What is a claim for benefits? If HCE complains that he was cut back in ADP testing, is this a claim? What are consequences if we do not follow plan procedures in answer?

If I convert a $200,000 IRA to a Roth IRA can I contribute to an Education IRA if I have an AGI of $75,000 before the conversion?

Does anyone have, or know where to find, information concerning the percentage of DB plans that offer lump sum distribution options?

If I roll over a large IRA now, and use the 4-year tax payment option, I am concerned that the increased gross income for each year will be counted as "real" income by the college financial aid offices, and threfore reduce dramatically the amount of financial aid my daughter may be able to get (when she begins college (no idea which one) in 2 years, even though our need remains the same (worse, since we're paying taxes on the rollover). I haven't been able to find a good answer, or even guidance anywhere on this, but I need to act by end of this year. Any suggestions? What's the current thinking? There's bound to be thousands of people in our situation.

The majority of the roth conversion calculators request that you input marginal tax rate for conversion years and distribution years. The marginal rate is accurate for conversion years since conversion amount will be in addition to AGI. My problem is that in distrbution years the marginal tax rate will overstate total taxes since there will be no additional earned income. Wouldn't it be more accurate to use effective tax rate at distribution?

For example a $75,000 annual distribution would have a marginal rate of 28% but an effective rate of 21% for an individual filling married/jointly. Utilizing the effective tax rate on the distribution yeilds a much different answer in the conversion calculations.

In a general analysis why would it be advantageous to pay 28% taxes now rather than 21% later?

posted 12-14-98 03:51 PM ET (US)            

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Query: Employer has an existing 401k plan. Approx 12 participants. He wants to terminaet the plan because he is sick of the high costs and wants to start a simple ira. in 1999. I see a problem due to reg 1.401(k)-1(d)(6) rules applicable to distributions upon plan termination. If the Employer terminates the plan (which is considered a distribution event) and makes a distribution he will be prohibited from starting a simple ira for the 12 months following the distribution. My research has led me to the possibility of coverting the 401k to a simple 401k, creating a SEP, or waiting a year to start the simple IRA. Bottomline my clients wants to save money. Do you see any way around the 12 month prohibition and immediately starting a simple ira? One more question. If the Employer does start a simple IRA, one year later, can you rollover into a simple IRA from a SEP or simple 401k? Thanks for any help you can provide.

This is not a specific 401k Q, but, I have a new client with 5,000+ employees and they would like for the employees to make better personal financial mgt choices, thereby reducing loans, hardwhip withdrawels, garnishments, etc. They are willing to provide Employee Financial Education Workshops.

I am looking for "off the shelf" tools to use at the workshops, ie, workbooks, overheads, etc. etc. We invision a 6 - 9 hour workshop over 2 -3 meetings.

Anybody know of such tools??

To assist in tracking nondeductible IRA contribution, these were transferred to Roth. Is this a nontaxable event? Do earnings on these nondeductible contributions have to be transferred?

If I have an employee who was injured on the job and is on workers comp, should I place them on FMLA leave as well?

Can anyone direct me to a fairly recent article (e.g., CCH, BNA, RIA, ASPA) on responding to an IRS audit of a qualified plan? Any other recommended resources? Thanks.

Any input would be helpful. Creative ERISA tax attorney asking about the creation of new DC or DB plan to accept $5,000,000 rollover. A private annuity would be created for older participant. Upon death of participant, funds would be used to either fund DB or DC. Goal is to avoid probate of this major asset. Any observations, methods, etc. would be greatly appreciated. I am drawing blanks. My feeling is NO CAN DO.

I've had an IRA for 5 yrs. If I convert to Roth and want to withdraw $$$ under special provisions (say school, or 1st time house buying), do I have to wait another 5-yrs from date of conversion?

If yes, is it more beneficial to stay in IRA and be able to redeem a.s.a. needed, although having to pay taxes on redemption?

How are TPA's handling plan forfeitures for daily plans that allow for immediate distributions?

We have just converted our daily plans from Trustmark to Quantech. In Trustmark, there was a Mr. Forfeiture in each plan with the social of 999-99-9999, however it was not a relational database so this was not a problem. After a distribution, we would transfer all nonvested $ to Mr. Forfeiture and allocate once a year.

We are debating over the following 2 options:

1. Leaving the forfeitures in the participants account until the end of the year. Does the fact that the participant still has voice response access and can make changes cause a problem ? And I believe we would need to do a transfer from the participant elections to a balanced strategy? Also, we are doing quarterly statements and we don't want terminated participants with nonvested balances to receive statements. In a big plan it would be a pain to have to manually take out the statements of terminated non-vested participants.

2. Setting up "fake" social security #s. I know this can cause a significant problem in Quantech. If we opted to do this, obviously each plan would have a unique social for Mr. Forfeiture and we would maintain a master list of any "fake" socials. As far as how to get the money from the participant to Mr. Forfeiture, could we just forfeit the terminated participant as if going into suspense and post a forfeiture to Mr. Forfeiture only ?

We are wondering how other TPA's who use Quantech are handling this. Any input would be helpful.

Judy Diamond is a service that provides basic information about DB Pension Plans and the plan sponsors. Does anyone know of a less expensive way to obtain this type of information . i.e. plan name, contact person, funding level, plan liabilities, etc.

As most of you know, my Employee Benefits Legal Resource site contains resources for everything from updated lists of section 415 and other inflation-adjusted limits to how to find out whether participants you cannot locate have died. For anyone who is interested, I have just added a new feature which enables visitors to take a tour of the site.

As most of you know, my Employee Benefits Legal Resource site contains resources for everything from updated lists of section 415 and other inflation-adjusted limits to how to find out whether participants you cannot locate have died. For anyone who is interested, I have just added a new feature which enables visitors to take a tour of the site.

Assume $400,000 is converted from a traditional IRA to a Roth IRA in 1998. This means that $100,000 will be included in income for 1998,1999,2000 and 2001. For federal income tax purposes, can the income be considered to be received uniformly over the three years following 1998, so that estimated taxes are paid each quarter on 1/4 of the income. Or, must the income be considered as all received in the first quarter of these years, so all the estimated tax on the $100,000 will be paid in the first quarter of each year?

I am working on how much of my portfolio I can afford to convert to a Roth IRA. A few thousand is in an IRA that was created with non-deductible funds, the great majority is in several IRAs formed from deductible contributions. I've noted that some kind of balancing must be done for conversion to Roth IRAs but don't know how to do this.

Are long term capital gains from the sale of rental property included in modified adjusted gross income (MAGI) for the purposes of Roth IRA's?

What is MAGI?