Michael Devault

I believe that life expectancy pretty much has to be determined by tables V & VI. Notice 89-25 gives some lattitude in mortality tables if using the annuity factor method, but the real difference in the amount of the annuity comes from varying interest rate assumptions. According to a notation in Tax Facts, the tables are entered with the age of the annuitant at their birthday nearest the annuity starting date. No interpolation is necessary (with the dread exception of determining a non-spouse's life expectancy when using joint lives). Hope this is of some help.

Sounds like some of the investments I've make in the past. You could likely close the account & withdraw the remaining balance. Since it is less than your basis, there's no gain on which to pay tax. However, the loss isn't deductible. Capital gains & losses aren't available on IRAs & Roth IRAs. All income is reported as ordinary income. Sorry. Hope this is of some benefit.

A conversion is the process where you convert a traditional IRA to a Roth IRA. A recharacterization is a method where a contribution made to one type of IRA is treated as having been made to different type of IRA. For example, if someone converts an IRA to a Roth, then later finds that they exceed the AGI limit for conversion eligibility (resulting in a "failed conversion"), they can recharacterize the Roth back to a Traditional IRA. Recharacterization also comes in handy if you make a contribution to a Tradition IRA, then later find it's not deductible. Through rechacterization, you may be able to treat the contribution as made to a Roth IRA. Hope this helps. If you need more information, look at IRS Pub. 590.

The only limiting factor on Roth IRA contributions is your modified adjusted gross income. Unlike Traditional IRAs, participation in an employer's retirement plan is not a deciding factor in whether or not you can make a Roth IRA contribution. Contributions to Roth IRAs are not deductible in any circumstance. They are made with after-tax dollars, but qualified withdrawals can be made on a tax free basis. For more information, look at IRS Publication 590. Good luck.

It can be found in Internal Revenue Bulletin 2000-1, page 187. IRBs can be found in the IRS' website at: http://www.irs.ustreas.gov/ind_info/bullet.html Good luck!

Yeah, that was part of last year's tax bill which was vetoed by President Clinton. He vetoed the bill due to disagreements in Social Security spending, not the other general provisions of the bill. It's expected that the IRA provisions, along with others that were in the original bill, will resurface in a new tax bill. But, when it will happen is anyone's guess. It's possible that it could be this year, but 2000 is an election year. Keep your fingers crossed!

If you will e-mail your fax number to me, I'll be happy to send you a copy.

Sorry, but life insurance is not a permissible investment for IRAs. About all she can do is take distributions, pay tax on them, and use the net after tax value of the distribution to purchase the life policy. Maybe a limited pay policy (5-7 years) would help spread out the taxes. Keep in mind that if premiums are paid over less than 7 years, the policy will likely be a modified endowment contract (MEC), causing withdrawals to be taxed much like an annuity. But, the death benefits will be income tax free.

You can also find it on page 598 of Internal Revenue Bulletin 1999-48. IRBs can be found on the IRS' website at: www.irs.ustreas.gov/ind_info/bullet.html Good luck!

I assume from your question that you're rolling money from a traditional IRA. If that's the case, the date the money is distributed from the IRA is the factor that determines the conversion year. If the money was distributed from the traditional IRA during 1999, you have 60 days to roll it into a Roth IRA (or back to a traditional IRA). If converted to a Roth, 1999 is the conversion year. However, if the money hasn't yet been distributed from the traditional IRA, you'll have a conversion for the year 2000. Hope this helps.

When rolled to the traditional IRA, your pre-tax contributions, company contributions and earnings were not taxable. However, when the traditional IRA was converted to a Roth IRA, the amounts converted which were not previously taxed (i.e., the entire value of the traditional IRA in this case) are included in income. They will be taxed as ordinary income, not as capital gains. Hope this is of benefit to you.

