I need to recharacterize my 1999 Roth IRA contributions to a tradition IRA account. Going forward, it occur to me that I will have a choice of contributing to a Roth or Regular IRA. Since I'm in a volatile trading business, I don't know exactly how much I'll earn in any year. Is it wise to simply contribute to a Roth IRA and then recharacterize it if I exceed the limit or are there hidden penalties for recharactizing Roth? aside from the paper work headaches - are there any other drawbacks doing this all the time?

Thanks

Does anyone know of a resource for finding the average retirment plan earnings? I am trying to help a lawyer determine what a reasonable rate of return would have been on plan assets for years going back to 1987.

Are nonqualified plans subject to QDROs?

An ESOP plan document specifies that the forfeitures are reallocated. Can the document be amended so that the forfeitures go back to the company? The company would then put the forfeitures back into the plan as a contribution and receive a tax deduction for it.

We do not think that this is allowed, but we have a client insisting that a lot of ESOP plans do this. The plan has some cash, and has a leveraged loan that they are making payments on. The plan is not entirely owned by the ESOP, if this makes any difference. 1). Can forfeited shares or forfeited cash go back to the company? 2). If yes, could the company put the forfeitures back into the plan and receive a deduction for it? Is there any guidance such as a regulation that states that this can or can't be done?

If you agree that this is not allowed, are there other alternatives for the forfeitures besides reallocating them that would be to the advantage of the company?

The husband and wife owners of a company with 50 participants in the 401(k) plan shut down the operations of the company and terminated the 401(k) plan. All assets have been paid out of the plan. The company still exists with the owners as the only employees. What are the options for starting a new plan at this point? Do the successor plan rules apply? The owners may resume operations of this company or start a new company in the future.

Subject owner was born in 1933 and established KEOGH. In 1994 he terminated KEOGH and rolled assets into seggregated conduit IRA. He has not taken any distributions from IRA. Can he still use 10 year averaging if he takes entire balance of IRA?

I have an employee who worked for me part time for about a year. Then we hired him on a full time basis. What date do I use for his hire date?

I'm wondering what people are seeing from Humana for PPO plan increases. A client of 70 employees just received a TRIPLE DIGIT increase with no justification or backup.

Humana doesn't do business in Oregon so I'm not familiar with them.

I am trying to find out if there is a way my 73 year old mother could contribute towards a Roth IRA. She has a small pension, however she has no income from a job. Can the sale of or the profits from the sale of stock be considered income for this purpose?

One of my associates has heard of a 401(k) plan available on the net that any employer can participate in. He seemed to think it was some kind of omnibus plan that passed economies of scale to adopting employers. I had not heard of such and would welcome any additional information.

Generally a pension plan must provide "definitely determinable benefits" and contributions to a money purchase pension plan must be "fixed" without being geared to profits 1.401-1(B)1(i). On the other hand, contributions to a profit sharing plan only must have a "definite predetermined formula" 1.401-1(B)(1)(ii).

You have a predetermined formula, but I am not sure that you have a "fixed" contribution or definitely determinible benefits.

I would like to convert to my roth a portion of a trad. ira, which has ded. and non-ded. contributions. Since a portion will be taxable, can I make the conversion now (prior to 4/15/00) and include it on my 1999 tax return? Can't seem to find this issue addressed in the 8606 instructions. Thanks for any help.

john

I'm 39 years old with a $250K IRA of which I'd like to withdraw funds. It's earning a pretty good interest in the stock market. I've calculated my payout using the life expectancy method of 43.5 years, but how does one find out how to use the other 2 methods? Amortization and Annuity? Could you point me in the right direction?

In order to determine key employees, is the officer compensation threshhold prorated for a short plan year? I could not find anything anywhere.

Employer fails ADP test and the correction was to return excess contributions. There was match associated with the returned deferrals. Because matching contributions are immediately 100% vested, the plan document seems to assume there will never be any forfeitures and so is silent on what to do with forfeitures.

I believe the match associated with the returned deferrals has to be forfeited. What should be done with these forfeitures if the plan document truly is silent on the issue?

How do documents generally deal with this issue? (I've seen one that said what to do with forfeitures in this case was at the discretion of the Plan Administrator.)

I have a takeover DC plan with a plan year end of 12/31/99. The plan allows for deferrals, match and profit sharing. The plan has 12 partners and about 15 rank and file folks.

8 of the partners fund their deferral elections throughout the year against the monthly draws they take. These deferrals are remitted within the confines of the 30 day rule.

4 of the partners write personal checks to fund their annual deferral amount. These checks appear to have been cut anywhere between the first day of the plan year and March 15, 2000.

My question is two-fold:

1) Can partners write personal checks to fund their deferral elections without it being construed as an after-tax contribution?

2) If the answer to the above is yes, when must the funds be deposited in order to be deductible on the 12/31/99 K-1?

Will you all be using the new DOL VFC program for the problem of late deposits of employee deferrals. Is this now the only right method of correcting the problem? I understand the 5330 must still be filed. Is the 15% on the interest that must be deposited only? Thanks for any help!

A 401(k)/profit sharing plan of a sub-S made a distribution of $34,000 in March 1999 to NHCE at his "urgent" request with only verbal discussion of taxes & penalties by Trustee (intended as hardship?) but no paperwork at all either for loan (no provision in plan), in service distribution (no provision in plan), hardship (in plan), etc, money was just paid out. No taxes withheld, no reporting on 1099(yet!). We found the transaction last week when working on 12/31/99 val. Also, a normal retirement participant and termination of employment participant was processed without paparwork in 1999. Plan otherwise has been in complete compliance. In retrospect, if catagorized as a hardship, maximum was $18,000 (employee deferrals only). No attempts at repayment by payroll deduction, etc, in fact, participant continued to defer pre-tax, while employed under age 59 1/2. Plan assets $2,000,000. Most concerned about qualified status of plan, less concerned about impact to participant. Is this APRSC? VCR? Walk in CAP?

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I recently received a letter from a previous employer stating that the 401(k) plan that I had participated in had, from 1/1/95 through 7/15/97, been administered as if the plan document provided for quarterly entry dates. In actuality the plan document provided for semi-annual entry dates.

I began participating on 10/1/96 (quarterly entry). Quarterly entry was expressly stated in the SPD that was provided to me. I terminated in 11/97 and opted to leave my money, which was in excess of $3,500, in the plan. On 10/22/99 I rolled all of my money into a Rollover IRA.

They are now telling me that a portion of the money that they distributed to me on 10/22/99 included ineligible salary deferrals plus earnings and do not qualify for tax-free rollover.

I don't believe that I should be punished for their inability to administer their own retirement plan?

I had made deferrals based on their guidance. Do I have a problem here?

Eligible employer sponsors a "bridge" plan that pays $400 per month to employees who terminate after age 55. Payments end at age 62, with the intent that payments are a bridge to Social Security benefits. Plan doesn't satisfy 2000-1 "severance pay plan criteria." If 457(f) applies, we have a tax problem because no substantial risk of forfeiture. Can this arrangement be treated as an eligible 457 plan? Has anyone seen this type of formula in an eligible plan? How do you calculate dollar limits under 457(B)(2)? Since there are no employee deferrals and no assets are set aside to pay benefits, is a 457(g) trust required?