Is this possible? My wife's plan offer limited number of funds. Does she have to leave the job to move this money somewhere more productive?

Thanks!

Tim

Have any of you "backed into" the terms of a private retirement benefit for an executive, in such a way that the existence of the private retirement plan would not result in offset of long term disability benefits to the executive.

Employer in question is not-for-profit, and the private retirement benefit would likely fall under Code Section 457(B).

Employer excludes bonuses from its 401(k) plan definition of comp for contribution purposes. During 2000 employer inadvertantly permits deferrals from bonuses and matches these contributions.

The variation on the theme is that the employer has determined that if the participants' accounts are retroactively corrected back to the date of the error (the employer's recordkeeper has the capability of doing this) then (1) certain employees will have received a loan higher than they should have received (ie, in excess of 50% of the revised plan balance) and (2) other employees will have received hardship distributions in excess of the amount permitted under the plan.

If the employer corrects the improper bonus deferral (either by forfeiting the deferral and making the employee whole outside the plan, or by distributing the excess deferral), and forfeits the match, do the loans and hardship distributions need to be corrected as well?

Thanks-

card

I am familiar with the concept of the qualified sign-on bonus whereby a newly hired employee who will be an HCE next year (he or she is not currently a 5% owner) is allocated a large contribution in a profit sharing plan during the first year of service. This is done via an amendment that specifies the contribution for this person and since he or she is not yet a 5% owner, there is no discrimination in favor of an HCE.

If the profit sharing plan requires a year of service before entry, can this also be waived for our new-hire? I suspect this may be allowed.

And finally, can a qualified plan provide immediate vesting specifically for an individual who, will be an HCE? This I suspect will be prohibited not in the year the person is hired, but in the following years when he or she is an HCE.

My understanding is that financial planning programs are not considered ERISA welfare benefit plans. Can you pre-tax contributions? If the benefit is 100% employer paid, are there any discrimination testing requirements for these plans? Any information or referral for a research source would be appreciated.

HELP! I really messed up. I have a mutual fund account and since I already paid taxes on it, I decided to contribute some money to a ROTH IRA. So instead of writing a check for the amount, I just had the money transferred from my existing acct. I have received a FORM 1009-B and need to know what to do. I don't want to pay taxes on money that was already taxed before. How do I avoid that in the future?

Also, I would like to contribute for the year 2002 (~3K). Can I just write a check for the amount and send it in without penalty?

Thank you in advance for your help.

Barbra

I am almost certain that I read somewhere that the 5 year forward averaging method of paying out a qualified plan participant is no longer permissable after 2000. I have this question because I know 10 year averaging is certainly still an option under 72(t). Is 5 year averaging still available?

Thank you in advance for your help.

When valuing an ancillary benefit (for example - vested termination liability from withdrawal) - does the lump sum value of the accrued benefit get valued at the greater of FASB assumptions or GATT??

This may be a problem on several levels. Client added a CODA to existing PSP effective 1/1/01. CODA included a safe harbor non-elective 3% contribution and notices were provided by the TPA to the client with instructions regarding timely notice.

Sole shareholder (and the only HCE) dies during the plan year. Several NHCEs deferred small amounts--but HCE did not defer any amount prior to death (intent was obviously to fully fund to $10,500). The office manager is now trying to sort out what needs to be done--we advised that they are on the hook for the 3% non-elective; HOWEVER, she advises that the notices were never provided to the ees!

1) So, are they "off the hook" for the 3% non-elective becuase proper notice wasn't given? I realize ADP must be performed, but that's obviously no problem.

2) Now aren't we looking at a plan operational failure (failure to operate plan in accordance with its terms to provide the notice and safe harbor contribution)? Wouldn't correction include providing the 3% non-elective anyway?

Obviously, they'd like to avoid providing the 3% contribution at this point. Any insight?

I am in need of good ERISA Attorneys in the Boston area. Any advice?

If you participate in a Dependent Care FSA with you employer that runs from 10/1/01 to 9/30/02, but do not incurr any expenses until after the first of the year (1/1/02) then how is the amount shown in Box 10 of your W-2 not treated as taxable income on Form 2441, Child and Dependent Care Expenses.

