Can anyone confirm whether an individual with an account under a SEP will be able to rollover those funds to a qualified plan under the new EGTRRA rules? The new law does not make specific reference to rollovers from SEPs to other types of plans. However, since SEPs are generally subject to the same distribution rules as IRAs, can we now assume that a rollover will be permitted between a SEP and a qualified plan beginning in 2002?

We are a public college system. We are considering contracting for the administration of our 401(a) DC Plan.

The contract would be for virtually all administration except on-site enrollment and offering investments. (The on-site enrollment would be done by the colleges' H.R staff. The investment options and participant account record-keeping would be provided by separate "Fund Sponsors" that the TPA would help select).

We need sample contracts for the above--especially information about the manner and amount of compensation to the TPA.

Thanks

In the prior year, the sole assets of a defined contribution plan were allocated insurance/annuity contracts. Therefore, there was no audit requirement and the contracts were only reported on Schedule A of the 5500.

In the current year, the plan has both allocated and unallocated contracts and an audit will be required. The allocated contracts will still be excluded from the plan financial statements and only be reported on the Schedule A.

Does this change the testing of participant data? Since the allocated insurance contracts are excluded from the plan's financial statements, they will not be covered by the auditor's report. Do I need to perform any testing on the individual participant's holding these allocated insurance/annuity contracts?

Also, is the fact that the plan allows these investments usually footnoted and, if so, with or without amounts?

Please provide any references/sources that you have found on this subject.

In the summaries of HR1836 I have not seen mention of the ability to use IRA funds to purchase service credit in governmental DB Plans. I was under the impression that was part of the legislation. Is it? Is the IRS working on rules on how it is to handled?

I think I would like to start a Roth IRA account. I have an existing traditional IRA but I am 28 and don't have a ton in there yet. I would think changing it over now would help me more in the long run. My question is, should I expect to have to pay fees and commissions on a Roth IRA? Can you recommend where I would go to start one (pref. with no fees and commissions)?

I recently started an Roth IRA account for two purposes. One being for retirement and two for help in saving for my new borns college. I was told that there would be no penalty for deducting from the account as long as the money was going to a educational institution. Is this correct?

A surviving spouse was treated as having received proceeds from an individual retirement account (IRA) that were owned by her deceased husband and, therefore, was a payee or distributee of the IRA. However, to the extent that the amounts standing in the IRA were directly transferred to one or more IRAs maintained in the name of the surviving spouse, the transferred amounts were includible in the surviving spouse's gross income since the proceeds were not rolled over within the applicable time period.

