I mistakenly had taxes withheld from my conversion from my IRA to my Roth IRA. Schwab is telling me I can't redeposit those funds even though it's within 60 days. Is anyone aware of a law that says I can't redeposit the amount I withheld for taxes thereby avoiding a penalty. I know I can't get my original tax withholding back but why couldn't I redeposit the same amount and have my original tax withholding just represent a tax credit. Please help. Schwab is telling me I can't do this but if the conversion tax withholding is a penalty distribution then I have 60 days. Correct?

Can a sole proprietor (no employees) make his employee elective contribution for 2000 as a $6,000 lump sum now (by the 2000 tax filing date), or was he required to make regular contributions throughout 2000?

The Florida Legislature has directed the Office of Program Policy Analysis and Government Accountability to conduct a special review which will explore the feasibility of privatizing Florida’s Division of Retirement. The Division of Retirement is responsible for administering Florida’s statewide retirement system and providing oversight of retirement plans administered by local government. The Division’s services include distributing benefit payments to retirees and beneficiaries, determining eligibility for benefits, enrolling members, maintaining retirement records, counseling members on their rights and benefits, and processing requests for benefit estimates.

As part of this review, our office is examining other states’ efforts in privatizing or outsourcing the administration of state retirement systems. We would appreciate the assistance in identifying 1) states that have outsourced or attempted to outsource some or all of their retirement benefits administration, and 2) private contractors who can provide some or all of these services.

Any information, such as contact names and phone numbers or recent research efforts in this area, would be greatly appreciated.

Respectfully,

Marti W. Harkness

Senior Legislative Analyst

Office of Program Policy Analysis and Government Accountability

Florida Legislature

On Roth IRAs, what constituts Hardships under the rule for withdrawing qualified contributions early?

I'm confused by something I've been reading about the alternative flat benefit safe harbr non-discrim test. I'm wondering if using the AFBSH test to pass 401(a)(4) necessitates the use of the average benefits test to pass 410(B)?

401(k)Plan Sponsor receives a request from an employee to increase 401(k) contribution rate from x% to y% in 1999. Employer reports change to recordkeeper but fails to process the request on payroll. Therefore, the employee continues to contribute to the Plan at the rate of x% instead of y%.

Employee never notices the error and the error is now identified by the sponsor. The participant's quarterly statements have all reflected the participant's actual contributions at the rate of x%. However, each quarterly participant statement incorrectly contained the following statement:

"Your currrent contribution rate is y%"

As a result of this error, the participant received compensation that should have been deferred into the Plan.

The employee is an NHCE. No matching contribution was lost due to this error because the Plan does not match contributions in excess of x%.

Is the Sponsor required to take any corrective action?

Is it permissible to file a copy of a 1999 optically scannable form,or are only originals allowed?

How have you been handling the reporting of IBNR claims on 5500 Sch H? The 1999 Form 5500 instructions were changed to include IBNR claims on line 1g, benefit claims payable. In prior years the IBNR claims were not to be included in benefit claims payable, only claims processed and approved for payment were included. The instructions are silent on how to handle the adjustment caused by the change in presentation.

It would seem our choices are to change the prior years claims payable to include IBNR, which even if explained will probably result in a notice from the DOL, or to run the prior year change through the current year expense, which I am not in favor of since it can result in a large loss for the current year.

The DOL help desk told me it is an issue that has not been addressed yet and they suggested amending the prior year 5500 to include IBNR and showing the new amount in the beginning of year column on the 1999 Sch H. This results in increased fees for the plan to have the amended return prepared.

How have you been handling this?

Does anyone have the telephone number for Covington. Thanks.

In the past three months, I have been asked to assist three separate clients with the same plan error:

Each client sponsors a qualified plan and is a member of a controlled group of corporations. The plan documents each allow "Employees" to participate in the plan after satisfying the age and service requirements. An "Employee" is defined as any employee of the "Employer." "Employer" is defined as the plan sponsor and any member of a controlled group, Affiliated service group, etc. The sponsor, however, has only allowed its own employees to participate and not employees of other members in the control group. I plan to use Walk-IN CAP to seek a retroactive amendment to conform the plan with prior practice. Treating this as an operational failure will get very expensive! Each client is a small company owned by a large parent

Help- Agree or Disagree? Suggestions?

I have a prospective sole-proprietor client with a money purchase and a profit sharing plan, who has never filed a 5500EZ. The plans were established in 1990, and assets exceeded 100K prob in 93 or 94. Does anyone have any experience on what penalties the IRS will assess if he comes forward voluntarily and files all the late 5500EZ's now? Or, does anyone have any experience on how the IRS may treat this if discovered during an audit?

OK - statutory exclusion question. Lets say an employee is hired april 1, 1999 and terminates august 1, 2000. I think you can exclude this person. Statutory entry dates can be the earlier of the first day of the plan year or six months after meeting the statutory 1-year requirements. This person was not employed six months after completing 12 months. Any thoughts?

If a tax exempt employer is funded by various Federal, State and local government grants, would they be considered an instrumentality of the government? They provide employment training for a county in PA.

The reason I ask, is that they are currently sponsoring a 401k plan, but I am lead to believe that they may not be an eligible employer. How is a government agency or instrumentality defined? Does anyone know of any additional questions I need to ask in order to properly assess taking over the admin for this employer?

Thanks

Has anybody run across an “automatic increase form” for a fidelity bond which says something like this: “ At inception of this policy, if you have a Limit of Insurance for your Plan that is equal to or greater than the amount of insurance required by ERISA, we will automatically increase the Limit of Insurance to be equal to the amount required by ERISA at the time the loss is discovered.”

Our firm is fairly new to Quantech. This is our first time with them for the end of year. I have already asked Quantech about Safe Harbor plans and they said they don't have the ability to run them yet, does anyone know how to run a New Comp Plan where the Employer contribution is based on different classes?

I'm looking for help with the "consistency rules" under a 125 cafeteria plan that allow to have employees make changes mid year to an election if they have a life event and the change is consistent with the life event. If an employee gets married, we know they can add a new spouse to an HMO. If they say their new spouses doctor does not participate with the HMO, can we allow a change to our indemnity option. Are we stretching the consistency rules?

Can anyone provide cites or tax code reference that shows that distributions to a spouse via a DRO, rolled into a "Traditional IRA" not a "Conduit IRA" can be rolled back into another qualified plan as long as the "TIRA" never had other assets?

Next - is there a cite that says it cannot be done?

Suggestions? We have a client who will be recieving a distribution from her now ex-husband but would like to roll it into her existing 401(k) - can this be done via a QDRO distribution?

Employer's health plan was canceled for issuing bad checks. I was placed on disability due to a lung transplant and elected COBRA coverage. I filed out the forms and sent in six months premimums (six checks) October and Novembers checks were cashed. Now I learn from insurer that coverage for the group was canceled October 1st because employer submitted NSF check. I was notified in late December long after 62 days had passed. Now I am uninsurable. What rights do I have and how do I procede?

A matching contribution and safe harbor contribution were deposited to a participant's account by mistake. Should both deposits be transferred to forfeiture and used to reduce future contributions? Is withdrawal of these contributions a correction under EPCRS?

We have a 401(k) plan that has two participants that took hardship distributions, therefore they can not defer for a year. There plan however has individual insurance policies that their match money goes to pay the premiums. If these two participants do not defer and therefore do not get a employer match who is responsible for paying the premiums on the insurance policies in order that they don't lapse?