I agree. 1.411(d)(4) Q&A 2-(B)(2)(x)

My husband and I are both planning on opening a ROTH this year with the money we receive from our tax returns. We file jointly, and I understand that we can open individual ROTH accounts, with our maximum investmets per year being $2000/ account. My question is this: is there a MINIMUM amount that we must invest in order to establish a ROTH? I have been told that the minimum amount needed is $250. Is this true? I have searched high and low for this info. Can someone help?

Recently my union sponsered defined benefit pension program amended its rules as follows:

A participant with 30 pension credits can retire at 55 years of age and draw full benefits. A vested participant with less than 30 pension credits at 55 years of age will be subject to a decreased benefit amount up to 9% of the credit value he has actually accumulated. Since the participant only receives payment on his actual number of credits, this rule benefits only an elite few. This seems illegal. Is there a violation of any ERISA ruling here?

Taxpayer had a large traditional IRA, which she intended to convert to a Roth IRA over a number of years, beginning 1999 and ending the year before reaching age 70 1/2, so as not to be in the highest income tax bracket in any year.

She converted some in 1999, and some in 2000, and now finds that her income went over $100,000 in 1999. So she has to recharacterize the 1999 conversion, along with the "income" thereon.

The calculation would be simple if she had not yet done the conversion for 2000 (into the same account). But it's made more complicated by the fact that she already did the conversion for 2000.

The regulations appear to say that she simply has to write to the IRA custodian (in this case, a large brokerage firm) to have them recharacterize the 1999 contribution plus the "income" thereon. This would leave it up to the IRA custodian to do the calculation.

What is the best way to handle this?

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Bruce Steiner, attorney

(212) 986-6000 (NY office)

(201) 862-1080 (NJ office)

also admitted in FL

Please help.

We started a 401(k) in August 1999. We waived the 1 year eligibilty for all current employees. Our plan document allows age 18 to participate. We have 2 HCE and 4NHC participating for 1999. Bothe HCE are over 21 and have been with the company for years.

If we include all employees we fail our ADP/ACP tests. If we exclude the two employees who are under 21, we pass the test.

I do not understand SBJPA section 1459 where it says they must pass a test of their own? Do we run a separate test with just those two people and no HCE in the group?

Do our documents need to say anything to include only those over 21 for the tests?

Can we just run the tests with the employees over 21 and ignore the other two?

Thank you!

Am eligile to participate in SARSEP (set up in 1986), but have reason to believe that employer is not in compliance with IRS regs. In summary:

(1) NO info provided until last year and then all that was said was "we have a plan and you can participate."

(2) Only 2-3 people out of 10-12 employees even knew about it and have been the only participants.

(3) To my knowledge all contributions for the 2-3 empolyees) have been elective deferrals.

Will provide more details if needed. I fear participating because of possible adverse consequences to ME if they are not in compliance. Should I be concerned? PLEASE HELP.I've been researching this for weeks and have found no answers. Today I lucked up and found this board. By the way, Mr. Lessor I have your SEP And SARSEP Answer Book (1997), but it is considerably over my head. Thanks in advance for any help.

A participant in a 401(k) plan that provides for self-direction is interested in purchasing covered calls. Is this permissible? I know of the UBTI issue for the plan as a whole, but thought that only applied if plan didn't provide for self-direction. Any thoughts? Thanks. Ed

We are just starting the process of merging two frozen 403(B) plans into an existing plan. We have drafted a resolution transferring annuity contracts and custodial provisions. Other than anti-cutback, are there any other concerns, issues or procedures we should be aware of related to merging 403(B) plans?

A plan fails the ADP test. HCE 1 deferred 10% and the amount to be returned is determined by reducing his deferrals to 8%. HCE 2 actually receives the distribution to correct the test. The employer match was dollar for dollar. Whose match gets forfeited to comply with 401(a)(4)? Was this addressed in any legislation?

Thanks in advance.

Does anyone know what the IRS position on the minimum normal retirement age in a defined benefit plan can be? All participants will be fully vested at all times and because the plan's assets will be invested so as to equal the interest credits (it will be a cash balance plan), the vesting and funding issues should not be relevant. We want to allow in-service distributions after normal retirement age and want to set normal retirement age as young as is permissable.

I have two Roth IRA's. One was a conversion from a traditional IRA. Can I combine these two IRA's into one?

A Profit Sharing Plan with a 401(k) salary deferral feature permits employees to defer salary immediately upon enrollment, but requires 12 months of employment to receive the discretionary employer profit sharing contribution. If the Plan is top-heavy, must the Plan provide the minimum top-heavy contribution for the employees who are eligible to defer salary, but not yet eligible to receive the discretionary employer profit sharing contribution?

Is there a way to disaggregate the portions of the Plan for purposes of determining which employees are to receive the top heavy minimim contribution?

A participant plan on retireing this year. She currently has an outstanding loan in her employer's 401(k) plan. The loan program states that loans are repaid through payroll deduction. There is no other option. This is a large plan with numerous loans and the employer does not wish to handle loan repayments outside their payroll system. The participant does not wish to request a distribution from the plan until after the end of the 2000 tax year. She would like to continue to make her loan payments to the trust. She does not wish to take the loan as a partial distribution nor does she wish to default on the loan. The loan program states that loans are considered to be in default after 60 days from the date a payment is missed. What are her options?

Where can I find reviews or ratings of TPA's for a defined contribution plan? We are unhappy with our current TPA and would like to get some input about potential new provders

Is there any downside to taking an earlier withdrawal from a roth IRA to pay for my kids education in 15 years. It seems that this would be a better vehicle than a mutual fund. It seems that you get taxed the same way, and If I do not need all the money for education, it keeps earning tax free until we retire.

Thanks

Joe

If a partner loans money to an ESOP, is the loan interest paid by the ESOP reported on a 1099-R or a 1099-INT?

Does anyone have any statistics concerning the percentages of employees who make the election to opt out of a plan when they are negatively enrolled?

here is an interesting issue I have encountered. If a participant has made extra loan payments, then the amortization schedule 'adjusts' his loan payments to correspond to the number of months remaining.

NOTE: this does not appear to change the regular payments, it is simply the amortization schedule that prints this way.

in other words, if I want to print a revised amortization schedule on an individual, I have to model it, set the loan payment amount to the original payment amount and then print the schedule.

In fact, as with all loans, the last payment is usually slightly different than all the other payments. As a result, the loan payment amount might end up differnt on your amortization schedule regardless if extra payments were made. I have encountered some varying a few pennies.

AGAIN, I would emphasize, this is only the amort schedule. the system does not appear to be using these adjusted amounts.

If you don't 'model' before printing, you might not even be aware the system is doing this.

I would like to hear what others will be doing. Do you think this just another bump in the road like the 1994 TAM was? It is certainly coming at an inopportune time, with restatements coming soon.

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Andy Treece

Prop. Treas. Reg 1.125-1, Q/A-17

Prop. Treas. Reg 1.125-2, Q/A-7