'd a call from the auditor on one of my plans who said that she received information from the EBSA that her audit was not suifficient and she would need to complete a new one. She then contacted me and told me that there were a couple of changes that needed to be made to the form itself including the 5500 itself and the schedule H. From reading the instructions, it appears that since the EBSA has requested a revised form, the amended return box should NOT be checked off. Is this anyone else's understanding as well? (It seems odd.) Also, when processing an amended return, the instructions say to attach only what is changed. In my case, the 5500 and Sched H. However, since we are amending it due to EBSA, do we attach everything or only the selected Scehdules?

Any input would be appreciated.

Form 5330 instructions say the due date is the 7th month after the employer's tax year. The employer's tax year ends 12/31/04. The employer files a 5558 extension for the 5500. Is the 5330 and tax payment due by January 31, 2006?

I have a takeover plan, allocation groups are defined by birthdate ranges (Example: If born before 1/1/1949 you're in one group, if after 12/31/1948 you're in another.)

Question is, could this allocation grouping possibily be in violation of federal age discrimination laws?

Is there any requirement that there has to be an annual open enrollment period?

I guess this relates to the requirement that the open enrollment period be prior to the period of coverage. Does it say a period of coverage couldn't be more than a year in length? E.g., two years, three years?

Thanks!

I have a client that has been having ADP issues recently due to a myriad of reasons. The ADP percentage of the NHCE group has been around 5.5 - 6%. Typically one would think that's a fairly good percentage given that his company is a manufacturing facility with average wages of 30-50k. But the HCE hasn't been paying himself a whole lot of $$ over the last few years and thus his actual dollar limit is rather low.

He's upset over the expenses of the plan in relation to his benefit. You and I know that his benefit is in proportion to his compensation, but getting him to see that is tough. Especially when all he sees is the SS taxes involved in raising his comp.

His current plan is a 401(k) with a comparability test profit sharing plan. Someone (there is always a "someone" to muck things up) told him that he could terminate the 401(k) portion of his plan and start a simple 401k. Well that's not possible, nor plausible, but it got me to thinking...

If he were to start a separate entity, with just he and his spouse, and that new entity had a 401(k) plan. He could receive comp from both entities...defer into new one and receive a profit sharing contribution from the old. So long as the matching (if any) contribution were the same, the level of benefits would be as if it were a single plan....However, he wouldn't be limited by the ADP test issues that he is now. Am I missing something here?

One of our employees enrolled in our Health Care FSA has filed a claim for a home drug testing kit for marijuana. This is a first for us. Does anyone know if this is a reimbursable expense? Its not technically needed to treat an illness or injury unless your consider it for diagnosis similar to a pregnancy test kit.

Are there any auditors out there?

We are looking for some help for the following note disclosure and would very much appreciate your opinion(s).

The second paragraph of the AICPA’s sample note disclosure for Investment Contract with Insurance Company reads as follows:

There are no reserves against contract value for credit risk of the contract issuer or otherwise. The average yield and crediting interest rates were approximately 8 percent for 20X1 and 20X0. The crediting interest rate is based on a formula agreed upon with the issuer, but may not be less than 4 percent. Such interest rates are reviewed on a quarterly basis for resetting.

What source documents should we use to obtain these figures? We have inquired of our client’s third party administrator and they were not familiar with the terminology and consequently, did not know where to get the rates or the source of the formula.

Thank you for your help.

Hello. I am trying to rollover my pension trust from the Southeastern Carpenters and Millwrights Pension into a Traditional Ira. I no longer work for the union and my pension will not make any more money but the potential to lose it all is very possible. According to the plan summary it is allowed if 100% vested which I am, but when I called to get the process started I was informed that it will not be done and when I asked why the answer was "because we don't do that".

Can anyone give me some advice on what my nextstep would be. I am running into brick walls laeft and right and I am stumped on the next step. Please help. I would greatly be in your debt

Thanks for your time, caclancy