I just received the year-end info from a client and there was a re-hire that I hadn't shown in the ADP test during the year.

Of course now the test does not pass! I think that I remember reading that I can combine the deferrals and match to test them combined, can't I? Kind of like a QNEC? The match is fully vested and goes to all who defer, regardless of hours or termination.

Thanks.

It would appear that because the 401k plan had not had tax withholdings (due to no taxable distributions) for over 3 years...well the IRS took away the EIN for the plan. I was just told the EIN is now "unassigned" and I can't have it back. (If I can come up with the original mailed IRS notice of the EIN assignment from many years ago, then I could get it back.) This is despite the fact that the annual 5500's have always (and will) use this EIN. I have gone around in circles with 3 people at IRS and all came to the same conclusion; the 5500's are handled by a different group at the IRS and there is no communication between the two so I now have to get a new EIN for the plan so I can record future Form 945 withholdings from distributions.

Well this sounds fine from within the tax-deposit section of the IRS, but I'd like to keep this job and I'm very worried about this "solution". Does anyone know what to do about the pending confusion with the 5500? What is the DOL's take on this?

Oh, and of course the 2nd quarter 2002 distribution withholding/945 we sent in was not recorded with the plan or even under the plan sponsor EIN. It is floating around somewhere and to get credited to the plan I will have to get a new EIN assigned... So I need to know either how to get this corrected, or if it really is ok to have different EIN's for same plan.

(For the record, their advice is if you have no activity during a year, still send in an annual 945 with $ 0.00, just to let them know you're still alive. Why don't they tell us these things when we got the EIN?)

Thanks for any encouraging words.

I am trying to figure out a non-spouse beneficiary's options regarding an inherited IRA. It looks like the beneficiary can defer distributions under December 31 of the year following death and then may be able to (if the document allows) take periodic distributions over his/her own life expectancy to avoid a one-time taxable distribution of the full IRA amount.

Also, I understand the IRA document may not allow this and could require the entire amount be distributed to the beneficiary within 5 years of death. But, in any event, the beneficiary could have done nothing for at least a year following death.

Can someone confirm my understanding is correct?

Many thanks

If a participant has taken distributions from a custodial account under 403(b) in violation of 403(b)(7)...what effect on the participant and the plan as a whole? Here, the plan is employer-money only (and is therefore an ERISA plan). Does the participant have income inclusion with respect to contributions only for the year of the violation? Or is the custodial account "tainted" until correction is made? Are there any negative effects on the plan as a whole (including taxability of custodial accounts with respect to participants who did not receive impermissible distributions), or are only the custodial accounts at issue affected?

Also, violations of 403(b)(7) are considered operational failures under Rev. Proc. 2003-44 (EPCRS). But what would be an acceptable correction method? Ask the participant for the money back?

Is anyone aware of any resource materials or guidance on the administration of Stretch IRAs?

My organization is looking at adding it as part of our overall retirement planning product line.

I am finding very little in terms of guidance on administering these types of IRAs in terms of annual tax reporting, etc.

Are you aware of any resource which specifically addresses the nuts & bolts of administering these types of arrangements?

Can a 401k plan be retroactively amended to correct a failed ADP Test and not have to return the excess contributions to the employees?

Is a 10% plus (but less than 50%) partner in a partnership always an "employer" in relation to the partnership's qualified retirement plan, as "employer" is defined for prohibited transaction purposes (e.g., "any person acting directly as an employer, or indirectly in the interest of an employer, in relation to an employee benefit plan.")?

We have a contruction company that routinely lays off ee's for about 4 months in the winter. What are the rules about loan repayments during this time? Thanks

During 2003, Mr X defers a total of $ 22,000 into two separate employer 401(k) plans. The two employers are unrelated. The $22,000 is comprised of $12,000 into one plan and $10,000 into the other plan.

It is my understanding that since the two employers are unrelated, then there is no IRS nor ERISA rule which requires either plan document to have any wording regarding distributing excess deferrals in such a situation like this.

So am I correct in thinking that the employee has the full responsibility for dealing with this excess dereral matter (in other words he cannot force either employer to distribute the excess now, nor issue him a corrected W-2, nor detemine the amount of investment income attached to the excess deferral when the excess deferral is distributed to him upon retirement) ?

