Suppose a DB plan is amended to eliminate future benefit accruals (benefit "freeze"). At the time the amendment is adopted (or effective date, if later) A participant in this plan has a benefit governed by the 415 $ limit. For example, suppose his accrued benefit under the benefit formula at the time of the freeze is $8,000/mo, but the 415 $ limit is $6,000/mo. Since his accrued benefit under the formula is $8,000/mo, is he entitled to future benefit increases as the 415 $ limit is indexed, regardless of the benefit freeze? Or, since the 415 $ limits are presumably part of the plan document's provisions, can the benefit "freeze" eliminate entitlement to the 415 $ limit indexed increases?

A doctor is leaving his LLP group. He will receive a buyout over time for his equity interest in the partnership. In addition, he will be receiving his net realizable value of the receivables over the next 24 months. This is for work that he did while with the group and it will be taxed as ordinary income.

CPA thought that he could set up a SEP for this income. I do not think this would constitute earned income for self employment purposes as there is no trade or business being carried on by him. He has already performed the service while a partner with his former LLP. I don't see how he could set up a separate plan for this. I also don't see how he could continue to participate in his LLPs plan as his service has ended.

Comments?

Elderly IRA owner lost $$$ in IRA based on bad advice from an investment advisor. The worthless stock is still in the IRA. Lost $$$ is recovered.

Question: is the recovered money immediately taxable to the IRA owner, is it now considered part of the IRA portfolio, or can it be pocketed without tax consequences?

I have a client which was an employee of a very large company last year. In November my client bought a part of the company he worked for and it was moved to a new company. All of the employees which worked for the part that was purchased were terminated on December 15 and rehired the next day by the new company. Some of the employees still received paychecks until December 31 and deferrals were withheld.

We established a new plan on March 1 and then discovered that deferrals had been withheld for December but never submitted and still remain in the general operating account of the old company. Any suggestions about how this can be corrected without causing a huge problem?

I was recently laid off (This was perfect timing - my daughter was just born and I was planning on quitting and staying home being "Mr. Dad"! YIPEE!) and will eventually have to get my 401K into and IRA, then into a Roth IRA. Here are my specs:

-Wife and I are 33, with newborn (1 month).

-Married, file jointly.

-Her AGI was 25K last year, will probably be near 30K this year. My AGI will likely be close to 20K this year (only worked part of year). Our total AGI last year was 102K.

-I have 35K in my 401(k) plan ready to convert to IRA.

Question 1: After I convert my 401(k) to an IRA, should I immediatly convert it into a Roth, or should I wait until next tax year and convert it then?

Question 2: Assuming we are at the 28% tax rate this year, and the 15% rate next year (the cutoff being AGI +43K), would the tax for converting to Roth would be $9800 this year, $5250 next year?

Question 3: Do I have to snort all that tax money out my nose at once?

Just wondering if there are any terminated Nationwide PPA's which participate here. If so, would you please Email me regarding your contract termination and what has happened. We have recently been placed in this situation and I am concerned about our future. Any feedback would be appreciated.

In yr 2000, I contributed 2K to a roth IRA without realizing that there was a maximum income limit. Due to a severance package, I made in excess of the $95K max. While filing my taxes using Turbo Tax I realized I had to pay a penalty fee of about $90, which I paid because my investment was in tech stocks and worth 1/2 of its value. I have left the investment in the fund. In 2001, I will probably not hit the $95K income limit. Will I be penalized again if I leave the money in the Roth if I don't make more than the max income? Can I contribute another 2K in 2001 if I don't reach the max or do I have to skip a year?

I have an affiliated service group question.

Facts: Government contractor (Company A) is currently working on a contract where 50 employees are on Company A's payroll and qualified plan. On August 1, employees are transfered to Company C, the ensuing contractor on the project. This Company is 40% owned by Company A and Company B. Company B is 40% owned by Company A as well. Can Company A still keep the Company C employees on it's qualified plan, or must they role them into a new plan. Because of their relationships, Company A provides accounting and billing support to Company C.

If an employer wants to make a profit sharing contribution and allocate it as of 12/31/00, by when must that contribution be made strictly for allocation purposes? I realize the year of deduction and the year the amount is treated as an annual addition have rules laid out, and may cause contributions that are allocated in one year to be treated as annual additions and/or deducted in a different year. But I do not know of any rules restricting allocation dates. Could a contribution made on 12/31/01 be allocated as of 12/31/00? How about a contribution made on 1/15/02? Any cites?

Thanks for any input.

We have just discovered through background checks that we have a number of immigrants who have been working with our company using falsified social security numbers. These employees have been terminated from our company. Our question is, do we have to offer COBRA benefits to these employees?

Hello-

Has anyone come across a creative way to avoid the imposition of the 4978 excise tax? The ESOP at issue bought $11 million dollars of employer stock 1-11-99. As sale of the company is contemplated. I am looking for any ways to avoid or minimize the excise tax? Any thoughts?

The Eye, Nose & Throat LLC disolves, and three new business: Eye LLC, Nose LLC and Throat LLC are started. All of the employees from the original company perform their same functions at their respective brand new companies. There is no sale of assets. The 401(k) Plan from the original employer is terminated.

