What is the due date for a conversion from an IRA into a Roth IRA and make it count for year 1998? In other words, can I make a IRA conversion to a Roth before April 15, 1999 and designate it as a 1998 conversion and include it on the 1998 income tax return. I do understand that it will be taxable in 1998 and not qualify for the 4 year spread since it was not done by December 31, 1998. I do see several references that April 15 is the due date for a regular Roth contribution, and make it applicable to 1998, but I'm not sure of the date for conversion. Thanks for the help.

A union pension plan provides benefits based upon years of service multiplied by salary received. However, the formula does not include overtime worked; if overtime was included, the salary, and hence, the retirement benefit, would be significantly higher.

29 USC 1054 (B) (1) (A) seems to say that "a normal retirement benefit" is based on "average rate of compensation" during the consecutive years where an employee's salary was highest. However, these terms are not defined in the statute.

Does "average rate of compensation" include overtime, and is the failure of the plan to provide credit for such overtime actionable under ERISA?

Thanks in advance to all who respond.

I believe you could have simply "recharacterized" your Roth IRA as a traditional IRA. I don't think you needed to "roll" it back again, so the 62 days would not have been an issue. You can recharacterize your IRA anytime before filing date, including any extensions to which you are entitled. Lots of people will be recharacterizing their Roths if it turns out they earned too much in 1998 to be eligible for a Roth, or contributed more than $2,000.

Speak to an accountant or tax specialist about what steps you need to take and what penalties you might have incurred inadvertently. There may be a way out of this. The IRA's custodian may know too, but his/her concern is with investments, not tax issues per se.

If the retirement account is recharacterized as a traditional IRA, there should be no tax liability whether paid as a lump sum or spread over four years, because your IRA remains a deductible tax-deferred account as the 401(k) was. That's why one can't roll a 401(k) directly to a Roth, which is tax-free (taxes having been paid upfront on the original earnings). And the four year tax break was only good till December 31, 1998 anyway. Henceforth the taxes due on conversions to a Roth have to be paid as a lump sum.

Talk to a professional.

I will be getting a share of a 401(k) as part of a divorce settlement. I'm anxious to convert this to a Roth IRA for its long-term benefits, but know that I have to go through a traditional IRA first.

(1) No calculator that I've seen provides for the option of paying part of the conversion tax with outside assets, and the remainder with some of the IRA assets -- or in my case what would have been a 401(k). Does this mean the taxes have to come from a single source? I don't have enough ready cash to pay the whole tax burden, but I don't want to deplete the retirement account either.

(2) If the 401(k) is transferred to me and I roll it over immediately into a traditional IRA, and then convert this into a Roth, will both transactions be penalty-free because of the divorce situation, or only the initial transfer of the original 401(k)?

Thanks.

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Lyric

Husband purchases a joint & survivor annuity (not an employer plan). Wife dies 5 months after he does. There are no other beneficiaries. Q: Does the annuity become "worthless" upon wife's death, and therefore, value of zero is reported on her estate tax return?

Any assistance is appreciated.

We have a client that operates as a partnership. They asked us to calculate maximum contribution for 1998. They indicated that all four partners should share equally regarding wages for the common law employees. But the K-1 compensation is vastly different for each partner and indicates that partnership percentages are various.

I am not an accountant, but this arrangement seems questionable. Is this arrangement strange or normal?

If you have several regular IRA accounts, and want to convert, say one, and pay the tax all at once --- and then take a second IRA account and pay the tax using the 4-year spread, can you do this?

If a plan allows a dependent care election change based on the participant's relocation of residence (where this is only a legitimate change in family status for purposes of changing health/accident/life insurance) are the only consequences to the particpant e.g., loss of income exclusion) or are there potential plan-wide consequences? I thought that only violation of nondiscrimination rules conduct could disqualify the entire plan. In this particular instance the relocation is only by a few blocks and does not impact availability of dependent care.

who is offering the most competitive roth ira rates?

This article mentions that there is a bill which would signifigantly increase the AGI limit on Roth conversions.

Does anyone know the status of this bill or the bill number?

Why didn't Congress just use the same limit for starting a new Roth for the conversion??? My life would be much simpler.

