We have a school district client that is considering a change to an ERISA 403b arrangement with a group annutiy provider. Does anyone have any cites or documentation or evidience for us to use to convice them to make this transition. The current arrangement has non-consolidated assets. In other words what concrete evidence can we provide to the district to convice them to move to this more controlled arrangement?

Thanks

Company currently sponsors a KSOP and is in the process of being sold. Company stock in plan will go away after the sale. As long as the stock is sold at the current fair market value, there is no problem replacing the stock with cash in the plan correct?

I have a 3 co. controlled group with 2 of the companies use a points allocation formula and the 3rd a pro-rata formula. Do I need to run a rate group test since the contribution formulas are not uniform?

We have an ESOP client who is thinking of setting up a 401(k) plan and wants to survey his employees as to their interest. Can anyone point me to a survey? We'd like to include questions about what an employee might defer if matched and if not matched. Thank you for your help!

A local union represents a universe of about 1000 employee/union members. Of this group, only 10 or 12 work on "special projects". These special projects are also projects subject to the Davis-Bacon Act. These 10 or 12 individuals work on the special projects for approximately 1/2 of the year (or about 800 hours per year). The employers would like to pay a portion of the prevailing wage to this small universe of individuals in the form of a retirement benefit without having each employer install a separate qualified retirement plan for its employees. The retirement benefit paid by the employers would be made to a SEP established by the local union. The local union proposes to sponsor the SEP and restrict participation only to union members who fit a particular job classification--which, as noted above, currently covers only about 10 or 12 of the union's 1,000 employee/union members.

I have a number of questions:

(1) can the local union sponsor a SEP (it appears that only "employers" may sponsor SEPs and the local union is not technically an employer)?

(2) assuming the local union can sponsor a SEP, can eligibility be restricted to decorative sheet metal workers (i.e., the small subgroup of union members which at the moment consists of 10 to 12 individuals)? The eligibility rules applicable to SEPs suggest to me that all employees except for those who satisfy prescribed list of exclusions must be covered by the SEP.

(3) finally, assuming (1) and (2) are not problems, different participants will work on different projects at the same time and the participants working on Project A may receive a larger contribution (based on their Davis-Bacon pay) than participants working on Project B. This differential seems to violate the uniform contribution requirement. It also seems problematic that only Davis-Bacon pay will be taken into account in determining the contribution as opposed to W-2 pay.

Thanks in advance for any thoughts.

I have a 401(k) where the employer incorrectly deposited $1,020 too much into an employees' account (a key employee, no less). Do we refund the employer? Is there anything else that needs to be done to keep the plan in compliance. It was truly a mistake by the bookkeeper.

I do not deal with cafeteria plans very often and need some clarification. An employer has a cafeteria plan that they make contributions to. Some of the employees put a portion of these contributions into the profit sharing / 401(k) plan. What is the correct money type for these contributions and how do the tax implications come into play?

For example, some employees elect to put the cafeteria plan contribution into the plan and also have a separate 401(k) election. Would the cafeteria contributions also be considered employee deferrals? If so, are the two contributions taxed differently with regard to FICA and FUTA? I don't think they would be considered nonelective ER contributions.

If a plan consists of pooled investment accounts for which the participants can direct which funds their contributions are invested, would this arrangement be considered "individual accounts" subject to the Blackout Notice requirements?

Controlled group of companies all with their own 401(k) Plans. One company closes down and terminates its 401(k) Plan. Employees of terminated company are transferred to another company in the controlled group. Do the prior plan assets of the transferred employees have to be transferred to the new 401(k) Plan or can they be distributed?

When is a phantom stock plan an ERISA plan? This one is a single employee (basically like a contract for a bonus in the form of phantom stock (cash) upon sale of company)

When is a phantom stock plan an ERISA plan? This one is a single employee (basically like a contract for a bonus in the form of phantom stock (cash) upon sale of company)

I have always allowed round trip mileage but an associate heard that it's just one way... any thoughts?

A mother inherits the IRA of her deceased son, who was age 50 or so (the mother is in her 70's). Can the mother treat this as an inherited IRA and spread the distributions out? The broker says that since it's going from son to mother, the entire distribution is taxable in 2004, the year the brokerage account was "liquidated". The mother would like to put the money back in the IRA and spread the distributions, if possible.

Any replies would be appreciated.

Is a grandfathered governmental 401(k) plan subject to the Sarbanes-Oxley rules regarding blackout notices?

If two 401k plans are mergering, under ERISA is there a specific timeframe during which the plan sponsor must send out a communication piece to plan participants? Which plan sponsor is responsible for sending out the notice - the existing plan sponsor or the plan sponsor of the new plan into which the plan is merging?

