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.

For Top Heavy testing, do you account for a terminated participant's inservice distribution when their current account balance is no longer considered?

Here is the situation:

Three years ago a participant takes a hardship distribution. A year later that same participant terminates employment from the company. So when doing the current year Top Heavy test, we no longer consider that participant's account balance due to the termination two year prior. What about that participant's inservice distribution that was taken three years ago, due to the five year Inservice distribution rule?

We are having a little debate regarding the answer, so any sources or links for your answer would be greatly appreciated.

Thank you.

The download file we are receiving from Schwab only contains the trade date not the record date -which is allocating dividends based on the wrong date.

What I'm looking for is : Are others succesful in getting a file from Schwab that contains this date?

If not how are you allocating your dividends?

Tomorrow, Wall Street Week will be interviewing Ted Siedle. He will be disclosing the shark like fees associated with investing in DC plans.

If there is a business partnership (equal ownership) consisting of three people can each one of three partners open their own Individual (k) or would there have to be one Individual (k) plan set up for all three partners? Please advise.

Thank You

I realize the "Individual (k)" is used when a small business owner establishes a plan covering only th business owners (or owners and their spouses). If the business eventually hires employees that must be covered under the business's retirement plan the business owner must generally decide to expand their Individual (k) plan into a traditonal 401(k) plan or switch to a different type of business retirement plan.

Once the employer has eligible employees does the Individual (k) automatically beome frozen? How much time does the employer have to establish a traditional 401(k) plan? Please advise.

Thank You

The owner of a traditional IRA purchases the XYZ fund through his IRA custodian. The purhcase represents less than 10% of the total IRA. XYZ Fund resides in a Limited Parternship that is owned and managed by the IRA owner's son and daughter (50/50 partners). The investment in the XYZ fund by the IRA represents 50% of the total value of the XYZ Fund.

Because of the purchase in an investment, where the investment is owned by the son and daughter of the IRA owner, has a prohibited transaction occurred?

Thanks!

7/31/04 Plan year end. ADP test failed and 1 HCE needs to have $1900 returned to him. HCE is catch-up eligible and the plan allows for catch-ups.

By 11/30/04 he had already deferred 16,000 in calendar year '04.

If we recharacterize the 1900 as catchup for the 7/31/04 plan year end, does he now have a 402(g) violation of 1100? Or must we return the ADP amount? I would think that had they gotten the data to us and we had known of the failure earlier we would have recharcaterized the excess and then told him to deposit less catch-up but now I'm not sure which comes first Chicken/Egg!

Any comments? (be kind, it's Christmas!)

Merry Christmas and Happy Holidays to ALL!

1. Notice 2005-1 Q&A -10 contains a statement that salary deferrals generally may not be made subject to a substantial risk of forfeiture. What is meant by this statement ? Does it now prohibit normal salary deferrals under a non qualified plan?

2. Can a greater than 50% owner of a privately held company that sponsors a nonqualified plan still defer part of his salary under 409A when all of the requirements of 409A (a) (2),(3) and (4) are met? and the plan is unfunded and an unsecured promise to pay?

3. Can a greater than 50% owner still have a distribution event under a change in control?

An attorney in my firm recalls having heard about a case several years ago that held that the Buyer did not have a claim against the Seller regarding the imposition of a lien by the PBGC. The purchase agreement stated that the company's assets were not subject to a lien; however, because the statement was not in the employee benefits section of the purchase agreement and the statement did not refer to a lien imposed due to underfunding of the retirement plan, the court found that the rep was not violated.

Of course, we cannot find such a case. Does this purported case sound familiar to anyone? If so, do you have a clue as to the case name or maybe the jurisdiction?

Thanks.

Churches aren't subject to Code section 457, but that doesn't stop financial institution salespeople from wanting to sign churches up or church human resources people from wanting to get their employees a benefit similar to governmental 457s.

I would think a church could sponsor a broad-based nonqualified deferred compensation program like a governmental 457(b) plan but using a rabbi trust rather than a 501(a) trust as required under 457(g).

No rollover, of course, but it seems there would be enough advantages to make it attractive.

Are any 457 providers offering such a product? Any thoughts?