we've been advised by members of this board to generally keep life insurance outside of qualified plans. If a 61 year old University Professor feels the need for life insurance; how do you feel about borrowing from the plan money to put into a variable life policy? If the stock market does go to 30,000 he is probably ahead in the long run and if it sinks short term then he still has the death benefit. What are the odds of a long term stock market decrease?

I'm talking to a potential client with over 20 employees who also has several age 65+ employees. The employer has asked me why they can't pay these employees additional compensation to drop out of the employer sponsored health plan and buy medicare supplements. I've told them it was illegal but can't put my hands on anything that spells out the possible penalties. Does anyone know what the penalties are? The CFR reference?

I will be taking a new job soon and I have after tax contributions in my current 401K plan. What options are available for the after tax contributions? Is it best to leave it in the current 401K? Can I transfer it to my new employer's 401K? Can it be put in a rollover IRA?

I don't currently need the money so it I would like to avoid the tax implications of taking the distribution.

Interesting situation involving possiblity of taking a new job. In Colorado, teachers are covered by the PERA (public employees retirement association). However, Denver school district is not covered by PERA, but has a similar retirement plan.

Person Age 42 currently has 18 years service under PERA, the value of the account is approximatly $70,000.

Option 1. person stays with a PERA employer until 40 years of service pension benefit would be 100% of HAS (higest average salary, 3 years).

Option 2. person leaves PERA covered employment, would receive a pension of approx 45% of current HAS ($40,000) so 45% of $40,000, plus the proceeds from a Denver pension, assume 22 years, and perhaps an income of $80,000.

Option 3. same as option 2, except the person takes the $70,000 roll over to an IRA and manages the funds themselves.

It would seem that the proceeds of the the IRA could be considerably better than the 45% of $40,000, the real question is how much better or worse off would the person be than with OPTION 1.

My wife and I are modifying our estate planning family trust. Included in our assets is a qualified pension plan with myself as participant. As this is a second marriage for both of us, we wish to have my wife as primary beneficiary of the pension plan whereby she would receive all current income while she was still alive. The alternate beneficiary, after the death of my wife, would be the Family Trust A, which designates my daughter as beneficiary.

The intent here is that my wife, while she survives me, would have full use of the current income and, if necessary, principal . Up her death, the pension plan assets would go (via Trust A) to my daughter. In addition, I would like to keep the pension plan intact with periodic payments to her to retain the tax-deferred status of the assets and avoid the immediate income tax if a total payout were made.

In addition, since my daughter is currently 39 yo, if we could include her as a beneficiary, could we reduce the minimum required payout from the pension plan. I am 63 you and my wife is 58 yo.

Hello.

I've read that you can withdraw cash from a Roth IRA early (i.e., long before retirement) without a tax penalty, as long as:

a) It's for a qualified purpose, such as a college education or buying a house; and

b) As long as you withdraw only cash you've contributed, without taking out money that's accumulated via interest or capital gains.

However, I've also been told that if you withdraw money in this manner, you can only take it out in increments, versus one large lump sum. Ergo, if you wanted to take out $10,000 for a downpayment on a house, you'd have to withdraw, say, $1,000 a year for 10 years.

All that is a long way of saying I'm looking for information that can verify the truthfulness, or lack thereof, of the foregoing. If anybody knows of any articles on the RothIRA.com site, or elsewhere, I'd love to find out about them.

I wanted to get an idea of what you'd advise. My sister has $2000 to invest. She will also add $2000 a year. She thought she'd put it in a taxable account, but I suggested a Roth. This would be opened in her husband's name and he is 52 1/2 years old. They meet the income requirements.

Money would go toward purchase of a B & B in the future. She likes the idea that in a taxable account, it's immediately available, where in a Roth, she couldn't access earnings for 7 years. However, she probably wouldn't need the money for at least 7 years.

