I declared an IRA for $1000 on my tax form which was sent in on time. However I needed to purchase the IRA for 2003 by April 15, 2004. I still need to make this IRA purchase however my bank said I couldn't. Is there a way to purchase an IRA for 2003 or should I make one for 2004. If not what will the penalty be as I have already received my refund?

Will pre-tax salary reduction under a cafeteria plan be deemed to indirectly fund an HRA where premium payment for the health plans sponsored the employer only permit after-tax contributions to the extent of the monthly HRA contribution (i.e., the HRA participant does not have a choice of using HRA contributions in lieu of pre-tax salary reduction contributions). Also, what are the practical penalties if the HRA is recharacterized as an arrangement that does not meet the definition of an HRA? Would this only entail income tax inclusion to the participants and wittholding obligations on the employer? Thanks for your thoughts.

I started a Roth IRA in 1998. I am not yet to the 59 1/2 year old age to take out the money, but I want to withdraw it anyways. I read an article on-line that mentioned that if you opened the Roth IRA in 1998 or 1999, you don't have to pay the 10% penalty. Do you know if this is correct?

I have a client with a Safe Harbor 401k Plan with a 5/31 year end. They are thinking about terminating the plan.

I have advised them that the plan should be terminated as of 5/31. If they were to terminate mid plan year, then the short plan year could not be Safe Harbor. Right now the owners are the only participants deferring into the plan, so they wouldn't pass ADP for the short plan year. They only fund the 3% Safe Harbor, no other Employer contributions.

Am I right in my thinking that a final short plan year cannot be Safe Harbor?

Thanks.

Searching through the cobwebs of my brain, I seem to recall that employees would be able to enroll in benefits if they incur a 'significant change' under their coverage say through their spouse's plan. This would pertain to (example) a situation when a husband who has the family coverage goes through Open Enrollment at different time than the spouse and the change in benefit cost is 'significant' and they are no longer able to afford the plan. Now they would wish to enroll in the wife's plan and cancel the coverage under the husband's plan. I can't seem to locate regulations that would pretain to this - Can anyone help me with this one?

I have a plan that remains in the 80-120 participant count for multiple years. Can they continue to use that "exception" and file the Sch I with no audit? The company's internal auditors think the exception can be used for only one year.

Now that the range has been reduced for to 90-100% for current liability calculations, is there any use of the 105% (the old high RPA rate)??

It seems like they left it alone and it still is used in the quarterly penalties but would like other opinions.

Thanks in advance.

DB Plan now only includes husband/wife but used to include other employees. Can we switch from filing a 5500 to a 5500EZ this year? Thanks....

As part of the new voluntary life product, each enrolled employee could choose one product from the following free:

1. Eyewear discount program

2. Counseling services

3. Mail order Rx.discounts

4. Chiropractic

5. Legal

6. Nurse hotline

7. Travel Assist

They could also buy any other of the programs on a payroll deduction basis.

My question is – is any or all of these services eligible for pre-tax payroll deductions? Do you have or do you know where I can get a list of eligible pre-tax benefits?

i have a client who currently pays the investment fees (annuity wrap) for all participants in his plan. now, he wants to pay only for current employees, not former ones. i thought i saw some kind of write-up recently that addressed this, but i can't come up with it.

any thoughts?

Has the DOL taken any action to finalize the

COBRA regs it issued last Spring? The last

I heard the implementation date was

postponed past January, 2004.

If a participant is overpaid by $145, can we collect only $45?

Revenue Procedure 2003-44, Section 6(5)© states that generally for submissions under VCP, the plan sponsor is not required to seek the return of an overpayment of $100 or less but must notify the participant or beneficiary that it's not eligible for favorable tax treatment (rollover).

Although we aren't under the VCP, in practice we don't collect overpayments of $100 or less but do inform the participant re the fact that it's not eligible for favorable tax treatment.

So can we collect only the amount over $100? I don't think it's clear so I wondered what everyone else thinks?

A participant (HCE) took a loan in 02. Loan was OK by plan terms. He defaulted in 03. In addition to his regular participant account balance he had a rollover account from a prior plan. The plan permits dstribution from the r/o at any time. There are no other in-service distribution provisions in the plan.The loan papers do not specify which account secures the loan. Rather than considering the defaulted loan as a deemed distribution, can I consider it an offset against the r/o? Is the defaulted loan a PT? If so, does the offset cure the PT?

at death is it possible for beneficiary (not spouse) to rollover over the participants'

plan without having to take a full distribution?

thanks,

mark

A client terminated his DB plan when he reached NRA and rolled the money into a new PS plan. I realize that the J&S feature still applies to the rollover. The PS plan allows for in-svc. distributions (the DB allowed in-svc. distr. at NRA) and my client would like to take advantage of that. If he wanted to take monthly or bi-monthly distributions that were less than $5,000 each, would spousal consent be required?? I think it is, but would like confirmation. Thanks.

I funded my Roth IRA in 1998 with normal contributions when I was 57 and rolled over (Converted) a traditional IRA to this same Roth IRA in 2003 when I was 62.

After reading Publication 409, tax topics 428 and 558 from the IRS web site, and documents from several other web sites (including this one), I am of the belief that once I have passed age 59 1/2 and have satisfied the five year rule, the conversion in 2003 and all subsequent conversions are not bound by the early distribution 10% penalty (see TTCA-98 Brings Order To Roth IRA Distributions).

Please let me know if I am understanding this correctly.

Thanks

William

Any opinions on how to handle a situation where a plan sponsor assumed their Canadian employees could participate in both a DB plan and a 401(k) plan? My opinion is that they have no 415 comp so they may not have any benefits under either plan. Therefore, they can not receive any benefits under the DB plan and the plan sponsor should look to see how this effects their funding since they have been funding these employees. Also, the match should be forfeited in the 401(k) plan and the plan sponsor should decide how to handle the deferrals but they will not be distributed on a 1099R. Am I being too conservative?

The health & welfare plan requires an individual to work 375 hours per quarter to be eligible for coverage the next quarter. Any excess hours are put into an hour bank. If a participant retires with 600 hrs in his hour bank, the participant will be covered for one quarter only. The remaining 225 (600 - 375) hours will be lost to the participant in that it falls below the minimum of requirement of 375 hours. Can the plan eliminate a retiree's hours in an hour bank that fall below the threshold limit of 375?

If a retiree returns to work, can the fund require the retiree to fulfill the initial eligibility requirements of the plan?

If a participant's membership in the fund has terminated and the participant elects and pays for COBRA for a full 18 months, at the end of that 18 months, can the fund set the participant's hour bank to zero and require the participant to fulfill the initial eligibility requirements of the plan?

Thanks in advance for your help.

We have a couple of new client that came over to us, some in the beginning of last year, some in the middle last year and some towards the end. Before they came over to us the trustees were individuals. When they signed on with us they chose to have a Corporate Trustee. Who signs the schedule P for the 2003 5500 if the trustee changed during the year? The individual trustee or the corporate trustee?

Please help!

Thanks

EGTRRA added 411(d)(6)(E) that allows eliminating optional forms of distribution "except to the extent provided in the regulations." The IRS issued proposed regs on July 8, 2003. My 2004 code says they are still proposed. Does anyone know the status of finalizing the regs?