If spouse is one of multiple beneficiaries, but whose life expectancy is the shortest for purposes of determining the applicable distribution period following IRA's owner's death, how is spouse's life expectancy calcuated? Is life expectancy determined in year following death and then reduced by one for each year thereafter or is special spousal recalculation applied?

Could anyone point me to the cite, regulation, ruling etc. which specifically states that as long as both the distributing and accepting plan have provisions which allow for direct rollovers of loans from one qualified plan to another, it is permissible to roll over loan balances.

Can anyone point me to articles on the internet or elsewhere which discuss issues relating to the merger of a 401(k) plan and an esop into a ksop?

I have a profit sharing plan that is in the process of terminating. The plan holds warrants that do not expire until April, 2002. All assets have been distributed except for these warrants. Any ideas on what to do about this asset or are we just stuck until the expiration date comes up?

FACTS:

I have a three owner LLC who sponsors a 401(k) plan. Net earnings from self employment for one of the partners is negative (the use of guaranteed payments to partners allows self employment earnings to be different between the shareholders, even though the profit/loss split is 1/3 1/3 1/3). This partner deferred. My understanding is that in this situation, he should not have deferred because he had no "compensation" from which to defer.

QUESTIONS:

I presume the deferrals and appropriate earnings should be distributed. Can this be done via self correction?

Because he had no "compensation" for the year - is it correct that he is not reflected on the ADP test at all?

A curiosity question - how are other people handling the fact that self employment earnings is not usually known prior to the March 15th testing deadline - e.g. how do you handle damage control for a client who wants refunds prior to 3/15 but can't get them because their CPA won't provide me w/ net earnings from self employment in time to run the test?

Thanks for any help!

My wife and I recently found out (by using TurboTax)that we shouldn't have contributed to a Roth IRA in 2000. It says we will get a penalty because our income was over the limit (due to selling stocks). We have "backed out" the $2K Roth and have received the $2K. What, if any, is the penalty for this? Will we even get a penalty since the Roth was basically dissolved? Or was it dissolved too late since we contributed in 2000 but dissolved it in 2001?

Thanks for any advice.

I have a 401(k) plan where, during 2000, a number of employees were reported to the recordkeeper as terminated, when in fact they had only transferred to another division. About 100 of these actually took impermissible distributions. We are now trying to correct this.

Unfortunately the recordkeeper was changed (from one major bundled provider to another) as of January 1. The taxes were remitted and 1099-R's issued by the old recordkeeper. Needless to say, they refuse to have anything to do with the cleanup.

My two concerns are (1) getting back the withheld taxes remitted by the prior recordkeeper under their own tax ID number, assuming that the participant repays the portion he/she received; and (2) dealing with the 1099-R situation if the person repays. There may also be participant loans involved, and those will need to be dealt with on a case by case basis.

Does anyone have any suggestions as to how to deal with these issues?

Is there any notice that is required to be given to a terminated participant who has requested a distribution that the plan assets have been revalued as of a certain date? Our current administrative forms do provide for informing the participant that "as of _________ (date), the value of your account under the XYZ Plan was $??????" . I would think that it would be sufficient to reflect the interim valuation date within that blank and answer any participant questions that may arise rather than notifying all participants that an interim valuation was done as of ???? date and for the following reasons: 1,2,3,4,5,....

Anyone have any comments? Thanks in advance.

A client maintains a self insured medical plan subject to the 105(h) discrimination rules. They want to cover one group of employees (Group A) after 90 days, while making another group of employees (Group B)wait 1 year.

Under the Code and the Regulations, this would seem to be OK, since we are allowed to disregard all employees with less than 3 years of service in applying the 105(h) test. However, I know that there were a series of PLRs in the early 1980s which said otherwise(8432036, 8411050, 8411051, 8336065). The IRS argued in those rulings that while the plan met the eligibility test, it failed the discrimination in benefits test in any case where a HCE received benefits early (in this case, before 1 year).

