masteff

Recent prior discussion here: http://benefitslink.com/boards/index.php?showtopic=38874 (especially before ya'll go down the preemption road again as it's discussed there as well)

I take the question to be the latter of 6 months or 1000 hours, not "1000 hours in 6 months" (note the OP's emphasis of the word AND). Yes, it can be faster than the minimum required by law, as long as you don't exclude someone who'd be required by the general minimum. 410(a) says a plan can't require more than 1000 hours in 12 months for a "year of service". The problem in using both 6 months AND 1000 hours is the trouble of administering people who reach their 1000 hours sometime between months 7 and 12. If your plan entry date is the first payperiod or the first of the month following eligibility, then you'll have to continuously measure for 1000 hours for people in their first year of employment. So you'll want to review your plan entry date in conjunction w/ this.

In this case that would mean your post #62, which is your posting that was "previous" or "immediately prior" to George's post #63. You took Vebaguru's posting explicitly referring to leveraging of trades and you posted a follow-up question that referred to real-estate. It was this that George questioned in post #63 as you were putting the two items on equal footing (in your post #62). In post #64, you stated leveraged trading and real-estate were different. So in post #65, I attempted to point out what point George was making in post #63, which you seemed to have not understood in your post #64.

George's point was that in your previous post you equivocated the two... now you're stating they're different which proves George's point. Perhaps it would be best if you stop asking follow-up theoretical questions as you seem to only be confusing your issues even further.

IRS Publication 590 tells us that "A separate 5-year period applies to each conversion".... "is determined separately for each conversion, and is not necessarily the same as the 5-year period used for determining whether a distribution is a qualified distribution." I read this to mean you could be past the 5-year mark to pay tax on earnings, but could still have to pay 10% penalty. Note that page 67 specifies that Roth contributions come out of the account before Roth conversions... so depending on how much contributions you have, it might be possible to take distributions w/out incurring the 10% penalty. http://www.irs.gov/pub/irs-pdf/p590.pdf

Just to add a specific thought to Belgrath's answer... We commonly accepted the estimate of costs that most campus financial aid offices can provide (if it's good enough for federal student loans and grants, ought to be good enough for a hardship w/drwl). The financial aid office should have several sets of estimates... one of which is specifically for students in off-campus housing. Have your participant contact the financial aid office and request this. Then, since you'll have access to a copy of the apartment lease, you can adjust the amount accordingly.

The other half of the equation is whether the distributing country would recognize the rollover and continue to defer taxation or whether they'd count it as a distribution. As you don't specify the country of origin, here's a thread that asks the question re: UK plans. Some of the discussion and links might be helpful. http://benefitslink.com/boards/index.php?showtopic=35698

No. Notice 2007-7 Q&A-15 A-15. Section 402©(11) provides that a direct rollover of a distribution by a nonspouse beneficiary is a rollover of an eligible rollover distribution only for purposes of § 402©. Accordingly, the distribution is not subject to the direct rollover requirements of § 401(a)(31), the notice requirements of § 402(f), or the mandatory withholding requirements of § 3405©. If an amount distributed from a plan is received by a nonspouse beneficiary, the distribution is not eligible for rollover.

A PT/fiduciary thread might not be bad. But I'd strongly vote against combining non-qual DC w/ qualified... the beasts are just too different and it would be inviting confusion to put them in the same cage.

No, it's not still open. You've either not read or not fully understood the code section that Jim Norman cited above. Both you and the company constitute a party in interest / disqualified person (don't get hung up on the word "person") and therefore cannot extend credit to/for the plan.

You've got it backwards. It's that they've made it easier over the last decade to move non-Roth money around. In the past it was much more restrictive to move all types of monies. Since the Roth-type feature was only added to 401(k)'s in the last several years, the need for better Roth portability is a new thing. And given the slow adoption of the Roth feature into existing plans, it will be some time before legislation is likely to address Roth portability.

See IRS Pub 590, page 65, Rollover From a Roth IRA. http://www.irs.gov/pub/irs-pdf/p590.pdf No. Conversion of an IRA is permitted by specific provision of the code and there is no provision for it to occur w/ a Roth account in a PS plan.

Is the question: can A continue to operate B's plan for B's employees after the asset acqusition? Sure, it's been done before. Have to be careful about definitions of eligible employees in both A's and B's plans. I believe ours said something like "not eligible in this plan if covered by another plan of the Company such as the B plan". Oh, and be careful about EE's or execs trying to game the system by saying "this employee is just on loan to the parent company, so still gets B benefit"; if the EE is transferred to A from B, then the EE gets put into the A plan. Just to take your case to the extreme... we had scenario where mgmt was uncertain about reselling B in near term so B employees were maintained in B's plan for over 8 years. Wasn't until that location joined same union as other locations that they finally joined the A-union plan. Oh, and you'll want to review for possible non-discrim testing issues.

