In order to use the disability exception to the 10% penalty for an early withdrawal from an annuity, must the individual "become" disabled after entering into the annuity contract? Restated, may an individual who has already been deemed disabled by the SSA enter into an annuity contract then take withdrawals and not be required to pay a 10% penalty?

Can anyone provide a cite for me that says that when the profit sharing contributions of a 401(k) plan are being tested for nondiscrimination under 401(a)(4), the Average Benefit Percentage test is done using elective deferrals and match? I know that the rate groups are determined using only profit sharing contributions and forfeitures, and the average beneft percentage test is done using those plus deferrals and match, but I cannot find where in the regs, Code or other guidance this is explained. Can anyone point me to the right place in the guidance?

A 401(k) plan has a five year graded vesting schedule and provides that a YOS is granted if the participant completes one hour of service.

Can the plan be amended to change the provision to 1000 hours?

(My concern is that 1.411(a)-8 applies.)

Any thoughts?

Thanks!

Our income was $150,090 (over by $90!!) so we have to recharacterize some of our Roth IRA, which I know how to do.

However, with the children's Education IRA's, I cannot find the formula for determining how much we'll have to withdraw. Does anyone know what that formula is?

Other than the cafeteria plans for medical and dental expenses, is there one for legal expenses?

I contributed $2000 to my Roth IRA on 1/1/2001 for the 2001 tax year. My wife changed jobs midyear and our income will exceed $160,000, therefore I must either recharacterize to a non deductible Traditional IRA or withdraw the contribution.

Question: The Roth is in a tech. mutual fund and the FMV at 12/31/2001 was $1200. What amount should I recharacterize or withdraw. If I withdraw $1200 can I deduct the $800 loss, as I would have to include any gain in income?

What are some of the potential claims/causes of action that may be brought against a custodian or trustee of pension assets in the case of hostile take overs or Leveraged Buy Outs?

Client has existing option plan (that does not include ISOs) and a plan that allows employees to purchase stock from the Company (not a 423 plan). Client wants to amend existing option plan to include ISOs and amend existing stock purchase plan so that it qualifies under 423, but does not want to go to shareholders for approval of either plan. The shareholders approved the existing plans two years ago.

Should the client have the shareholders approve the amended plans (the amended plans will be substantially different that the existing plans)? Do Code Sections 423 and 422 require shareholder approval for material amendments to plans?

Can both my husband and I each invest in a Roth IRA if his company contributes money into a profit sharing pension plan for him every year and if he earns more than 100,000/year

Is is considered insider trading if an employee would re-allocate his 401(k) investments to our company stock fund based on confidential information? I know it is illegal to do this on the open market, but not sure how it applies to company stock within our retirement plans.

Last week I posted a question re: how to verify a TIN. I was referred to freerisa.com, where I registered and was able to use their EIN finder. So far I'm 3 for 3; each number I entered came up zilch. Researching some old threads on TIN's I discovered that the IRS purges trust ID numbers after several years of inactivity. Is there a way to reactivate a TIN? If not, I can just see it now -- I file a SS-4 to get a new TIN and the IRS comes back and says one was already issued. But if you use it on 1099-R and 945 forms they reject the filings. Thanks all. Maverick

We have a partnership with approximately 20 partners and staff of 100. The company wants to put in a cash balance plan for the partners only (already have a xtested and 401(k) plan) and then loan monies from the plan to the partnership. In reading the definitions of who is a party in interest we believe this is truly a prohibited transaction. Two of the partners are attorneys who argue that the definition is not clear on who are the employees of the employer? Any thoughts regarding this is appreciated.

One of my clients has a 401(k) plan which also permits after-tax contributions. Traditionally, participants separating from service and seeking to avoid taxes would elect to roll over 100% of the distribution to an IRA. The plan administrator would segregate the after-tax contributions, roll over the remaining amounts, and issue a check (non-taxable) for the amount of the after-tax contributions only. Great result--some cash for the separating participant, no taxable event.

Following the new rollover rules for 2002, the administrator is now rolling over the entire distribution, including the after-tax contributions. The IRA custodian is saying that the 10% penalty tax applies to a pre 59.5 withdrawal of these after-tax contributions. This doesn't seem right to me, but I'll be the first to admit that I don't have a lot of IRA experience. I'd appreciate any insight that could be offered, as well as any cites or links that might be appropriate.

Thanks in advance for the help.

I have been told by the Plan Administrator of a governmental thrift plan (similar to a 401(k) plan) that it decided to collect new beneficiary designation forms. It supposedly sent a letter in 1998 to all participants, including retirees, advising them that the prior beneficiary designation forms were revoked, and that if the individual did not submit a revised form, then the terms of the plan would apply. The plan provides that the beneficiary is the spouse, if surviving, then the estate.

Has anyone heard of a plan doing such a thing? Was that action in the best interest of the participants?

In my client's situation, the Plan Administrator is telling us that the 84 year old aunt did not return the correspondence in 1998, so she had no named beneficiary, and payment must go to the estate. The Plan Administrator's position is that the beneficiary designations signed at the time of the participant's retirement were revoked by its 1998 correspondence.

Oh, and, by the way, the plan administrator also mentioned that the 2000 correspondence from the record keeper that said that minimum distributions are based on the niece as beneficiary does not matter, since the beneficiary for minimum distribution purposes could be different than that for death benefit purposes.

Just wondering if anyone has heard of other Plan Administrators doing this.

Thought everyone ought to see this, and be made aware of what some are trying to do...

SCAM - Loaning deferrals to participants

I think everyone ought to view this - so here is the link to the discussion on the 401(k) board.

SCAM - Loaning deferral monies to participants

Is there any guidance related to the expenses incurred by an employer necessary in making a "DRO" a "QDRO". In other words, if the Plan's attorney & actuary review the "DRO" in order to determine what needs to be changed or clarified in order to make it a "QDRO", can those fees be passed on to the participants and/or alternative payee?

As many of you know, if your dealing with an attorney with little or no QDRO experience, you can rack up quite a bit of time getting the DRO qualified.

Okay - let's talk about this - has anyone seen this?

Participation Loan

I stumbled upon this site while doing a search, and just could not believe that someone would actually try to get this established in our country. Talk about taking advantage of people.

The most interesting portion is in how the "interest" is calculated, and the fact that the formula does not incorporate losses that a participant may incurr.

Let's beat this up, and make everyone aware of some of these scams in the market.

Just received my "Notice of Active Status" from the Joint Board and I am a little confused as to when I should start using the "02-" prefix for Schedule Bs, etc. The notice I received states "Under these extensions, your "99-" prefix is valid through August 31, 2002. Beginning September 1, 2002, you must use the prefix "02-" before your enrollment number."

Now I know that this is relating to the extension for continuing education due to 09/11. However, I can't determine whether I have to wait until 09/01/02 to start using "02-" even though I've been approved for "active" enrollment, or should I start using "02-" now since I've been approved?

If one cannot locate the beneficiary of a deceased participant with a $ 600 accoutn balance in a terminated DC plan, what are the options? We have tried a private locator company.

I know the PBGC program allows you to purchase an annuity (viable here?) or deposit money in an individual bank account opened in the participant's name

I have heard of sending 100% witholding to IRS; has anyone done this successfully?

Are there any other options? Does anyoen see a problem with any of the above mentioned?