Ms. XEC receives $1,000 per year in consulting fees and has an IRA with $3 million in assets. In 2002, Ms. XEC establishes Plan M, a profit sharing plan. Ms. XEC then rolls over $2 million from the IRA into Plan M and makes a contribution of $180 to Plan M. She then wants to purchase life insurance on her life.

Under the incidental benefit rule applicable to life insurance under a qualifeid plan, is Ms. XEC able to pay premiums of (a) $500,000 + or (B) $45?

Employer X is privately held and sponsors ESOP M. If Employer X purchases COLI to fund its repurchase liability, (a) is the inside buildup on the COLI and/or (B) any death benefits on the COLI, subject to the alternative minimum tax?

Dear Moderator, What is the maximum contribution that a well paid department head at a county can contribute in his county 457b plan in addition to his employers match contribution ?

Say our state was in federal compliance, and he being over 50 years of age wished to max out, but the employer was also going to contribute-- then is the max only $ 11000 + $ 1000 (-minus the

employers contribution) ? Or could it be higher than the plan the plan limit of $ 11000 + $ 1000 + ER contribution, for the year 2002.

Thank You

3 months ago mom turned 70 and wants to know does she have to start withdrawing money from her Roth IRA? Can she also continue to make monthly contributions?

We have capital losses, enough actually to enable a transfer of at least one IRA to a Roth IRA with several thousand left over to offset any capital gains in our taxable brokerage account. Think this will fly? I will also inquire with the IRS directly but thought someone here might know. This is my first time here. Thanks in advance for any information.

A 401(k) plan has a fiscal 5/31 plan year. For the plan year ending 5/31/02, is the 402(g) limit $11,000? It seems that there is a difference between cost of living and statutory increases, or does this just apply to the 415 limits?

Second question: For participants age fifty or more by December 31, 2002, can a catchup contribution be made for the 5/31/02 plan year? I read the proposed regs as yes, but am interested in what others think.

Can any one define a goverment organization. In this day and age there seems to be a lot of gray areas, Hospitals, senior centers, mental health organizations, Amtrack, etc..

Is it

Taxing authority

Elected oficials

Board appointed by State, County, City, etc.

Goverment funding - total - partial

:confused:

I make maximum contribution to my employers 401(k) plan. My wife's employer does not offer any retirment plans. Our combined AGI is less than $160,000.

Questions:

1. How much can I contribute for ROTH & Traditional IRA for 2001?

2. How much can my wife contribute for ROTH & Traditional IRA for 2001?

Thanks for your help!!!

My wife and I are over 50 and jointly file on our income taxes. I have a 401K plan which is max'ed out for the year 2001 and my wife's employer does not offer a 401K plan. The last piece of the equation is that my income dropped to 128K this past year and my wife earned 16K.

1) can I, and what is the amount I can contribute to an IRA for 2001. For 2002.

2) can I, and what is the amount I can contribute to a Roth IRA for 2001. For 2002.

3) same two questions as above pertaining to my wife.

Thank you for your assistance.

I have client with a SIMPLE Plan, but wishes to convert to a Safe Harbor 401(k) Plan as soon as possible. No deferrals in the SIMPLE Plan have been made for 2002.

Can you retroactively convert the Plan to a Safe Harbor 401(k) Plan effective January 1, 2002? Is there still a 30 day notice requirement? If 3% nonelective contribution will be used, would compensation be considered for the full year?

Thanks,

Joe

I know that a Safe Harbor 401(k) is not subject to ADP/ACP tests, but what if the employer intends to satisfy the safe harbor requirement using a 3% non-elective contribution and also makes a discretionary matching contribution (subject to vesting) in which the only employees who are deferring a HCEs? Does the matching contribution automatically satisfy the ACP test?

Thanks,

Joe

I'm a government contractor in Germany, and pay no German or American taxes. Am I eligible to open a Roth IRA since my income is tax-free?

What are the consequences if one fails to file a 5500-EZ for a keogh money purchase plan for the year the plan was terminated?

Assume this was the only year that the EZ was due: single participant and balance was always below $100K (at termination balance was approx $2K).

Reg Jones

Are companies that manage Roth IRAs required to report to the I.R.S. a Roth IRA owner's annual contributions, interest payments and withdrawals, or is this solely the responsibility of the Roth IRA owner when he files his annual tax forms?

new rule changes effective has clear advantages for school employees(elimination of coordination rules etc.). New York state requires govermental 457 plans to create a deferred comp board and pass assets through a trust agreement. Are schools considered governmental for this purpose? Would a trust be required or would a group annuity arrangement be acceptable? Thanks for the input

Our client is a governmental entity (a city) who has recently extended an employment contract to a new city manager. In the contract they offer a "deferred compensation program annual contribution, payable in monthly installmets by the city, to a 401 or 457 type plan sponsored by an appropriate agency".

Would these contributions by the city be considered wages and subject to FICA, Medicare and not Withholding? Thanks for any guidance!

Our client is a governmental entity (a city) who has recently extended an employment contract to a new city manager. In the contract they offer a "deferred compensation program annual contribution, payable in monthly installmets by the city, to a 401 or 457 type plan sponsored by an appropriate agency".

Would these contributions by the city be considered wages and subject to FICA, Medicare and not Withholding? Thanks for any guidance!

This plan fails multiple use. There are two HCEs who don't have the necessary hours or last-day employment status necessary for receiving a match. Therefore, only one of the original three HCEs is actually in my ACP denominator. And because of that, her 2% match provides me with a 2.00/1 HCE = 2.00 ACP, and that's slightly too high.

Question is: Is it possible to treat even a dollar of a terminated HCE's deferrals as match? This has the effect of "forcing" him into the ACP test, doesn't it? Then my ACP is 2.00 + 0.01 = 2.01, divided now by 2 HCEs giving me a nice 1.01 ACP, and a plan that now passes multiple use.

The specific regulation 1.401(m)-1(B)5

says that any of the deferrals treated may be treated as matching contributions....if they are deferrals of employees eligible under the plan being tested. Now, this guy was previously ineligible for the 401(m) component....but it doesn't REALLY say component plan, it says plan. And this guy was eligible for the 401(k) arrangement. So I *think* I'm on to something here.

Anyone want to say yes or no to that?

Thanks

bri

Brain is not working....

M&P GUST opinion letter is issued 11/15/01.

What is the last date that clients may adopt the GUST document? 12/31/02 or 02/28/03

A brand new start-up company, formed July 1, 2001, desires to have a qualified plan to benefit the new owner. Plan is drafted with the following eligiblity requirements:

If employed on July 1, 2001, employee is immediately eligible for the plan. After that, eligibility is the attainment of age 21, with semi-annual entry dates.

The company adopts the plan with a July 1, 2001 effective date and then hires a series of new employees after July 1 and before December 31, 2001. The company now wishes to amend the eligibility requirements to require 1 year of service instead of only the attainment of age 21.

Effective January 1, 2002, can we amend the plan to reflect eligibility of age 21 and one year of service (1000 hours) so new employees hired after July 1, 2001 will not enter the plan until January 1, 2003 (i.e., after completing one year of service)?

Thanks for any answers and comments.