To start with the topic: I'm curious as to what my Roth IRA should be invested in?

But first, I would like to thank you everyone who responded to my post a few weeks ago about Roth investments. I've read up a lot and now feel a little more secure about my financial future.

To remind those reading THIS post, I'm an 18 year old high school graduate, who is looking forward to college in the fall. For years, I've loved the market, but due to recent underminings (poor stock choices) I no longer want to be in the game. Too much fluctuation. But two years ago, I heard of Roth IRAs and how tax-free money for your retirement was the way to go. Now I've saved money very well, allowing me to have "emergency" money, "play" money, and now "retirement" money.

My business teachers explained to me that I must immediately begin my Roth IRA for time is ON MY SIDE. I am aware there is a $3000 limit/year and because I'm going to college on several scholarships, I need not worry about not making the payment. So basically, I want to invest as much as I can, into a fund that will give me the greatest return in my retirement. This way I'll not only have my military pension (planning on joining the air force after college), but a nice retirement portfolio.

So in closing, I'm just a little unsure of in whom to invest in? I already know about a few things. For instance, banks nowadays have very poor returns, stocks are doing bad and probably will continue to do so, but index funds allow for the "dollar-averaging" scheme to take place. So now its really a matter of what index fund and what broker. Does it have to be a broker? I mean, who else does Roth IRA/Index Fund investments? Do they charge a commission? I just want to do things right. I do have some time however because I just turned 18 about 4 days ago, LOL. Thank you for reading this...and any help in this matter would be GREATLY appreciated. Thanks again. Look forward to your replies

Upon shareholder's death, his shares of Company stock were transferred in 2003 to Trust A and Trust B. Trust A and Trust B are irrevocable. Presumably, shares received a "step up" in basis at time of shareholder's death. Trustee of Trust A and Trust B proposes to sell shares to ESOP.

My thinking is that sale won't qualify for 1042 treatment because Trust A and Trust B have not owned the shares for at least 3 years. Since the shares received step up in basis at shareholder's death, it seems to me that the Trusts cannot tack their holding period to the shareholder's holding period.

Any thoughts? Thanks.

Is this article correct? http://www.foxnews.com/story/0,2933,125994,00.html

I always thought different and I think I read different on this board and some reference material- in that the conversion would have to include some of the after-tax and some of the pre-tax

Part of what she says is

Now here's where things get interesting. Consider rolling your after-tax contributions into a separate traditional IRA. This is a relatively new twist and is only possible because the 2001 Tax Act introduced a provision that allows rollovers of after-tax contributions.

Since your income will clearly be below the $100,000 limit for Roth conversions, once this money hits IRA #2, you can immediately convert it to a Roth IRA. From then on, any gains the account generates will be tax-free. Furthermore, unlike the owner of a traditional IRA, the owner of a Roth IRA never has to take any withdrawals. (With a traditional IRA, you must begin withdrawals the year you reach age 70 1/2.) As I've explained here before, when you convert money in a traditional IRA to a Roth, you have to pay income tax on the amount that has not yet been taxed.

But here's the beauty of the strategy I'm suggesting: By definition, you already paid income tax on your after-tax contributions! (Hang in here with me.) By detaching the earnings from these contributions (and sending these to IRA #1), the only assets in IRA #2 are those which have already been taxed. So the conversion costs you nothing!

You end up with a traditional IRA (IRA #1) containing all of your pre-tax money (both contributions and earnings) and a Roth IRA (IRA #2) with after-tax money that can benefit from tax-free growth for as long as it remains in the Roth.

The situation is that the individual considers herself self-employed, although her "vendor" issues a W2 and withholds taxes, but does not include her in their plan (she is a mortgage loan processor that works with a bank).

I think that most likely their plan is just excluding her in a class, and because the plan can still pass testing, that's okay. I don't see how the bank could treat her as an employee by issuing a W2, and then have her still be self-employed. She claims that she files a Schedule C as well, but on that same income. This bank is her only "customer". If they were treating her as a vendor, wouldn't they issue a 1099 rather than a W2?

The individual has a SIMPLE plan already and has been contributing routinely.

If this is legit-- Can someone please explain how this works?

I need some help on figuring out whether certain employees are considered participants for top heavy purposes. Let's say that the eligibility for a plan is "employee who is a member of the sales team". For two years employee satisfies the participation requirements and participates in the plan. In year three employee becomes a manager and is no longer a member of the sales team. However, employee has not terminated employment with sponsoring employer. Has employee's participation terminated? Is employee still required to receive top heavy minimums if plan becomes top heavy? Citation would be helpful, if available. thanks in advance.