This may be a very simple question but I am new to financial planning. I contributed to a Roth (Mom's gift) a few years ago when I earned much less than the AGI limit. It was a one time contribution. I now earn more than the limit - what do I do with this Roth? May I keep it there? Invest with it? Or do I have to move it to something else?

Thank you,

SRajan

Under the NEW proposed minimum distribution regulations, is it possible to have multiple beneficiaries of a single IRA establish separate accounts after the Owner's death if the Owner dies after his required beginning date? For example Owner names Child and Grandchild as 50% beneficiaries of his IRA and dies after his required beginning date. May Child and Grandchild establish separate accounts, so Grandchild can use his longer life expectancy, even though Owner did not do so by his RBD? Proposed Reg. 1.401(a)(9)-8, Q&A 2(B) seems to be limited to either (i) lifetime distributions (whether before or after RBD), or (ii) after-death distributions where the Owner dies before his RBD. It would certainly be convenient if Owner did not have to worry about separating his IRA into two pieces by his RBD. But it looks to me like this is still a concern. Does anybody have a different reading of the new regulations?

Our plan has been joined (in California) in a divorce case. We haven’t received an order. We have received a pleading on joinder. The attorney for the spouse (the alternate payee) says we are on notice of a claim for a portion of the participant’s account and participant cannot receive a distribution or a hardship withdrawal. Can they do that without submitting a domestic relations order for our review? If we ignore the notice and distribute benefits if the participant, for example, terminates service, the attorney says our plan will have to pay the spouse’s interest anyway. Is he right?

Every now and again, plans I work with receive claim forms for class action securities settlements. Recoveries are often small. How do you treat thse settlement payments? Do you simply include them with earnings for the year received, or is there an oblgation to ascertain the period that the applicable security was held by the Plan and make allocations on that basis? If the latter, is there any obligation with regard to participants who have received distributions prior to receipt of the settlement payment?

Is an employer required to set up new health insurance service areas for COBRA recipients moving outside NY State? The employer in question has headquarters in NYS and service technicains employed and covered in 5 other states. The former employee is moving outside of any currently established service areas. Thank you

Can a co-op employer participate in a Section 125 plan? They are looking at the very least offering medical as a pre-tax deduction. The employer has about 50 employees with 25 of the employees being declared "owners".

When more than one plan is in a trust, and payments are made from both plans, is it ever acceptable to issue 1 1099-R showing the total payment from the trust? Or do separate 1099-Rs for each plan always have to be done? Why?

Non-qualified supplemental plan. Vanilla. SFAS 87 accounting rules.

Vested EE terminates employment and goes to work for a competitor. Sponsor state that this violates the non-compete clause in the plan. Forfeits the entire liability for this EE, thus increasing the accumulated gain (or decreasing the accumulated loss) in SFAS 87 balance sheet.

But EE files lawsuit. If the suit/settlement later results in some payment to the EE, should this be accounted for as if it is paid under the plan (even if not specified)?

What if a settlement is reached after the plan no longer exists?

Any specific cites?

Company A is in the process of purchasing enough stock of Company B that they will consitute a controlled group. Company A intends on terminating its 401(k) plan prior to that transaction and distribute the assets to participants.

After the sale is finalized a new 401(k) will be established but ONLY for the employees of Company A (Company B has a 401(k) but the employees of Company A will not be eligible to participate in that Plan and vice versa -(410(B) has been satisfied).

1. Does the fact that they are now a controlled group and the old Plan was maintained and terminated by one employer (i.e. Company A) and the new Plan is established and maintained by a new employer (i.e. Company B & Company A controlled group), permit a distribution of elective deferrals from the old Plan and starting up a new one within 12 months of the distribution, even though this new Plan is just for Company A's employees?

2. Would it make any difference if the new Plan was drafted with the "employer" being defined as "Company A and any other member of the controlled group adopting the Plan" but it excludes any other member from participation in the eligibility requirements?

They do not want to continue the old Company A plan.

How do you think the IRS would view this? The intent is clearly to terminate and distribute and start a new plan just for the employees of Company A.

how many times per year can you withdrawal from your Roth IRA account?

Does anyone have a sample Cafeteria Plan enrollment form? If not, where can I get one from -- on-line? We currently have one, but don't understand and can't explain it to our employee's.

If a company is going to be sending some employees to Mexico for a while and wants those employees to have insurance coverage while in Mexico, does the employer need to amend the welfare benefit plan that covers the employees in order to provide them Mexican insurance?

We are a small Non-Profit Organization (Literacy Volunteers of America, DuPage, Inc). We have two full-time salaried employees. Our Board would like to offer each employee $100 per month to cover a benefit of their choice. One employee has her health insurance and would like the $100 applied to this. The other is covered by her spouses insurance and would like the $100 applied to a pension type benefit. We would like the organization to pay this benefit directly to the provider without adding the $100 to the payroll. Can we pay the Health Insurance Company $100 directly? Can we pay $100 directly to an existing IRA account (does it matter if it is Roth or regular IRA?)? Any suggestions would be greatly appreciated.

I have a traditional IRA that I want to convert to Roth and pay the taxes and be done with it. Presently I am receiving monthly dividine checks and the bank is taking out 10 per cent for income taxes. I have done this for yrs. 1998, 1999, and 2000 and presently 2001. In 2001 i will be 65 and I want to convert to roth and then receive monthly checks with out the taxes. Question: Can I convert to Roth since I am retired and already drawing social security?

An employer offers subsidized health club membership and massage benefits, as a wellness benefit. Health club is NOT onsite. They are not in the business of providing health clubs/massages, so is not an "employee discount."

The subsidy is included in taxable income, no?

Am I correct that IRC 411(a)(3) permits a plan not subject to QJSA requirements (i.e. a profit sharing plan), to forfeit account balances attributable to employer contributions upon death of the participant, regardless of the participant's years of service?

Also, does anyone know for sure if participant 401(k) deferrals are deemed attributable to employer contributions or not for this purpose? It wouldn't seem right, but what do I know.

Thanks in advance for any thoughts.

I have a Roth IRA valued at 77K, of which 60K has taxes paid. I need to take out 60K to pay off Debt. I would like to repay the Roth IRA in monthly installment of $500 in principle and $166 in interest. Can this be done?

If a corrective distribution is made for a calendar year plan year plan for excess contributions or excess aggregate contributions in the first 2 1/2 months after 12/31, the distribution is reported on the 2001 1099-R as taxable in 2000. If the particpant elected withholding on the distribution, does the participant get credit for this withholding on their 2000 1040 tax return, or not until the 2001 1040?

How is HCE status determined under IRC Section 414(q) for the first year of a calendar year 401(k) plan and no employees are 5% owners when there is no "look back" year?

Most of the new MRD prop. regs. have obviously been good news for IRA holders. However, the ability to do a spousal rollover looks to have been eliminated for some taxpayers. The added restrictions are:

1. The spouse must be the sole bene of the IRA

2. A trust may not be the beneficiary even if the spouse is the sole bene of the trust.

Source: new prop. regs 408-8 A-5

These are new conditions to 408-8. These new conditions fly in the face of PLR logic that routinely allowed spousal rollovers from a trust (assuming the spouses access to the allocation and the withdrawal of funds could not be blocked).

Some tax attorneys have told me that since A-5 only effects the "deemed election" you can still do a spousal rollover if trust is the bene. I don't think so: see 408-8 A-7 which speaks to the rollover issue and refers back to A-5.

I know for 2001 we have a choice between old/new pregs. but the Trust as bene issue to my knowledge is only addressed in PLR's with respect to rollovers.

Interested if anyone has any further information. Am I missing something??