Copy 1 of Form 1099-R is supposed to be sent to the state tax department. Is this the state that the company is located in, or the state that the participant resides in, or both? Is there anywhere to get a comprehensive list of mailing addresses of state tax departments that these forms should be sent to? Some states apparently don't require filing Form 1099-R (for example, Pennsylvania supposedly gets information directly from the IRS). Is there any easy way of finding out which states have what requirements?

What, if any, adverse federal income tax consequences do you think would result if the fomer employer (i.e., the acquired) continued providing health coverage to non-M&A Qualified Beneficiaries (i.e., those employees that continue on with the new employer) until the acquirer can get a health plan up and running?

A teacher is contributing to a teacher's state retirement fund. The state plan is in lieu of Social Security. While working the teacher is receiving her deceased husband's Social Security benefits. When this teacher retires, can she continue to collect her husband's SS benefits and collect her retirement benefit through the teacher's state retirement plan? The state is Texas. Cites would be helpful.

The exemption for Schedule H for welfare plans applies if the plan meets the requirements of 29 cfr 2520-104-44. That reg says that the exemption applies to "unfunded" and "certain insured" plans. The "certain insured" plans means those which forward employee contributions (if any)within three months. There is no mention of how to handle an unfunded (i.e., self-funded) plan that has employee contributions. If there are employee contributions for a self-funded plan is the plan considered "unfunded" for the purposes of the exemption? The reg says that benefits must e paid "solely from the general assets of the employer". Are employee contributions that are withheld from pay considered to be general assets of the employer?

I have a New Comp. Plan effective 1/1/99. The 1999 Profit Sharing was accrued and therefore as of 12/31/99 there was no actual balance in Mr. X's Account. Is Mr. X required to take a 70 1/2 distribution based on accrual.

Also Mr. X turned 70 1/2 in 1995 when the plan was not in existence. Does he have the right to make an election or does he HAVE to take the required distribution?

I would appreciate if anybody has dealt with such a situation in the past or knows the answer.

Thank you.

I resigned last March from a company with a defined benefit plan. The plan includes provision for a single sum distribution. I looked into rolling it into an IRA but have been advised by the company I need to sign a Repayment Agreement under the provisions of Treasury Regulation 1.401(a)(4)-5(B) which places restrictions and limitations on the amount that can be distributed as a single sum distribution. I am told that the present value of the benefit, payable as a single sum distribution, exceeds the maximum amount (the "Nonrestricted Limit") that can be paid to me by the "Restricted Amount."

Getting information from the administrator is a little difficult and so I am turning to this message board with the following questions:

1. Can somebody tell me where to find a copy of Treasury Regulation 1.401(a)(4)-5(B)?

2. Can I still roll the "nonrestricted limit" to an IRA and leave the "restricted amount" with the Plan?

3. If I leave the "restricted amount," can I still draw a retirement benefit based on that amount? (I will be 55 next February and eligible to draw a benefit if I leave ALL the money in the Plan.)

4. This last question is rhetorical: How in the world did this all get so incredibly complicated and convoluted?

My thanks in advance to anybody who can help.

Who knows weather a school employee who works for both

the superentendant of school district county office part time and also works for one of the feeder schools part time

can have the county match and deferral from the second school into one TSA-403(B)? Without any violations.

We have a participant originally from the UK. He still has a balance in a "UK approved pension scheme". He wants to roll this into a 401(k) plan. The prior recordkeeper in the UK seems willing to do this within certain limitations. Assuming these are met, could this money be acceptable in a 401(k) plan? I couldn't find specific mention of this in the code. It doesn't seem to be an "eligible retirement plan" per section 402©(8)(B). Therefore my inclination is that it is not acceptable. But does anyone know of a place where it excludes foreign pension money from being rolled into a qualified plan in the US? I'd like to be able to show him the rule. Thank you.

Here's another tax question regarding the conversion of a traditional IRA to a Roth IRA. It's kind of long, but please be patient with me. It's a two part question:

Background:

At the beginning of 2000, I had a traditional IRA that was in two different accounts (2 different mutual funds). I also had a Rollover IRA in a third account that was rolled over from a previous employer's 401(k) plan. My basis in the traditional IRA is $12,000 (nondeductible contributions to the traditional IRA in previous years). Earlier this year I converted the traditional IRA (both accounts) into a Roth IRA (total approx $57K), but I left the Rollover IRA alone.

I was reviewing Form 8606 to get a better handle on my tax situation for the year, and I have a question regarding Line 6. This line asks you for the "total value of ALL your traditional IRAs as of December 31 ...." This amount will determine what percentage of the basis you can claim and thus reduce your taxable portion of the conversion.

Question 1:

I could not clearly tell what traditional IRA means. Is my Rollover IRA (from my previous 401k) actually treated as a traditional IRA on Form 8606, Line 6? If not, then I can use the entire $12,000 basis against the conversion leaving a taxable portion of approx $45K. If the Rollover is considered part of the traditional IRA, I will only get to use approx $4K of the $12K basis to reduce the taxable conversion amount to $53K. This is about a $2,500 tax difference.

Question 2:

If the Rollover IRA is considered part of my traditional IRA on Form 8606, Line 6, then may I roll my Rollover IRA into my present employer's 401(k) plan before the end of the year leaving a zero balance in the traditional IRA? This would make Line 6 = zero, and I could use my entire basis in reducing the taxable portion of the conversion. Is this okay to do, or would the IRS impose a tax anyway?