Just to clarify, let's break this into two pieces... 1) The plan wants to add loans in a non-discriminatory manner (ie, allowed to every participant). 2) The company's overall objective in adding the loans is to allow certain execs to have a means of financing purchases of company stock. As long as the enabling amendment and the loan documents don't directly tie the loan provisions to the execs ability to make a stock purchase... I see no problem (but am happy to hear opinions from greater minds than mine). What the employee does w/ a loan is not material to the plan. Whether I buy a cotton candy machine, put the money in my mattress or buy stock of any company (including my own), is of no consequence to the plan because it occurs outside the plan. The problem would be where they start wanting the loan proceeds to go directly from the plan to the company. That's where I'm in a grey area of knowledge. I'll just say that I'd rather the check go the participant and then the participant remits money to the company for the entirely separate transaction of the stock purchase. (I could probably tolerate the participant endorsing a loan distribution check over to the company, if the respective banks didn't have a problem w/ it.)

If the distributee is ineligible, then per Notice 2008-30 Q&A-5 the distributee can recharacterize pursuant to sec 408A(d)(6). This would still apply where the distributee is a spouse bene. Notice 2007-7 pertains only to new provisions for non-spouses and can't be extrapolated to spouses. The rule for spouses continues as before 2007-7. As per IRS Pub 590: "If the sole beneficiary is the spouse, he or she can either delay distributions until the decedent would have reached age 701/2, or treat the Roth IRA as his or her own."

It says absolutely nothing about IRAs because while QPs and IRAs have similarities, they do not share certain enabling and controlling IRS Code sections (eg, 401 vs 408). That does not say that some items are not in common... however you'd be well advised to not make an error of extrapolation from a qualified plan to an IRA (or vice versa).

Sieve - I have to disagree to some extent. 1) we can't assume the availability of more than 1 loan at a time; while permitted, the regs don't mandate multiples. 2) in a generaly reading, the regs only require the participant to have taken a loan, not the absolute maximum. The participant doesn't have to "tap out" all loans before a hardship can occur. To me, IMO, that's an overly strict reading of the regs. This is based on my 8 years in corporate benefits administering four 401(k)s w/ $1B+ combined assets. In the most common reading of the regs, the participant only has to take the plan minimum loan. While you're interpretation is fundamentally correct and is the more conservative approach, there is a body of practice that has passed IRS scrutiny/audit that is less conservative but stays w/in the regulatory boundary. tajcc - Does the plan have any money other than employee pre-tax contributions? If so, you'd need to review your plan for source heirarchy. Plans typically take loans from non-pretax monies first. This leaves the most funds available for a hardship. Next question is does the plan limit hardship to pre-tax contribution source? If so, then the hardship is limited to the current pre-tax balance (having subtracted out any amount attributed to a plan loan). Basically, you follow the plan rules to subtract out the CURRENT loan balance from the appropriate sources and then determine the balances of the sources available for hardship. You can then allow withdrawal for the lesser of a) the documented need plus gross up or b) the balance available for hardship.

I think you'd need to look at 2 separate groups... employees and non-employees. One is an education assistance program, the other is a scholarship program. The following article might give you some ideas on code sections to review: http://www.aicpa.org/PUBS/JOFA/sep2004/fenton.htm

1) I concur w/ Sieve that the OP (PMC) needs to be looking at this as a refinancing as permitted under the revised regs. Plan loans cannot be "renegotiated" as such (there's not mechanism for it). Options are refinance (assuming document allows it) or payoff loan and take a new one. That said... if the plan document / loan rules don't allow for it, then you'd have to amend because it can't be done otherwise. 2) Doing a quick "back of the envelope" I concur w/ Janet's last assessment... there's is a pretty small impact on the payment from doing this. Make sure the participant understands the actual change in payment that would result from a refi and make sure they want to go thru with it.

You don't have to analyze it to that degree. Simply request a copy of the good faith estimate of closing costs. You'll want to look specifically at the line that says the buyer must bring X dollars to closing. You can allow for that amount plus gross up for taxes, but not more than is available per plan rules.

