An S-Corp ESOP is exchanging shares of different classes (all the features will be the same so it should be permissible)(A shares to B shares). The value of the B shares will be greater than that of the A shares. There will be a dividend paid and I wanted to know if the dividend associated with this transfer will be considered earnings. If so, I won't have any potential 415 problems. Any help would be appreciated.

Does a one person 401(k) Plan have to receive and submit a SPD?

Thanks!

the question posed by the sales guy: Can we terminate a 412i plan and rollover the distribution to a new DB plan? Yes. But what he really wants to do is change a 412i plan into a "regular" DB plan. My simplistic answer is that once the 412i DB is no longer funded with insurance it ceases to be a 412i and becomes "regular". The next question posed was - can we "restate" the 412i into a prototype document? What do you all think?

Another issue that seems to be rearing its head is how domestic relations orders will be treated under the AJCA. Because there are strict NQ distribution situations, with no guidance as of yet with regard to ordered distributions from an NQ plan, how do you think these will be handled? I've looked high and low for some information and have come up empty. Any ideas? Any direction? Thank you.

I just found this board and read as many correspondences as I could find on the subject of Roth IRAs.

John G had this to say in a reply to kathye's post: "assuming that you qualify for a Roth in both years".

1. What does it take to qualify for a Roth IRA?

I am 61 and divorced. I understand I can contribute $3500 per year as long as my earned income for the year is the same or more than the $3500.

I am currently on sabbatical from operating my piano studio (therefore, no earned income June-December 2004) in order to write a book but I had more than $3500 earned income this year Jan-June. (I am living on the monthly income from my ex-husband's pension plan.)

2. Is it possible to start contributions to a Roth IRA this month, December, or is there an earlier cut-off date requirement? (I read something about a mid-April date but wasn't clear on it's significance.)

3. In 2005, is it correct that I wouldn't be able to open or make a contribution to a Roth IRA until/unless I began working again?

A few months ago, before I found this board, I went to a community bank in the little town to which I relocated recently. I asked to speak to someone about Roth IRAs and a woman came out into the lobby to talk to me (quite different from the big city atmosphere I'm accustomed to where you're ushered into a private cubicle to have financial discussions--I had to chuckle inside).

The conversation was very brief because I wasn't sure I was being given accurate information. The woman told me I couldn't open an account because I was retired.

Confused me.

4. What constitutes "retirement"?

5. I am not currently collecting social security but if I were to do that when I turned 62, would that preclude me from opening/contributing further to a Roth IRA?

6. Basic question about the Roth IRA account. Each new year that you make a contribution, does it go into the SAME Roth IRA account or might individuals have many different Roth IRAs?

Thank you for reading and for any help in answering my questions.

Nancy

does the $205,000 compensation limit apply to employer contributions to a 403b plan? In other words, when the employee's annual compensation hits $205,000, does the employer have to stop contributing, even if the other limits on total contribution have not been met?

I would like to get an idea of how different people are interpreting "meaningful benefits" (I think that's the correct terminology) for the purposes of headcount in the 401(a)(26) test.

I know IRS hasn't said what meaningful benefits are. What are your feelings on this? Have you heard anything that IRS has said informally?

Thanks.

The following formula could be added to Part1pg (or a variety of certificates) to project out a cash at retirement.

This particular formula, since it uses '1' would be for projecting out the deferral account on that report.

It assumes the current year deferral will be constant for all future years.

This is written for 6%, easily modified for other interest rates.

You would have to add PLANEE table to make it work.

you could modify it to project out on other sources. e.g ContrForf2 would be match.

the first half of the formula uses the current year contribution. The second half is the ending balance in that source.

Round ((Sum ({@ContrForf1}, {RPTEE.SSNUM})*((1.06^{PLANEE.FUTRSVCYRS})-1)/.06

+Sum ({@EndBal1}, {RPTEE.SSNUM})*1.06^{PLANEE.FUTRSVCYRS}))

Does this apply to age weighted plans? I know it applies to cross tested. Thanks.

If individual has IRA that says the required beginning date is the

April 1st following attainment of age 70-1/2, has non-spouse bene, attains 70-1/2 in 2004 and dies in Sept 2004, must an RMD be taken for the year 2004?

It appears to me that the IRA would be governed by the rules for an individual's dying before his required beginning date. Am not sure about current year though.

Cites would be helpful.

Under the AJCA, "Specified Employees" of publicly traded companies cannot receive distributions for 6 months after seperation from service. "Specified Employees" are Key Employees under 416. In determining "officers" under 416, should a plan disregard or foreign employees (e.g. nonresident aliens receiving no US source income)?