I told her that she could withdraw the CONTRIBUTIONS at any time without penalty. She just couldn't get the earnings without penalty until 7 years have passed. Since she probably won't need the money for at least that long, why not have the benefit of no taxes on the earnings. If she needed to withdraw the contributions, she could always do that at any time.

We're not talking a huge sum of money here, but I figure why pay ANY taxes that you don't have to. At least she's in Florida where they don't have state income tax to also pay.

It is my understanding that at age 59 1/2, her husband could withdraw ALL the earnings at once, if he wanted, and there would be no tax or penalty. Is this correct?

Also, he has a traditional IRA with a large sum of money. I think you can withdraw money from a traditional IRA at 59 1/2 and pay taxes but no penalties. Is this correct?

Thanks, Patti

Say you have an integrated plan that made a 5% of salary integrated contribution. The percent of comp will vary depending on the key/non-key mix and who is over/under the Social Security wage base.

To satisfy top heavy... what do you do exactly? Do you compute each participant's % on an individual basis and look to see who is under the 3% required min contribution? Or can you somehow just go along and fill in the gaps?

I'm not sure on this one... and I am trying to be mindful of 401(a)(4) here. I want to be able to meet those requirements too of course.

A plan has valued its assets and is supposed to make a lump-sum distribution to a 100% vested terminated participant within the next 60 days. However, one of the plan's assets ( a Receivable) happens to be the prior year contribution that is currently receivable from the employer. The terminated participant demands his full lump-sum distribution within the next 60 days (just like it says in the Summary Plan Description). However, the plan won't receive that prior year contribution from the employer corporation for another 5 months (the corporate employer's prior year income tax return has been extended & the corporation won't be paying that contribution to the plan until 5 more months).

What is the Plan supposed to do in order to comply with the 60 day deadline as stated in the Summary Plan Description? How can the Plan distribute an asset that it does not yet have in it's possesion. Is the Plan even required by ERISA to include the receivable in it's annual valuation ?[Edited by Moe Howard on 08-18-2000 at 07:52 PM]

On prior years forms premium rates were entered in Part 3 - Insured Welfare Plan - on line 8(d)- Premium Rate or Subscription Charge. On the new 1999 5500's I do not see any place to enter this data. Was this eliminated as part of the streamlining of the form or is there really a place for it to be entered.

Thanks for your input.

Professional Corporation, loan proceedures allow terminated participants to continue to pay on their loans. One x employee has a loan that has been habitually past due. The loan is currently 43 dfays past due and we have been advixed that the participant can only pay on the loan once a quarter. They want to re-amortize the loan for quarterly payments, which would not extend beyond the due date of the original note. Would this change be considered a new loan (plan does not allow for new loans to terminated participants) and should the loan be current prior to re-mortization? Thanks for any advice.

We recently took over an existing 401(k) plan. The sponsor is a sub-s corp. While preparing the '99 valuation, I have discovered two loans were made to the owners. Any ideas on how to proceed? The loans were both made in '99. The plan has well over 100 participants so it will also need to have an audit done. Any thoughts would be appreciated.

Quantech Southern User Group

Fall Meeting

Upcoming User Group Meeting. If there is interest, there will be a C-2 DC review session for the ASPA exam.

..................................................

Friday November 10, 2000

Savannah, Georgia

8:30 – 9:00 am Registration

9:00 – 10:30 am Quantech 6.0 Roundtable

(moderator: Bernadette Sharma, HAW Benefit Advisors)

10:45 – 12:00 noon Using Crystal Reports with Quantech: Crystal 7, Subreports,

Parameter Fields and Other Features

(instructor: Kory Murphy, Crystal Report Designer, formerly Quantech Report Designer with Corbel)

12:00 – 1:00 pm Lunch

1:00 – 4:00 pm Crystal Reports (continued)

6:00 – Dinner at Marshall House

Meeting Fee: $125 SUG members/ $155 non-members (includes meeting, lunch and dinner with group)

Location: Marshall House (912) 644-7896

123 E. Broughton Street, Savannah, Georgia 31401 www.marshallhouse.com

Please call the Marshall House directly to make your room reservations. Mention that you are attending the Quantech Southern User Group meeting. We have reserved a block of rooms at the special rates noted

below. These special rates apply to this block of rooms only, so make your reservations now.