If Adjusted Gross Income on your joint return is less than $150,000, a contribution can be made, you can likely make a full contribution to a Roth IRA for both you and your spouse. The contribution limit is phased out if AGI is between $150,000 and $160,000. No contribution can be made if AGI is over $160,000. Look at IRS Publication 590 for more details. It's available on the IRS' web site.

No. Adjusted Gross Income is the determining factor in conversion eligibility. SInce you file a joint return, you have to consider total AGI shown on the return, regardless of the source of the income. Look at IRS Publication 590, starting on page 36, for more information. Hope this helps.

The limit in 72(p)(2)(A)(i) is "$50,000, reduced by the excess (if any) of (I) the highest outstanding balance of loans from the plan during the 1-year period ending on the day before the date on which such loan was made, over (II) the outstanding balance of the loans from the plan on the date on which such loan was made..." In this case, item (I) would be $35,000. Item (II) would also be $35,000. The excess of (I) over (II) is zero, so the $50,000 wouldn't be reduced. Mike

The ability to make a contribution to a Roth IRA is limited only by your Modified Adjusted Gross Income. Employer contributions to a retirement plan will not affect contribution eligibility to a Roth IRA. They only affect the deductability of contributions made to a traditional IRA. Check out Publication 590 (available on the IRS' website) for more information. Hope this helps.

Eligibility to contribute to a Roth IRA is based on Modified Adjusted Gross Income, which is the Adjusted Gross Income on your 1040, plus certain deductions and exclusions, such as foreigh earned income, traditional IRA deductions, etc. Since AGI includes capital gains & losses from Schedule D, it would seem that your trading income would have to be considered in determining your eligibility to contribute to a Roth IRA. For more information, you might want to check the IRS' web site and download Publication 590. The current version has been updated for 1999 returns. Hope this helps.

I, too, was doubtful at first. However, after reading section 72(p) carefully, it appears that you can do it. Good catch!

John, you might take a look at IRS Notice 97-75. It's my understanding from reading Q&A 10 of that notice that the distribution you describe would NOT be considered a required distribution, thus it would be eligible for rollover. After looking at the notice, I would appreciate your interpretation, as well as that of others, to make sure I'm on the right track. Hope this helps. Mike

I believe you do. According to IRS Pub 590, "For purposes of the plan rules, if you are self-employed, your compensation for a year is your net earnings from self-employment (line 4, Section A of Schedule SE (Form 1040)) before subtracting any contributions made to a SIMPLE IRA on your behalf." Hope this helps.

I believe the pre-1987 account balance is subject to the old MDIB rules. There was little interpretation of those rules, but it was generally thought that they required distribution under an arrangement where the present value of the payments to be made to the participant must be more than 50% of the present value of benefits made to the participant and his/her beneficiary. Try looking at Rev Rul 72-241 and Rev Rul 73-239 to see if they help. Good luck!

The 402(g) limit for TSAs was $9,500 in those years. Keep in mind that it was lower for 401(k) plans prior to 1996.

The offset distribution occurs because of the event which allows an actual distribution (in this instance, death of the participant).

Texas also requires TPAs to be licensed. I believe that Ohio has similar laws. My firm looked into this about 3 years ago and couldn't find a source for this information. We had to resort to hiring a law firm to conduct the research necessary to determine which states do and do not require TPAs to be licensed. Good luck!

According to IRC section 72(t), the 10% premature distribution penalty will apply unless the distribution is made on or after the date the taxpayer reaches age 59-1/2, unless one of the other exceptions apply. Look at Form 1099-R when the payor issues it. Box 7 will contain a code. A code "1" means that there is no known exception to the penalty. Code "7" reflects a regular distribution. Maybe your client will get lucky and the 1099-R will be coded with a 7 Hope this is of help.

I don't think so. Look at section 1.401(k)-1(d)(2)(iv)(B) of the income tax regulations. It's pretty clear that the plan must provide that elective deferrals cease for 12 months. Hope this is of benefit to you.