Does anyone have any comments or opinions on the IRA article in the 3/18 Wall Street Journal (front page section C)?

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

ok. Thanks for clearing that up for me. So to add to my original question, can the distribution be made to a conduit IRA, and then be moved into the living trust as a sub-account, so as not to commingle the assets??? I guess what I'm getting at is can the IRA continue on, status quo, as an 'asset' of the living trust?

I'm self employeed and make maximum yearly contributions to my SEP-IRA. The Roth IRA is obviously attractive because of its tax-savings. Can I have both a SEP-IRA and make contributions to a Roth IRA? Thanks for any information you can pass along.

My contact information is listed at the end of this message.

My question is with Minnesota state income taxes for 1998, 1999, 2000, and 2001 with a 401k to IRA to Roth IRA conversion. I am using the 4 year averaging federal income tax made for ROTH IRA conversions made before December 31, 1998. My conversions were completed before December 31, 1998.

First, I switched employers in July 1998 (one large corporation to another large corporation). At the same time, I switched residency from Tennessee to Minnesota, too, again in July 1998 (change jobs, new job in Minnesota, move to Minnesota for new job, etc).

Due to my switch of employers, I was allowed and I did roll my 401K plan to IRA and then to a ROTH IRA from my former employer. I did this in October 1998, after I established residency in Minnesota. To further complicate this, in May 1998, while I resident AND employed in Tennessee, I was allowed and did roll $20,000 from the 401k plan to a IRA and eventually to a Roth IRA (in May 1998). This early withdrawal was allowed in the 401K plan.

All the income contributed to this 401K plan was earned while I was a resident in Tennessee (1985 to July 1998). These were pretax contributions made to the 401K plan while.

The first $20,000 was converted to the ROTH IRA (via an IRA) was I was in Tennessee (May 1998). The final larger amount, $100,000 (not the real amount) was converted to the ROTH IRA after I established residency in Minnesota (October 1998).

How do I declare this on my Minnesota state income tax form? As a side note, I have already completed my 1998 Federal income tax forms and all asssociated forms. There is no confusion with how I declare this on my Federal income tax for the next 4 years.

1. I cannot find the correct forms or regulations for Minnesota for this. From my view, at least the $20,000 should not be included in Minnesota state income tax. I was not a resident in Minnesota when this was done. This income was also earned in Tennessee.

2. I am also trying to determine if the final $100,000 may also be excluded from Minnesota state income tax for the next four years. Why? I earned this income while a Tennessee resident. This pretax deduction reduced my Tennesseee taxes (pretax deduction in Tennessee). Tennessee state income tax only covers interest and dividends, not income from a job.

If so, what forms do I use for Minnesota. I have already searched Minnesota web site for forms and regulations.

On line 1 on the Minnesota state income tax, I enter line 39 from the 1040. This includes the amounts in 1. and 2. above. I cannot find how I can deduct this further down the Minnesota state income tax form on line 5 Subtractions. (I should be able at least 1. above -this occurred in Tennessee. Or how can Minnesota tax me while I was a resident of Tennessee on income earned in Tennessee?)

Here are even more details.

First, I have resided and only earned income in Tennessee from December 1985 to July 14, 1998, working at a job (paid Federal income taxes though on this income, withheld from my paycheck; it was a job at large corporations, normal W-2s, W-4s, etc.).

I moved to Minnesota and started earning income on July 27, 1998 (again a job at a large corporation in Minnesota, withholding for Federal and Minnesota state income tax, W-2s, W-4s,etc).

I established residency in Minnesota through a purchase of a home in Minnesota on August 15, 1998. I also sold my home in Tennessee on August 8, 1998 (sold just before I purchased my home in Minnesota). I also switched my driver's license to Minnesota, purchased and registered an automobile in Minnesota in August 1998.

While working in Tennessee from 1985 to July 1998, I participated in the large corporations 401k plan during this time - all pretax deductions for "Tennessee income", excluded from Tennessee state income tax.

Scott Bemis

Work Internet email: sebemis@bemis.com

Home Internet email: sebemis@access.webcombo.com

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Scott Bemis

Internet:

sebemis@access.webcombo.

net

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%?