GMK

I know I'm missing something here... The deductible starts on January 1, and then on 9/1 you get no credit for amounts you paid 1/1 thru 8/31, and the deductible starts over on 9/1 for the remaining 4 months of the year..., and then on the next 1/1, the amounts paid from 9/1 thru 12/31 are disregarded, and you start over with another 8-month period of deductible payments. (Who agreed to this?) If this is true, get a 12-month period for the deductible payments, instead of the 8- and 4-month periods, and match the insurance year with the deductible year. Until the insurance year and the deductible year coincide, the plan will be jumping through lots of hoops to do what it is intended to do (but you knew that).

Spicoli, John G's advice about investments vs. the lottery is right on target. Read it carefully. Belgrath is correct, too. He did not say he knows what will win (quite the opposite). And he is not equating "speculative" with home runs (if only that were true). Riskier investments (say stocks) are expected on average to give bigger returns than safer investments (say Treasury bonds). The bigger potential return is the reward for taking the bigger risk, but the risk also means that you could lose more. The real question with investing in a Roth is whether or not it is likely to provide more net income in retirement than a 401(k) or other tax-deferred plan would. Before retirement, you have an amount of money for investing each paycheck. With a 401(k), the whole amount goes into your account, because it's pre-tax, and the miracle of compound interest grows it for many years. With a Roth, you don't have as much money to invest, because some of that money goes to pay the taxes now. Compounding grows your contributions, but your Roth account balance is less (and therefore your earnings are less) than in a 401(k), assuming the same investments in both. At retirement, the money you put into the 401(k) and the earnings are all taxed when you take them out (at whatever the tax rates are then), which reduces your net retirement income (maybe a little, maybe a lot). In contrast, you get all the money you put into the Roth and the earnings; no tax. Which one comes out ahead depends on your personal circumstances. Retirement calculators help give you a range of possible outcomes, which can depend significantly on the actual returns from your investments, future tax rates, and other things you can't predict with certainty. And some simply say, "I'll take my chances paying the taxes now rather than later," while others prefer to put off the taxes for as long as possible.

Maybe this can work, but I agree with GBurns that these people look like employees ... unless they perform services for more than one unrelated firm at the same time. I'd also worry about the part that says that a worker is generally an employee if the employer has the right to discharge the worker and/or the worker can quit without incurring liability. Just some thoughts. I'm no expert.

There are several possibilities here. For example, the preliminary value may have been based on estimated financials, and the actual numbers in the audited financial statements showed less value. There are also a number of approaches to valuing a company (estimated earnings, book value, etc.), and those used in the preliminary valuation may not be as appropriate as others for this particular company. While it is best to use a consistent method of valuation from year to year, the valuation assumptions and method need to be reviewed from time to time to determine if any revisions are appropriate to best reflect the nature of the business. Doesn't answer your question (which depends on the nature of the CEO's "influence"), but a few thoughts.

Generally under COBRA, those who lose coverage due to a qualifying event have the same coverage options under continuation coverage as the employee had at the time of the qualifying event. Not everyone has to elect continuation coverage. If some elect not to continue coverage, the others still have the option to choose to continue coverage individually or as a group (if the group is an appropriate coverage group of people, like family coverage for a parent and children). So, the spouse can elect family coverage for the spouse plus the children or can elect single coverage for each person or for some of the children or for the spouse only or for a combination of persons. If "double" coverage is an option, the spouse can elect it for the spouse plus one child. As GBurns recommends, contact the carrier.

Yes, good answer. FWIW, the duality of energy and matter (E=mc2) isn't from thermodynamics. In thermo, energy and matter do not change their forms. Energy stays energy, and matter stays matter. But I digress...

FWIW, here's some information. Scroll down a little to read about withholding 30% (or less depending on treaties) for pension and annuity payments to nonresident aliens: http://www.irs.gov/businesses/small/intern...=129241,00.html and there's IRS Publication 515.

From what I've read on BenefitsLink Message Boards, it may be possible if there is a treaty that allows it. (That's all I know about this topic.)

The IRC and Regs. are like the air that we breathe. What a great analogy ... in so many ways.

