Has anyone allowed an in-service distribtion of rollover contributions? Meaning, a current employee wants to take the money they rolled into our plan and roll that over into an IRA.

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I am seeking new information on current legal developments and personal experiences of professionals who deal "employee vs. independent contractor" issues in the workplace, particularly related to employee participation in benefit plaans. If you have information about other sources, questions, or just wish to share your own experience in this controversial area of "independent contractor or employee" status, benefit plans and participation, please let me know. Thanks very much.

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www.researchoncall.com

I have a case problem to present for this readership and am intersted in your opinions on its viability.

An IRA ower died before age 70 1/2 with a balance of $100,000. The sole beneficiary of this IRA is the son. This beneficiary is also executor of the decedent's estate and sole beneficiary of the estate.

The gross Federal Taxable Estate of the decedent is under $625000.

Usually the beneficiary would need to receive these funds in full before the end of the year in which the fifth anniverary of death occurs. As received it would be taxable income to the beneficiary for Federal purposes and taxable for the year in which received.

Under IRC section 2518(B) many IRA beneficiaries have successfully disclaimed interest in a decendent's IRA proceeds so long as four requirements are generally met:

1. Disclaimer is in writing

2. Disclaimer is within 9 months of the death of the IRA owner

3. no assets have been previously

received by the beneficiary

4. The beneficiary makes no attempt to influence or direct where the disclaimed funds will go.

In this case all of the above have been met.

The IRA Plan Document in force also has a default beneficiary designation to the estate of the deceased if no other beneficiary is designated by the origianl owner. No Plan language on discalimed interest exists however.

The son of the deceased would like to disclaim the IRA proceeds and let them pass into the estate of the deceased as he believes the IRA Plan so seems to default. As the estate's executor and MOST IMPORTANTLY the estate's sole beneficiary, he believes that the IRA proceeds will be then distributed to him through the estate settlement avoiding Federal Income Tax to him because of his disclaimer and also avoiding Federal Estate Taxation because of the total size of the estate.

This seems too good to be true? What's missing in this assumption? Will the IRS challenge this action or is it a legitimate assumption for this case?

Would appreciate your comments and especailly from any tax practitioners who understand estate taxation and IRA

Regulations.

Regards,

Dave Hammond

I would like to rollover my 401k from previous employer into a roth IRA. i am have been told that I must roll it into a traditional IRA and then convert it into a roth ira. Does this sound correct? Thank you.

I converted my mutual fund IRA to a roth IRA in May 1998. Since then the value of my fund is approximately $1000 lower. If I recharcterize and then convert again to a roth, can I report the lower conversion value on my 98 taxes? I realize I have lost the right to spread the tax payment out over 4 years. Thanks for your assistance.

I have a client who is an owner-participant in his own company's profit sharing plan. the company is an s-corp. if he unelects s-corp status, is he permitted to make a 'third party loan' from the assets in his account to his brother-in-law's company? if so, do the standard IRS loan rules apply to this type of loan? Can he set his own interest rate, say 7%? does anyone have this experience to pass on? any help is greatly appreciated.

I am trying to find out what common practice is in cases where long term disability plans provide for the offset of a participant's Social Security disabilitiy benefit. Does the offset include the attorney fee that the court awards directly to the attorney? Thanks for your help!!

I know you can report a 1998 Roth contribution on Form 8606, but it does not look like a requirement. If reporting you Roth contribution is not a requirement, how will the IRS keep track of basis? Thanks. Shane.

Check out the organizations at these websites: ifebp.org, aspa.org, and nipa.org.

Generally in order to receive a substantial raise an employee must quit and go elsewhere for employment. Then the company has to train and pay someone more than they were paying the original employee to come in and do their same caseload. Why do companies do this?