Are the employees of the original employer subject to the same desk rule?

Are the new employers restricted from beginning their own 401(k) plans (successor plans)?

Any guidance is appreciated.

I am trying to find a survey or study that will show how doctors/hospitals rate health plans (PPO's specifically). Currently with Cigna but group considering changing. Please send me links or places to look (already have IFEBP looking for me) for this kind of survey. My dream report would show several different health plans rated on various issues, such as fee's, timliness of paying, administration, etc. Thanks much fellow benefits dudes and dudettes.

After several attempts I have just received a copy of the 401k & mpp plan doc. from my former employer. As I was a plan trustee and did the 1999 y.e. calculations for both plans I was familiar with the plan's provisions as they applied to computation of er contributions and forfeitures. The plans I just received have been amended effective June 1, 1999 and "signed" Dec. 22, 1999. The 401k plan was previously a std. plan, now suddenly non-std w/ last day rule language and no loan provisions, which were present in the previous docs. I guess my first question is: are these docs legit. since I know for a fact they were drafted within the last 30 days to keep me quiet and back dated to when I was still an employee and plan trustee, never formally removed from either plan. Do I have any reason to be concerned that my trustee status could be in a fiduciary breach? I only left in Oct. of 2000 and these changes were never provided in a smm or verbally discussed by the owner of the co. Its pretty obvious that these plans were deliberately altered to eliminate 2 employees from receiving any 2000 plan year $.

How can my 6 year old max out in a Roth IRA? Does he have to show earned income? Are there ways to get around that?

I know part-time employees may not be excluded from participation in a 401(k)plan. Can an employer provide for different match formulas for part-time and full-time employees? Would this be illegal as non-discriminatory on its face, or would it depend on the outcome of the ACP test? (Most of the part-timers are NHCEs.)

Assuming the plan permits it, is there any reason why a 401(k) plan could not accept a rollover contribution (an eligible rollover distribution from the plan of a subsequent employer) by a former employee who is still a participant?

I am doing the GUST amendments to a DB plan where the only lump sum distributions permitted are involuntary cash-outs where the present value of the accrued benefit is under the cash-out limit. As amended for TRA '86, the plan provided in the specific provision governing cash-outs for use of the "applicable PBGC rate" determined as of the proposed distribution date. Elsewhere, in a general catch-all provision governing actuarial factors to be applied in general under the plan, it provides for use of an 8% interest rate and 1971 group annuity table (based on 50% male/50% female rates) with the exception that in calculating any lump-sum payment the interest rate to be used will be the interest rates for Valuation of Plan Benefits published for the preceding January 1 by the PBGC for purposes of valuing benefits with respect to immediate annuities under terminating plans covered by Title IV. I believe that this latter provision must have been retained in the plan for 411(d)(6) reasons -- in particular, it seems from reading IRS Notice 87-20 that the 411(d)(6) relief granted there w/re to the switch from the use of the immediate PBGC rate required under 1.417(e)-1T (the temporary regs issued under REA) for 1985 and 1986 to the "applicable PBGC rates" required under Section 1139 of TRA '86 was specifically conditioned upon not changing the date that the rate was to be determined. Here, the date was changed from January 1 of the year of a distribution to the actual distribution date. My question is, under the 417(e) regs as amended to reflect GATT, and in particular the 411(d)(6) relief granted there for switching from applicable PBGC rates to GATT rates, do you think that that relief also applies where the plan kept the immediate PBGC rate for January 1 of the year of a distribution as an alternative? In other words, can I substitute GATT rates for PBGC rates across-the-board under this plan without continuing to protect the use of the immediate PBGC rate for the preceding January 1 that seems to have been kept in the plan because there was no 411(d)(6) relief granted w/re to it back when the TRA '86 amendments were made? I have puzzled and puzzled over the 417(e) regs on this point and am nearly going crazy, so any help would be enormously appreciated!!! Many thanks for any thoughts.

GATT Tables for annuity to lump sum conversions (30 year bond %, monthly multipliers. male female and blended)does anyone know how i could get these off the net? or a book? My financial calculator, hp12c, cannot get the exact figures that are derived from these tables! THX

Taxpayer sold shares to ESOP in 1999. Taxpayer intended that sale qualify under Code section 1042. Sale satisfied requirements of section 1042 (i.e., ESOP owns at least 30% of stock, 3-yr holding requirement), but -- taxpayer did not file Statement of Election or Statement of Purchase with his 1999 Federal or State income tax returns. Taxpayer is considering filing an amended 1999 return and including such statements. And, we're considering requesting a private letter ruling that by filing amended return and statements, taxpayer should be treated as having complied with 1042 requirements. PLRs seem to distinguish between statutory requirements (e.g., the Statement of Election must be filed by due date for 1999 return under 1042©(6)) and requirements under regulations (e.g., notarized Statements of Purchase). I've seen conflicting PLRs where IRS granted relief even though Statement of Election was not timely filed, but other PLRs where IRS denied relief because Statement of Election was not timely filed. My question is: Does anyone have thoughts/comments on what the likely result of a PLR request would be under these circumstances?