Does 3401(a) compensation include deferrals to a Section 125 plan?

Excuse this if this is a duplication.

Start with a regular IRA party non-deductible. Now take a 401-k amd roll it into a new IRA. Take the new IRA and convert all of it and only it into a Roth (this actually already done in 1998 and spread 4 years).

Is the entire conversion the correct taxable amount or must all the IRAs be totalled and the basis % figured with the result being that some of the conversion is non-taxable just like any other distribution. I believe this is correct but I have seen examples that hint otherwise and show a basis in one year and not another in showing consequtive distributions and conversions so I am unsure. Can this 401-k rolover and conversion be treated in isolation since it stayed intact and was never comingled or must the non-deductible basis be considered??

I see in other messages that any 1998 non-deductible contributions cannot be changed into Roth but I assume that I can amend 1998, 1999 and 2000 to correct the conversion amount (if indeed the basis needs to be considered).

If a married couple has a Roth IRA that they've paid into for a couple of years, and they don't want to close the entire Roth IRA account...but, this year they've made excess contributions 'cause their income is too high:

1) Can one spouse take the $120 hit on one Roth IRA (maybe made a goodly sum on their IRA) and the other spouse withdraw the contribution to the other Roth IRA (their investments stunk)?

2) If the contributions are withdrawn, must the person identify those stocks/funds/earning/etc which were paid for specifically by the 2001 contribution?

Thanks, KG

Client has contributory group life plan. Has allocated demutualization proceeds between employer and employees, and has established a custodial account with Pru under the DOL Trust Policy, to be used to provide a premium holiday to employees.

What the heck is the tax impact of this?

When client instructs Pru to sell the stock, and use the proceeds for the premium holiday-

Is client taxed on the gain?

Does client get an immediate corresponding deduction? Do the section 419 welfare benefit rules apply?

Is there imputed income to employees? Is this an employer contribution under section 79, or is this an employee contribution?

My guess is that since this custodial account is not a separate taxable entity, the client has to take the proceeds of the stock sale into income; the client gets a corresponding deduction for the contribution to the group life premium; and the employees have imputed income.

Except for the imputed income, the net affect of handling the transaction this way is that the proceeds wind up as nontaxable. But had the stock been distributed instead to the employees, they would have tax liability on the sale of the shares.

Anyone work through this????????

Thanks-

card

For the Cash Balance plan, if the formula provides different benefits for different classes of participants, does the Cash Balance Plan need to pass the Rate Group Test if all plans pass the average benefits test and the Gateway DB/DC combo.

Are plan sponsors required to mail an annual COBRA notice to employees? We provide COBRA information upon a qualifying event and also in the SPD's but the SPD is not necessarily updated annually. I understand that the Women's Cancer Rights must be mailed annually, could we include the COBRA notice with this or does it have to be mailed separately if an annual COBRA notice is required?

Is a workman's comp. plan a qualified plan? An H.R. person for one of the companies I deal with mentioned that she'd heard that they don't need a fidelity bond to insure the assets in their W.C. Plan any longer. Instead, they can use a portion of the assets in the plan to secure the assets. Does anyone know if this is true? If so, how would you go about securing the assets?

HR allowed an employee to begin deferring July 1, 2001.--They are not eligible until January 1, 2002.

As I read the rules the fix is to retro amend to include the ineligible employee.

Can I amend to include this employee by name or do I need to come up with some objective measurement to bring them in?

I have a client that recently purchased a company and has terminated the existing 125 plan previously sponsored by the aquired company. The question has been raised as to whether or not the employees from the aquired company have the right to incur expenses and submit them for reimbursement through their FSA's [through the end of what would have been the Plan Year; 12/31], or are they cut off as of the day of Plan termination.

Any thoughts would be helpful.

If Carve- out is used to pass ADP/ACP do you have to go back and re-test 410(B) using carve-out also?

Is there a table of historic rates for section 415 post-separation COLAs? I believe the rate for 2001 was 1.0351 and 1999 was 1.0160. Also, how are these rates calculated? Presumably, these are simply CPI adjustments of some sort.

I am with a TPA firm, and we are planning to switch from our current in-house administrative software to that of a software provider. We want a conprehensive application, and so far my top choices are Corbel, ASC and Datair.

Anyone have someone comments or advice on what software to use?

We also want to implement daily valuations, and are leaning towards BenefitStreet, Corbel or Fidelity. Anyone have any suggestions in that arena too.

