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!

This is my first post, so please forgive me if not properly done.

I have a single person self-employed Keogh Profit Sharing set up in 1977. Made contributions for 3 years in the beginning. No contributions made for last 20 years but have been growing the plan from the early contributions. I have been reading lately that amendments must be made by Feb. 28, 2002. Do I have to amend or ask for a letter in regards to this plan, if I will not be making future contributions, but am just waiting to retire? In the beginning this plan was set up by a bank's trust department using their prototype model whic had been approved by the IRS. The last few years I have been the trustee.

I realize I have not made myself very clear. I just don't want to miss some important deadline.

Thanks.

bldoz

Here are the facts:

The Prototype document has been submitted, and the Opinion Letter is pending.

Last week. the Prototype Sponsor forwards an amendment (they called it their GUST II amendment) to my client. This amendment only adds three provisions, and requests that my client adopt the amendment by 2/28.

The Prototype Sponsor's letter acknowledges that this amendment will cause my client's plan to become individually designed.

My initial thought is to recommend against adopting this amendment. The Service will likely require the items set forth in the amendment to be added to the plan document anyway, and once the Opinion Letter is issued, my client can then adopt the plan and be protected under the Sponsor's Opinion Letter.

Phones calls to the Sponsor have not be returned.

I appreciate any suggestions. Thanks.

We converted our IRAs to Roth IRAs in 1998 and this year are having to declare the 4th of the 4-year distributions required by the law on our taxes. Unexpectedly, our income was higher last year because of second jobs that both my wife and I took on to make ends meet. When I computed our taxes, I found that with the Roth conversion our adjusted gross income had gone over the limits that allow us to take the full $1200 deduction for each of our four kids. Suddenly, instead of owing nothing, as I expected and budgeted, I have a $3000 tax bill (including state income taxes, as well)! Am I just out of luck or did I miss something? Must my declaration of Roth IRA income - that I won't see for another 15 years - create this tax liability? Any similar experiences or advice? Thanks

Employer has profit sharing plan with no 401(k) provisions. Employer wants to add 401(k) provisions and meet the safe harbor by contributing 3% nonelective contribution. Employer wants that to be effective April 1, 2002. Given that there are currently no 401(k) provisions in the plan, can't the safe harbor notice be given insode the 30 day period, e.g., March 15?

Is there any need to have deferral limits in a safe harbor 401(k) plan (that will meet the safe harbor using the 3% nonelective contribution) given the 25% deduction limitation?

are employers required by law to offer only one open enrollment period for enrollment in the 403(B) defered comp plan. My wife's employer told her that she could make only one change per year to her 403(B) plan and only during the open enrollment time.

I can make changes to my 457 plan anytime i wish, if there are IRC regs or any other regs pertaining to this I appreciate any helpfull info. thank you

DB Plan is frozen - would anything prohibit a frozen db plan from stating that the compensation used under the plan for determining benefits will be the current 401(a)(17) limit (ie, 200,000 for 2002) for all years considered? It seems clear you can do this in an on-going plan (see Notice 2001-56), but I am not as clear about a frozen plan, though it seems you can still do it.

For example, plan was frozen 12-31-99. Participant terminates employment 1-1-00 and is a vested term. Vested term. is now due to be paid his benefit, which is calculated at 1.3% of average monthly earnings (looking at last five years prior to termination of employment) times years of service. We want to define earnings to include up to 200,000, rather than the limits in place during the last five years of his employment.

I believe this is ok, even if the plan is frozen??

what is the maximum amount that can be put in a 401(k) profit sharing plan for the year 2001. I am getting conflicting answers. Is it 15% of $170,000 (max comp) or is it 25%.