Can I rollover my teachers' deferred tax savings plan directly or indirectly to a Roth IRA? If yes, how do I do it? Can I spread the rollover amount over a few years to spread out the taxes due on the rollover to a Roth IRA? Thanks for any direction or assistance you can provide.

Hello folks,

I have an odd problem. I am into the 11 month of COBRA. My spouse has open enrollment next month and I wish to go over to his insurance. His personnel manager says I can not do that until my COBRA expires. I have MS and she is well aware of this and concerned about my medical expenses. I need a link or help that can prove I can change coverage before my COBRA expires.

Laurellynne

It is my understanding that the DOL has a new position regarding limited scope audits that it unleashed at the AICPA Employee Benefit Conference in May. Apparently, their position now is that the certification does not apply to the allocation of investment income to participants. Therefore, they expect to see work in a limited scope audit where the allocation (and therefore calculation) to the participant of investment income is tested. They have conceded that if there is an adequate SAS 70 report covering that area, then no testing is needed.

Any thoughts? I have confirmed with several policy setters in the Big 5 that they are in disagreement with the DOL's position on this.

I have a plan that has contributed equally for all employees, no match required, 100% vested, into individual annuity contracts. EE's may contribute as well. We have been told that this is not permissable, and that a new "group" plan must be installed. Also, a lot of "buzz"about reporting issues, testing, 404 compliance etc is being "tossed" around, causing confussion and concern. FYI, we use both fixed and variable options to satisfy 404 selection needs, and employee suitabilty needs.

If it is not the case, does the individual contract plan creat problems with 5500 or other reporting/compliance issues?

If this is the case, can we have the two side by side, whereas the employees who wish may continue personal contributions into their own, old plan?

Thank you!

This a Plan Asset Regulation Question. Company A invests 60% in Company B and unrelated third parties invest in the rest. Company B is a 100% owner of Company C, an operating company. Company B has no other investments. Company A has direct contractual management rights in Company C. Company B and Company C have the same board of directors, and essentially because Company B is majority-owner of Company C, it manages Company C. Company A wishes to know if its investment in Company C qualifies as a venture capital investment ("VCI") for purposes of the Plan Asset Regulations. This issue is whether Company B is an intervening venture capital operating company ("VCOC") which would prevent Company A's investment in Company C from qualifying as a VCI. Does the fact that Company B may be a VCOC by virtue of the fact that it is majority owner preclude Company A from counting the investment in Company C as a VCI? If that is the case, wouldn't all 100% investments in operating companies make the investor a VCOC? Doesn't that seem wrong? Does the intervening entity have to consider itself and attempt to treat itself as a VCOC for this to apply or is the status automatic if the requirements are made? This is an urgent question and any thought on the issue would be greatly appreciated.

Let me know of your experience with a letter from the IRS indicating that the plan would be referred to National Office for review as to whether the cash balance conversion adversely affected the tax-qualified status of the plan (without any further explanation of facts or issues). Is this part of the moratorium on issuing determination letters for cash balance plans?

I am trying to check the results in Relius for a plan that I am testing at Social Security Retirement Age with permitted disparity. I thought you had to use the factors from 401(l) adjusted for SSRA (i.e. .75, .7, .65). Relius tells me that because I am testing at SSRA, all participants should have a factor of .75. (That's what the system is doing) Is this correct?

I have a target benefit plan to do which recently created a short plan year. Prior to 4/1/2002, plan ran on basis of 4/1-3/31. Short plan year was created for 4/1/02-12/31/02 (which is the year which I'm trying to calculate). Plan uses the "safe harbor" (theoretical reserve method) to determine funding.

Without getting too crazy about this, proposing to do the following:

1) Use annualized compensation (comp paid in 4/1-12/31/02 basis multiplied by 12/9) to determine the target benefit under plan.

2) Theoretical Reserve as of 12/31/2002 equals Theoretical Reserve as of 3/31/2002 plus lesser of TB contribution and 415 limit for YE 3/31/2002, both increased by interest rate for 9 months. Plan specifies 8.5% as rate; propose to use (1 + .085*9/12) as increase.

3) Present Value = Target Benefit * Annuity Factor, discounted using Nearest Age and Retirement Age period (not sure how picky to get with fractions, as have always used whole year discount in past);

4) Target Benefit Contribution = (PVTB - TR)/TAF (TAF again calculated using Ret Age - Att Age +1), then prorated by 9/12 to reflect short plan year. Figure the "shortfall" will be made up in future years due to fact that the TR next year won't be reflecting the 3/12 piece.

5) Determine 415 limit by actual comp paid in short plan year for 100% limit, and $30,000 as dollar limit.