Thanks in advance for you help

Joost Revis

Because I anticipate a much lower income in 2002 than I had last year, I am considering a regular IRA contribution for 2001 and then recharacterizing as a Roth sometime this year when my taxes will be significantly lower. Is this permitted and does this make sense to do? Thanks for any help.

A participant's distribution form was lost for a while. We found it and are processing the participant's claim. This is taking about 6 months more than our usual time, but still within the 60-day provision of the plan document (401(a)(14) rule). The participant feels she is entitled to lost earnings. Does she have a valid claim because it was beyond our normal processing time or not because it is within 60 days of the later of normal retirement, 10 years of service or termination of service?

If we want to pay her lost earnings anyway, can we make an additional contribution to the plan that will be treated as earnings only for this participant or will we be violating the plan's allocation provisions by applying it only to the participant?

Thanks.

Can a person in a 403b ( still working for the school ) roll the 403b to an IRA now? I am aware of the 90-24 transfer from 403b to 403b, but under the new laws - is it possible to roll to an IRA without a triggerring event having to have taken place?

I am not as knowledgeable as a lot of you folks so take it easy in the jargon, please explain in English so that I can then explain it to the few hundred teachers that have asked me.

Thanks:confused:

A participant's distribution form was lost for a while. We found it and are processing the participant's claim. This is taking about 6 months more than our usual time, but still within the 60-day provision of the plan document (401(a)(14) rule). The participant feels she is entitled to lost earnings. Does she have a valid claim because it was beyond our normal processing time or not because it is within 60 days of the later of normal retirement, 10 years of service or termination of service?

If we want to pay her lost earnings anyway, can we make an additional contribution to the plan that will be treated as earnings only for this participant or will we be violating the plan's allocation provisions by applying it only to the participant?

Thanks.

One Owner owns two distinct and separate companies. It is a controlled group, but also QSLOB. One company has nothing to do with the other, no overlapping employees. Each company has it's own 401k plan. Should or must the plans be tested on an aggregate basis or could each plan be tested on it's own for ADP & ACP as well as 410(B). Thanks.

For what it's worth, I now drive a 4X4, so perhaps these test drives contributed to that, which means at least one car salesperson scored a sale - albeit at the expense of some others.

1. I was only recently reminded that I once "test drove" a Toyota 4X4 used vehicle for the express purpose of transporting my bicycle (badly broken) to the repair shop. I was without any bike rack or suitable vehicle. I had strategically brought a friend and chose a used truck with only the standard cab and bucket seats - meaning there was only room for two. As it was used - and minus the backseat - the salesperson let us take it out on our own. We transported the bike - driving right by the same dealer. Then, as we had made such good time, we proceeded to move something of my friends from one house to another. This didn't require a truck - but a truck made it much easier.

2. I was in the market for an SUV for some years - looking first at used vehicles. Wishing to test drive a used Chevy S10 Blazer, I took one out one winter evening and drove direct to the only new construction area I was aware of. I planned to use the 4 wheel drive in a tour of dirt roads. Unfortunately, I took a wrong turn and drove not onto a dirt road covered by snow, but an actual snow covered field with no road! I was terribly afraid of becoming stuck and having to explain myself to the car dealer. I put the pedal down (probably harder than I had to) to keep the wheels turning. It was a wide turn (to miss some trees) and I was in the field longer than I would've liked. We made it out of the field and headed back. It was only upon parking at the dealer lot and exiting the vehicle that I realized the SUV was coated in mud - not road slush/grime - but MUD. The salesperson met me at the vehicle and with eyes wide and mouth agape, he listened to my story about the semi truck, that had no business on the two lane road I crossed paths with him, which had kicked up soo much grime onto the vehicle.

I know these vehicles have fans and detractors. Mine does to off-road and tows a trailer, leaving me a choice between a truck and an SUV. The SUV does better on mileage than the truck.

Hello,

Any insight will be appreciated. I have a plan sponsor who has amended its Plan for GUST. They did not "declare" the method in the Plan Document and apparently counsel does not believe this is required. It was my understanding that the IRS requires that the testing methods be identified within the document itself, and therefore requiring a formal amendment to change in future years?

If someone could confirm my understanding or lack thereof, it will appreciated.

Does anyone have a definitive answer on the IRS position regarding whether you have to 100% vest participants in a MP plan that is being merged with a PS plan?