:confused:

I recently married but had already made my full $2000 Roth IRA contribution for 2001. Unfortunately (or fortunately!) my new husband's income may disqualify these prior contributions. But there may be hope if we file separately...I will probably have an AGI very close to $10,000.

1. If my AGI turns out to be < or = to $10,000, how do I figure what my max 2001 contribution should have been? Will my eligibility to contribute still in part be determined by my spouse's AGI? I've read the tax law on this and find it to be very confusing! How do I get rid of any potential excess before filing and being penalized?

2. If my AGI is >$10,000 or my husband's income is still too high to qualify (even filing separately), what are my options? Conversion to a traditional? Any other options?

If it matters, neither of us participate in any qualified plans.

Any general advice or concrete examples will be appreciated. Walk me through it.

Sincerely,

C. Yelkovan

Plan A is a safe harbor 401(k) plan, effective Jan 1, 2001, sponsored by Company A. Plan year is the calendar year. Company B merges with Company A, effective July 2, 2001. Company B assumes control and becomes named trustee of Plan A. Company B's intention is to merge Plan A into Company B's plan, Plan B. Plan B is not a safe harbor 401(k) plan. Contributions in Plan A are frozen, effective July 31, 2001.

Would Plan A still have to pass ADP test for 2001 since contributions were not made for an entire year in the first year of existence?

We are trying to set up a cafeteria plan that includes flexible spending accounts. There are currently 25 employees, 10 of which are physicians and are considered to be key employees. We are concerned that the plan will not pass the key employee concentration test. Are there any suggestions as to how we can structure the plan so that it would pass?

Under what circumstance can an agreement between a privately held business and one key manager be considered to be subject to ERISA? Even if the document deals extensively with retirement and benefit matters, it is still a contract with one person who is a manager. There are other employees of the business and not one of them is subject to any similar type of agreement. It seems to me that the document between the manager and the company is more in the nature of an employement agreement than a retirement "plan". Can anyone cite any key authorities on the matter?

I need to know if Notice 2001-61 disaster relief for taxpayers just issued applies to contributions for Schedule B purposes that would be due no later than 9/15/2001 (if a 2000 calendar plan year).

Thanks

Beleive it or not, I have a client who has 15 household employees, all bieng paid W2 income. The employer (head of houdehold) would like to establish a 401(k) Plan, with no employer match, the employer will not participate in Plan. I see no reason they can not establish a Plan, but have found nothing to substantiate.

Can an employer that has previously maintained a defined benefit plan establish a SEP IRA utilizing a prototype?

Does anyone know if minimum funding deadlines (9/15) or 5500 filing deadlines (9/15 or 10/15) or any other pension related filings have been extended due to the terrorist attacks?? Thanks.

Because of the horrific tragedy on Tuesday, does anyone know if the DOL-PWBA plan on granting extensions past 10/15/2001 for anyone in an affected area? I know the IRS has just released notice 2001-61 allowing this for extended corporate and individual returns. However, I was uncertain if the DOL was prepared to take a stance.

We submit our payroll withholdings for a 401K Plan approx. every two weeks (bi-weekly payroll, gather files from 3 subs, proof, submit). Prices for mutual funds are invested at close of market prices.

As it turns out, we were a bit behind due to files snafu at one sub. That was fixed, I am ready to go with 3 payroll files--except market is closed. One payroll was submitted last week and will invest Monday (or whenever market opens).

In role as fiduciary, should I space out the other two payrolls over next week? Can I wait to see (1) if the markets are working okay, and (2) if the recent tragedies will skew the market?

I will (procedurally) send each payroll on a separate day as a separate transaction. (About 600 participants are involved and there are 9 mutual funds in the plan).

Gil

What is the Federal law pretaining medical benefits for employees in different salary groups? I am the administrator for a Church. We would like to provide the Senior Pastor and the ministry pastors with benefits different from the other exempt and non-exempt employees. :confused:

I think that a terminated plan participant must be given notice that if their account balance is greater than $5,000 they are not required to take a distribution from the plan. If this is so, how is that requirement met? Is there a special notice for this, or can it be added to the 402(f) Special Tax Notice as a separate paragraph, say at the beginning of the tax notice?

