In 1998 I exercised the option to rollover some TIAA/CREF annuity accumulations into a traditional (or "classic") IRA, then converted those assets to a Roth IRA. In 1999 I took initial minimum distributions from remaining TIAA/CREF annuity contracts and had those funds "credited" to the Roth (as permitted by TIAA/CREF forms). I am retired and do not have earned income. Is this action treated as a conversion (rather than a contribution) and shown on 8606?

Early in 1999 I opened a Roth acount with a broker in the amount $1100. Funds were invested in mututal funds. Later that same year I forwarded funds in the amount of $900 to the same broker, to meet my allowable $2000 limit. After the funds were received and deposited in a money market, but before any equity purchase, I realized (too late) that the broker had a $1000 minimum for any equity investment. Now I was stuck with $900 in a low earnings money market. I called the broker asking what to do and they advised me to write a letter explaining and asking for the funds back. I did and they returned the funds. I subsequently opened a Roth count in the amount of $900 at a different broker with lower investment minimums. Just recently I received a 1099 on the $900 at the first broker, showing a distribution. My concern is not a tax issue, as the earnings were only $1.13, but how will the IRS view all these deposits?

Are my total Roth contributions for 1998 $2000 or $2900 (higher than allowed)? How does the IRS view contributions and withdrawls from the same aco**** in the same tax year?

Thanks for your advice.

dan

I have a couple questions about Roth Iras that I hope someone can help me on.

I am 21 and want to start saving for retirement but I dont want to go to a financial planner or on-line broker. I'm going to try and see if I can research everything by myself. So where can I set up an Roth IRA on my own? Also, for 1999, I was a full-time student and didnt have any "taxed income" but I do have some money saved up over the years that I want to contribute before 4/15 for the 1999 IRA. Can I do that even though I had no taxed income. I had heard that you can only contribute the same or above ($2000) the amount of taxed income you had that year.

I'm planning to buy buy 1-2 Mutual Funds to put in my IRA and many people have told me that Vanguard is the best. Specifically Vanguard Total Stock Market Fund and Vanguard Growth and Income. But I had read that Vanguard mostly deals with index funds and I had wanted to stay away from those because I feel at my age I can be a little more aggressive and index funds arent managed very much. Are the above Funds index funds?

Well, thanks for listening!

Lisa

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"Does they leave it there during the game?"-Bill Lee on the Green Monster

I am unsure as to how to address the following scenario:

One of our self-funded health plan clients with an original plan effective date in 1988 recently restated their plan with us (we did the booklets for them).

It has just come to light that the new booklets we produced last November contain a change in the limits on psychiatric benefits (from dollar to days/visits caps).

The new booklet does not say when the change is effective, and the plan effective date as stated in the new booklet is the original plan effective date back in 1988.

A recent check of their plan logic in our claim system showed psych benefits still limited the old way, with dollar caps. Obviously this needs to be corrected to match the current plan document, as well as to comply with ERISA.

I need to set a date in the claims system for the change to be effective. Unfortunately, I can not locate any plan amendment paperwork or other documentation in our files on the change in question, and the employee who handled all this has left the company.

I do know that the work on the most recent booklet began in early 99, and this is presumably when the change was specified. This client's plan logic in our system already has revision dates of 02/1/98 and 01/01/00, which were installed to accomodate other plan changes.

Any ideas on how to remedy this mess and bring the plan and the plan document into compliance with all applicable regulation? Please help!

Situation:

One plan (401(k) & P/S) with one plan sponsor and 3 participating employers (all controlled group members). Each participating employer has the right to pick P/S amount or percent for their own employees each year. Plan is top heavy. For the 1999 calendar year P/S is as follows:

Sponsor - 5%

Part Employer #1 -4%

Part Employer #2 - 6%

Part Employer #3 - Top Heavy minimum only

I know that for 410(B) and 401(a)(4) purposes, all employees in the controlled group must be included, but here is my question. When testing for 70% coverage for Part Employer #2 can I include the allocations that all other companies made even though they are less than the 6% or do the other employees show as not benefitting since they didn't receive the same 6%? On the flip side, when testing for Part Employer #1 can I inluced the other allocations even though they are more than 4%? How do top heavy minimums come into play?

Alot of maybe dumb questions but any help would be apprecieated

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During 2000, a client of mine discovered that the incorrect deferral percentage (10% rather than 3%) was used to calculate employee contributions. In addition, the employer match exceeded the 3% of compensation base. The plan is now overfunded. I am unable to find a straight forward answer as to how this should be corrected. Does anyone have thoughts on this issue? Any citations would be appreciated.

