Okay, this is rather complicated - I messed up with an IRA in a couple of different ways and now am trying to rectify the situation. I would appreciate any suggestions.

I opened a regular IRA on April 14, 2000 (for 1999 tax year) and never claimed a deduction for it on my tax form (that year I think didn't earn much and didn't even claim deductions). I actually meant to open a Roth IRA, but did it with an online brokerage while I was online, and must have messed the online application up (I don't even have a copy of my original application).

In any event, I now a) am on my company's 401k plan and b) earn more than I am allowed for deducting an IRA for tax purposes. What would be the best way of handling this? Do I try to amend my previous tax return? Or can I somehow "cash out" my IRA and contest the 1099-R, saying that I never took advantage of the tax benefits of the IRA and so shouldn't be charged a penalty (someone suggested writing a hold harmless letter). Or should I roll it over to a Roth even though I'm no longer eligible to have an IRA? I'm really a novice, so any thoughts as to what my options are, are very much appreciated!

Thanks again!

A client just called me and said that the company name had changed on 11/5/01. This is a calendar year SH 401(k) plan. I will draft a plan amendment to change the employer name and plan name. What about changing the Safe Harbor notice that was distributed on 11/30/01? My gut feeling is that there's no substantive change, so why change the notice. Is this correct?

A company has a Section 423 stock purchase plan under which payroll deductions are taken and, at the end of each quarter, stock is purchased at a discount. An employee was inadvertently allowed to purchase stock in excess of $25,000 for the year 2000, and the employer has just now discovered the error.

Must all of the stock purchased during 2000 be taxed as nonqualified options, or can the amount up to $25,000 be treated as a purchase under a qualified stock purchase plan?

Hoping someone can help me understand the "process" of allowing participants the ability to defer catch up contributions.

We have not yet updated our prototype plans for GUST (removing the deferral limit for NHCE's) so most of the plans that we administer still have a deferral limit (typically 15% but sometimes 10%). We did provide for a prototype plan sponsor EGTRRA amendment that allows for catch up contribuitons. I understand that the law allows for participants to exceed this plan stated limit to allow for catch up contributions.

The problems I am having is how to calculate the amount to defer? As compensation is a moving target (dependent on number of hours worked) how do we advise on the correct deferral rate to allow for catch up contributions? Is 12%, 13%, 14% the right number? What happens if the amount the participant defers is actually more than the stated limit, plus $1,000.

Or does it even matter......If by December 31, 2002 I amend the plan for GUST and remove the deferral % limit, only those deferrals in excess of $11,000 for 2002 deemed to be catch up?

How are plan sponsors notifying their participants of this availability? Any suggestion on a revised deferral election form until the plans are amended for GUST?

Any thoughts would be appreciated.

Thanks!

Could someone provide some guidance on this issue?

I meet with a client and walked through the benefits of a safe harbor match. The client agreed. I delivered the notices to the participants and explained the plan. About a week later, the client called wanting to eliminate the plan. Deferrals have not yet been made. Can the plan be stopped? Thanks.

Can someone tell me if 457's allow for Self Directed options. Thanks

I am sure this has come up before, but here it goes again.

Who has more liability as a trustee. A plan that does not allow for participant self-direction, i.e. a pooled investment that hires a money manager, has a written investment policy, makes decisions quarterly with investment manager. Or, a participant self-directed plan where the participants choose among 12-15 funds. Again, from a trustee standpoint, which scenario carries more liability? Thanks

good grief. people must think I am old enough to know these things. I have never even seen one of these animals.

anyway, someone is working on restating a 401(k) plan sponsored by the govt which has been granfathered forever.

does such plan require ADP language or were they exempt from testing as well (since govt plans usually have all type of special rules, I have no clue)

thanks!

Is the 10 year spousal exception an option or must the exception be used if the spouse/beneficiary is 10 years younger than the participant?

can we try to create a "top ten" list of the risks associated with being a fiduciary of a LESOP or ESOP?

I have a 401(k) plan that was effective 1/1/00, but they made no contributions during this year. They began deferrals as of 1/1/01, and I am working on their testing for plan year ended 12/31/01. Can I use the deemed 3% rule for the NHCEs, even though it technically is not the first year of the plan?

On Sch A there is a question re: basis of premium rates.

We have qualified plans funded w/individual flexible premium annuity contracts. The amounts contributed into these contracts are calculated in accordance w/the formula/allocation outlined in the plan document. The insurance co does not tell the plan the amount to be contributed. Instead the plan directs certain amounts for deposit into these individual contracts.

What information is the IRS looking for in response to this question?

Since this is a qualified retirement plan instead of a welfare benefit plan, would it be appropriate to answer N/A and continue on?

We have an employee who turned in a receipt for a bunch of prescriptions that included shipping charges. Can we reimburse this shipping charge along with the prescriptions as a medical expense? Does anyone have any documentation saying one way or the other? Thanks for your help!

Rachel

When Prudential sent out letters last year to terminated defined beneift plans, I didn't expect them to actually give stock to nonparticipating nonmutual contracts such as group annuities upon a plan termination. Well, now they did. There have been many threads on these boards dancing around the issues involved without clear guidance.

Has anyone received official guidance from the IRS on the various tax issues?

Has anyone received official guidance from anyone on various trust/employer/reporting issues?

I can list more than 40 specific (semi)unanswered questions, but first need to find out if the IRS has given any insight on this (I am not talking about extrapolating general principles from other similar situations - I am looking for concrete info directly on these demutualizations; and the information from Prudential is worthless).

We are a small TPA. Some plans we administer make deposits for claims and expenses directly to a common account that we disburse claims reimbursements from and others have their own account which claims are paid out of. We have a fidelity bond in our name. Does each plan need to be purchasing a bond in the name of their plan? These plans involve only medical and FSA's, no retirement plans.

I was wondering if someone turned in a receipt for a massage for chiropractic treatment that was perscribed by the Doctor is it eligible for reimbursement in his flexible spending account.

Are Hedge Funds an allowable investment within an IRA account. It seems as though they are handled like Private Placements, does anybody know by chance???? There is no reference in any publications that govern IRA's. Anybody????

We are a small TPA. Some plans we administer make deposits for claims and expenses directly to a common account that we disburse claims reimbursements from and others have their own account which claims are paid out of. We have a fidelity bond in our name. Does each plan need to be purchasing a bond in the name of their plan? These plans involve only medical and FSA's, no retirement plans.

Links to new versions:

• Publication 571, Web page version
  
• Publication 571, PDF version
  
• Publication 575, Web page version
  
• Publication 575, PDF version
  

Links to new versions:

• Publication 571, Web page version
  
• Publication 571, PDF version
  
• Publication 575, Web page version
  
• Publication 575, PDF version