I'd like the thoughts of our esteemed reader group on when do you considere a contribution to actually be made.

This affects two areas. For contributions made near the tax filing deadline (plus extensions), is it deductible for the prior year. And, for defined benefit plans, what date does the actuary put on the Schedule B.

Several possibilities that I could think of:

1. The client wire transfers the contribution on date X and it is posted on date X. (duh, this is simple).

2A. The client dates the check as date X, gives the check to the broker on date Y (Y usually equal to X), and it appears on the brokerage statement (i.e., the broker posts the check) on date Z.

3A. The client dates the check as date X, mails the check to the broker on date Y (Y usually equal to X), and it appears on the brokerages statement (i.e., the broker posts the check) on date Z.

2B. Same as 2A except substitute "bank"

for broker.

3B. Same as 3A except subsitute "bank" for broker.

Thanks

I am changing the form of a plan from an ESOP to a profit sharing plan. I anticipate that, shortly thereafter, the company stock will no longer be readily tradable on an established securities market. Currently the stock is publicly traded on the NYSE.

When the stock becomes no longer readily tradable, must I include a put option in the profit sharing plan thereby preserving what would have otherwise been required to be done if the plan were still an ESOP? Alternatively, can I eliminate in-kind distributions once the stock becomes not readily tradable as I would be able to do if the plan were still an ESOP under the ESOP and stock bonus plan exceptions of the 1.411(d)-4 regulations? If so, how do the limitations of the ESOP investment requirement of 1.411(d)-4 Q&A 2 come into play once I change the plan to a profit sharing plan?

I converted my IRA to a Roth IRA in 1998. My accountant is telling us that we have to pay the penalty tax this year. I understood that I could spread it for 4 years. Our joint income was $137,000. Our income was high this year because my husand earned an extra $7,000 that we will not see in 1999. Is my accountant right and we have to pay the taxes this year or should we spread it out over 4 years? Thanks

We are reviewing and working with a group and its board of directors and they are wondering if they should shop their acturial services. I wondered if anyone has a good feel for the range of hourly fee rates charged in the marketplace and an explanation for the variances. Some of the board can't seem to grasp the reasons for the hourly rates charged. I would greatly appreciate any feedback about rates and justification for these rates.

Thank you,

Garry

A participant terminated employment in 1998. The Participant signed and dated his distribution election forms July 1998. The election forms were mailed back to the plan administrator, and postmarked three months after the date on the election forms. Participant wants his benefit determined using the July 31 1997 valuation, but the Plan Administrator feels that the July 31 1998 valuation should be used, and is taking the position that the Participant back-dated the election forms (which were signed subsequent to the July 31 1998 vaustion date) in order to take advantage of the higher 1997 valustion.

Should the Aug 1997 or Aug 1998 valuation be used?

I apologize in advance if this has already been discussed but I could really use some input. A client wants to implement a 125 plan at his company. He intends to use the plan to cover his wife's aunt's nursing home expenses of $2500/month. Does this fall under dependent care (I don't know if he does/can claim her) or as medical reimbursement? Can someone fill me in on the dollar limit that might apply to this? Is this even allowed?

I can't find the answer to this anywhere in the code or regs. Reg § 1.402©-2 indicates that pre-tax 501©(18) deferrals cannot be rolled because it does not define 501©(18) as a qualified plan. But, on the other hand, 501©(18) affects 402(g) deferral limits, IRA deductibility, and is subject to certain 401(k) rules. This would suggest that it should be treated as qualified for rollover purposes, too.

Any precedence or citation on this? I am working with a retiring client who very much needs to avoid a big tax hit. Thanks!

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How do I determining the tax "basis" for ROTH IRAs (re: 8606 line 15) if the traditional IRA(s)converted to ROTH IRAs had comingled deductible (pre-1987)& non-deductible contributions?

My conversion amount totals over $83K because I'm a long time investor, and it came from some 20+ mutual funds.

Other Concerns: 2) The ROTH "income" for 1998 (even IF carried over four years)pushes me into a higher 31% backet (i.e. higher taxes); 3) I've read about penalties being slapped on for under-reporting income in 1998 due to "new found" ROTH income; 4)apparently I have to file to pay quarterly an estimated min. tax to avoid more penalties in '99,'00, '01.

