For an non-Gust amended plan, that wants to "terminate" and distribute the assets, how do you report the distributions now that it is disqualified? The IRS has provided no guidance at this time.

Is it permissable for an employer to invest money 'collected' from employees for their FSA's in an interest bearing account?

Thanks,

Fred

ESOP terminated two years ago. Stock "distributed". Participants put stock back to company. Particpants received partial payment and notes. Most participants rolled proceeds and notes over to IRAs. Balance on notes was paid a year later by a new company that purchased the former ESOP company. ERISA and state securities litigation about the purchase price of the stock from participants. Settlement reached with additional proceeds from sale to be made. Payment will come from a former party in interest. The ESOP and trust no longer exist. Can payments be made directly to IRAs and participants according to their original elections? If no, who issues the elections? Will new 1099-Rs be required? If yes, who issues the 1099-Rs? Thank you.

ESOP terminated two years ago. Stock "distributed". Participants put stock back to company. Particpants received partial payment and notes. Most participants rolled proceeds and notes over to IRAs. Balance on notes was paid a year later by a new company that purchased the former ESOP company. ERISA and state securities litigation about the purchase price of the stock from participants. Settlement reached with additional proceeds from sale to be made. Payment will come from a former party in interest. The ESOP and trust no longer exist. Can payments be made directly to IRAs and participants according to their original elections? If no, who issues the elections? Will new 1099-Rs be required? If yes, who issues the 1099-Rs? Thank you.

What is the deadline for making a deductible DB plan contribution? Is it the same as DC.....due by tax filing date, including extensions? I know nothing about DB plans. (I'm not sure I ever want to know much about them either. Yuck) THank you.

I know this subject has probably been beaten to death and I have read some of the other posts. I just want to make sure I am understanding correctly.

Client has a 401(K) plan. In 2002 beginning of year participant count (Form 5500 line 6) was 82. Client filed Schedule I. In 2003, beginning of year participant count was 173. Is it correct that they have no choice but to file Schedule H (with audit) since the participant count is greater than 120?

Thanks.

Doc (of course) currently sponsors a PS Plan through his medical practice. He would like to direct his own investments, but does not want the "hassle" of offering this option to other Plan participants.

Doc is also an owner in a separate business venture, totally separate from his medical practice, consisting of Doc and his business partner (no common law employees).

Doc wants to know if his "other business" can establish a PS Plan, to which he would rollover his balance under the medicla practicie's Plan (via an in-service distribution) and then be able to self-direct the investment of his account?

He would roll his balance over to an IRA but wants the added ERISA protection of having his money in a qualified plan.

Other than possible controlled-group issues and not intending to make "recurring and substantial" contributions to the "other business" PS Plan, are there any other issues (pro or con) to consider?

Please weigh in! Thanks!

A plan excludes overtime/bonus from the defintion of compensation. The comp ratio tests fails because the disparity between HCE and NHCE is 5% - more than a deminimus amout. The only contributions are 401(k) and discretionary match, no profit sharing.

The ERISA outline book (chapter 9 page 9.12) states that if the comp. ratio test is failed the employer has 2 choices:

1. Amend the definition of comp. to satisfy section 414(s) and continue to rely on the design based safe harbor.

2. Allocate the contribution under the plan's definition of compensation and satisfy 401(a)(4) under rate group testing.

I could understand #2 for a profit sharing allocation but can you rate group test a 401k and match contribuiton?

If the plan is amended - under #1 above - does the plan just have to run the ADP and ACP testing using a safe harbor comp. definition? Does the employer have to make some sort of additional contribution?

Hello and Happy Holidays!

I have been on this forum off and on for the past couple of months. I am 5 months into my first job out of college and am ready to initiate my Roth IRA account. Right now, my girlfriend and myself are looking at putting in the full $3000 into Roth accounts and count them for this year, 2004, as from my understanding this is possible as long as we declare it by April of next year.

Right now, we are trying to decide on whom to setup the account through. The names that we have been thinking about are Vanguard, Ameritrade and SiebertNet as some options. The problem we are having right now is trying to sift through all of the hidden fees.

To make it short, we are looking to atleast setup a no-load fund (probably index) to start off with for our individual accounts. She just turned 26 and I will be 26 in February. Of course we plan to continue maxing out on contributions for years to come.

Any suggestions on companies to consider as well suggestions to determing fees that will be applied? Any suggestions would be great.

Take care and thanks.

