I converted a traditional IRA to a Roth in 1998. Paying the tax thereon over 4 years. Will pay my last tax on the conversion in 2001. I am 65 years of age. One of the securities in that Roth account has gone from a 1998 price of $100 a share to a current price under $1. I paid my tax calculated on $100. Can I, after 2002, withdraw that security from my Roth account; deposit it in a non-IRA brokerage account; sell that security for $1, and claim a capital loss of $99?

When a client contributes 401(k) contributions late (past the 15th business day following the month in which the contributions were due), what is the penalty calculated on?

The total amounts of the 401(k) contributions plus any earnings?

or

Only the amount of the earnings attributable to the late deposits?

Whichever reason, can you tell me why and where I can see it in writing.

Thanks!

Prior to being amended for EGTRRA, a defined benefit plan limits compensation to "the amount prescribed by Code Section 401(a)(17)." The plan sponsor does not want to recognize the EGTRRA increase and wants to keep the limit at $170,000. Can the sponsor amend the plan now (February 2002) to provide that, effective 1/1/02, compensation is limited to $170,000, or is it too late? My concern is that, by incorporating 401(a)(17) by reference, the limit under the plan automatically became $200,000 on 1/1/02, so that a retroactive amendment now would be a prohibited cutback. Thoughts, anyone?

I've got an adopter of a volume submitter 401(k) plan which was adopted back in 1997. Employer never submitted plan to IRS for a determination letter. Operational defects abound. To what extent might employer meet "favorable letter" requirement of Rev Proc 2001-17?

I am sending out SPD's for our FSA enrollees. Do I need to send an SPD to 2002 enrollees who were also in the plan for 2001 and received an SPD at that time?

Does anyone know where I can find a sample Plan Document on the net for a non-qualified deferred compensation plan?

Restating a Principal Financial Group non-std prototype plan this morning and could not find a named trustee, but did find this text: "The plan is not trusteed. Plan assets shall be invested only in an annuity contract."

I guess the trustee section of the adoption agreement is left blank, but what about the Schedule P?

You learn something every day in this business. Thanks. Maverick

I have a client who has not been distributing SPDs up to this point. The client understands that they will need to distribute them in the future and we have informed them of the potential civil liability to the participants if a lawsuit brings it up. We are currently drafting SPDs for their future use. However, in all my research I can't find two answers. Is there a penalty that either the IRS or DOL can impose if the failure to distribute comes to light (any citation for this would be appreciated)? And is it possible to apply for amnesty under one of the compliance programs? The Rev. Proc. 2001-17 on employee plan compliance resolution does not address failure to distribute SPDs. Thank you in advance for any infomration you may share.

Kristen Brown

Raleigh, North Carolina

Plan limits deferrals for plan year to 20%. We discover in 2002 that an employee exceeded the plan limit by $500 in 2001. I believe I need to have the excess adjusted for gain/loss distributed to the employee. Is this reported on Form 1099-R?. Does the ER adjust the 2001 W-2? Does anyone use the "creative accounting" approach that keeps the $ in the trust to offset the ER's next deposit?

Any guidence would be geatly appreciated!

401(a)(28) requires age 55 and ten years of participation to become a qualified participant. May an ESOP be amended to reduce the ten year requirement to nine years and not suffer any negative consequences? Any authority out there?

Thanks.

I have a couple of questions:

1. If you are suing for failure to provide notice for the statutory penalty - do you have a claim for the penalty for each person (i.e. employee, spouse and depend.) since each did not get notice and each lost coverage. (even if the Er *could have* only sent one notice, they didn'' send any.)

2. Does the penalty cease if they got other coverage? E.g. went on Medicaid 6 months after leaving employment, but never got notice.

3. Can you file one lawsuit for all? Can you file one lawsuit for unrelated employees who didn't get notice?

4. If anyone has a complaint they are willing to share, that I can use for guidance, I'd really appreciate it.

Thanks

I have a 401K of about $11.5K. I want to transfer this to an IRA so that I can use the $10K to purchase our first house since my 401K can only lend me 50%.

I hope you can help me on the following:

1) Do I transfer this to a ROTH IRA or just an IRA?

2) Can I transfer all of my 401K or just part of it like $10K?

3) How do I transfer this? Fees?

4) Is there a waiting time before I could withdraw this after transferring?

5) Am I missing anything here?

thanks

A directed trustee has standing instructions/directions to purchase company stock,

Market conditions dictate that it would neither be prudent nor best interests of plan participants to currently do so because of various financial matters both internal and external, is the trustee liable for breach if he does not purchase additional company stock?