I am not a lawyer, so these are just suggestions, mainly based on standard Summary Plan Description information ... The Plan Administrator of the 401(k) is responsible for distributions from the 401(k). Look in the Summary Plan Description to find out who is listed as the Plan Administrator. My guess it is your brother's employer. Once you have sent a written claim for a benefit to the Plan Administrator (which from previous posts, I think you have already done), the Plan Administrator has to distribute the benefit or else provide you with a written or electronic notice of denial. The Plan Administrator is supposed to respond to you within 90 days after the Plan Administrator receives your claim. That response may tell you that the 90 days has been extended to 180 days (total), but you are supposed to get some response within the first 90 days. If the Plan administrator denies your claim, the Plan Administrator has to send you a notice of denial (written or electronic) within 90 days of receiving your written claim (or 180 days if you were notified that the time for the claim review was extended). That notice of denial has to give the specific reason(s) for the denial of your claim, reference to the specific Plan provision on which the denial is based, a description of any additional material or information needed from you to perfect the claim and an explanation of why that material is necessary, and a description of the Plan's review procedures and the time limits applicable to those procedures, including a statement of your right to bring a civil action under ERISA Section 502(a) following a denial on review. This information about a notice of denial should be in the Summary Plan Description. If Fidelity is the Plan Administrator, send them a written claim for the benefit and ask them for a Summary Plan Description. If they deny your claim, they have to send a written notice of denial as described above. If you receive a notice of denial, appeal it. See the notice of denial and the Summary Plan Description for information on how to appeal. If the appeal is denied, you are again supposed to be sent a notice of denial in writing or electronically. If the deadlines pass without a notice from the Plan Administrator, send your story (in writing) to the Employee Benefits Security Administration of Department of Labor and request their help in obtaining your benefit from the 401(k). Sometimes phone calls answer the questions and get the job done. In this case, it all has to be in writing. And keep on keeping copies of what you send. Good luck.

well said, Q. I don't know if it matters that it's not a church Plan.

Agreed. One consideration with the option is that it is administratively easier to use 1000 hours in the Plan year, so you do not have to keep track of vesting year anniversaries for everyone. Computers can keep track for you, but at the end of the Plan year, you have to check hours in each not-fully-vested participant's "second half" of the year to get their vesting right. As an aside, we have 1% vesting after 1 YOS (and then 20%, 40%, ...). The vested balance at 1% is small (to some, laughable), but it is something, a beginning, which we find is usually viewed as being better than nothing.

JanetM and Below Ground have it right. And as always, check for what the Plan document allows.

One way to explain it may be to point out that the conversion follows the same rules as converting a traditional IRA to a Roth, including that any amount not rolled over to the Roth is subject to withholding (10% unless you elect some other percentage, including 0%) and if you are under age 59-1/2 is subject to 10% penalty tax. Unfortunately but inevitably, young people (=under age 59-1/2) take the big 10% hit rolling over to a Roth.

The 20% is withholding, like withholding on your pay checks. Your actual tax will depend on your income. You have the choice of taking your IRA balance in cash paid to you or have it rolled over to an IRA. You can also choose to take some of the cash and roll the rest over. Any amount you have directly rolled over to a traditional IRA is not taxed now, and nothing is withheld from the rollover amount. You will pay taxes on any amounts you take out of the IRA later, when you take them out of the IRA. Any amount that you could have rolled over but instead was paid to you is taxable income and subject to the 20% withholding. When you reach age 70-1/2, you will be required to take distributions (payments) from the IRA. These Required Minimum Distributions (RMD) are taxable and cannot be rolled over. Uncle Sam wants his tax money eventually, and this is how he makes sure he gets it. The 401(k) administrator should be able to give you detailed information about the tax consequences of receiving your 401(k) balance and information on rollover options. Contact the benefits people at your work and tell them you want the information and forms for taking a distribution from your 401(k) account. Hope this helps. Oops, QDROfile beat me to it.

Also expect to hear some grumbling down the road. In a year or so, employees will learn how fast insurances premiums are rising. It is good that they know this, but they may see falling take home pay even if their share of the premiums does not go up from 25%. Even so, it's worth making this work. If you ask (for example, in exit interviews) what the most important benefit you provide is, most will say it's the health insurance.

That's a great suggestion, Jim Chad. Even the simplest cafeteria plan, a premium only plan (POP), provides a benefit that employees will notice. There's no tax (not even FICA) on the employees' portion of premiums. (I don't know if state income tax may be due in some states.) For the employer, the POP is inexpensive, and usually it more than pays for itself, because of the reduced FICA contributions. Administering a POP is easy. Payroll keeps track of the employees' deferrals and taxable income totals, and once a year we send the TPA the census data, which is not complicated, for the non-discrim testing. Including other benefits through the cafeteria plan, like for medical and dental expenses, makes the plan even more attractive to employees. As with any new plan, look into all the details, including the administrative load, so you know what you're getting into.