6) Top Heavy minimum obviously based on 3% of actual comp.

Does this sound like a reasonable approach for this situation?

If forfeitures in a 401(k) plan are used as a discretionary match rather than to reduce matching contribution, is this amount used as a contribution in the ACP test. This is the issue--BYSIS tells us no, PPD tells us yes. Our recordkeeper tells us no. In a sense these are forfeitures first and reallocated as match.

Employer has a 403(b) and a Profit Sharing Plan. Employer is considering discontinuing the 403(b) plan and adding a 401(k) provision to the Profit Sharing Plan. If the employer does this can the 403(b) monies be rolled into the 401(k)? It seems to me that the answer is no; the discontinuance is not a distributable event, but then again I know very little about 403(b)'s.

Thanks in advance for any guidance.

We are submitting a plan for determination. The plan has been on a standardized prototype since its effective date - January of 1988.

Because the plan has never been submitted for determination before, the IRS is asking for every Opinion Letter and every Adoption Agreement executed between 1988 and 2003. No problem, with one exception: the Opinion Letter that was applicable when the plan became effective (1988) is not to be found.

The client never received a copy. The retirement association which sponsored the plan changed trustees/document sponsors in 1989 so we have no idea where to turn for this Opinion Letter.

I'm not sure what to do here. Any suggestions?

401 k plan has a few accounts of prior participants under $1,000 that they would like to force out.

It is my understanding that if they do not hear back from the participants then the trustees can have the financial instutition roll these monies out of the plan into an IRA fbo the former participants.

The trustees have notified the financial institution of the above circumstances, yet the financial institution has denied doing this without the former participants signatures.

The trustees have decided to write the financial institution an letter requesting that this be done.

Needs - Does anyone know the regs or any correspondonce directly relating to this so that it can be referenced in the letter?

Thanks,

Ronnie

I have a 401k Plan with participants from three divisions participating in the Plan. The Company makes a matching contribution subject to a 3 Yr. Cliff Vesting Schedule. The Company sells one of the divisions to an unrelated Company. What happens to the vesting for those participants who are part of that division with non-vested balances????? These participants are considered terminated participants because of the aquisition by the other Company. Should the vesting be updated to 100% because of the aquisition???

thanks for the help.....

Anyone know how to get whole life insurance out of a retirement plan?

If a participant in 401(k) plan decides to rollover thier non-conduit IRA into thier employer's 401(k) plan, is the IRA money in the 401(k) plan subject to anti-assignment provisions?

Quick question-

Stock ownership from a son does not attribute "up" to the father if they work at the same company?

Having trouble using the search feature, so I unfortunately have to post this, although I'm sure it's ben previously addressed. Can Mrs. Owner defer $0 all year long, and then defer full $12,000 out of her year end bonus (which figures to be over 6 figures)? She will give a safe harbor contribution (3%) so 401k testing is N/A. Assuming everyone gets this option, is this on the up and up? I think you can see where this is coming from. Owner wants a 401k but has no intention of contributing any of her own money to it, and will use the "bonus comp" deferral as an indirect way to get more money for her into the plan, technically as a 401k contribution, but practically speaking its not really that.

One other question: Can the safe harbor (3%) contribution be via integration, as long as everyones allocation from it is at least 3% of pay and fully vested?

Thanks for any input and advice.

IRA owner (under age 59 1/2) is receiving monthly distributions on the 30th of each month. The monthly distributions are intended to qualify for the exception to the 10% early distribution penalty under Code Section 72(t)(2)(A)(iv) affectionately known as "substantially equal periodic payments" or "SEPPs". IRA owner attains age 59 1/2 on June 15, 2003. In order to avoid modification of SEPPs under Code Section 72(t)(4), should the last distribution take place on May 30, 2003 or June 30, 2003? If you believe the answer is May 30, 2003, do you think there is the potential for the IRS to assess the recapture tax under Code Section 72(t)(4) on the basis of the fact that the SEPPs essentially terminated approximately two weeks before the IRA owner actually attained age 59 1/2?

If two weeks doesn't seem like a big deal, think about this issue in the context of annual distributions:

1.) IRA owner receives annual distributions each December 30th

2.) IRA owner attains age 59 1/2 on September 30, 2003

In order to avoid modification of the SEPPs, should the last distribution occur on December 30, 2002 or December 30, 2003?

Any insight would be greatly appreciated.

Does a collectively bargained plan (DC) get included with another defined contribution plan for Section 404 deductibility testing?

I have an owner that has been receiving RMD's for several years. Spouse is also participant, but died at age 69. Can owner begin taking RMD's from her account without moving her account into his or must he wait until she would have been 70.5?