My question is, does anyone know whether this is still the IRS position? Are they enforcing it on audit? Anyone seen any litigation on this issue? It seems that some plans are ignoring the issue, since different eligibility provisions are fairly common.

Regarding Simple 401(k)'s: Does the top heavy test have to be performed? ( I know it doesn't for Simple IRA's )

Also, would a standard prototype document work for use with the Simple 401(k); Under match just reuqire the mandatory amount?

Thanks in Advance

Under a self-insured plan, if the employer contribution (for active employees) DECREASES, but the employee contribution (for active employees) REMAINS THE SAME, do we have to DECREASE the COBRA rate?

I am trying to identify what the top HR concerns are for those in the banking industry. (i.e. is it high turnover of customer service employees, providing competitive benefits, etc.) Anyone out there in HR in banking industry that can identify some of these top concerns for me? Large banks especially.

Hi. The proposed MRD regs. provide that a designated beneficiary may disclaim their benefit. All the articles I have read discuss this from an IRA perspective. In light of the ERISA and IRC antiassignment and alientation laws, is a disclaimer allowed under a qualified pension plan? Under the antiassignment and alienation rules, the participant or beneficary may make a voluntary assignment of their benefit but it is taxable income to the participant or beneficairy, whereas a disclamer would be taxable income to the new person. The only reasoning I can think of why a disclaimer would be allowed under a qualified plan is that under the proposed rules the beneficairy must be recognized by the plan by 12/31 in the year after the participant's death. To the extent disclaimer rules generally require that it be made in 9 months and the plan has 12 months or more to recognize the designated beneficiary, the designated beneficiary would essentially be designating a new beneficiary for the participant via the disclaimer. If this is true then the plan sponsor must adopt the model amendment before accepting a disclaimer. Any insights you have will be most helpful. Thanks

Does anyone else think the new simplified rules for Required Minimum Distributions just got confusing for 2001? The IRS seems to have clarified that plan participants can use the new rules to calculate the amount of their Required Minimum Distribution (RMD) despite the plan not being amended to use the new rules for 2001. In that case, why not just make the rules effective for 2001? Does the plan sponsor have any obligation to calculate the RMD under the new rules and inform the participant that the participant is allowed to use those rules even though the plan did not? Does it make any sense that the plan would not have to do 20% withholding but the participant could roll over the amount of the difference? Should TPAs just have every plan sponsor adopt the amendment to avoid any confusion?

Reg 1.417(e)-1(d)(1) says that the PVAB of any optional form of benefit must be at least equal to the PVAB of the normal retirment benefit determined under the app interest rate and app mortality table.

Reg 1.417(e)-1(d)(6) seems to imply that d(1) does not apply to say a life annuity pension form for eg.

My original thought was that say a reduced early ret. benefit must be at least equal to the PVAB of the normal ret benefit under the app. factors, but based on the above it appears that this may not be the case.

Any thoughts about this one?

Gary

We have been approached yet again by a marketer who claims that under IRC Section 106, an employer can save huge amounts of money by withholding 100% of the health insurance premium on a pretax basis and then also reimburse the employees for that amount on a pretax basis. Does anyone have any experience with this sort of "double dipping"? Thanks.

How does your company respond to ee requests for ergonomic accessories e.g. back rests, monitor risers? Assessment by Worker's Compensation carrier already confirmed ergonomically compliant workstation and chairs? Can we request medical documentation for accessories above and beyond?

I opened a Roth IRA in Jan. 2000. Do I have to report interest made on it to the IRS on my federal tax return?

I was b Aug 1932. Which of the following dates is the

latest date for me to transfer my traditional IRA to a Roth? Dec 31,2002 or Jan 3, 2003.

I am 50, annual income 10,000. My husband is 53 annual income 40,000 (25,000 taxable). Neither of us have a retirement plan other than Social Security. We could probably invest between 3000 and 5000 a year until he reaches 65(12yrs), Would an IRA or Roth IRA be a good thing to get or is there any hope for us this late in the game? Thanks