My wife and I recently withdrew some money out of our Roth IRA accounts. We're going to use this money to pay part of the cost on purchasing our first home. CAn anybody enlighten me about the tax rules of withdrawing money out of an IRA account? Will my wife and I end up paying taxes on this withdrawal even though we used the money to purchase our first home?

Thanks for any feedback.

We have a client with a calendar year plan. They just informed us they added a supplemental insurance policy pre-tax effective 1/1/03 that was not included in their previous plan documents. Do you amend the plan now with a 1/1/03 effective or use a more recent date?

Thanks!

First, I admit to not yet researching this nor asking the PBGC for a coverage determination, both of which I intend to do, so I am asking only for information that anyone knows without research.

A DB plan formerly subject to PBGC coverage used to have 4 employees but two of them terminated many years ago and the last employee except the owner terminated about 2 years ago. All benefits have been paid out within the last year under normal plan terms except the owner's. Now the plan is being terminated. There are no employees other than the owner. Is this now a one participant owner-employee plan exempt from PBGC coverage, e.g. exempt from the 60 NOIT and PBGC filing upon termination?

Hi,

i've been very impressed with the responses on this forum.

Yesterday, I was told by a Primerica home office person that a non-qualified, tax-deferred annuity could be "rolled" over into an IRA. This was a new one on me, althought I do know that you can roll the after-tax portion of 401k accounts into a traditional IRA now.

So, is it true that I could surrender this annuity (which is out of penalty period) and "roll" it into an IRA?

Much appreciation for you help,

Alex Shore

Plan is a 401k plan with a fiscal year ending 8/31/03. We are in the process of completing the ADP/ACP testing so that corrective distribution can be made before deadline of November 15th. Plan has typically failed the ADP test in the past.

For this current plan year the plan has one HCE and it appears it will fail the ADP test and the HCE will need corrective distribution of around $2300.

Problem - HCE terminated shortly after the fiscal year end in September and rolled all monies out of the plan.

Possible solutions or is there anything that needs to be done?

Thanks,

Ronnie

I perform deep technical review of qual and nonqual plans. On a trail basis (internet & CD) I'm looking at CCH, BNA, RIA Checkpoint as well as the internet blogs.

Any experienced user votes for the "best" of breed?

In order to suspend loan payments during a leave of absence, does the plan doc/loan policy have to address this? I have this situation now and the loan requirements are very vague and do not address a leave of absence.

If a loan policy states "only one loan per participant may be outstanding at a time", can the plan allow the participant to do a refinance to increase $ and extend the loan beyond the 5 year maximum term? (assuming the participant's balance is adequate to cover the new loan). Under the new regs, if a participant is refinancing to extend the terms of the loan beyond the original 5 years, both the replaced loan and the replacement loan must be considered outstanding at the time the new loan is issued. Since they are both considered outstanding at the same time, does this violate the terms of the policy, which states only outstanding loan is allowed per participant? The policy does allow for refinancing. The policy probably should be written to say that multiple loans are allowed for a limited time due to refinancing, but at this point it does not state that.

The participant elected to have his $6900 distribution rolled over to Vanguard in 2000. After discovering that the distribution check was never cashed, Vanguard was contacted and indicated that they did not have an account for the participant. The participant has now indicated that he wants a cash distribution instead of a rollover. Under these circumstances, is there any reason that we cannot issue a cash distribution (less income tax withholding) and report the distribution on a 2003 1099-R while correcting the 2000 1099-R which reflected the rollover? Is it necessary to have the plan sponsor sign the new distribution form requesting the cash distribution? This may be a problem in this instance since the company has split up and this plan may no longer be in existence.

A plan participant incurs a break in service and is unvested at the time of the break (only had 3 years of service - 5 year cliff vesting - 15 year break).

The participant is rehired by the same employer (covered by same plan). The plan has a 1 year of service requirement for beginning to participate again.

Can the plan require the employee to again complete the eligibilty period he previously completed (even though service was lost due to a break)?

Also, can anyone give me a good source to look to for the definition of a "participant" and a "former participant"?

Thanks for any help.

Does anyone have access to the Crocker T-5 turnover table?

I need to verify that the rates used on a schedule B are correct.

I have a client who has a participant who would like to take their money out of the plan. The plan does not allow for in-service, hardship, or loans. I have advised my client that these forms of in-service distributions are available and the plan can be amended to allow them.

They asked if they could terminate the participant long enough to take their distribution and then rehire them. I advised them against allowing the participant to terminate just long enough to receive their distribution and then return to employment. They would like to know if there is a cite that states that this is not permitted. I could not find where there is a IRC or Reg stating this specifically. Does anyone know if there is one?

Thank you so much for your help!

Ok - it's time to beat that dead horse... I have a 401(k) using the safe harbor match. They have no eligibility to defer & participants enter on the first of the month coincident or following hire date. I know I can use my age 21 & year of service exclusion for safe harbor $, but my question is this: Let's say we have an employee hired in 2002 who entered and began deferring at hire (06/01/2002). This same employee NEVER works over 1000 hours, but is age 21. If I use the "year-of-service" exclusion, she will never have a year-of service (YOS defined in this plan as 1000 hours in a plan year). Does that mean I can exclude her indefinately from the safe harbor match? It doesn't seem right to me?!?!? I thought she should get the match for 2003. Thanks in advance! Patti

Plan X allows participant loans, but prohibits the taking of a new loan in the same calendar year that an outstanding loan is paid off. X takes a loan in 2000 and pays it off in 2003. In 2003, x requests and obtains a new loann. This is a qualification issue since there is a violations of the plan's terms. However, it does not implicate Section 72(p). Any suggestions on how to correct this?

My firm expects to switch from a SARSEP to a simple 401K. What are my options for my SARSEP funds? Do I have to transfer them to the 401K?

I have a client with a frozen DB plan who would like to set another plan to provide some contributions for a select group of non-highly, non-management employees.

These employees are not members of a specific class of employees by either job description, geographic location or method of compensation. Most are older, but not all. They appear to have been selected arbitrarily. This group is about 30% of their total rank and file employees.

I'm not very familiar with non-qualified plans. Is it possible to give these select employees a contribution?

I am new to the post and would like to find out or get some type of direction regarding the rollover of my existing 457 plan I have to a traditional IRA. Someone told me recently that the tax laws have changed and this is now possible. If so any insight would be much appreciate. Thanks.

Is it necessary to determine the "allowable deferral amount" in the 401(k) prior to January 31st of the following year? This is implied by the earlier PLRs regarding 401(k) wraparounds, but is not indicated in the most recent (PLR 200116046).

My basic question is whether you have to report the deferrals to the 401(k) that were recast from the deferred comp plan on the W-2 for the plan year being tested or whether its reported on the following year's W-2??

Does anyone know if all employees of a controlled group are required to be eligible to participate in a Section 125 plan which includes a flexible spending account that is adopted by only one of the entities of the group? I know they are required to be aggregated for nondiscrimination purposes, but can we limit participation in the plan to only the employees of the one entity? I believe that if at some time one of the other entities wanted to participate in the Sec 125 plan they would be required to formally adopt the plan as a participating employer and that the employees are not automatically considered eligible to participate because they belong to a contolled group.

As some of you may know, FASB has proposed new disclosure requirements for defined benefit plans effective with fiscal years ending after 12/15/03. The changes are heavily weighted towards financial type disclosures. Question: the disclosure requires long term expected rates of return by asset category. How are people determining these rates? Are you looking to the investment advisor? Are you getting rates from trust statements? Are you taking a best guess?

This statement may become effective very shortly so any input would be appreciated. Thanks