Letter Ruling 200126038, April 4, 2001

LETTER TOO LONG- THIS SITE IS RESTRICTED TO 10,000 WORDS FOR POSTING

Letter Ruling 200126040, April 4, 2001

Extension of time for making certain elections

This is in response to the *****, letter, submitted by your authorized representative on your behalf, as supplemented by correspondence dated in which you request relief under section 301.9100-3 of the Procedure and Administration Regulations.Taxpayer A is married to Taxpayer B. Taxpayer A and B file joint Federal Income Tax Returns.During December, 1998, Taxpayers A and B converted several traditional individual retirement arrangements (IRAs) to Roth IRAs. Taxpayer A converted IRA V in the amount of Sum E to Roth IRA Y. Taxpayer B converted IRA U in the amount of Sum C to Roth IRA W. Additionally, Taxpayer B transferred Sum D from a traditional IRA to Roth IRA X.IRA U and Roth IRA W either were or are maintained with Company M. IRA V and Roth IRAs X and Y either are or were maintained with Company N.The conversion of the traditional IRAs to the Roth IRAs by Taxpayers A and B, summarized above, were accomplished at the suggestion of their broker. Your authorized representative asserts, on your behalf, that Taxpayers A and B either were misadvised by the agent of their broker or misunderstood his instructions so that they believed that they could convert their traditional IRAs to Roth IRAs as long as their adjusted gross income for the year of conversion did not exceed $150,000. Additionally, your authorized representative asserts that Taxpayers A and B either were misadvised by the agent of their broker or misunderstood his instructions so that they believed that they had until April 15, 1999 to convert their traditional IRAs to Roth IRAs. Finally, they believed that they had until April 15, 2000 to reconvert their Roth IRAs to traditional IRAs if necessary.Taxpayers A and B became aware of their inability to convert their traditional IRAs to Roth IRAs during calendar year 2000 when their 1998 Federal Tax Return was being prepared. Taxpayers A and B had previously filed for an extension of the filing date with respect to their 1998 Federal Income Tax Return and, as asserted by your authorized representative, paid the amount that would have been due on said 1998 return if they could have converted their traditional IRAs to Roth IRAs.As of the date of this ruling request, Taxpayers A and B have not filed their 1998 Federal Income Tax Return. Additionally, as of the date of this ruling request, Taxpayers A and B have not reconverted their Roth IRAs to traditional IRAs.Taxpayers A's and B's Federal adjusted gross income for 1998 (calendar year 1998) exceeded $100,000.This request for relief under section 301.9100-3 of the Procedure and Administration Regulations was made pursuant to the advice of Taxpayer A's and Taxpayer B's accountant and was filed shortly after Taxpayers A and B discovered that they were ineligible to convert their traditional IRAs to Roth IRAs because their adjusted gross income exceeded permissible limits.Based on the above, you, through your authorized representative, request the following letter ruling:That, pursuant to section 301.9100-3 of the regulations, Taxpayers A and B are granted a period not to exceed six months from the date of this ruling letter to recharacterize their Roth IRAs to traditional IRAs.With respect to your request for relief under section 301.9100-3 of the regulations, section 408A(d)(6) of the Internal Revenue Code and section 1.408A-5 of the Income Tax Regulations provide that, except as otherwise provided by the Secretary, a taxpayer may elect to recharacterize an IRA contribution made to one type of IRA as having been made to another type of IRA by making a trustee-to-trustee transfer of the IRA contribution, plus earnings, to the other type of IRA. In a recharacterization, the IRA contribution is treated as having been made to the transferee IRA and not the transferor IRA. Under section 408A(d)(6) and section 1.408A-5 , this recharacterization election generally must occur on or before the date prescribed by law, including extensions, for filing the taxpayer's federal income tax returns for the year of contributions.Section 1.408A-5 , Question and Answer-6, describes how a taxpayer makes the election to recharacterize the IRA contribution. To recharacterize an amount that has been converted from a traditional IRA to a Roth IRA: (1) the taxpayer must notify the Roth IRA trustee of the taxpayer's intent to recharacterize the amount, (2) the taxpayer must provide the trustee (and the transferee trustee, if different from the transferor trustee) with specified information that is sufficient to effect the recharacterization, and (3) the trustee must make the transfer.Section 1.408A-4 , Q&A-2, provides, in summary, that an individual with modified adjusted gross income in excess of $100,000 for a taxable year is not permitted to convert an amount to a Roth IRA during that taxable year. Section 1.408A-4 , Q&A-2, further provides, in summary, that an individual and his spouse must file a joint Federal Tax Return to convert a traditional IRA to a Roth IRA, and that the modified adjusted gross income subject to the $100,000 limit for a taxable year is the modified AGI derived from the joint return using the couple's combined income.Sections 301.9100-1 , 301.9100-2 , and 301.9100-3 of the Procedure and Administration Regulations, in general, provide guidance concerning requests for relief submitted to the Service on or after December 31, 1997. Section 301.9100-1© of the regulations provides that the Commissioner of the Internal Revenue Service, in his discretion, may grant a reasonable extension of the time fixed by a regulation, a revenue ruling, a revenue procedure, a notice, or an announcement published in the Internal Revenue Bulletin for the making of an election or application for relief in respect of tax under, among others, Subtitle A of the Code.Section 301.9100-2 lists certain elections for which automatic extensions of time to file are granted. Section 301.9100-3 of the regulations generally provides guidance with respect to the granting of relief with respect to those elections not referenced in section 301.9100-2 . The relief requested in this case is not referenced in section 301.9100-2 .Section 301.9100-3 of the regulations provides that applications for relief that fall within section 301.9100-3 will be granted when the taxpayer provides sufficient evidence (including affidavits described in section 301.9100-3(e)(2) ) to establish that (1) the taxpayer acted reasonably and in good faith, and (2) granting relief would not prejudice the interests of the government.Section 301.9100-3(B)(1) of the temporary regulations provides that a taxpayer will be deemed to have acted reasonably and in good faith (i) if its request for section 301.9100-1 relief is filed before the failure to make a timely election is discovered by the Service; (ii) if the taxpayer inadvertently failed to make the election because of intervening events beyond the taxpayer's control; (iii) if the taxpayer failed to make the election because, after exercising reasonable diligence, the taxpayer was unaware of the necessity for the election; (iv) the taxpayer reasonably relied upon the written advice of the Service; or (v) the taxpayer reasonably relied on a qualified tax professional, including a tax professional employed by the taxpayer, and the tax professional failed to make, or advise the taxpayer to make, the election.Section 301.9100-3©(1) (ii) of the temporary regulations provides that ordinarily the interests of the government will be treated as prejudiced and that ordinarily the Service will not grant relief when tax years that would have been affected by the election had it been timely made are closed by the statute of limitations before the taxpayer's receipt of a ruling granting relief under this section. 

cONTINUED- MESSAGE TOO LONG FOR ONE MESSAGE

Noticifcation to individual of period of preexisting condition exclusion as required under HIPPA. Section 2590.701-5(d).