Thanks,

Joe

I'm looking for a little heads up info on the potential application of the 4980 Tax on Reversion of Qualified Plan Assets to Employer. A client has been presented with a proposal to have an unrelated company "purchase" a newly formed subsidiary which will have become the plan sponsor of the client's currently substantially overfunded pension plan. Third party will pay to client to purchase the subsidiary approximately 75% of overfunding.. Upon closing, third party will spinoff "back" to client assets, sans overfunding, to cover benefits as originally accrued. Third party them "markets" overfunded shell plan to underfunded plan.

I find it hard to believe that the IRS would not or has not taken the position (successfully if challenged) that the payment of the purchase price is an indirect reversion, taxable under 4980.

Anybody know of any IRS position on this? To say nothing about DOL

I wanted to verify my understanding of K-1 dividends and their relation to the definition of compensation.

As I understand it, for an S-Corp, K-1 earnings are not included in the definition of compensation. The IRS addressed this issue in PLR 8716060. Furthermore, an S corp is not an organization that can have self-employed individuals as defined in IRC 401©(1).

Is there any way that an S-corp can include K-1 income in the defn of compensation?

Is there any mandatory requirement to announce a black out or quiet period before a transition? If so, what is the time amount required? I know it is recommended, but I wasn't sure if it is mandatory.

Do the contribution percentages and limitations of Code section 457 plans apply separately to each 457 plan or to all 457 plans (assuming someone is a participant in more than one 457 plan)? Thanks!

I am wondering about the change to Code Section 403(B)(3) made by EGTRRA (and clarified by the recent Job Creation and Worker Assistance Act) which allows employers to make 403(B) contributions for up to five years after an employee's retirement. I am aware of a number of school districts that either have or would like to establish early retirement "severance" arrangements which may be problematic under TAM 199903032. It appears that the modification to 403(B)(3) would provide the employer with an alternative to the severance type of arrangement; however, I have seen little discussion of the 403(B)(3) change. What is the purpose behind the change and any thoughts as to the viablility of post-retirement 403(B) contributions instead of a severance arrangement?

In 1998 I converted a traditional IRA to a Roth IRA. I spread out the IRA distribution over 4 years for tax return purposes. The fund that i had converted to has gone down by 40%. (It was a heavy tech fund). I have not made any further Roth contributions to this fund(needless to say). Am I able to recharacterize my year 2001 IRA distribution so that I am reporting less than the $2500 that I've been reporting annually over 3 years or was the recharacterization only available to the entire conversion amount in 1998 to be recharacterized by the end of 1999? I've asked a financial advisor whose not sure and he advised that I come to this site for a clarification. Comments will be appreciated.

Can a union contract establish a 401(a) trust by providing for a lump sum retirement buyout to union employees? The objective would be to gain income averaging treatment on the lump sum distributions (these distributions were made in 1996).

I work for an insurance company the deals with annuities. We have questions from our clients asking if we use the surrender value or accumulation value when doing a Roth Conversion. We have surrerender chares and Market Value adjustments when doing a surrender. Any help on this matter would be appreciated. We have been told to always use accumulation value as of the day the client wants to covert. Example client has an IRA annuity with us. Client sends in request to covert to a Roth. We would look at the accumulation value as of the date of the letter and use that value for reporting and taxing.

Hello,

My name is Mike and I am new to the board. I have been referred to you by 403bwise.com.

My school district is having a buyout this year and we are trying to determine how we can shelter the money for our soon to be retired colleagues. 403 or 457 and we have many questions. To be specific, these are the things we are trying to solve:

1. Our retirees will be getting 4 payments over the next two years.

Is a 457 plan the best way to shelter this money?

2. How does the 457 plan work?

3. How long does it take to set this up?

4. Does the district save FICA if the money is directly deposited? If so, why?

5. Does it work like an annuity, i.e. do you have to "buy"from a specific company?

6. What is a defined group in terms of this type of plan?

7. Give reasons why a person would want the money put directly into a 457.

8. Give reasons why a person would NOT want their money put into a 457.

9. How does a person get the money out of his/her 457? What are the penalties?

Any sort of advice or help would be great. Thanks in advance.

My email is makouri@novi.k12.mi.us

Thanks again,

Mike