I'm thinking of having to "recharacterize" about half of the converted funds back to Traditional IRAs just to avoid all the penalties let alone finding the money to pay for the taxes, and hit on my Misc. deduction threshold alone. Is there a spreadsheet on the web that you can point me toward that already has all the tax implications figured in for 98 and the out years?

Thanks.

I'm a first time BB user so pardon me if I should have made the above all diffent questions. I'm sure I'm not alone in discovering ROTH's downsides.

After I open a Roth IRA with cash, can I use the money to purchase stock in the company I work for through an employee stock purchase plan where we receive a discounted price? Are there any tax consequences to this which are different than simply purchasing stocks through a broker with my Roth IRA money?

I work for a newly merged health system of non-profit facilities. Currently we have both 403(b)'s and 401(k)'s throughout the system. We're building one retirement program to include all employees and want to go with a 401(k)plan. I'd like to provide upper management with 401(k) selling points vs. 403(b)'s and any assistance would be greatly appreciated.

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Cyndi

Does anyone know of suggested publications that pertain to the development of the various most common mortality tables, what the purpose and relevance of each of the tables are. Just background information to have on the subject. How the tables relate to one another.

Pax if you respond, if it is not too much trouble I would like to be able to respond to you by email. Thank you, Gary.

We are currently converting to QT and the system freezes up on a regular basis. Have others experienced this?

I am a vested member and want to roll over my total account into an IRA so I can control the investments. TMRS is telling me that I can only have my contribution and would have to forfeit the city's matching portion (a considerable amount). This doesn't seem right, does anyone have any experience with forcing TMRS' hand in this matter? Surely some other member has hired an attorney to accomplish this and had some success. Thanks.

I am a vested member and want to roll over my total account into an IRA so I can control the investments. TMRS is telling me that I can only have my contribution and would have to forfeit the city's matching portion (a considerable amount). This doesn't seem right, does anyone have any experience with forcing TMRS' hand in this matter? Surely some other member has hired an attorney to accomplish this and had some success. Thanks.

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I made roth conversion last year. I decided to pay taxes over 4 years. Now I found that the converted roth portion of money pushed our tax return bracket from 28% to 31%. This means I have to pay 31% tax for my roth conversion. This can mean thousands of dollars more to Uncle Sam over 4 years. I just cannot believe it. If I have left it in the traditional IRA, I think I will never have to pay such a high tax rate. Does anyone face the similar situation, or have I done something wrong in my calcualtion? Without the roth conversion, my husband and I are in the 28% tax bracket. I will greatly appreciate it if someone can help me and give me some guidance.

Yan

I was a resident of two states in 1998. I converted my Rollover IRA to a Roth at end of year. Can I select which state I wish to pay state income taxes to? There is a fairly large difference in tax liability.

I converted a traditional IRA to a Roth IRA in December, 1998 only to realize in January, 1999 that my AGI was over the $100k limit. In Jan, '99, I recharacterized the total back to the Traditional IRA. Several IRA's were affected but the total of all assets in each were reversed.

My questions are:

1. Is it necessary to report the conversions and recharacterizations for tax year 1998?

2. I received 1099R's for the original move to the Roth. Should the Trustee be sending me additional 1099R's which reflect the transfer back to the Traditional IRA?

3. If necessary, how do I report the activity on the 1040, using which forms, etc. if necessary?

Thanks in advance for your time!

I'm considering this program in my newly started benefits administration business. I have one mid-sized client who is interested in using it, and I *think* it will work well, but I'd love to hear from anyone actually using the program. Either an employer or an administrator would be fine.

Thanks so much!

Peg

I converted some IRA's to Roth IRA's last year. Then, in December, I took a distribution from the Roth in order to pay taxes on the Roth (I am over 59.5). That, inadvertantly threw me over $100,000 of income ($102,000), thereby disqualifying me from the conversion. More than 60 days have passed since the distribution, therefore, I cannot roll that distribution back in. Is there anything I can do at this point in time? I am not self-employed.

Employer's nonqualified plan states that distribution occurs upon termination of employment (plan says no termination if transfer to subsidiary). Plan also gives discretion to Plan Administrator to vary manner and timing of distribution. Plan participant transfers to sub and employer wants to payout the small balance. Constructive receipt issue? Taxes will be paid at time of distribution. It is the employer's wish to payout, not the participant's.