Does anyone have a sample of this Notice that they would be willing to share. The Notice is given to an employee to notify them of the waiting period for preexisting condition. The DOL is citing an Employer pension client of mine for not furnishing this notice to their employees. HIPPA enforcement regulations call for the enforcement of HIPPA by the state for insured Health Plans . I'm not sure why the DOL is chasing this employer for this notice, and not the Insurance Health Provider, which in this case is a Blue Cross Insurer.

Thanks

Jim

A client of mine currently has a self administered 403(B) with 18 different vendors. They are freezing the contributions to those vendors and starting a new 403(B) with a single vendor who will also provide administration. Are there any requirements of the new administrator regarding the 403(B) assets already in place with the 18 prior vendors? Is there any recordkeeping or administration requirements for these outside assets.

Joe P.

I have been asked to speak at a seminar for the board of a government sponsored retirement plan and need some presentation materials.

The topics are "The role of the board and the investment policy" and "Conflicts of interest facing a fiduciary".

Does anyone have any sources?

A friend told me of an orginization that sponsors seminars for public plans called Nez Perce. Has anyone heard of this group.

Thanks.

Dr. A retired from his practice that his colleague is continuing; thus the Plan survives. Dr A has a life insurance policy as a Plan asset and has received a distribution of all of his account balance but for the life policy. It cannot be rolled over into an IRA, nor does Dr. A desire to take ownership of the policy and pay taxes on this distribution to him. So he's left it in the Plan hoping that his old collegaue does not someday terminate the Plan prior to Dr. A's death and force the distribution to him.

Dr. A has a tree farm but did not want to set up a plan for the tree farm. But could he set up a 0% money purchase plan to accept the distribution of the life insurance policy? The policy has sufficient value such that premium payments are being funded internally by the policy itself.

What is the downside of this approach?

I would like information on the typical matching contributions that software companies are using

If you get a hardship withdrawal to pay a dependent's college tuition, will you have to prove that you used the money for that tuition when you file taxes? What if you don't use the money for tuition?

Scenario:

The Plan Trustee is planning a change in plan investments. The plan currently offers both fixed and variable annuities w/ A insurance company). The Trustee is planning to move all funds from A to B (mutual fund company), which of course does not offer a fixed annuity product. The "market value adjustment" to liquidate the fixed annuity product will result in a substantial penalty to participants at this time. The fixed contract allows an employee to move 20% of their fixed account each year without incurring the market value adjustment.

Question:

Can the trustee require each employee to liquidate 20% of their fixed account each year to help move toward the day when all funds will be with B, while attempting to minimize the market value adjustment? Will this require a plan amendment or is the trustee's decision, together w/ appropriate employee notice to those affected employees sufficient?

Is anyone aware of any guidance as to how long a time is "reasonable" for purposes of 72(p)(2)(B)? I have a participant who is applying for a 20 year loan for acquisition of a dwelling unit now that is intended to become the principal residence in 18 months (individual is intending to live there after retiring in 18 months). Is 18 months a "reasonable time"?

Does anyone have any thoughts on permissible exceptions (if any) to the requirement that a waiver be irrevocable under the 401(k) regs (perhaps for an extended period of time, say 10 years or so). I'm including the thread under this category instead of the 401(k) heading because the waiver that I am contemplating would be from an integrated profit sharing plan. I'm not sure that there are any exceptions, but if anyone can think of one, please give me your ideas.

My wife and I have been contributing to our ROTH IRA for 3-4yrs now. We are in the process of purchasing our first home and were wondering if we could use some of this money from the Roth towards the down payment?

If so, are there any stipulations and how do we go about doing this?

Thanks,

Ian

An S-Corp has two employees,both of whom are owners. The corporation establishes a PS plan for calendar year 2000,then decides not to make a contribution.They now have a plan with two participants and zero assets. I can't find anything that exempts them from filing a 5500 for 2000,but it doesn't make sense to report on a plan that has no assets. If they were partners instead of owners they would not have to file a 5500EZ until they had $100,000 in assets.Has anyone run into this situation before?

A W2 is issued for military retired pay and income tax is paid on this income. Therefore, as I asked previously, is this considered as income for the purpose of contributing to a Roth IRA?