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

I have two questions: (1) Is it appropriate to provide a domestic relations order exception to the exclusive benefit language required in the trust? (2) Can you provide for reasonable Plan/Trust expenses to be paid from trust assets? It would appear to me that the answer to the first is no and that you can pay legitimate expenses from the trust but I would appreciate other comments. Thanks.

How are people handling QDRO's when there is an outstanding loan in the participants account? The alternate payee does not want the loan responsiblity. Example: alternate payee is awarded 60% of total account balance. Account contains 50K in cash and a 50K note(loan). What langauage protects the alternate payee so that when the loan is paid back, the alternate payee receives the payments. What happens if the participant defalults? Any protections?

If a small 401(k) plan covers one hce and 2 or three nhces and the company offers a safe harbor match and none of the nhce's defer, can the hce still defer the full 402(g) limit since there is no ADP test?

If separate accounts are no longer required for Roth Conversions and Roth Contributions, how is the 5 year distribution period determined for subsequent yearly contributions when the conversion was made in 1998?

What I am assuming you wish to do is have the contribution posted to the individual accounts but not perform the investment buys associated with that contribution. This way you have the contributions in the system to perform the necessary testing.

Assume the following:

Plan year is 10/1/97 - 9/30/98.

Employee deferrals for the last month of the plan year are deposited after 9/30/98.

Matching of deferrals for the last month of the plan year are deposited after 9/30/98.

To have the contributions posted to the 9/30/98 plan year without having to perform the associated investment buys you could do the following:

1. Establish an Employee Receivable account and an Employer Receivable account along with the other investment accounts. The account type used for these accounts should be Employee Receivable and Employer Receivable, respectively.

2. To post the contribution, input the Employee Receivable investment in the ACCOUNT # on the contribution transaction input screen, with the same being done for the Employer Receivable contribution. Also select the appropriate contribution type EE-Pre-tax, ER-Pre-Tax Match etc.)

3. Post the transactions as you would normally although this does require the posting of Employee and Employer contributions separately. (The Confirmation Required should not be selected for the posting).

4. The contributions will now show on the participant statements under receivables, have the data in the system for testing, but not require you to actually perform the investment buys.

When you actually do the investment buys for the "receivable contributions" you will perform the following (which should be in the following plan year):

1. Use a Transfer/Exchange transaction, selecting the Transferring Receivables option, to transfer the Employee Receivable account into the Employee Deferral.

2. Use a Transfer/Exchange transaction, selecting the Transferring Receivable" option, to Transferring Receivable to transfer the Employer Receivable account into the Matching.

3. If Confirmation Required for the above two transfer/Exchanges is selected, perform the investment buys as instructed.

I'd check the 1040 Form to be sure, I think the answer is Yes to all of your questions.

If one converted to a Roth in August and then later recharacterized to the traditional IRA and now finds that the original August conversion date will be most beneficial, is there a way to recharacterize backwards to the original conversion date? Is there a way to just "undo" the recharacterization? (Market timing is tough and made tougher by brokerage firms paper processing delays.)

I would appreciate input regarding the manner in which the Calif. FTB treats Roth IRA conversions. Does the amount converted have to be declared as ordinary income as with the IRS? If not, how are the future distributions treated ? Any help will be appreciated.

I am 62 years old and have some money in a

Tax Sheltered Annuity (TSA). Can I transfer

$2000 of this TSA and invest it in a Roth IRA? Please let me know if this is allowed by

the company that is handling my TSA.

I have been told that I can convert an IRA which I currently have in a traditional IRA in a mutual fund to to Roth IRA at no cost. A traditional IRA which I currently have invested in common stock (GE and IBM) will require a commision fee; commission fee to withdraw and a commission to reinvest/ rebuy. Is this correct ??

An individual died after payments had commenced from an IRA. Payments were based on individual's life expectancy (not recalculated. Individual's spouse is beneficiary. (1) What are her options? (2) Over what period is she required to receive distributions from the IRA? Any thoughts? Thanks. Ed

Are couples eligible to make 1998 Contributory Roths if their 1998 AGI exceeds $160,000 because of Roth conversions (income + Roth conversion amount > MAGI)?