It is my understanding that the schedule T is required to be filed every third year. There is a rumor going around in the office that if a plan started in 1999-or never filed a C/R that a schedule T never has to be filed for them. The question is, what exactly is the rule on when to file the schedule T. I couldn't find any documentation that would prove or disprove the above. The instructions just say you don't have to file one if your using the three year testing cycle and your relying on coverage information from prior year.

We have a NQDC plan for highly compensated employees and an employee has asked for a hardship distribution (which our plan allows) to purchase a second residence. He has stated that he has no other avenue for obtaining the money needed to buy the house. First, is there any IRS guidance relating to the issue of hardship distributions from NQDC plans (besides the section 457 regulations)? Second, if we make the distribution and the IRS later determines that it should not have been made, what are the possible consequences (e.g., will all plan participants be considered to be in "constructive receipt?")? Thanks!

A plan participant's spouse got sentenced to 125 years in prison. She wants to change her beneficiary designation to her children. The spouse in jail will not consent to waive his benefits. Does she have any recourse other than divorce?

FYI- I HOPE THIS HELPS THOSE WHO STILL HAVE INVALID ROTH CONVERSIONS- IT SEEMS , THERE IS HOPE

LTR-RUL, UIL No. 9100.00-00 Extension of time for making certain elections, Letter Ruling 200120040, (Feb. 20, 2001)

Letter Ruling 200120040, February 20, 2001

Uniform Issue List Information:

UIL No. 9100.00-00

Extension of time for making certain elections

This is in response to the *****, letter, submitted by your authorized representative, in which you request relief under section 301.9100-3 of the Procedure and Administration Regulations. The following facts and representations support your ruling request.Taxpayer A, who is unmarried, maintained IRA X, an individual retirement arrangement described in Code section 408(a) , with Company M. On or about December 28, 1998, pursuant to the advice of Individual B, his financial advisor employed by Company M, Taxpayer A converted IRA X to a Roth IRA, IRA Y, also with Company M.Taxpayer A's adjusted gross income for 1998 exceeded the limit found at section 408A©(3)(B) of the Internal Revenue Code. Individual C, an accountant, assisted Taxpayer A in completing his 1998 Federal Tax Return. However, Individual C did not advise Taxpayer A that he was ineligible to convert his traditional IRA, IRA X, to a Roth IRA, IRA Y. Additionally, Individual C reported Taxpayer A's December 28, 1998 IRA conversion as a rollover and did not report any portion of the converted IRA proceeds as taxable income. Thus, Taxpayer A did not pay Federal income tax on the IRA X proceeds which were converted to IRA Y.During the 1998 and 1999 calendar years, Taxpayer A believed that he was eligible to convert his traditional IRA, IRA X, to a Roth IRA, IRA Y. However, during calendar year 2000, Taxpayer A changed accountants and began using the services of Accountant D. Accountant D advised Taxpayer A that he was ineligible to convert IRA X, a traditional IRA, to IRA Y, a Roth IRA, because his income exceeded the Code section 408A©(3)(B) limit.Because Taxpayer A believed that his conversion of IRA X to Roth IRA Y was valid, he was unaware of the need to recharacterize IRA Y to a traditional IRA and, consistent with his belief, was unaware of the time limits found in Announcements 99-57 and 99-104 for recharacterizing an amount that had been converted from a traditional IRA to a Roth IRA. This ruling request was submitted before the Internal Revenue Service discovered the failure to recharacterize pursuant to said Announcements.Taxpayer A timely filed his calendar year 1998 Federal Income Tax Return.Based on the above, you, through your authorized representative, request the following letter ruling:That, pursuant to section 301.9100-3 of the regulations, Taxpayer A is granted a period not to exceed six months from the date of this ruling letter to recharacterize her Roth IRA, IRA Y, to a traditional IRA.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.Code section 408A©(3) , provides, in relevant part, that an individual with adjusted gross income in excess of $100,000 for a taxable year is not permitted to make a qualified rollover contribution to a Roth IRA from an individual retirement plan other than a Roth IRA during that taxable year.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 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.Announcement 99-57, 1994-24 I.R.B. 50 (June 14, 1999) provided that a taxpayer who timely filed his/her 1998 Federal Income Tax Return would have until October 15, 1999 to recharacterize an amount that had been converted from a traditional IRA to a Roth IRA.Announcement 99-104, 1999-44 I.R.B. 555 (November 1, 1999), provided that a taxpayer who timely filed his/her 1998 Federal Income Tax Return would have until December 31, 1999 to recharacterize an amount that had been converted from a traditional IRA to a Roth IRA.Taxpayer A timely filed his 1998 Federal Income Tax Return. As a result, although he did not treat the balance of his IRA X as taxable income on his 1998 Federal Tax Return, he was eligible for relief under either Announcement 99-57 or Announcement 99-104. However, he missed the deadlines found in said Announcements. Therefore, it is necessary to determine if he is eligible for relief under the provisions of section 301.9100-3 of the regulations.In this case, Taxpayer A was ineligible to convert his IRA X to Roth IRA Y since his adjusted gross income exceeded $100,000. However, until he discovered otherwise, Taxpayer A believed that he was eligible to convert his IRA X to a Roth IRA. Taxpayer A filed this request for section 301.9100 relief shortly after discovering that he was ineligible to convert IRA X to a Roth IRA and, as noted above, before the Service discovered his failure to comply with the Announcements referenced above. Calendar year 1998 is not a "closed" tax year.With respect to your request for relief, we believe that, based on the information submitted and the representations contained herein, the requirements of sections 301.9100-1 and 301.9100-3 of the regulations have been met, and that you have acted reasonably and in good faith with respect to making the election to recharacterize your Roth IRA as traditional IRAs. Specifically, the Service has concluded that you have met the requirements of clauses (i), (iii) and (v) of section 301.9100-3(B)(1) of the regulations. Therefore, you are granted an extension of six months from the date of the issuance of this letter ruling to so recharacterize.No opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the Code or regulations which may be applicable thereto.