I really would like to leave the Rollover IRA as an IRA and not roll it to a 401(k) for flexibility reasons. Also, I may want to convert part of it to a Roth next year. However, for a $2,500 tax savings, I would roll it into my 401(k).

Thanks for your help (and patience in reading this long thread)!

I'm opening a Roth IRA this year, and wish to use money from my 401k. I realize that I would need to roll the funds into a qualifying IRA before converting the IRA to a Roth IRA. What's the downside? Any tax/penalty consequences?

I am a little confused about the changes to 415 under TRA'97 relating to the purchase of permissive service credits. We are in the process of terminating a small governmental plan because the entity has become a participating entity in the statewide retirement system (effective 1/1/2000). Our small plan has "pick up" contributions as well as some after tax employee contributions that predate the "pick up" amendment. The statewide plan is permitting the purchase of service credits in that plan and is allowing a direct rollover to it in order to purchase this service. Am I correct in my understanding that any rollover to purchase past service will not be subject to 415© but will be subject to the limitations of 415(B)? Am I also correct in my understanding that any distribution from the small plan attributable to after tax employee contributions that cannot be rolled over or out of pocket dollars will be subject to the new rules?

Suppose your client, before you took over the plan, ran a loose loan ship and allowed participant loans without requiring repayment via payroll deduction. Much to his surprise, some of the loans went into default. Now a participant who defaulted on a prior loan wishes to borrow again. I think his defaulted loan balance, regardless of when the default occurred, counts as part of his balance for purposes of determining the maximim available amount. For example, suppose I had a balance two years ago of $20,000 and I borrowed $10,000 and did not make any repayments. I defaulted on the loan and was issued a 1099R for $10,000. Now, my non-loan balance has grown back to $20,000 again and I look to borrow. I think my plan balance is $30,000 (actual cash balance plus defaulted loan of $10,000), so the maximum outstanding loan amount would be $15,000. Since my existing balance is already $10,000, I can only borrow another $5,000. Forgetting all of the reasons why it might not be prudent to let me borrow from the plan again given my history, is the math right?

When filling out the ROTH IRA contribution form on 1/1/00. I accidentally check 1999 TAX Year. I wanted it for 2000 TAX Year. The online broker firm will not change the form and sent a Form 5498 to the IRS stating for 1999 I had $4,000 contribution. Which is a mistake? How can I correct this?

We are TPAs who typically use insurance companies' group annuity contacts as our funding vehicles. We are interested in finding a pure mutual fund product (non insurance company) which provides participant allocation, ie a daily value recordkeeping system, prefarbly multi fund families. Does anybody know of any providers?

My client ("A") acquired another company ("B") in 1998. B's plan was merged into A's plan in 1999. Both plans were large enough to require an accountants opinion. B's former bundled provider won't provide needed information to B's accountant. The latter has now provided written notice that, as a result, they are unable to complete the audit for 1998 and the short 1999 year. A's accountant won't complete A's 1999 audit without B's audit.

In short, the refusal of the bundled provider to furnish the requested information is causing everyone a lot of problems. Any recommendations about how we might "persuade" them to furnish it? I have gone up the chain of command and get lots of promises but no actual information. Meanwhile the 10/15 deadline is drawing alarmingly close to get two audits completed.

Is anyone aware of what rules there are, if any, concerning what documents and records must be retained by a TPA firm and in what format? I am specifically concerned with trading confirmations and participant and plan level statements. I would like to store these documents in electronic format such as CD ROM. I dont see any reaon why if the SEC says these documents can be stored electronically that the DOL would have a problem.

I have some basic questions. Please contact me if you can help.

I have a question on the definition of compensation used for calculating a match in a SIMPLE plan -- Do section 125 contributions reduce the compensation used to calculate the match?? When I follow the references from 408(p)defining compensation I cannot find any place that authorizes us to add back Section 125 contributions. Can you help??

A plan participant wishes to rollover the full amount of his plan distribution to an IRA. He has had a life insurance policy in the plan.

Am I correct that:

1) He can (providing it is not prevented by the plan document) choose to purchase the life insurance policy by writing a check to the plan in the amount of the cash value of the policy.

2) The total of the PS-58 costs that have been reported in the past will have to be paid directly to him as a non-taxable distribution.

3) The non-taxable distribution will not be subject to the 10% premature distribution penalty.

4) The remaining money after distribution of the PS-58 costs must be paid in an eligible rollover distribution?

Defined Benefit Plan: States that payments won't be made at age 65 unless you elect to take the money (ie, deemed deferral until minimum distributions). What do you do when:

Vested term. reaches age 65 and does not return distribution forms; thus, deemed deferral; time comes for mimimum distributions; you do not have current info. on the participant (ie, participant terminated 10 years ago and you do not know whether the participant is married, and if so, the age of the spouse)to allow you to calculate the mimimum distribution and you cannot get participant to respond to your request for the info. (or, in some cases, you can't find the participant). What should you do? In the case of the participant who simply won't give you the information, do you simply warn them of the excise tax and not pay the min. dist.? What about the case of the missing participant?

I suppose in the case of the missing participant, after making diligent effort to locate the missing participant (e.g., participating the in the DOL program), you can segregrate the funding attributable to that participant's benefit in some type of suspense account, subject to reinstatement if the participant resurfaces. ????

Has anyone run into these problems? Any suggestions would be appreciated.