Some questions you and she might consider: Can she leave the 401(k) in place or does the 401(k) require her to take a distribution? Are the investment choices and performance of the 401(k) good enough for her to want to keep the investments there, if that's allowed? Do you know of a better way to invest the money? Does she need the money now, or can it stay as a retirement investment? Answers to questions about the 401(k) may be in the Summary Plan Description. If you can't find your copy, contact the benefits person at her former employer and ask for one. That person should also be able to answer any of your questions about the plan. Find out what your options are before you make a move. Taxes are an important consideration. If she decides to (or is required to) take the money out of the 401(k), she can avoid paying taxes on it now by having it directly rolled over into an traditional IRA. It could also be rolled over to another employer's qualified plan, but from your post I assume there will not be another employer at this time. Any amount that could have been rolled over but is instead paid to her is taxable income and is subject to 20% mandatory federal withholding. It may also be subject to an additional 10% "early withdrawal" penalty tax. However, the 10% penalty tax does not apply if she at least age 59-1/2, or if she resigned after she reached age 55, or if she retired due to disability (the 401(k) will have its definition of disability), or if the amount paid to her is less than your deductible medical expenses. For a rollover to a Roth, the amount rolled over is taxable but not subject to the 10% penalty, no matter what her age is. Be aware that you cannot take a rollover to a Roth if your household income is over $100,000 or if your tax filing status is married filing separately. And as WDIK points out, contacting a tax professional and an investment advisor is always a good idea.

I think an important point is that insurance premiums have gone up n%, n%, and n% in recent years, and this is becoming a serious hardship for the company. Perhaps an example or two of how rising insurance costs have limited the company's ability to work on project A, or upgrade equipment, expand facilities, add needed personnel, etc. The company realizes that this will be an added burden for employees and wishes the changes weren't necessary. And (if it's true) add that everyone is subject to the new policy from the President on down. When implementing the change, use payroll deductions for the employees' payment. For employees who are paid weekly, spread the employee's payroll deductions over the first four weeks each month. You might see if you can add Double coverage, in addition to Single and Family. Double covers 2 people: the employee and spouse or the employee and one child. Typically, premiums for double coverage are significantly less than for Family coverage. Even if the employee pays 25% for it, at least it's 25% of a smaller premium. Expect a full range of reactions. Be prepared to answer questions about why the company is doing this terrible thing to me just when I have all these other problems, and gas is so expensive. Don't panic. Gather all your facts and give them straight answers. And be thankful when (if) someone says they understand that it's not easy for the company, and they want the company to stay in business so they can have their job, even if they have to pay some for insurance. Good luck.

Thanks, Gary. Your charts are great. They go in the "important stuff" 3-ring binder immediately.

Generally, the ESOP is the owner of the shares in the ESOP, and the participants are not considered to have ownership of the shares in their accounts. For example, the shares allocated to a participant's account are disregarded in determining whether the participant is a more than 5% owners, and such. That being said, there are cases where the ESOP account shares are counted toward the participant, for example, in the case of a "disqualified person" (owns 10% or more the ESOP's shares and synthetic equity in the company, or 20% or more in conjunction with family members) and nonallocation years and that sort of ugliness, which you of course will avoid. For further reference: http://findarticles.com/p/articles/mi_qa37...01/ai_n19431693 http://www.crowechizek.com/crowe/Publicati...tail.cfm?id=469

Personal opinion, not expert advice: The rule of thumb demonstrates that one should be more into stocks the further one is away from retirement. This is because historically stocks provide the highest return over the long run (past results are not a guarantee of future performance, but you go with what you know), and you have time for your stock investments to recover from dips (and drops) in the market before you need the money. The closer you get to retirement, the more secure you probably want your retirement fund to be, so you transfer some of your stock gains to less risky investments. The idea of keeping some of your investments in stock is to try to generate additional returns that keep up with inflation. As you approach age 110, the overall possibility of your having less buying power due to inflation decreases. Assuming you do not plan to retire in the next few years, 90% in stocks seems reasonable to me. And since stocks are down right now, this is probably not the best time to transfer out of those stocks. When you move some of your funds from stocks to less risky investments, think of it as taking some of your hard earned gains off the top and putting them into something where they will hold their own and are not likely to be lost due to downward market swings. Hope this helps.

We like to include a friendly reminder in mailings to participants (account statements, SAR, etc.) that it is the participant's responsibility to keep the Plan Administrator informed of changes of address, marital status, etc. I think we'll keep doing it.

jlea: Thanks for posting your follow-up findings.

I second J Simmons' recommendation to keep the signed originals on file. You might also keep pdf's of the signed copies. For your electronic records, if those files are from a word processing program, make a pdf copy or save the files as text (ASCII) files, so you can read them in 10 years. Otherwise, when you get a new version of Word or whatever, check that it can still read your oldest saved files. Similarly, if you scan images in, keep the software that can recreate those images. Every now and then with a software upgrade, you can't go back and read the older files. (And that's no fun when you're relying on electronic document storage.)