This letter is directed only to the taxpayer who requested it. Section 6100(j)(3) of the Code provides that it may not be used or cited as precedent.

Pursuant to a power of attorney on file with this office, a copy of this ruling letter is being sent to your authorized representative.

Sincerely yours, Kenneth T. Yednock, Manager, Employee Plans Technical, Tax Exempt and Government Entities Division.

I work for a large Publicly Held company that owns 4 different division. I just recently transfered from one division to another division. What I found out was that my portion of my premium for my insurance will rise by 3x's the amount. When I questioned the President of this division of why my portion of my premium will rise she said that she does not pay for dependent coverage like the corporate office. My question is ... is it legal to have the same corporate company offering different employee contribution from one division to the other. YES it is the same insurance for all divisions. The corporate office and all of the other divisions pay $30.40 biweekly for employee/dependent coverage. This division charges $93.25 bi-weekly for employee/dependent coverage for the same insurance. It seems to be an unfair situation not just for me but for the other employees of this division. So my question is ... is it legal?

If you are a division of a large corporation is it ilegal to make one division have their employees pay for more of their health/life/dental coverage than another division?

__________________

Laurie

Does anyone know if investing in a GIC would require the completion of a Schedule D?

Thanks for your help!

A multi-employer Welfare plan provides health benefits to employee - members only, not dependents. May the Welfare Fund pay to educate and enroll the members' dependents in government sponsored medicaid programs when the trust agreement specifically provides that contributions may only be used for the exclusive purpose of providing health benefits to employees?

Company A is merging with Company B. Company B's plan will merge into Company A's plan. Company B's plan document states that, upon a plan merger, account balances will be treated as if the plan is being terminated - hence, balances will become 100% vested. If there are terminated employees in Company B's plan who still maintain partially vested account balances, must ALL these balances be made 100% vested, or is there guidance on how far back one must go back to vest up? Only terms with less than 1 year break will be vested? 5 year break?

I read an article which discussed the ability of participants to defer the receipt of stock issued upon the exercise of non-qualified stock options into a non-qualified deferred compensation plan. Can this still be done? Also, can a participant defer the receipt of restricted stock received as a bonus into a deferred compensation plan?

If Company A hires all of the employees of Company B (all of whom terminated employment with Company b), but no sale or merger is involved, and the companies are not related (not a controlled group, affiliated service group, etc.), can the "same desk rule" apply? The employees continue to perform their same job duties, but now for a new, unrelated company and without any sale or merger.

What exactly is the definition of compensation under a 5304-SIMPLE plan if the employee participates in a Section 125 plan (for the employer adopting the SIMPLE)? Example: Gross Pay=$30,000, Sec. 125 withholding for daycare, medical spending, and insurance premiums=$10,000. Compensation subject to Federal Income Tax (before SIMPLE deductions) = $20,000.

A participant had been separated from his wife for 10 years (not a legal separation). Recently the wife and participant started divorce proceedings and a property settlement agreement was filed with the court in which the wife waived her right to benefits (50% QPSA) under the husband's money purchase & 401(k) plans. The settlement agreement does not meet ERISA requirements for a waiver of benefits (no notary, witness etc). The husband designated a beneficiary other than the spouse (no spousal consent) and died before the divorce was completed. Does anyone know of any cases or theories which may be helpful to the designated beneficiary in establishing the waiver of benefits in the settlement agreement as a waiver of the QPSA?

What is a great International Benefits Survey? Are employers offering their Canadian employees medical insurance? Are employers offering their Korean employees dental insurance?

In light of the First Union and related lawsuits, I'm interested in finding out what financial institutions and mutual fund companies are doing with their own 401(k) Plans? Are most of them offering only their own mutual funds? Proprietary and non-proprietary funds? Do the mutual fund companies offer the whole family of funds to employees in their own 401(k) Plans or only a selection? Any ideas of where to go to find out this kind of information? I am striking out with the various consulting companies.

A plan failed to prohibit participants from making elective deferrals during the 12-month period following their hardship withdrawals. The safe-harbor correction involves returning the mistaken deferrals. But how do you implement this correction with respect to participants who have already terminated and taken a distribution of their mistaken deferrals?

Has anyone out there worked with a program where the employer pays for or subsidizes the purchase of a PC / internet access for employees? (like Ford, Delta, etc. have implemented) I'm looking for general information on program guidelines and associated costs.

Thanks!

An employer has a discretionary match that maximizes at 3% of compensation. He has made this contribution for his employees during the first four months of this plan year. He has a discretionary profit sharing provision that he has not been using. The plan is top-heavy.

He is going to drop the match and initiate a 3% discretionary profit sharing contribution to maintain the same percent of pay for the participants while satisfying the top-heavy minimum. He does not implement a Board of Directors resolution to communicate either types of discretionary contributions.

Is there a problem to view or recharacterize the first four months of employer contributions as profit sharing contributions rather than matching contributions. Both types of employer contributions have the same eligibility requirements and vesting provisions.

Are withdrawals from 401(k)s to pay for Investment Advisor Fees on that account considered taxable income and subject to any 10% early withdrawal penalty?

Are withdrawals from IRAs (Roth or Conventional) to pay for Investment Advisor Fees on that account considered taxable income and subject to the 10% early withdrawal penalty?

Are withdrawals from IRAs (Roth or Conventional) to pay for Investment Advisor Fees on that account considered taxable income and subject to the 10% early withdrawal penalty?