Client opened 2 different Roth IRAs and put $2,000 in each. Is there a penalty? What does he need to do?

Thanks to BPicker for your reply. The IRS

stated to me over the phone that I have

to pay the 10% penalty on the $2,000 contribution

I made to my Roth in 1998. So who is right,

you or them? They quoted some rules in

their Pub. 590 which state that conversions

*and* contributions are subject to the 10%

levy. Is there some other rule their

rep was not aware of?

thx,

Earl Baker

An employee of "Company A" who is on extended workers compensation leave is paying his portion of group health insurance with after tax money. Company A is continuing to subsidize its portion of coverage.

Employee's spouse has lost job with Company B and employee wants to add her as a dependent to his plan, in lieu of her selecting COBRA with Company B.

Can Company A require its employee to pay the full portion of dependent coverage for his spouse (no employer subsidy)? I am presuming there is no way to force the spouse to elect COBRA coverage.

I'm running the ABT and, in the classification portion, have a Rate Group Ratio EQUAL to the Employer's Plan Ratio Percent (which is the lesser of Plan and Safe/Unsafe Midpoint).

The end result is that Quantech says the test FAILS. It passes the Average Benefits Percentage portion of the test.

Is this correct? If so, do you have any ideas what I am overlooking?

Thanks.

Hi (I am a first-timer, can you tell?) I know the economy is slow now but I would like to advocate for a technology reimbursement program at my company. Do any of you know of such programs in other organizations and if so, what is involved? I know a large healthcare company had one as of a couple years ago. In order to improve employees' computer skills and keep them current/ahead, the company would reimburse the employee $500.00 for any of their technology purchases on an annual basis.

Thanks for your thoughts and experiences in advance.

(unknown author)

Count Your Blessings

If you woke up this morning with more health than illness ... you are more blessed than the million who will not survive this week.

If you have never experienced the danger of battle, the loneliness of imprisonment, the agony of torture, or the pangs of starvation ... you are ahead of 500 million people in the world.

If you can attend a church meeting without fear of harassment, arrest, torture, or death ... you are more blessed than three billion people in the world.

If you have food in the refrigerator, clothes on your back, a roof overhead and a place to sleep ... you are richer than 75% of this world.

If you have money in the bank, in your wallet, and spare change in a dish someplace ... you are among the top 8% of the world's wealthy.

If you can hold someone's hand, hug them or even touch them on the shoulder ... you are blessed because you can offer God's healing touch.

If you can read this message, you are more blessed than over two billion people in the world who cannot read at all.

Have a good day, count your blessings, and pass this along to remind everyone else how blessed we all are.

We have a takeover plan that has 2 owners (husband 51% and wife 49%), the daughter of the owners and a handful of other non-highly compensated employees. The cross tested allocation formula indicates 2 groups of classes - A & B. Class A is the non-shareholder employees and Class B is the shareholders of the company. My question is this: is the daughter considered a shareholder (Class b) for purposes of the allocation even though she doesn't directly own any of the stock of the company? I know for purposes of key employee and HCE, the stock is attributed to her, but what is the case for an allocation? She is the youngest employee with the company, so it will really make a big difference what Class she should be included in.

Thanks in advance for any feedback.

We have the safe harbor rules for withdrawals in our 401(k). I'm looking for an definition of "medical expenses" -- what qualfies? :confused:

We have an employee that's looking to take a withdrawal for cosmetic surgery, and while I feel that probably doesn't qualify, I'd like to be able to back it up.

Are top heavy minimum contributions subject to vesting?

As of July 1, 2001 you must file 1998 and ealier 5500 forms with the PWBA instead of the IRS. Do we now have to file future extensions (form 5558) with the PWBA or IRS? :confused:

:confused: the sponsor of a 401k declares bankruptcy and is then unavailable to the plan participants. The court ordered bankruptcy trustee is unwilling to deal with the plan. Participants call wanting their money, but we have no authorized signature to distribute the assets. Any idea on how to proceed?

We are making a QNC to restore a participant who missed deferrals in prior years.

Someone has told us that such QNC contributions are not deductible. Is this correct?

If so, would that impact using company matching forfeitures to fund the QNC? The matching contibutions were deductible of course.

As I understand it, a sponsor is not required to have an SPD for a Section 125 Plan, as it is not an ERISA plan. The underlying ERISA plan could require an SPD, ie. the health insurance plan whose premiums are being paid pre-tax.

If this is correct and I am pretty sure it is, why are most of the SPD's given to participants in Section 125 plans so long and complicated. They all seem to try and include the information required of ERISA plans. It would seem more of an effort would be made to keep the SPD simple and understandable, since there is no required language.

I would appreciate your thoughts.

I am curious to know if there is a ROTH Educational IRA, or is just an Educational IRA? And what is the annual contribution to them?

I realize this is one of those "gray area" in the realm of cafeteria plans but a client brought a cafeteria plan to me with a interesting default option. The client has been using this option for several years but now there has been a problem with an employee who forgot to make a new election during the open enrollment period. The plan has medical benefits designated as mandatory core coverage and each employee is given an employer allowance.

This plan, instead of simply using the evergreen election approach and rolling over the prior year's election, considers the participant to have selected the default provision. The default provision is the lowest cost employee-only health coverage. Here's the catch... the failure to re-elect causes the participant to forefeit his employer allowance and the cost of the default option is paid by salary reduction.

Has everyone ever seen a penalty provision like this in a 125 plan?

:confused:

What happens in a situation where the 5500 is prepared on an cash basis and the audited financial statements are prepared on an accrual basis? The actual Participant Summary is cash. I realize this makes it harder, but it is acceptable? Also, we have just switched from Accrual to Cash....on the 5500. Any help would be greatly appreciated.

We are making a QNC to restore a participant's account. Deferrals were suspended in 1998 due to the 402(g) limit and were not started again in 1999. The error was discovered in 2001.

The QNC will include make up for missed pre-tax deferrals, company match, and earnings.

Can we use our matching forfeitures for this if the plan document says that forfeitures are used to reduce "Company Contributions"?

Do you have to file one Form 5500 for a multiple employer welfare plan? If so, what should each participating employer file to satisfy their reporting requirements?

I am looking for the average expense nationally for 401(k) administrative and investment services. Does anyone know where such statistics might be?

When calculating the 15% deduction limit for a PS plan in 2001, can I include the full-year comp of a new participant who enters the Plan on July 1, 2001? The Plan will only recognize this participant's comp from July 1, 2001 on for purposes of allocation of a benefit.