Eric

I am not sure where to post my question, but it is:

My employment ended with a company and I received 15 months worth of severance pay, which is great. However, when my employment ended, all company contributions to the pension plan and to my 401K ended as well as my contributions to my 401K. Can I pay a percentage of my severance pay into some sort of retirement plan I establish, i.e., an Individual(K) plan and something similar?

hello all!

i am 33 and its about a year since i left my previous employer. i still have a 401K account with them and am wondering if it'd be a good idea to rollover the money in it into a regular IRA and then to a Roth IRA.

can somebody give me pointers on all the factors i should consider while doing so?

at what rate will i have to pay taxes when i do the conversion (IRA -> Roth IRA)?

also, i do have a new 401K plan with my current employer as well.

thanks,

sudhir

hello all!

i am 33 and its about a year since i left my previous employer. i still have a 401K account with them and am wondering if it'd be a good idea to rollover the money in it into a regular IRA and then to a Roth IRA.

can somebody give me pointers on all the factors i should consider while doing so?

at what rate will i have to pay taxes when i do the conversion (IRA -> Roth IRA)?

also, i do have a new 401K plan with my current employer as well.

thanks,

sudhir

A forfeiture was charged to my 401k account due to a caculation error by the company that manages the plan. As a result, five months later I received a check for part of my contributions, but not the assocatied match or earnings on the forfeiture amount. I believe that they should correct their error and restore my account to where it would have been had they correctly calculated the ACP test.

This is what I was told by the plan administrator:

"Sentinel calculated our IRC401(m) or commonly referred to as ACP test using the wrong year to date figures for you. As a result they concluded your contribution exceeded the plans 15% allowed. They took your YTD and divided your yearly contribution into it. It was higher then the 15% that the company allows. What they needed to do is confirm those figures below making the adjustment, but they did not. Even though they were wrong, there is nothing I can do to have the forfeiture amounts reversed, it is against the IRS's rules and regulations. As a result, you will

receive a 1099R after Jan. 1st and a check for the before mentioned amount."

Is what they did legal? If not, how should I proceed to have them correct my account.

A sole proprietor sponsors a db plan in which the owner is the only participant. In a given year his 412 minimum contribution exceeds his earned income, resulting in the contribution being nondeductible. Assuming the contribution is not returned to the sponsor, will the nodeductible contribution be considered a basis in the participant's ulimate distribution?

With all the mortgage brokers and construction companies making hand over fist right now, I have seen a lot of clients looking to put as much money into theri plan as possible right now. They are all assuming that their income and contributions will be dropping within the next few of years.

The client in particular that i have in mind is a plan with just two individuals, both 50% owners of the company. They are considering putting their parents on the payroll and making contributions for them. There are no other employees. They have said that the parents will be doing a legitimate job for them that will justify the pay. The quesition though is can they put a 5 year cliff vesting schedule in the plan?

Obviously with the plan being top heavy, normally the vesting schedule would default to a 3 year cliff or the 2/20 vesting. But since everyone is highly compensated do we have to go to the top heavy vesting schedule or could we keep the five year cliff as long as everyone is highly compnesated?

5 beneficiaries of parents IRA ( father deceased passed to mother deceased) will take share of IRA and have been informed "conduit IRA" as the place to put distributions. Can this transaction be tax exempt, can the assests be rolled into Roth IRA... any suggestions will be appreciated!

Im yet another newbie so bear with me. My job has been outsourced and as a result I have to deal with the shares from my ESOP. I dont know much but I know that to just cash out would be very expensive. I am 44 and while I have some retirement savings going on (mostly mutual funds) I have not been very directed but I think it might be a good time to get my act together.

I assume that my best move is an IRA? But there is something about this being taxable that I have to take into account but Im not very clear on how but "NUA" keeps popping up -- shares were bought at approx $19 and now are at approx $70. There are not a ton of shares - about 150 I think. Are there particular approaches I should take to minimize the tax impact? Thnks for any advise/patience,

My favorite subject...

Suppose you have corporation A, owned 100% by Mr. X. It has a profit sharing plan, on a calendar year basis. In early December, Mr. X and Mrs. X purchase corporation B. They are 50/50 owners, and with attribution it is a controlled group.

Now, under 410(B)(6)©, it seems as though corporation A's plan is all set until 1/1/2006. If they WANTED to include corp B's folks, they could amend the plan to credit prior service with corp B. They don't want to do this. So far, so good, I think.

What they appear to want to do is establish a plan for corp B, for 2004 and 2005, that ignores corp A. I don't see how they can do this. If they had an existing plan, they would receive the same treatment as corp A's plan under 410(B)(6)©, but since one of the requirements for the "free pass" is that the plan has to have been in existence at the time of the transaction, this requirement isn't met. Since there was no plan for corp B, then if they attempt to establish a plan, they will have to consider all of Corp A's people.

I can't shake the feeling that I'm missing some obvious point or solution - if someone could point it out, I'd be be most grateful. Thanks, and Happy Holidays!

Partnership has dissolved, but employees stay with one of the two partners. The partner keeping the employees continues the plan. Is that a severance from employment for the other partner?

Have a 25 participant DB and PSP that was originally set up by an insurance agent. So of course the DB contains life insurance. The policies have been in force only a few years so CSV is low.

This employer would really be better off with a non-safe harbor floor offset plan. Their younger employees understand and appreciate a 10% of pay PS contribution, while 5 senior owner employees would be happy with the additional benefits in the DB. Both plans would easily pass 401(a)(4).

Our dilemma is how to deal with the life insurance as the new proposed design may result in no DB benefits (after the offset) for several participants. Yet these same participants currently have policies of 100 times benefits. They could terminate the plan and start a new DB but that would result in 100% vesting. Since the same employees participate in the PSP, is there any way to somehow transfer the policies to the PSP?

Thanks much.