Michael Devault

Rev. Rul. 55-747 contains the Uniform One Year Term Premiums for $1,000 Life Insurance Protection. This ruling was originally issued as Policy Statement No. 58.

There is no time limit for making a rollover after the triggering event occurs. Thus, since she has already severed employment with the employer sponsoring the 403(b), distributions can be made and rolled. The distribution may be rolled into an IRA and, if her current employer's 401(k) plan so permits, she can roll the distribution into that 401(k) plan. Hope this is of benefit to you. Best wishes.

According to Publication 590, the 25% penalty applies to early distributions during the 2 year period following the date on which the person first participated in the SIMPLE plan. Hope this is of some help to you.

Since this case involves Texas teachers, I thought it might be helpful for this dicussion to look at the applicable provisions of Texas law. Chapter 1103 of the Texas Insurance Code in this area is a bit "circular." It says that whoever is named as beneficiary has an insurable interest in the life insured. And, the person applying for the insurance may name whoever they wish as beneficiary. So, if A applies for a policy and names B as beneficiary, B automatically has an insurable interest in A. Another relevant point: A third party can apply for insurance on another person's life. However, that person has to approve of the transaction. So, in order for the plan to work, the retirees would have to approve the purchase of life insurance on their lives. I guess my fundamental question is whether the plan would work in actuality. It seems to me that for it to be beneficial to the retirement system, the mortality of the insured retirees would have to be worse than that assumed in the pricing of the policies. That, and the net investment earnings would have to be better than the retirement system could earn. With such a large number of prospective insureds, it would seem that the state could "self insure" such a program which would out perform a purchase from a for profit insurance company. But, I'm not an actuary. Would appreciate any comments from those who are.

I believe that age 75 was mentioned in a couple of old Letter Rulings. You might look at Let. Ruls. 9345044 & 7825010. Hope this helps.

EGTRRA does, indeed, permit distributions from 403(b) plans to be rolled into a 401(k), an IRA, etc. However, EGTRRA did not change section 403(b)(11), which requires that a specified event occur before distributions can be made. Unless one of the qualifying events listed in 403(b)(11) takes place, the funds in the 403(b) account may not be distributed and rolled into another type of plan.

I have never encountered a situation as you describe. 403(b) contracts are owned by the employee, not the employer. In all of my experiences, the insurance companies have acted as the employee asks. I have seen one instance where a third party administrator suggested that distributions be taken from each of several separate annuity contracts. However, it was just a suggestion: the TPA understood that they had no actual control over the matter. The TPA also never gave an explanation as to why they made the suggestion they did. Hope this is of some benefit to you. Happy holidays!

The daughter has to use the single life expectancy table.

Publication 575 (for preparing 2003 returns) says, in relevant part, the following on page 31: "However, if you have more than one tax-sheltered annuity account, you can total the required distributions and then satisfy the requirement by taking distributions from any one (or more) of the tax-sheltered annuities." There is an advantage in keeping the monies as 403(b) accounts: If there was an account balance as of December 31, 1986, that balance is not subject to required minimum distributions at age 70-1/2. Distributions can be deferred until age 75, if desired. This advantage is lost if the 403(b) accounts are rolled to an IRA. Hope this helps.

Contribution limits for traditional/Roth IRAs are combined and are limited to a cumulative $3,000 per year per individual. If you're 50 or older, there's an additional $500 catch-up. Contribtions to Coverdell accounts are not aggregated with IRA/Roth IRA contributions. If fact, you may make a maximum contribution to a Coverdell account for each child. However, any contributions from others, such as grandparents, etc., must be combined so as not to exceed the maximum annual contribution for each child. By the way, I believe that the maximum Coverdell contribution is $2,000 and not $3,000. Hope this helps. Good luck!

You can transfer the 403(b) accounts to another 403(b) account and retain the grandfathered status of the December 31, 1986 account balance if (1) the existing custodians report those balances to the new custodian as part of the transfer process and (2) the new custodian agrees to track that information. However, if you roll the 403(b) accounts into an IRA, the money will take the comlextion of IRA funds. That is, any benefit of the 1986 account balance will be lost. Hope this helps.

I believe it's 1.403(b)-3, A-4. Hope this helps.

Yes, they can. The catch-up for participants age 50 or older in a 401(k) plan is not coordinated with the similar catch-up for IRAs. Thus, in 2003, it's possible to put an additional $2,000 into the 401(k) and an additional $500 into an IRA. Keep in mind that participation in the 401(k) may affect the deductibility of a contribution made to a traditional IRA.