I am comfused by the definition of a "waiting period" for purposes of the enrollment date. If the Plan contains certain eligility requirements, other than the passage of time, when does the waiting period start? For example:

A welfare benefit plan provides health benefits which requires an employee to work at least 30 hours per week for 4 weeks before the employee is an employee eligible to enroll. After (1) meeting this eligiblity requirement and (2) preparing an enrollment form, the employee becomes a participant in the plan on the first day of the first month following completion of these two requirements. Lets assume that an employee starts employment on June 1, 1998 and works no more than 20 hours per week until January 11, 1999. On January 11, 1999 the employee begins working over thirty hours per week. On February 8, 1999, the employee completes 4 weeks of employment with at least 30 hours per week, and prepares an enrollment form for an effective date of participation of March 1, 1999. When does the enrollment date start under HIPAA? June 1, 1998, January 11, 1999 or February 8, 1999? I would think February 8, 1999 since that is the date he has met eligiblity and now is waiting for his participation to begin on March 1, 1999. June 1, 1998 doesn't seem to make sense. Nor does January 11, 1999 since the employee has not met eligiblity. If it is June 1, 1998, then part time ineligible employees who work more than 12 months would never have a preexisting condition exclusion apply to them, right?

Sponsor has two plans (prototype).

Employee who will soon be eligible to participate (non HCE) wants to opt out of the Plans (presumably in return for more salary).

1) Is this allowable?

2) If it is allowable, is the opt-out decision irrevocable?

3) If it is allowable, does the opt-out person count against the Sponsor in 410(B) testing?

A partnership incorporates effective 1/01/99. The partnership maintained standardized mppp and p/s plans. The company changed investment managers and retained a new TPA, both effective 1/01/99. The company wishes to restate onto the new TPA's prototypes. Can the new entity, with a new EIN, adopt and maintain the plans with a restatement or should they be terminated and new plans started? Thanks.

In the current issue of TIME magizine (January 11,'99) there is mention of a new provision to 401(k) plans. It says, "taking effect this month, companies no longer have a financial incentive to make new employees wait up to a year before becoming eligible for these [plans]. What is this referring to???? It doesn't sound like the harbor provision or the using of last year's discrimination test for this year's HCE contrib limit. Any ideas???

I was wondering if anyone had information on getting a loan from a profit sharing plan that is in the process of being terminated. Our company has been bought out, and the new company is in control of it. It still has the same administrator, but nobody seems to know whether or not I can get a loan from it for the downpayment on a principal residence. It has been sitting idle since December of 1998. Can anyone help me?

On a brand new 401(k)Plan if an employee is making over 80,000. do you need to check on his prior year compensation assuming he was at this company in the prior year?

I am a physician working as a contract employee of a for-profit corporation and physicain partnership. I will be eligible to participate in the 401k plan in July, but will be required to contribute the ER match portion out of my gross wages (pre-FICA) in addition to my EE contribution. The corporation pays the ER portion of my FICA. How does the definition of EE and ER differ in respect to the 401k plan?

I am new to the HR field, having been a labor/employment attorney for a couple years before I joined my current company. As most HR people know, the job market is extremely tight right now. In order to attract more blue collar workers who are lured by dollars rather than benefits, I want to propose to our company that we consider a policy whereby new workers can elect a higher starting hourly rate in exchange for waiving certain benefits such as medical and dental insurance. At the right hourly increase, this is a win-win situation. The company attracts more workers and there is a cost savings in insurance premiums. The employee gets more in his or her paycheck. I am looking for other companies who have considered and/or implemented this kind of policy, in order to have my facts before I make the proposal. It might be a stupid idea -- like I said I'm new to this. Any info anyone has would be most appreciated. Please email me at croach@adesa.com. Tx.

I am trying to locate the full text of ERISA on-line. Does anyone know if there is a website that has published the Act in its entirety? I searched the GPO website and could not find it, although I may not be searching correctly. Thank you.

How is the 401(a)(17) $160,000 limit applied in the salary reduction context? For example, suppose the plan allows a 6% salary reduction. The employee makes $200,000 and elects a 2% contribution. Suppose the plan allows a participant to change their election monthly. We have been advised that when the employee reaches the $160,000 compensation level, that the employee's allowable contribution drops to 0%, even though the employee did not make the maximum deferral under the plan for most of the year? It seems to me that the employee would be limited by the lesser of the 402(g) limit and 6% of $160,000, or $9600. And that the employee could raise his or her percentage to 6%, even though the employee at that time was receiving over $160,000 for the year, since the employee had not yet contributed his $9600.