It appears that Roth IRAs are subject to the mandatory withholding requirements of regular IRAs. Is this true? If not, please provide cite. If it is true, do we withhold on the full amount of the distribution (i.e., including those portions aready taxable to the partiicpant) or only on the taxable portion? Cite would be appreciated.

An employee (not eligible for FMLA) is suspended for a positive drug test. He no longer qualifies for benefits under the plan because he is no longer an active full-time employee as defined by the plan. COBRA is offered and elected. He completes a rehab program but fails the drug test again upon return to work from the suspension, at which time he is terminated. Can COBRA be terminated? Does theemployee handbook need to state that failure of a second drug test, after a suspension, is considered gross misconduct and COBRA continuation would be terminated at the time of termination of employment?

Unique situation. Employer has 2 sets of employees, Federal and Non-Federal. When calculating MEA for 403(B) test, how do we count years service if person was Federal (not eligible for 403(B) Plan) and then moved into a Non-Federal position within the same Employer? Do we count just the years they were eligible for the 403(B) or all the time they were with the Employer?

[This message has been edited by jgroves (edited 02-01-99).]

In 1998 I had a 401-K which I converted to a Rollover IRA. It was then converted to a Roth IRA also in 1998.

I just received 2 Form 1099-R's for 1998. One is for the conversion to the Rollover and another for the conversion to the Roth. Excluding my account number, the information on them is identical. The distribution code in Box 7 is G on both, etc..

The financial institution who sent them said I need both and the boxes are checked off correctly. I don't feel

comfortable with this explanation and am leary that the IRS may want to tax me twice on the amount. Does anyone know about the logistics of getting 2 of these Form 1099-R's?

Thanks.

Under Canadian tax laws, do CODA contributions made by Canadian participants to their 401(k) plan reduce their taxable income? Thanks in advance.

The answer has gotta be "No" but here's the question. Can I fund my newly created Roth IRA with stock shares? If so, am I allowed to do so on the BASIS price of the share (what I paid for it), or do I have to use the price of the share as of the day of funding. If the day of funding, do I use the closing price, or can I use anything in that day's trading range?

I converted my IRA to a Roth, recharacterized during the stock market crash and converted back with lower share prizes. Now my 1099-R shows a distribution and taxable amount that is way to high and I don't know how to put the numbers into my tax return without messing myself up. How do the different transactions get transferred into the form 8606?

Do you "lock in" your tax bracket in 1998 or does it change each year?

i.e., Convert 100K, 25 each year. Tax bracket in '98 is 15% and jumps to 28% in '99, '00, and '01. Do you pay 15% of 25k all 4 years or 15% in '98 and 28% of 25k the other 3 years?

We administer a plan where the sponsor has been over reporting hours for at least the last 5 years. Many participants who did not work 1,000 hours were reported as doing so, and incorrectly given a year of vesting service. About 30 terminated participants are involved with total overpayments of $8,000. Of course, these funds should have been allocated as forfeitures.

Total plan assets exceed $1,000,000,

so no single person is significantly impacted. Short of trying to collect small sums from all the overpaid former participants, what corredctive action would be appropriate? Would all the prior years need to be re-allocated if the employer deposits the funds? All ideas welcome!

Hi! My employer sent me the following letter with regard to health benefits for my spouse:

"In order to keep our health plans compliant under ERISA, the eligibility

for a participant to add a dependent is either at open enrollment (usually

around Nov/Dec of each year) or as a result of a change in family status in

which you have 30 days from the effective date of that change. In your

case unfortunately you missed out on adding your husband to your health

plan under both arrangements. We cannot make exceptions as it would make

our plan out of compliance under ERISA (federal law)." We were married last December 18. Is there any way I could still add my husband to my health benefits? -- Girlie

I am looking for a good COBRA/HIPPA seminar to attend. There are so many to choose from, and I want to make sure that I get my money's worth. Thanks in advance for your help!

How does one terminate a SEP (not a SARSEP)? Can a SEP be terminated on the last day of a plan year effective as the first day of the plan year, or do employees have an accrued benefit which must be funded? Thank you in advance.

I am looking for a way to gather information (as much as possible) on TPA in PA, Ohio, WVA. I am looking for those that may be interested in a merger/acquistion. Any ideas?

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Proposed Regulations 1.414(o)-1 deal with "Avoidance of employee benefit re-

quirements through the use of separate

organizations, employee leasing or other

arrangements." CCH commentary on these regulations indicates that they have no effect and that "there are no rules of which a court could take notice." I have a situation where 5% owners are hired by a leasing company (which they do not own) and leased back to their respective

companies. They are covered by a safe harbor money purchase plan and a 401(k)

plan sponsored by the leasing company. Do I have to worry about the proposed regulations and, if so, what testing do I have to perform to convince the IRS that there is not a nondiscrimination issue?

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When starting up a new 401(k) plan, which fees can be charged to participants?

In our first year we expect fees to include:

$2000 Set Up

$28 Per participant

$2,000 annual administration

$2,800 annual Trustee

$2250 non-discrimination tests

We expect 200-400 participants, assume $1.4million in assets

The 5307 schedule Q attachment for application for a determination letter must be 410-b compliant with it's coverage testing. Does the new 5500 coverage testing need to be compliant with 410-b regulations?

I know this has been addressed before. What does one do if a participant has left the company, has a vested balance, and cannot be located?

The employer has already tried to locate him, and has sent letters to the IRS and SSA to be forwarded according to their procedures.

One suggestion was made awhile ago that the trust obtain a cashier's check so that the funds are out of the trust (rather than having an outstanding check). If the cashier's check remains outstanding, what does the bank do? Will the trust eventually be credited back with the money and if so can it be absorbed rather than held for the missing participant.

Why can't this $ just go to the State as unclaimed funds? Other ideas?

Has the SS integration rate for DC plans increased above 5.7%? I've had several people tell me it is 6.2%, which corresponds the the OASDI rate, not the OA rate called for in the Code. I'm assuming they are looking at the wrong rate, but thought I would first check with others.

Please note that I have edited and closed the thread pertaining to the

chain letter that appeared here this morning.

I will attempt to keep this reflector centered on IRA and IRA related topics. This is growing into a very active BBS and your participation is appreciated greatly.

Hope that you agree. Thanks to all.

Dave H.

If a practice has a Section 125 plan for health insurance only (employees pay 100% of premium), how much advance warning is required before the employer can cancel the plan?