In addition, one employee has left and taken his "overfunding" with him. How probable is it that the employer can get the funds back?

If a non-key employee becomes employed and at the same time immediately becomes a participant in a top-heavy plan mid-year, what compensation is used to determine that non-key employee's top-heavy minimimum contribution? His/her compensation only from the date of hire/entry?

A client of mine is the on the receiving end of a substanital increase in health insurance premiums (effective 4/1/00). They are considering the removal of their prescription card benefit under their coverage to help offset the increase. They would like to allow the folks in their 125 plan (YE =12/31) to change their medical reimbursement elections ASAP to help defray the financial impact of the above action. I do not believe the above qualifies as an allowable mid-year change to the medical reimbursement portion of the 125 plan. Does anyone have a thought on this matter? If it is allowable, could I have a citation?

What has to be done (tax, penalties, etc) if an employer was withholding employee deferrals but never made the deposit into each acct and now wants to do a lump sum deposit upon "discovering mistake"? I know they have to make the deposit and include earnings but do they notify IRS and what fees and penalties will apply? ANy info would be appreciated.

If an employee separates following more than 15 years of service with a qualifies employer what rules apply to the amount of 403-B contribution that may be made in that final year (note: there is no employer contribution).

I have recently heard from a reputable mutual fund company representative that an individual cannot establish a Substantially Equal Periodic Payment prior to age 45. Does anyone have any further information regarding this -- either substatiating or refuting this?

I currently have an Traditional IRA (rolled over from a 401K, no comingled funds in this account), a roth IRA and my wife is about to leave her job to become a stay at home Mom. I would like to convert the IRA and my wife's 401K to Roth IRAs. I do not think I can afford the tax bite of converting my wife's 401K AND the IRA. My questions are as follows:

Can I convert portions of the IRA and 401K to a Roth IRA to spread the tax bite out over several years?

Can I ultimately merge all of these into ONE Roth IRA?

Can I invest the ROTH funds in equities as well as managed funds?

It is also my understanding that I cannot rolla 401K directly to a Roth, is that correct?

thanks in advance for any help.

Joe

Am I correct in my reading of Notice 2000-3 that a 401(k) plan with an existing match cannot be amended after May 1, 2000 to provide a safe harbor match for this year? And that to make a 401(k) plan with an existing match a safe harbor plan (for 2000) after that date, you must use the 3% nonelective contribution?

I've been running into this a lot lately. Smaller and not so small employers either pay their employees Individual plan bills or give them cash to pay their monthly individual plan premium, say for the employee rate only. I know this has payroll tax and other consequences for the employer.Does anyone have any experience with these problems or any technical information? THANKS!! email is fine.

The plan documents should state which contributions get limited first. THe 25% 415 limit still applies in any case.

The plan documents should state which contributions get limited first. THe 25% 415 limit still applies in any case.

For everyone who knows me from this board, and has my e-mail, etc., information in their Rolodexes, please note that an update is in order. (I've already updated the information on the board--this is an issue only if you're keeping a card on me somewhere else.) I just started my own law firm, Calhoun Law Group, P.C. New e-mail address is cvcalhoun@benefitsattorney.com . Other contact information can be found by clicking here.

I'm very excited about being on my own (well, if you don't count the 7 attorneys in Sanders, Schnabel & Brandenburg, P.C., with which my firm has a mutual of counsel arrangement). But for those who have expressed concerns, my employee benefits site will be continuing as always.

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Employee benefits legal resource site

[This message has been edited by CVCalhoun (edited 03-03-2000).]

[This message has been edited by CVCalhoun (edited 03-03-2000).]

To back up one sec - does the money purchase plan allocate forfeitures among other employees' accounts, or apply them towards the employer's money purchase contribution?

Congratulations, and good luck!

(From one sole prop to another.)

PS - I still have more messages posted than you do. Nyah nyah.

[This message has been edited by Dave Baker (edited 03-03-2000).]

Assuming the plan year is a calendar year. A plan participant was a 5% owner on 3/99. On 5/99 his company was sold and he was no longer a 5% owner. The former 5% owner turned age 70.5 after 5/99. He continues working and wants to defer receiving minimum distributions.

Is this person a 5% owner "with respect to" the 1999 plan year? If he is, then he must begin receiving distributions by April 1 of 2000. However, he was not a 5% owner at the time he turned 70.5 or subsequent. I think the correct answer is he cannot defer receipt of minimum distributions, but I could not find an answer in the regs, notices or committee reports which confirmed that. Any thoughts? Thanks.