We currently use an outside software package (Lawson). Does anyone have any comments positive or negative regarding this package? We are also upgrading from the 6.0 product to the 6.1 product. Has anyone recently gone through an upgrade? Does anyone have any feedback regarding this process? Does anyone have any feedback about other payroll processing software vendors?

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I have a partnership 401(K). 3 partners and 2 staff. The plan's adoption agreement specifies "415 Comp" as the comp. definition and I'll be using this comp. for ADP and 415 limits.How do I define "415 comp" for the partners? Deriving "earned income" from K-1 involves several subtractive items. Do I just add-back deferrals to "earned income" or do I add back more?? Also, for deductibility under 404, is the calculation still 15% of "earned income" for the partner portion?? Any direction or help on these would be appreciated!!

I'm having trouble filling out Form 8606. Here's my situation:

In April I converted my traditional IRA to a Roth IRA and made my $2000 annual contribution (to the Roth IRA).

In October, I recharacterized my entire Roth IRA back to a traditional IRA, then immediately converted it all back to a Roth IRA to take advantage of the drop in the stock market.

My question is how do I account for my $2000 contribution on Form 8606? Since the $2000 was already taxed before I put it into my Roth IRA the first time, it doesn't seem right that it would be taxed again as part of my second conversion from the traditional IRA to the Roth IRA.

Any help would be greatly appreciated....

A calendar year 401k plan receives a profit sharing and match contribution after 12/31. If 5500 prepared under cash method is this contribution reported on 1998 form, or in the year received? Does it make any difference if this is a first year filing?

Employer that has maintained a 105(h) plan for over six years without a plan document now wants to adopt a plan document - need the plan document be effective as of inception of informal plan, or can it just be effective going forward (due to fact that 105 does not require written plan document).

Having a child in the 1st year of college, I was thrilled to learn of the $1500 Hope Scholarship tax credit. I was also thrilled with the thoughts of tax free retirement money so I converted my Traditional over to a Roth without realizing I was pushing our combined taxable income over the Hope limit even if I spread out the IRA distribution over the four year period. Is there anyway around this short of recharacterizing the Roth IRA back to Traditional status? I can't believe this is happening!

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Chuck W

Can someone please claify the following:

For family attribution rules to determine HCE for Plan years after 12/31/96, do you apply the effective control test, when the father and adult son owns the company, that is if the father is a 20% owner and the son is a 2% owner with compensation less than 80,000, would the there be attribution between the father and son? What if the son did not own any stock and his salary was less than 80,000, would he be HCE. All that I have read has indicated that there would not be attribution to him from his father if he is under age 21 and as such would not be deemed a 5% owner and as a result would not be a HCE. Can someone verify this?

Thanks.

i am offering a two day study course on the c-1 exam one weekend in May in Albany New York-if interested please e-mail me @ amy.cavanaugh@milliman.com. My last study group all passed with an 8. While I cant offer any guarantees, I think that I have been quite helpful in helping ASPA students prepare for this comprehensive test.

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I will be offering a two day comprehensive study weekend in May. The course will be held in Albany, New York and will address all matters of defined contribution plan administration. For more information e mail me @ amy.cavanaugh@milliman.com

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Will the plan satisfy the ACP safe harbor under VI.A. in this stuation?

3% safe harbor nonelective contributions are made.

Additional matching contribution satisfies VI.B.3. (other matching contributions). To receive these other matching contributions, the participant must work 1,000 hours and be employed on the last day. The other matching contributions are subject to vesting.

The 100% vesting and no accrual requirements do not appear in VI. and the Plan has a 3% safe harbor contributiion.

I understand that only self employed individuals and employers with less than 50 are eligible to contribute tax free and earnings grow tax free. What about a larger employer? Can a large employer establish MSA but there will not be any tax advantages; employer cannot deduct contribution and it is subject to inclusion in employee's taxable gross. Is there such a thing as a non-qualified MSA? Must the employer contribute then to all employees?

I have a cross tested Profit sharing plan covering 2 corporations and 1 sole proprietorship. Each entity will decide how much to contribute to the plan. When determining 415 limits, is the limit computed per entity for each participant, or is the 415 limit determined by counting all compensation from all 3 entities? Thanks for input...

I converted to a Roth IRA in 1998. During the year I made a distribution thinking it was required (I am older than 70 1/2). After receiving my 1099R from the conversion I realized it was not in my best interest to convert to Roth IRA. In Feb 1999 I reconverted back to a Traditional IRA. My question is do I have to pay the 10% penalty on the distribution I made while it was in the Roth IRA ? Please Help me! Thanks!

I have a 401(k) plan that was signed on 12/23/97. For 97, only PS contribution was made. For 1998, ADP is failing and could use the 3% fpy prior method. Section V of notice 98-1 indicates the fpy is the "first py in which the plan, within the meaning of 414(l), is or includes a 401(k) plan (i.e., the first year a plan provides for elective contributions.....). DOES THIS MEAN I TREAT THIS AS THE FIRST PLAN YEAR, AND USE 3%? THANK YOU.

I left a company. I requested a lump sum of my benefit. The lump sum was calculated based on age nearest birthday (plan historically administered this way) at time of distribution. My age nearest birthday increased by a year prior to the distribution date. However the plan administrator paid my lump sum based on my younger age. I submitted a claim stating that I am entitled to an additional lump sum payment, since my age increased by time of distribution. Any thoughts. P.S. payment was made about 9 days after I attained my next age nearest birthday.

When amending a pension plan to be a cash balance plan, are there any known restrictions w/r to determining the present value of benefit in order to arrive at an initial account balance? One plan used a rate of 9%, which seems high, considering that when a plan pays a lump sum, there are maximum allowable rates.

Ok, I have two questions.

1) I'm graduating in May and starting my new job on May 17th. My company's 401(k) matches $.50 for the first $1500 I contribute, not matter how much I contribute. I was planning on contributing 15% to my 401(k), but since their matching is so low, I decided to do it this way:

First, I'll contribute $1500 to 401(k).

Then, I'll save $2000 to put in a Roth IRA. Last, I would contribute the rest back to the 401(k) plan.

For example, if 15% of my salary was $15,000 (it's not), I would contribute $13000 to my 401(k) ($1500 + $11500) and then the other $2000 to the Roth.

Does this seem like a good idea?

2) If I get paid 15 times at my new job (once in May, twice a month in June through December) and I save $268 each month, I'll have the $2000 to put in to the Roth. What I don't understand is this: Can I open up a Roth with nothing in it and make monthly contributions of $268 (up to $2000) or do I have to open and/or contribute to a Roth between Jan. 1 and April 15th? That I guess is what is confusing me.

Thanks for any info.

We are seeking health coverage for individual manager of our Condo Association. He has had health problems and we cannot secure individual coverage. Any Suggestions? Are there any Associations which he can join and obtain Group Health Coverage?

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William, I am not sure about the settlement money. The average rate of return on a Roth IRA depends on what financial vehicle you invest it in. Wether it be mutual funds, stocks, bonds etc.... That is the great thing about the Roth. You are in control and you decide how your money will be invested.

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Gordon

In 1998 I had converted a 401k from a previous employer to a Trad. IRA to a Roth IRA. After doing taxes I discovered our AGI was 106,000 (I thought 150,000 was the magic number) due to a car allowance from my employer which was included into my AGI but was ment to take care of car expenses for work. The payment was always given as a seperate check. Without this amount we would have been under 100,000 with no problem. What must I do now ? Are there any clauses that can help me keep my conversion where it is?

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Gordon