In terminating a plan that has ee contributions, we are purchasing ann'ys from an insurance company.

Is it required (after the date of term.) to continue with the fancy method of crediting interest (i.e., 120% of apr), or can the insurance company switch at that point to its own (simpler) methodology?

Any guidance w/b appreciated/thx/David

A 401(k)plan had an employee listed as eligible in the year after he should have been included (should have been included in 1997, was included in 1998). The only contributions for 1997 and 1998 were salary deferrals (no match, no top-heavy, etc). The employee did to defer in 1998.

How would the employer self-correct? Does he offer the employee the option of making a 1997 contribution?

Does anyone have a good explanation (with examples) of the distinction between constructive receipt and economic benefit?

One of my clients has asked me about a method of calculating minimum distributions in which the IRA is somehow split between the husband (IRA owner) and wife (beneficiary) and separate calcs are done on each part. Apparently, as he understands it, you could use joint life expectancy for his portion and single life expectancy for his wife.

I've never heard of this and asked him to send me the information he received from his source describing this method. Has anyone heard of this?

I have a basic question. Does a Form 990 or some other form need to be filed for a section 457 trust for a governmental plan?

Does a traditional IRA to Roth Conversion have to be completed by 12/31/98, or started by, to qualify for the 4 yr installmt plan? I've seen both explanations.

I have after tax money that made into the 401(K) plan since I exceeded the allowed pre-tax amount. Is there a way to take this money out and put it into a Roth IRA?

Thanks

We married in 1995 and have been filing separate returns since then because the tax burden is lower. I understand to qualify for a Roth we have to file a joint return. I anticipate that by the end of 1998, our AGI will be just under $100,000 but it will likely exceed that in 1999 and thereafter. I have a traditional IRA that has only about $26,000 in it; my wife has an IRA but I do not know its value. Would we have to file a joint return for 1998 income to be eligible for a Roth? If so, we will pay more in taxes. Would we then be better off converting already existing traditional IRAs to Roths or keeping the traditional ones, stop making contributions and open new Roths? By the way, my IRA was opened when they first started and the contributions were deductable. I made contributions to it in 1997 and 1998 but they were not deductable. What to do, what to do?

Can a Roth conversion done in December 1998 be partially reversed in 1999 ( prior to the due date of the tax return) when it is determined how much the taxpayer wishes to actually convert and pay tax on?? If yes, is there a restriction on which assets can be transferred back to the original IRA?

What to do if a participant defers 20% and the plan is top heavy? The document says that, in order not to have an excess allocation, 'er contributions are reduced. Does this mean the participant does not get a top heavy contribution?

A client wants to adopt a formal waiver program to pay employees for not electing company coverage. My research indicates that a formal Section 125 plan with language specific to this program must be adopted. Can someone either provide me with a prototype document or lead to an organization that will not rob the bank. The first firm I approached would charge $1000 for an 100 employee company. Thanks for your help. You can feel free to call me at 609-778-4600 ext 119.

A company offered an enhanced early retirement program effective 2/1/97 - for ee's age 50 + with 5 years service. The retirement was enhanced 5+ years on age and service. Senior executives were not eligible.

In Aug 1997, company announces that it will liquidate in 1999. In 1998, a sale of assets document indicated that 2 officers will be given an early retirement like the one offered in 1997. (These were the same executives who were deemed not eligible in 1997 ) No offer was made to any other age 50 + who turned 50 subsequent to 1997. The 2 officers are also plan fiduciaries. Can plan fiduciaries set up an early retirement plan just for themselves??? Are there any requirements that an early retirement must also be offered to others similarly situated (others now age 50). Can excluded employees be retroactively offered an early retirement under an early retirement program where they were specifically excluded?. What if it's a new program(in '98 or '99) but only for those 50 as of 2/1/97. What if it was known in 1997 that the company might be liquidated and the officers were told that if anything happens, they'll get the early retirement (and the heck with the ones who turn 50 after 2/1/97). What if the officers weren't told, but someone decided that's what the plan would do. Is there any ruling that would require the company to also offer early retirement to others similarly situated. There has been a precedence that for every layoff there was an early retirement, now that there is the ultimate layoff, they are not offering ER to last group of 50+.. The pension is overfunded, although not enough to cover a last early retirement without additional contributions. The company has not contributed to fund in years. There is money available if they really wanted to offer it but they say it's too late. Any info or comments would be appreciated.

In converting to a Roth IRA, am I correct in assuming that if the value of the IRA at conversion is less than the original after tax contributions to the IRA, this will not be considered a taxable event?

Thanks for your help.

Is there a plan design which will enable contributions to favor the younger ER whose employees are all older than the ER? Is there a "reverse" cross tested technique that I am overlooking? Thanks for any ideas.

It takes about $600,000 to provide a lifetime pension of $50,000 to a 55yr old. In a contributory plan the retiree's account balance may approximate $100,000 or 1/6 of the cost. (Most DB Plans in the public sector require the employee to contribute at a rate of about 5% of pay while the Plan guarantees interest of about 5-6% per yr.) At first glance one would say "what a generous sponsor"!!. After, however, adding onto the individual's account balance the true investment earnings that were never credited to the account the retiree has in reality contributed about half the cost of his or her pension not one sixth as the Plan Administrator and the Union leaders would have the participant and the taxpayer believe. Such "recordkeeping" substantially reduces one's death benefit prior to retirement as well as the amount eligible for rollover should one leave employment without a vested benefit.

[This message has been edited by joel (edited 12-14-98).]

I've always favored CCH over the red RIA books (or whatever they're called). But now cch is going to straight annual billing and I don't like that. Does anyone use RIA? (I'm not sure this is the exact name) Do you know a contact phone #? Thanks!

David Lipkin

Can 1999 Roth contributions be made into a 1998 Roth conversion or do I need to set up another account?

Does anyone have an authoritative cite on how to handle a distribution of an ADP excess to a deceased participant? The participant died very recently and his account balance in the plan is still intact.

The plan administrator would like to have the refund check made payable to the spouse (beneficiary).

I believe that the 1099R should be done on the deceased's ssn for inclusion as income on his final tax return. I would like to confirm this. Also, does this create a problem in making the refund check payable to the spouse?

Thanks for any help.

[This message has been edited by Beavis (edited 12-09-98).]

Do all SAR-SEPs need a new form 5305A-SEP this year. If so, why?

Is anyone familiar with any authority after the Citrus Valley Estates, Inc. case that concluded that interest rate assumptions less than 5% were reasonable? I'm looking at a situation where a 3% rate was used with a NRA of 45. Trying to persuade IRS to accept 4% interest rate. Thanks. Ed