Help is appreciated.

Had an unusual conversation with IRS auditor looking at one of our DB clients. The client's pension plan excludes "Cashiers". Most work under 1,000 hours, and 410(b) coverage has never been an issue.

The auditor made it clear that in her mind the client is being discriminatory against low-paid employees under new 410(b) guidance and she is going to require them to retroactively put all eligible Cashiers into the Plan. (flies in the face of recent memo where IRS thought plans were giving too much to low paid employees). She said she might have overlooked the exclusion had we excluded the Owners.

I told her that we disagree that this is discriminatory. It is a reasonable classification, and all coverage and discrimination issues are satisfied.

Anyone else have a problem like this? In December 2003, the client filed the Plan with the IRS for a DL, and we are expecting a response soon.

If mandatory pension contributions were picked-up in error, how are they to be treated? Must they be refunded as soon as administratively possible? Or can they only be distributed after separation from service?

For example, a participant is required to have only 5 percent of his salary picked up. However, 8 percent was being picked up instead. An excess of 3 percent was being picked up.

Would this be corrected the same way as contributions that exceed 415© in the case of defined contribution plans?

Sole proprietor client terminated a Defined Benefit Plan in '03. Actuary calculated a required contribution of $25K. It was non-deductible because of no earned income. Deposit was made in 2004.

Participant (client) rolled over the balance of the DB to an IRA in '04.

I think I've looked this up, but 2 things:

1) Non deductible contribution OK in last year of the plan (no excise tax)

2) Rollover of said non-deductible contribution a) OK and b) creates no "basis" in the IRA.

I'm away from my files, so I can't rifle through it for my cites.

I'd like to sleep some time this week....

A Company has a DB Plan and a cross-tested PS Plan, which are aggregated for the general test. The cross-tested PS Plan has the 1000-hr. and last day provisions. The Plans are top-heavy. Th participants who terminated and worked 1,000 hours during the year will accrue a DB Plan benefit during the year.

1. Will these participants be entitled to a 2% top-heavy DB minimum (not 3% since they are not benefiting in the PS Plan)?

2. Should they be entitled to the minimum DB/DC aggregate allocation gateway?

3. If the Company did not have the DB Plan, do you agree that these participants need not receive any top-heavy PS allocation?

Safe harbor 401(k) provides for eligibility rules age 21 and 1 year of service. Also provides for dual entry dates of Jan 1 and July 1 with entry date for a participant being the entry date coinciding with or next following the date the eligibility requirements were met. Employer hired new doc Oct. 2003. Employer wants to amend Plan to allow for new doc to enter plan as of July 1, 2004. In essence, eligibility requirement would have to be reduced to 6 mos. in order for new doc. to enter plan as of July 1, 2004 and thus be able to defer in 2004. Also, compensation taken into account would be for entire plan year and not just compensation from entry date. What issues are there with amending the service requirement retroactively, e.g., effective as of first day of 2004 plan year (Jan. 1)? Although potential discrimination issue in favor of highly compensated e/ee exists, wouldn't non-highly's also benefit by virtue of now being eligible for the 3% nonelective safe harbor contribution? Thanks for any input...

Company started in July of 2004. Plan year end is 12/31. I would like to avoid prorating comp for ADP. I heard somewhere that I could make my plan year begin 1/1 even though the organization did not begin until July. Is this correct?

Thank you

I'm sure this is a fairly easy question, but I don't work with SIMPLE plans and I want to be sure I give an accurate answer...

Client is terminating his SIMPLE Plan as of 12/31/2004 and starting a 401(k) as of 01/01/2005. There will be "receivable" contributions from December payroll that actually go into the SIMPLE Plan in January. Is this an issue with the SIMPLE exclusive plan rule? It doesn't seem as though it would/should be in practice, but then I got thinking .................any help is appreciated.

I have a 403(b)annuity account with ING. I am having financial difficulty, and am falling behind in my bills and payments. I am a single mother, and it is very hard at times to get caught up to date. I have tried twice to cancel my account and each time I was told I would have to take a loan out. Which I did. I did not want to do this, and now I am falling behind in payments and still have not been able to cancel my account. I would like to pay off the loans out of my annuity account and be sent the remaining balance. I know I will be penalized by the IRS. I do not think this is fair business. As of this date, they will not give me MY money. How can I get them to release my money? There hasn't been any money added to the account since June 2004.

Client is a small closely held ESOP with all comapny stock held in plan. We are down to jsut a couple of active participants with the terminated ees being paid out in installments over 5 years. The problem is that the cash is dwindling and with just a couple fo ees left even maximum contributions will not satisfy repurchase obligation...any sugestions?