Is anyone adding a surcharge to their bills this year as a result of the extra time spent completing the new 5500's?

I would like to convert my 401k (50k value) to a Roth IRA via Trad IRA route. Some questions:

Can my wife and I still contribute 2k each to the Roth this year or will the conversion stop this?

Can I split the conversion taxes over 4 years still or did they do away with that rule?

Are the taxes withheld at conversion or do I handle it with my normal taxes in April?

At what rate is the converted funds taxed at?

Now that 5500 season is in full swing, here's a question about a multiple employer plan filing for 1999. The IRS instructions clearly state on page 10, under Box A(3) that "Participating Employers do not file individually for these plans." You are required to file a separate Schedule T for each participating employer according to the instructions. My question is, what happens to all of the participating employers that filed separate 5500's for 1998? Will the IRS or DOL come looking for a 5500 for a plan of a participating employer in a multiple employer plan that no longer needs to file under the new rules?

If an employer-contributory 403(B) arrangement (hence subject to ERISA) does not update its plan document for SBJPA et seq. (presume underlying annuity contracts/custodial accounts ARE legally up to date) but is operated in conformance with SBJPA et seq. changes (e.g., multiple salary deferrals OK), are the Plan fiduciaries in breach of ERISA for failing to operate the Plan in accordance with its written terms??

A new teacher two years ago, I was not made aware of the availability of 403(B) plans. Therefore, although eligible, to date no deferrals for 403(B) have been made. Over the summer, I changed school systems (from one county to a neighboring county in Virginia). I am now at the point of asking a vendor to calculate the MEA. Are these calculations made on a calendar-year basis? If so, may I ask (is there a basis) to have the income earned in my previous public school earlier this calendar year included in the calculation?

My former employers pension plan year ends on June 30th. Before giving my notice of resignation last May, I inquired about eligibility requirements for the plan year to make sure I qualified. Employer has never given any employee the Summary Plan Description. Seems I met all those requirements according to the company that handles the pension plan annual reports. Upon receiving the distribution papers in June to sign, I immediately noticed the final figure to be that of June, 1999. This company did not tell me one had to be actively employed on the last day of the plan year. My question is: Am I not entitled to at least earnings on the balance from July, 1, 1999 to the date of employment termination or date of distribution? Is this company liable for not informing me at the time that one important fact of active employment on last day? Is my former employer liable for never giving any employee anything in writing about the plan? I just need advice, since after nearly 3 months I still have not received any reponse or the distribution.

Thanks.

My nonprofit organization sponsors a 403(B) plan with over 200 participants. The year 1998 Form 5500 was easy to complete ...I simply filled in ONLY page 1 of the 1998 Form 5500 (a piece of cake).

Is the year 1999 Form 5500 going to be as easy to complete, for a 403(B)?

Do I need to consider all the year 1999 Schedules (A,B,C,D,E,G,H,SSA,T)? Or can I simply ignore them and just fill in the basic information (plan name, sponsor name, address, ID#, efective date) on the 1999 Form 5500 (pages 1&2) and then mail in in.

I can't find the answer to this in the 1999 Form 5500 instructions.

An employer has only a profit sharing plan that is super top heavy. What is the minimum contribution?

If a NQDCP informally funded with a rabbi trust allows employee directed in-service withdrawals with a haircut (10-15%), is there a risk of plan benefits being taxed under the economic benefit rule, at least with respect to the top executives who might have the financial knowledge to foresee the employer's potential financial difficulties? Ie, would this render the plan "secured" for tax purposes since, it would be argued, there would no longer be an insolvency risk?

Thanks-

Rob [Edited by card on 09-24-2000 at 06:51 PM]

What is the difference between a medical flexible spending account (FSA) and medical reimbursement under a 125 plan? Is there a benefit to one over the other? Any available text to compare/contrast them would be helpful.

A profit sharing plan with a discretionary, fixed profit sharing formula has a last day rule. The plan sponsor funded the profit sharing formula during the year based on participants who were expected to be employed on the last day. Because some participants were unexpectedly not employed on the last day, the amount the employer contributed exceeds the amount of the fixed formula.

What should be done at this point?

I have a 401(k) plan that excludes bonuses from the plan. There are roughly 75 participants, and just 1 HCE. The HCE and 8 of the NHCE's receive bonuses. On the surface, it looks as though this would not be discriminatory. However, the HCE has base compensation of more than $170,000 with bonuses of around $50,000. If you look at their inclusion percentage without regard to the $170,000 compensation limit, they would be fine. If you use the compensation limit, he is at 100%. The NHCE's are below 100% so I would see it as discriminatory. Any thoughts?

I have a client that added a 401(k) feature in April 2000 and set it up as a safe harbor plan. Their PYE is 9/30. The IRS requires that the safe harbor plan meet safe harbor requirements for all 365 days of a plan year. In the case of start up plans that have short plan years for their first year of operation, does the IRS consider the 365 day rule satisfied if the plan was set up as a safe harbor plan from its origin?