Now, I know the old saying that there is no such thing as a stupid question ... but this one may challenge that statement.

Are 403(B) and 457 plans subject to restatement for GUST or is it only your "run-of-the-mill" 401(a) plans?

Company A: Been in existence for many years, never had a plan in its history. Puts in a 401(k) plan effective 8/1/01 with an initial short plan year of 8/1/01-12/31/01.

Company B: Brand new company - first day company is in existence is 8/1/01 and puts in a 401(k) plan effective 8/1/01-12/31/01 with an initial short plan year of 8/1/01-12/31/01.

Questions for each of the plans above (Company A and Company b):

For determining key employees, are any of the compensation amounts (officer, 1% owner) prorated?

For determining the 1/2% owners in the top ten, what compensation is used (compensation for what period)?

If the plan is determined to be top-heavy for the 8/1/01-12/31/01 plan year, what compensation must be used for the 3% top-heavy contribution? Is the contribution 3% of compensation from 8/1/01-12/31/01, or 3% of compensation from 1/1/01-12/31/01, or something else?

Also, my understanding is that the top-heavy determinaiton for the 8/1/01-12/31/01 plan year is based on pre-EGTRRA rules with a determination date of 12/31/01, and the top-heavy determination for the 1/1/02-12/31/02 plan year is based on EGTRRA rules with a determination date of 12/31/01.

I have tried to review previous threads on these questions, and I have been left uncertain of the answers.

Thanks for any answers and especially any cites. Have these questions been discussed at ASPA or other meetings?

Hello,

I'm 30 years old and have a Roth IRA that consists of stocks and cash ( in a money market fund). It started as a traditional IRA and i've had it since 1996. Now that i have a little money in it i'm starting to worry i might do something wrong that i don't realize and pay for it later. My question is if I sell some of the stock for a gain do I have to pay capital gains tax?, even if I leave the profits in the IRA account? I've always bought stocks with the account and haven't sold any yet, so before I do I want to know if I have to pay tax. I can't seem to find answers to this simple question so I hope someone can help me out!

Thanks in advance,

Scott

:confused:

Every doctor client is getting excited about paying their spouse $12,000 so the spouse can defer $11,000 into a 401k. My concern is that this may make a cross-tested plan Avg Ben Percentage Test blow up.

Am I correct that the Benefit Rate % used in the Avg Ben Percentage Test will still include deferrals (unlike the benefit rate % used for the Rate Group test)? In the example above, the spouse has 95% deferral, and, based on her age, that could be a 60% benefit rate if deferrals are included.

Client restates their only plan, the 'XYZ Money Purchase Pension Plan', to the 'XYZ Profit Sharing Plan'.

The trust and the trust ID number for the money purchase plan are under the name 'XYZ Money Purchase Plan'. We want to retitle the assets to the name of the Profit Sharing Plan. Can we continue to use the original trust ID number or do we have to apply for a new number under the name of the profit sharing plan? Is it possible to have the IRS change the name they have associated with the original trust ID number?

In the future we will be using 'XYZ Retirement Trust' as the trust name on all of our plans.

It turns out that my broker misidentified my new IRA in 1998, so instead of him opening a Roth for me, he opened a traditional IRA instead. In December 2001, with the mistake fully realized, I converted the traditional to a Roth.

Because of stock market changes, I was actually sitting on a loss in the account. I had made nondeductible (after-tax) contributions of $2,000 for four years, so my basis was $8,000. The amount I converted was $6,500.

Clearly, I don't seem to have any tax liability in this scenario, but I'm unclear on where (or if) I have to report this conversion on tax forms. If I have to fill out a Form 8606, Part II is certainly simply enough -- the conversion amount and the basis in that amount, on lines 16 and 17, would be $6,500, leaving zero for the taxable amount in line 18. But do I have to fill out Part I of that form? (I never did fill out an 8606 in previous years, even though it turned out that I had been making nondeductible contributions to a traditional IRA for the previous four years -- which apparently calls for an 8606.)

Also, it would seem that the $6,500 would be considered a distribution to be listed on line 15a of Form 1040. I did receive a Form 1099 from my IRA trustee showing that amount. But since the same trustee handled the old and new account, do I need to report that as a distribution, since it represents a loss on after-tax money?

Thx for your insight.

Hi

I sent away for info on T. Rowe Price's Roth IRA, and they sent me info that states I can have my checking account debited @$50 a month. Is this a good plan/company? I don't make a whole lot so I must do this as wise as possible.

Thanks!