Hotel Room Cost per night, excluding taxes: Single/Double: $109

Name(s): _____________________________________________________________________________

Company: _____________________________________________ SUG Member?: ___ yes, dues prev. paid

____ yes, dues enclosed

Address: __________________________________________________________ ___ no, send application

Phone: ___________________ Fax: ___________________ Email: ____________________________

____ I would like to bring ___ guest(s) to dinner [add $50 per guest to registration fee]

____ Please fax/email me a registration form for the one day ASPA C-2(DC) review course to be held on Saturday, November 11 at the Marshall House Hotel. Course will be taught by Tom Poje, QPA and is open to all ASPA students. Cost is $250 per student; last day to register is Friday October 27.

Return this form with your check payable to the “Quantech Southern User Group” to :

Maggi Heffernan phone: (770) 641-1429

Applied Financial Concepts fax: (770) 594-9631

1108 Hope Road, Atlanta, GA 30350

An employee waived enrollment in the vision care plan during open enrollment. He has now gotten married. Is he entitle to enroll himself and new spouse in the vision plan, or can he only add his new spouse to plans that he (the employee) is already enrolled in?

If an ESOP is maintained by a controlled group of corporations including S corporations, what is the deduction limit? That is, are all of the contributing employers limited to a 15% of pay contribution limitation or may C corpations contribute and deduct higher amounts?

Without getting into the issue of why it is held in a trust, are Section 125 plans that are held in a trust considered VEBAs?

Are Section 125 plans that are held in a trust considered VEBAs?

I'd appreciate some feedback on how others handle certain situations for post NRA people, for both allocations and (a)(4) testing if needed.

Assume an age weighed PS plan where everyone gets a contribution equal to the PV of 1% of pay. Assume NRA is 65 and a participant became eligible at 65 and is now 66.

Is the contribution for the 66 year old equal to or less than the contribution for a 65 year old? In other words, what annuity rate is used for the PV calculation, age 65 or age 66? My interpretation is that it can be done either way (provided the document does not specify, which is the case with one I'm dealing with.) Is this correct?

Is it correct that the contribution for someone age 66 cannot exceed the contribution for someone age 65 assuming the same pay level? (This gets to the procedure for normalization.)

How would this be tested for (a)(4)? Seems to me you would ordinarily use an age 66 APR, resulting in a higher EBAR for a 66 year old than a 65 year old, even though the contributions are the same, but that there is an exception in (a)(4) which seems to say that test failure for this reason alone can be ignored.

What do others use for the Annuiity Rate for post-NRA people, i.e., NRA or Attained Age for cross testing in general?

Would the answers be different if the person entered the plan at age 66, i.e. would this be their NRD and therefore test age, or would it be 65?

The target benefit safe harbor rules seem specific on these points, but there appears to be room for interpretation on other plans. Feedback would be appreciated.

Background -

A U.S. domiciled mission organization sponsors a 403(B) plan for their employees, 10% of which reside in the U.S., while the remaining 90% are dispersed throughout God's green earth.

The question regards Roth eligibility -

What determines eligibility as it relates to country of residence?

It seems to follow that if a person is exempt from paying U.S. income tax as a result of their "overseas" status they

would also be disallowed from the Roth IRA as an option.

Which raises another question of whether the sponsoring organization of the 403(B) can make "pre-tax" contributions

for someone who is not subject to income tax.

Thoughts??? Specific references/citations to IRC would be appreciated.

Thanks,

If an ESOP does not comply with the 409(e) voting requirements, is the validity of the entire plan jeopardized, or only the ESOP characteristics of the plan?