I work for a small TPA (30 ee's) and was recently promoted to administration supervisor. My main concern is there are no manuals/written procedures for the eligibility department. I have been doing research in our general manuals and on the internet, looking for a guideline/list but have not been able to find anything.

In particular I am looking for a list that will show required documents from the plan supervisor for eligibility changes (divorce papers, adoption, etc)

Can anyone point in the right direction on where to find something like this?

I very much appreciate your responses as I am new in the position. Thank you.

Does a plan sponsor have a fiduciary duty to notify, and send distribution election forms to, a terminated employee that he is entitled to a distribution under the terms of the Plan? We have an employee who termninated employment over a year ago. He is 51 years old. He has not appraoched us about getting his money out of the Plan and we have not notified him that he is currently entitled to a distribution. What should we do? Thanks.

We have a situation where we failed to cut off COBRA when the qualified beneficiary became entitled to Medicare. Person went on COBRA in 8/99. He became social security disabled in 7/99, notfied us within 60 days of 8/99 (that's another issue - should we have extended COBRA to 29 months even though he became social security disabled prior to having COBRA? Can we fix this?) and we extended COBRA to 29 months. In 1/2000, he became entitled to Medicare, and notified us, but we failed to cut him off. In 8/2000, our stop loss insurer notifies us that we should have cut this guy off effective 1/1/2000, due to his entitlement to Medicare, and that they are not going to pay his $170,000 in claims incurred in 2000. What can we do in this situation? Thanks.

What is considered a 'Benefit Claims Payable' for a Daily Valued Plan?

For a daily plan, I would think that a payable is not possible.

I am hearing if the TPA receives an authorized distribution request prior to year-end and subsequently process this distribution after year-end then this qualifies as a 'Benefit Claims Payable' for 5500 purposes. On what basis is this true?

Thank you.

I have an Equitable SIMPLE IRA, held longer than two years. I now want to move the full cash value of that plan (to close it out) to a new Traditional IRA outside of Equitable.

The transfer form that Equitable sent me offers two of three possible options (the third being a Taxable Rollover Conversion, which is not applicable). In the General Instructions "Reference to "Traditional IRA" will also include SEP, SARSEP and SIMPLE IRA"

The options are:

Option 1, Direct Rollover -

In accordance with IRS Code Sections 401(a)(31), 402 and other applicable tax rules from a qualified plan or TSA into another eligible plan. Indicate type of retirement program and check:

TSA to TSA; TSA to IRA; Qualified Plan to IRA; Qualified Plan to Qualified Plan

Option 2, Direct Transfer -

TSA to TSA - Direct transfer from a TSA to another IRS Code Section 403(B) annuity contract or custodial account ("Section 403(B) arrangement") in accordance with Revenue Ruling 90-24, 1990-1 C.B. 97

Traditional IRA** to Traditional IRA - direct transfer (issuer to issuer, or issuer to custodian or trustee) of an IRA to anoyher IRA. During the first two years of participation a SIMPLE IRA cannot be transferred to an IRA.

**IRA refers to an individual retirement account and/or an individual retirement anuity under Internal Revenue Code Section 408.

Roth IRA to Roth IRA - (N/A)

NQ to NQ - (N/A)

I've gotten two different answers as to which I should select (Direct Rollover or Direct Transfer) given what my intentions are.

Can anyone either explain the difference between a rollover and a transfer, or which best suits my intentions.

Carl

A participant lived in the US, worked for a US company, participated in the company's pension plan and earned a benefit. The participant then terminated employment and moved to Australia. We got election forms from her and are now trying to have the plan make the distribution to her.

Is the plan required to withhold 20% for federal taxes (she elected not to roll to an IRA)? I know that state withholding is not required for the state in which the company is located if the participant receives the benefit in a different state. But what about different countries?

Any insight would be helpful.

I have a small company ESOP, the company by-laws do not allow stock ownership outside of the plan. When the plan distributes a terminees balance, the shares are repurchased by the active participant's cash accounts. Very straight forward.

This year three significant distributions have occured, which have used all of the cash in the plan ($449,969 down to $805). The company has been making 15% profit sharing contributions to fund for these distributions.

This year, when I repurchase the shares of the terminees receiving a distribution, there is not enough cash in the active participant's accounts, I also have to use the cash in the terminated participants accounts.

I have reviewed the past seven years' allocation reports and terminated participants have never repurchased shares before. If a terminee decides to leave their money in the plan, they share in the appreciation or deperciation of the company stock and the gain or loss in their cash account until they are paid.

The plan document does not address the repurchase of shares, as far as active / terminated employees. Do I have a problem this year? The company and their attorney (who wrote the ESOP document) do not think so.

Thank you.