Code Secs. 72(t)(9) and 402©(10) [added by EGTRRA] will require a gov't 457 plan to separately account for any amounts rolled into it from a qualified plan, 403(B) or IRA in order to be able to identify those amounts subject to the 10% tax on early withdrawals. From what I can tell, there is not a comparable Code provision requiring the tracking of 457 dollars that are rolled to a qualified plan, etc. If not, then it seems as if those amounts would become subject to the 10% early withdrawal tax. Am I missing something here?

Hello,

I am thinking about transferring my loser Tech. Fund presently in my Roth IRA to another more stable fund. I was wanting to know if I could write off the amount that was lost due to the downturn of the market.

Thanks for any advice,

Zane

An employer terminated their DB plan and rolled it into a new 401(k) plan. I have been informed that the DB rollover money is not available for hardship or loans.

Any comments?

Thanks

A plan failed the ADP test but due to delays in getting information, the refund was not made until after the end of the plan year following the failure.

Any suggestions on how to correct? APRSC? In my opinion, the operational failure is insignificant.

Thanks

When a Plan defines act equiv for a lump sum based on the PBGC male purchase rates what mortality table are they referring to?

I mean it really isn't specific, if I were to play devil's advocate.

For example PBGC Table 1is considered the healthy male mortality table and is based on the GAM83 table for males. The PBGC table for lump sums is Table 3, which is the UP84 unisex table. That is Table 3 is neither a male or a female table.

The Plan uses the UO84 table with a 1 year set forward as the male table. While I believe this to be true, I am not sure where there is actual documentation supporting this assertion.

Curious to hear any thoughts out there.

Thanks.

lets say a construction company has a profit sharing plan. lets also say that this plan loans money to the clients of the construction company. the company insists that its clients COULD borrow from banks, but lending from the plan saves the client money by cutting out the middle man. i don't think the clients are parties in interest, but i am concerned that these transactions are prohibited anyway. any thoughts or suggestions?

A former employee who elected COBRA has become ELIGIBLE for group health coverage at a new job. She has inquired if she can keep her COBRA in place if she declines the new coverage. The benefits under COBRA obviously beat the new coverage she is eligible for. Does the former employer have the right to term her COBRA since she is ELIGIBLE for new group health coverage, or does she actually have to ELECT new coverage to lose her right to COBRA? Assume for the sake of argument that the new plan has no pre-x. Any opinions????????????

My accounting firm purchased 6 other accounting firms several years ago - and all 7 firms have their own qualified 401(k) plan. On November 1, 2001 we are merging all 7 plans into a brand new plan. My question is how do I handle the year 2001 adp/acp tests. For example, how do I consider my highly comp. ees, do I perform a short plan year test for each of the 7 plans and then another short plan year test for the new plan. What if I want to use the prior year method for my nonhighly comp. average percentages, etc. Any help or guidance would be appreciated. Also, does anyone know where I can read about this type of stuff. Let me know. Thanks a million!

Is there a statute or regulation that defines compensation for safe harbor matching contributions, or can it be defined by the plan document? I ask because I am weighing the merits of annual matching and per payroll mathching. Consider the following:

The employer sponsors a plan with a safe harbor match of 100% of the first 3% of compensation and 50% of the next 2%. An eligible employee, earning $52,000 per year ($2,000 bi-weekly payroll cycle), elects not to participate until the last payroll cycle of the year. The employee then elects a 10% ($200) deferral for the last cycle.

Would the employer match be $80, based on compensation for that payroll cycle, or $200 because the $200 deferral is less than 3% of annual compensation?

I have a client that is self-employed (only employee) and over the age of 70 1/2. This year he opened a Keogh and contributed $35,000.

Since he is greater than a 5% owner he needs to make a RMD. Since his 12/31/00 Keogh balance was $0, what do I base his RMD on? Do I base it on his initial $35,000 contribution?

Thanks

If a traditional ira was recharacterized in 1998 and this is the last year we are paying the tax on it. Is that money that we put in a roth ira considered contributions and are we able to touch some of it without tax or penalty, since we have been paying the tax on it anyway.

Is it still $5,250 per year or was it increased under EGTRRA?

If a previous employee does not pay their portion of the fee for COBRA benefits, how long must an organization continue to provide the benefits. Or, in the event that the employee does pay his/her premium but the check that he/she issues has bounced, approximately bounced checks since December 2000, how would you suggest the employer handle this situation. Please note that each time a check bounces, the employer does incur the bounced check fee.