Thanks for your help.

How does an ESOP track selling shareholders who elect 1042 treatment in order to avoid engaging on prohibited allocations? For example, the selling shareholders have until their 1040's are due to elect 1042 treatment. What happens if the ESOP makes an allocation before this deadline and gives an allocation to a selling shareholder that hadn't elected 1042 treatment at that time, but subsequently does? The shareholder had not made a 1042 election at the time of the allocation, but later did. Does that allocation become a prohibited one?

This post is related to my previous post entitled "3% nonelective contribution issue" . E/er's e/ee's are 1 doc and 8 employees. It appears that the 8 e/ee's will almost certainly not defer. Doc wants to add a matching contribution element to the 401(k) in addition to the 3% nonelective safe harbor such that he can put away as much the rules will allow. I was thinking of having a discretionary match limited by the 4%/6% requirements but which would not be subject to the safe harbor rules as to nonforfeitability, etc... such that the plan would ultimately have the following contributions: 3% nonelective safe harbor, discretionary match, deferral up to maximum percentage and the discretionary PSP (integrated with Social Security). Short of adding new comparability/cross-testing which wouldn't be appropriate since the doc is relatively young I think that's about as far as I can go. Anyone see any issues thus far???

Can a defined benefit plan covering only HCEs provide different benefits to those HCEs? I have a new client who hired sales manager 5/8/00. My client,the 100% owner, was told by his prior actuary that the sales mgr. did not have to be covered,and in fact had him execute a waiver of participation.Since the owner and the mgr. are the only employees this violates 401(a)(26).If the plan could be restructured to provide a lower benefit for the sales mgr.this might make the situation more palatable.Any thoughts?Thank you.

Small professional corporation wants to transition founding partners from FT employee/owners to consultants, with phased transition of stock ownership to younger shareholders.

As consultants the founders would work on premises and have W-2 compensation & benefits, including health coverage, life insurance and disability insurance, qualified plan participation, expense reimbursements, bonuses, and a bonus representing their share of the return on capital investments in the firm.

Looking for other examples of this type of transition.

I invested my IRA assets in some foreign stocks.

They withhled foreign tax on the payments of dividends.

Is this proper?

I know that dividends on domentic investments are tax deferred.

How can I get the withholding back?

With the EGTRRA increase in section 404 limits to 25% of eligible payroll, most companies maintaining both mppp and a p/s plans will be terminating the mppp or merging it into the p/s plan. If the plans are merged, vesting does not need to be increased to 100%, but the account balances retain the annuity option and must be tracked separately. One way to aviod this is to terminate the mppp and distribute the assets. Of course, vesting increases to 100%. While most will roll the distrbution into the pension plan, some won't. This bothers many employers, not to mention the 100% vesting rule upon plan termination.

Question: Is there a way to merge the mppp into the p/s plan and also eliminate the annuity requirement? I swear that I read this somewhere while studying the issue. Did EGTRRA expand the GUST provision? Thanks.

My company has a dependent care plan/cafeteria plan. Most of our employees are in the US; however, some of our employees are international employees. The international employees consist of US citizens working abroad and non-US employees.

The international employees do not participate in the dependent care plan because their dependent care providers do not pay US income tax. The plan document, however, does not exclude them from participation.

Do we include the international employees in eligibility and utilization nondiscrimination testing? :confused:

I recently was contacted about performing a valuation for a small plan. The plan was originally effective 01-01-1995. Everything was going fine until I discovered that the benefit formula in the plan is 2.00% of comp multiplied by years of plan participation (not to exceed 25 years) while the benefit that has been valued each year is 2.00% of comp multiplied by years of employer service (not to exceed 25 years). Two different actuaries have valued the incorrect formula. One of them is no longer available and the other is in a fee dispute regarding this plan.

The difference in the years of service used for the benefit formula appears to be a drafting error, although no clear written evidence of this exists. The employer contributed did what the actuary told him to contribute and, not surprisingly, did not compare the benefits in the valuation with the benefit formula.

Anyone else ever have this type of problem? If so, what did you do?