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http://www.rothira.com/reymann.htm

"There is some support for increasing AGI caps for conversion IRAs. The Medical Health Bill proposed to increase the $100,000 AGI conversion limit to $145,000 for single filers and $290,000 for joint filers, and in doing so was projected to raise of revenue was $2.4 billion over 5 years. This increase of revenue generated by conversion makes it a possible addition to spending bills which need additional revenue in order to be balanced. "

We rec'd a MCSO but the noncustodial parent is our 'ee and not enrolled in our health plan. The insurer says it will not enroll the child only, but the MCSO does not say that the 'ee must enroll in the health plan. What are we supposed to do in this situation?

Our state statutes prohibit withholding employee-funded pickup contributions of nonunion employees unless "The employer is required to do so by law." Do you know whether an ordinance enacted by a special district applying only to its employees in a state with such a statute qualifies as such a "law"?

over the past ten years i made non deductible contributions to my ira and did not file the req 8606's. in 98 i converted the non deductible dollar amt to a roth. ques. what is the avenue for correcting my oversight?

My wife and I own shares in a mutual fund earmarked for the downpayment on our first home. We don't expect to buy for five years. Question: does it make sense to transfer some of that money to a Roth IRA (understanding we will pay long term capital gains on the withdrawn amount), in order to realize some tax-free growth on at least part of our home fund? We already have Roth IRAs dedicated to retirement. Thanks for your input.

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Gregory Bell

What are you doing with "fractional people"? I've got 8 employees. 20% of them is 1.6 people. Do I have 1 or two people making over $80k and Top 20%?

Is it necessary for governmental plans to submit for a qualification letter? Is it true that governmental plans are considered "Qualified" until not qualified? What are the benefits of tax qualification?

I am looking for a check writing program to use for distributions from 457PST plans. I need to be able to export the data from Quantech and load to the check writing program. I heard a rumor that a company in Florida was successfully using a program but I was not able to get the name. Any suggestions?

I have opened ROTH IRA account in 1998. I found now that my MAGI is > 50,000.00.

What are the option do I have now?

Since, my company has 401k plan I can not open regular IRA. Can I open regular

mutual fund and transfer the money?

What do I need to do to report to IRS?

Any extra IRS form need to fill out?

Now that I have your attention.....

Have you ever longed for a Crystal version of theADP /ACP test? I'm giving away one such version at the next Southern Users Group meeting being held Friday April 30,1999 in Atlanta.

(Details on the report below)

Souther Users Group Agenda:

8:00 - 8:30 Continental Breakfast

8:30 - 9:00 Business Meeting

9:00 - 10:30 Document Update, emphasis on safe harbor plan. Instructor is Robert Richter from Corbel

10:30 - 12:15 Quantech 5.0 Update, instructors: Tom Poje, Lorraine Dorsa

12:15 - 1:30 Lunch, sponsored by Manulife

1:30 - 4:00 Autodoc Update and training, Instructor: Beverly Jackson

The group is planning on dinner afterwards.

The group has reserved rooms at SWISSHOTEL in Buckhead. 149.00 a night, call (800) 253-1397 for reservations. Rate is guaranteed through April 12. Hotel is accessible by MARTA from the Airport to the Buckhead stop.

Nearby Hotels: Holiday Inn $99 per night. (404) 264-1111 (next door to Swisshotel

Marriot $109-$119/night (404) 869-0818 (across the street from Swisshotel

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

membership is $50 annually (per firm)

future meetings this year:

Orlando, FL Aug 6-7 (2 day)

Columbia, SC Nov 13

nonmembers who wish to attend (or those who want to become members) should contact:

Maggi Heffernan (770) 641-1429

Hey, last year we had 2 people from Seattle attend!

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

Anyway, no guarantees on my ADP report, but this is a Crystal version, it sorts alphabetically, and will tell you who is excludable on the ACP test.(but does not do statutory exclusions at this time)

There is also a version for plans with no match contribution.

Report seems to be working fine, but one never knows what exceptions might arise.

Anyway, I'll bring that and a bunch of other reports to share.

By the way, I will be at the hotel Thursday night, if someone wants to hash out some Qtech questions.

Hope to see you there![my e-mail is lda@leading.net ] thats the letter l not the number 1.

We have come across a situation where a participant/shareholder has named his company as beneficiary of his MP/PS benefits. There is no QJ&S issue and my question is does anyone feel this prohibited by Erisa.

Any thoughts would be appreciated.