To the best of my knowledge, this hasn't specifically been clarified. However, most practitioners that I know feel that the catch up is permitted to be used in the tax year when the 15 years of service is met. The rationale is that a person could increase their elective deferrals to use up the additional catch up on the date that they reach 15 years of service. For example, if my 15th anniversary is September 1, I could then increase my deferrals to contribute an additional $3,000 for the balance of the year. Since it's all taking place in the same tax year, it would seem logical that I could simply increase my deferrals in January in order to contribute the same $3,000 over the entire calendar year. Hope this helps.

If it's taxable in 2002, you use code 8. If it's taxable in 2001, the code is P. Hope this helps.

The limit is $3,000 per year, with a lifetime limit of $15,000. So, if you use the maximum annual limit, the shortest time you can take full advantage of the catch-up is five years. You should look at IRS Publication 571 for more information on qualifications for this catch-up. Hope this helps.

Look at section 1.401(a)(9)-5, A4. Although it isn't as straight forward as the preamble, it basically says the same thing. While the employee is still living, you use the Uniform Lifetime Table to determine the applicable distribution period. However, if the spouse is the sole beneficiary, the applicable distribution period is the longer of that from the ULT or the joint life expectancy. Unless the spouse is more than 10 years younger, the ULT always provides the longer period. Hope this is of some help.

No. IRA's use the same tables.

403(B) plans may be set up for the benefit of: 1. Employees of an employer described in section 501©(3), 2. employees who work for educational organizations if the employer is a state or a political subdivision or agency of a state, or, 3. ministers. For purposes of (2), above, an educational organization is one that maintains a regular facult and curriculum and has a regularly enrolled body of students in attendance. From a practical matter, this generally applies to public school teachers. With respect to your situation, if the day care center has received a determination from the IRS that it's a 501©(3) organization, you are eligible to establish a 403(B) program for your employees. So, you're correct: it just boils down to the tax status of your organization: The number of kids, employees, etc. has no bearing on the matter. Hope this helps.

Take a look at section 1.401(a)(9)-1, A-1 ot see if it helps. It specifically states that all stock bonus, pension and profit sharing plans are subject to the required minimum distribution rules. This section also specifies the rules applicable to these plans. More importantly, it directs you to other regulation sections for rules applicable to 403(B) contacts and to yet other rules for IRAs. Since different rules apply, I would think that distributions from IRAs could not be used to satisfy distribution requirements for pension & profit sharing plans. As further evidence, keep in mind that the rules specifically state that distributions from 403(B) accounts can't be used to satisfy IRA distributions, and vice versa.

It will remain at $3,000 until 2005, when it goes to $4,000. It will raise again in 2008 to $5,000, after which it will be indexed for inflation. The "age 50" catchup stays at $500 until 2006, when it goes to $1,000. Hope this helps.

The instructions for Form 5500 contains a list of plans that are not required to file the form. SEPs are included in that list. Hope this helps.

In order to effect a rollover, you have to be eligible for a distribution from the plan. In this case, in order to roll money from your 457 plan, you have to be eligible for a distribution from that plan. Last year's tax law also enabled rollovers INto a plan in which you currently participate. In such a situation, you still must be eligible for a distribution from the plan containing the assets to be rolled. However, more than likely, money rolled into a plan is already in an IRA, which can be distributed at any time. Also, in some instances, money is in a plan maintained by a former employer, where severance of employment is usually a trigger that will permit a distribution. In short, as you've experienced, it's easier to get money into your employer's plan than it is to get out. Bear with the administrator a while longer... some of these rules are brand new and they may not fully understand them quite yet. Good luck to you. And, I couldn't agree more about this website. It is a tremedous resource of information. Dave Baker does an outstanding job!!!

First of all, rollovers from retirement plans, including governmental 457 plans, cannot be placed directly into a Roth IRA. Rollovers must first go into a traditional IRA, which may then be converted to a Roth if your AGI is under $100,000 and you're not married filing a separate return. If you are eligible for a distribution from the 457 plan, that distribution should be eligible for a rollover to an IRA. However, you may not be eligible for a distribution if you're still working for the employer sponsoring the plan. Check with your plan administrator to make certain of the eligibility for distribution and rollover. Hope this is of some benefit to you.

It's a corporation that elects to be taxed similar to a partnership. Basically, corporate income is passed thru to the stockholders to avoid the double taxation of what would otherwise be paid out in the form of dividends. Hope this helps.