And supposing the IRA can be established post-mortem... no one can make a beneficiary designation for the deceased (powers of attorney cease at death), so it would then be the IRA's default language for who the beneficiary would be... in many cases the default beneficiary is the estate... this could create more trouble than it saves. Another thought, might need to consult a probate attorney because, depending on how complicated the deceased's will is, some other heir could potentially contest the SEP as a manipulation of the estate's assets for one heir's gain over another.

The 401(k) and your personal Roth IRA are two entirely seperate accounts. You can have the Roth at any financial institution that you want. A Roth IRA is simply a special type of traditional IRA, which in turn is simply a special type of trust account that has special tax rules and restrictions. The investment options for your Roth will vary from investment firm to investment firm. Some offer only their own mutual funds, others offer a larger selected listing and others offer anything that's available in the stock market. You'd just have to check w/ Principal or any other firm to see what funds they offer. The 401(k), Profit Sharing plan and ESOP are plans offered by and run by the company, sometimes using a financial firm such as Principal to help w/ the administration and recordkeeping. And you're correct that you employer is likely using the profit share and esop to balance w/ other companies that might offer a 401(k) match. As to account fees in a 401(k), it varies but most employers (especially larger ones) pay the basic account maintenance fees. Of course there might still be a few small fees that get charged, like a loan fee if you take a loan later on, but that too will vary from employer to employer.

First off, congrats on making the mid-life move. Typically w/ an ESOP, you can't move the money out of the plan until after you leave that company. So this will be something that you just let ride until later. This is tax deferred money to you. Like the ESOP, you typically can't move it out of the plan until you leave the company. The main thing will be to make a well-rounded investment plan using the investment options offered in the plan. Since you have an ESOP, avoid buying company stock in the PS so you're not over invested in the company. 1) No, it's not an HSA. 2) They'll provide you w/ a list of things you can use the flex spending money on, it can vary a little by company (they can be more strict than the boundaries set by the IRS). Generally, yes, elective procedures not covered by insurance are allowed. It also covers doctor visit and prescription drug co-pays. And after a change several years ago, most over the counter drugs (but not vitamins or supplements) are allowed. Like I said, they'll give you a list that will give you some guidance. 3) No income tax now or later, that's the point/beauty of it. The money that's used for qualified medical expenses is entirely pre-tax. 1) If there's a match, be sure to enroll at your earliest opportunity and put in at least enough to get the full match. 2) I assume you mean "should I put my Roth IRA at Principal since they'll not charge me annual fees since I have a 401(k) account there?" If so, that's a personal choice; there are other company's w/ low cost IRA's, but if you like the investment options available to you from Principal, then it would be an okay decision to make. 3) If you mean, should I put money into the 401(k) because they don't charge you fees, well, yes, but that would be making the right decision for a slightly wrong reason. You want to put money in the 401(k) because it's annual limit is entirely separate from the annual limits on IRA's. So you can max out both your Roth and your 401(k) (if you choose). And since the 401(k) is pre-tax, it's better than putting into some other non-IRA account. 4) Again, a well rounded investment plan will be important for your 401(k) money. 5) No, you can't max both a Roth and traditional IRA. They are subject to the same annual limit. You could put part in one and part in the other but you couldn't put the full amount into both.

Actually it can now be rolled direct to a Roth. This was added by the Pension Protection Act of '06 (PPA '06), specifically Section 824 of that act. See IRS Notice 2008-30 (IRB 2008-12). http://www.irs.gov/pub/irs-irbs/irb08-12.pdf It's been discussed elsewhere on this board that the MAGI limit that applies to conversions will apply to rollovers made in 2008 & 2009, but not to 2010 and after. Q&A-6 discusses the withholding requirements for the plan (not mandatory but optional w/hldg is allowed).

I'd swear there was some guidance or a worthwhile ruling several years ago but I can't put my hands on it quickly. The reg says: (3) Payment of tuition, related educational fees, and room and board expenses, for up to the next 12 months of post-secondary education for the employee, or the employee's spouse, children, or dependents The IRS website says: tuition and related educational fees and expenses I know that books and basic supplies are viewed as necessary for the purpose of an education. And any required fees are good, like parking permits, computer lab fees, etc. I'm not comfortable w/ taking any R&B for living at home. Had they simply presented a statement from the school's financial aid office stating "here's our estimate of the cost of attending our school for the next year" then you could use that as a starting point (keep in mind that it's for "up to the next 12 months", you may have to rely on credible estimates as you can't know the exact expenses before they're incurred). But since you now know the student will be living at home, you have to be more strict. So I'd say yes on tuition, books and fees, but no on expenses for living at home. Depending on facts and circumstances, cost of commuting to school might be possible but that typically won't add up to much (unless it's a 50 mile drive or something).