So the employee has to report the $10,000 as taxable income on his 2003 Form 1040 without the support of a corrected W-2 and when the employer(s) do distribute the $10,000 to him (say 10 years from now) then the employee wil have the duty to report the $10,000 again as taxable income (wihhout the assistance of an employer provided Form 1099-R that shows the $10,000 as taxable) and determine, on his own, the amount of investment income attached to the $10,000.

Any thoughts ?? ...... thanks !

Is there a pending or publicly discussed legislative proposal to impose a 20% excise tax on defined benefit lump sum distributions?

IRA may be rolled over to a 403(b). As far as I know, no separate accounting is required (unlike 457 plan). A participant who terminates employment after age 55 may take a distribution without penalty tax. If distribution includes IRA funds, the penalty tax that would otherwise apply to an IRA withdrawal is avoided. Am I missing something, or is this a loophole?

Can the employer add income to the W-2 the employee share of distribution and keep the all the money in his trust account and payout the balance over 60 months? Also could I deduct a long term loss if the balance is reduced by not being 100% vested? Example balance was $75,000 and 20,000 was vested amount according to plan.

Hello,

I recently closed my Roth IRA account (I'm not yet at retirement age.) I had contributed $2000 a couple of years ago and the total was up to $2113. I just got the check today -- and it said that $211 had been subtracted for federal taxes and $110 had been subtracted for fees. I'm confused. I thought that I could withdraw the amount that I contributed ($2000) tax free. I expected to be taxed on the remaining $113 . . . but how can the federal tax on $113 be $211? That doesn't make any sense. Also, what is the $110 in fees?

I'm going to call the company Monday morning -- but I was hoping to find some answers on here first!

Thanks!

I have $X in pre-'87 after-tax contributions in one former employer's plan and $Y in post-'86 after-tax contributions in another employer's plan. I want to take distributions of these amounts only to my conventional IRA, then convert it to a Roth, paying tax on the pre-tax amounts in the conventional IRA. In the year following the conversion, I plan to take a total distribution of the amounts remaining plans to a new rollover IRA. I'll be over 59 1/2 with AGI <$100k in the year of conversion. Even though the administrator of the plan with the post-'86 after-tax contributions has orally told me they will make a distribution of the after-tax amount alone (leaving the remainder in the plan), I've heard elsewhere this may be problematic. Can you clarify? Also I have some NUA in the plan with the post '86 after-tax contributions, does my plan have any adverse consequences in that regard-i.e. in the year following the conversion, I plan to take the shares of the employer's stock paying tax on the employer's basis. TIA

I am in the early phases of opening a Roth IRA for my wife and myself. I have looked at several of the online companies and was wondering what type of fees I could expect to pay. For instance, one company charges a flat $12.00 per month which includes 6 free trades per month and the yearly IRA management fee is waived.

Does this sound fair? Suggestions? (I need to put funds in on a monthly basis as opposed to yearly lump sums)

I'm considering starting an IRA for my husband who never stays at a job long enough to qualify for the 401K benefit (no he's not a louse, he leaves by choice ). But what happens if he actually does stay at a job for longer than 4 months and the company has a good 401K plan? Can I transfer the balance of the IRA to the company 401K without penalty?? Or is the transfer considered a withdrawal and therefore taxed??

Enquiring minds (well, just me) want to know!

TIA,

Jennifer

Employer sponsors a profit sharing plan. He is the sole owner of a medical PSC. His wife is an employee of the medical PSC and also owns 100% of a separate S Corporation. My question relates to controlled groups and constructive ownership.

Section 1563(e)(5) says that an individual shall be considered as owning stock in a corporation owned, directly or indirectly, by or for his spouse...except in the case where the individual does not own directly any stock, is not a director, etc. etc.

Who is considered the "individual". Would it be the owner of the medical PSC sponsoring the profit sharing plan?

Thanks.

I nominate:

jusducki

Pensions in Paradise

Nameless Coward-s/b anonymous coward

If a participant is using a loan for the down payment on a principal residence, can the term exceed 5 years, or if they exceed 5 years, is the loan determined to be part of the mortgage?