We are thinking of investing in a Roth IRA for retirement and our daughters college education. She is 6. I'm wondering if this is a good investment and/or if there are any other types of savings tools out there that might benefit us more. I'm in my 30's and my husband is in his middle 20's. We don't currently invest in any type of 401K's at work or any other type of investment tools.

Can someone give me advice on this? Thanks!

Are the review of investment options by an outside consultant and the search for a new recordkeeper expenses that may be charged to a plan? Does the answer depend on the plan's provisions?

If a participant requests a copy of the full annual report - should we just provide the form and ALL the attached schedules?

Thank you for any help.

A sole proprietor (who has employees) is setting up a 401k plan. How should he declare his income so it can be used in the plan? OR maybe I should be asking what types of compensation should we include in the plan doc so his compensation is covered? From what I understand, he should not declare w-2 income? Any CPA's out there?

A fiscal year plan has been amended to a calandar year with a short plan year. when determining HCE's, what period do you use for the look back year. Do you pro rate (using the short plan year as the lookback year) or do you count compensation for the last full calendar year? a citation would be appreciated.

We are a TPA firm and presently prepare annual particpant statements for the participants in all of the 401(k) plans we administer along with SPDs and SARs. In addition, these same particpants are sent quarterly cash investment statements that reflect current market values.

The annual statements are run on a plan year basis, and reflect vesting etc. I was recently at a seminar and found that most of the TPAs have stopped the annual statement and only send the quarterlys. Our "document" is rather vague as to what the reporting requirements are.

What is really required. What do most TPAs send out?

Your thoughts would be appreciated.

Any opinions on 6.0? We're wondering if we should convert soon or wait until the end of busy season next year.

Any feedback positive or negative would be helpful.

Anyone have problems with the conversion?

Anyone have problems with custom reports other than those experienced from the 4.1 to 5.0 conversion?

If a 125 plan allows for a taxabe cash benefit, can it automatically be used as a 401(k) contribution? Or, must the 125 plan specifically state a 410(k) deferral option? What is the benefit of deferring a taxable cash benefit through a 125 plan? And, would compliance testing under the 401k plan become more cumbersome?

I have a client who is closing its trust department. They have notified their plans and most have transferred their accounts elsewhere. However, they have a number of IRAs and one qualified plan that have not moved. Are they required to find substitute trustees for the IRAs and plans? I have not been able to locate anything in the Code or ERISA.

I have a frozen DB plan that the sponsor wants to "terminate" in phases. Liability is about 1.8 Million, assets about 1.2 million. Plan has active EEs (all vested), VTs, and retirees.

1. Buy an annuity for retirees now, about 800K. About 175 participants remain. There is no resolution to terminate yet.

2. When the sponsor has more cash, plan will undergo a standard termination for remaining participants. This could be in 2 months or 12 months, etc.

Any problems with this that I have not noticed?

Plan sponsor wishes to consider a "rule of 90" (or maybe 85) (combination age and service) unreduced early retirement subsidy.

Plan has maybe 100 actives, 175 total participants, no lump sum option.

What happens when the plan terminates? Must participants who don't have the age and service as of the termination date be given the opportunity to "grow into" the subsidy, presumably through an annuity contract?

Are there any ways to get around this from the sponsor's perspective, in order to make the termination feasible?

One option would maybe be a lump sum? Are there any other options if the "grow into" opportunity needs to be protected, and the sponsor wishes to terminate the plan?

Anybody take this yesterday? What was with the cash balance conversion wearaway/early retirement subsidy question? Did the question make sense to anybody?

If a trust is the beneficiary of an IRA, how do I determine the date that minimum distributions must begin? Cites would be appreciated.

An employee elects a dental plan in writing at open enrollment. Due to error by HR department, the deduction was never taken. Ten months into the year, the employee realizes error when claims are denied (never looked for deduction on pay check). Employee wants to pay back premiums for the year and enroll in the plan. Allowable?

Also, another employee enrolls newborn on day 35 (5 days after deadline). What does everyone do in practice? Deny coverage? Does it matter if employee already has family coverage and premium doesn't change?

Question on Roth recharacterization calculations for earnings: Who is required to calculate earnings on my initial converted amount? Is the trustee, my CPA, or am I solely responsible for this?

Thanks,

Chris

I have a question on the rules on "net unrealized appreciation" (or "NUA") for employer stock that is held in a participant's account under a defined contribution retirement plan. The source rules are in IRC 402(e)(4).

If a retired participant has an account with such employer stock, and the participant has already started receiving "required minimum distributions" due to attaining age 70-1/2, does the participant still have the ability to obtain NUA treatment for the stock, if he takes a lump sum distribution of the stock?

(I am also interested to know: (a) if this is a straightforward issue or a tricky issue, and (B) whether there is specific authority on this point.)

This question has probably been asked and answered before, but please humour me - if a 401(k) participant maxes out his or her deferral limit early in the year - and the employer is allocating the matching contribution each payroll period, must the matching allocations stop as soon as the deferrals stop, even if the matching allocation formula would entitle the participant to more money if the deferrals took place over a longer period? Example: Employee 1 earns $170K, defers 15% or $1,062.50 per payroll period; maxes out at end of 9.88 pay periods. Matching formula is 50% up to first 6% of compensation - matching contributions total $2,100 at the time employee must stop deferrals. Employee 2 also earns $170K but defers at 6%. He receives full $5,100 matching contribution because he is not required to stop deferring, prematurely.

Presuming the plan document allows the employer to fund the match at the end of the plan year (or by applicable tax return deadline), can the employer can fund the additional matching contribution for Employee 1, after he or she must stop deferring??

I am looking for an article published recently regarding a terminated employee who sued his employer because the employer performed a special allocation mid-year on a normally only annually valued plan, because the value of assets had decreased due to market performance.

My employee's spouse is adding her during his open enrollment, which does not correspond with our open enrollment. She wishes to drop her medical coverage (125). Under the proposed regs for mid-year election changes, it appears this can be done. However, don't we need to make plan amendments to our self-funded plan document?

If a 401(k) plan provides that an employee must work 1,000 hours in a plan year to share in the employer's non-elective contribution for the year, can the non-elective contributions be paid to the trust and allocated to every participant's account each quarter during the year, and then forfeited at the end of the year from the accounts of the participants who did not satisfy the 1,000 hour requirement?