Hi Everyone,

A very common transaction of the last few years is an IRA Trustee/Custodial Transfer of Assets of a Deceased IRA Owner by a Non-spouse Beneficiary.

When successfully completed, the IRA resulting from the transfer is usually titled referencing the original owner as being deceased with the resulting IRA existing for the benefit of the non-spouse beneficiary. For Example: "XYZ Firm as Trustee of the IRA of John Smith (deceased) for the Benefit of John Jones, Beneficiary".

No doubt this has become a commonplace transaction recently with many IRA fiduciaries sending and receiving these transfers routinely without giving it a second thought.

Over the past several months I have become aware of an increasing number of these transfers being refused by a variety of financial institutions. They base their refusal of this kind of transfer on the lack of legal qualification of a non-spouse beneficiary to execute an IRA Plan Document (Form 5305/5305A and such) in the name of or on behalf of a now deceased IRA owner (this assumes that the deceased IRA owner did not have an established IRA at the organization receiving the IRA transfer).

While I know on no instances where the IRS has recently shown concern or interest over this matter, it is interesting to note that in earlier times, the IRS did see fit to issue a proposed regulation permitting an employer to execute an IRA Plan Document on behalf of an eligible SEP participant who was unwilling or unable to open an IRA to receive employer SEP contributions. (Prop. Treas. Reg. 1.408-7(d)(2). No doubt, these base circumstances are very different but, it appears to address the apparent need at that time to legally enable someone other than the participant to execute IRA Plan documents on their behalf.

I would be interested in any of your thoughts or discussions on this matter. A "Tempest in a Tea Pot" issue? Perhaps.

But with these kinds of transfers happening routinely these days, I would not want to be first on my block to have a high balance decedent IRA transferred by a non-spouse beneficiary disqualified on a document technically, remote that those circumstances may be.

Cordially,

David

As we were discussing amendments for our clients, we realized that for BEGINNING OF YEAR defined contribution (money purchase, target) pension plans, the 100%/40,000 limit will not kick in until plan years beginning 2003. Here's how it works:

The BOY plan has a valuation date of 1-1-2002. It therefore uses a limitation year beginning 1-2-2001, and ending on the valuation date of 1-1-2002. Since 415 limits are actually for limitation years (which normally coincide with the plan year, but not always), the increased EGTRRA 415 limits for DC plan will be for LIMITATION years beginning after 12-31-01. If you look at the example above, for such BOY plans, the limitation year beginning after 12-31-01 will be 1-2-02, and will be applicable to the PLAN year beginning 1-1-2003. Be careful with your illustrations or what you tell clients on such plans.

The above scenario applies to DC plan only, as the DB plan limitation year date is for limitation years ENDING after 12-31-2001.

I am self employed and operated at loss this year so i had no taxable income can I still make my yearly contribution to my Roth IRA?

Folks:

Am hoping for some feedback on this subject. Working with small company. Owner wants to keep his existing SEP plan and have the lone employee set up his own SEP. Each would remain within the limits provided by the plans. Also, no doubling up - just a plan for you and another plan for me.

Does this cause any particulars problems. And is illegal for any reason??

Many thanks.

Scott

Because Plans--apparently--have to affirmativly the types of transfers and rollovers they will and/or will not allow under the new EGTRRA portability rules, are there types of rollovers or transfers that a governmental 401(a) DC Plan and a 403(B) Plan should NOT accept? If so why not?

As one example, if an employee's former Plan allows after tax contributions should, should the current employer say no to the transfer or rollover of the after-tax portion of a current employee's rollover from that employee's former Plan?

As a second example, what would be the downside of a Plan Sponsor saying that ANY transfer or rollover of ANY sort from ANY other IRA, TDA or qualified plan is allowed?

A client just returned from a seminar on Form 5500s and asked whether use of a TPA's disbursement account to pay claims could adversely affect the self funded status of their health care plan (which has less than 100 participants).

The client sends fund to the TPA who pays claims on behalf of and reimbursements to participants from the TPA's own account (on the TPA's own check stock).

The seminar materials said "if the checking account was titled in the name of the TPA, the DOL may not consider the employer to be paying benefits exclusively from its genral assets. A separate checking acccount may give the employees the impression that the plan has an independent source of funds guaranteeing the payment of benefits."

Using a TPA's disbursement account does not strike me as something that should make a self-funded plan funded, but I seem to recall some concern about this a few years ago, and would like to hear if anyone can point me to something to reassure the client. Thanks for the help.

What software do people use to create SPDs? I have investigates the Corbel software and am looking for other options. Does everyone just cut and paste?