mbozek

The keogh contributions are only aggregated with 403(b) plan contributions. 457 contributions are not aggregated with a Keogh plan.

Contributions to a SEP type plan can only be made on an annual basis and the maximum contribution cannot exceed 40k in 2003. For tax law purposes it is too late to go back and make contributions for the prior years. Also the brokerage account's data entry system cannot be programed to allocate the contribution to prior years or allow a contribution greater than 40k in 2003.

The sale of property to the IRA would be a taxable gain for the owner if the fmv exceeds the cost basis. see Rev. rule 73-345. But a loss would not be deductible under IRC 267(b)(4) because the transaction is between related parties. See Rev rul 61-163. The sale of the property by the IRA would result in a taxable gain for the sale price either because the IRA is disqualified or because the basis of the property held by the IRA is 0 (other than AT contributions).

Isnt the failure to make the er matching contribution a Prohibited transaction, i.e, a loan of plan assets to the employer which triggers the 15% excise tax? The liability for the tax would be assumed by the buyer if this was a stock purchase.

Who is designated as the final authority for deciding claims under the administration agreement between the parties?

See rev rul 76-28- all employers are taxed as cash basis taxpayers for deduction purposes. Contribution is deductible in tax year it is made or can be deducted for prior year if made by date for filing tax return with extensions.

Isnt there a difference in defining who is a 5% owner between a corporation and an unicorporated business? The attribution rules applicable to corporations in the parthentical is not present in the sentence defining who is a 5% owner in an unincorporated business.

401(k) plans established by govt entities pror to 5/6/86 were grandfathered by Congress. NYC had a grandfatherd plan for a small group of employees which was expanded to cover additional classes of employees in 2002.

Blinky- you have a cite for that statement? IRC 318 only applies to corporations. You should check the 401(a)(9) regs.

Pick ups are permitted only for govt. qual plans under IRC 414(h). However, pick up contributions are mandatory- employees cannot elect to make contributions.

There is no typical arrangement. The terms depend on the what the plan provisons allow and the risks that the plan fiduciaries want to avoid. The plan administrator needs to retain counsel to limit plan's liability for investment advice provided by participant's advisor in a 404© plan.

Answer Z: Other. Question requires expertise in age discrimination under federal and state law. This question should be referred to counsel who will want to get paid for the answer.

The 318 attribution rules only apply if the sponsor is a corporation. If the busienss is unincorporated the attribution rules do not apply to family members.

Diversification of investments is only required in plans subject to ERISA. IRAs are not employer sponsored plans subject to ERISA.

Some states have POA forms which permit the agent to execerise rights over retirement benfits and IRAs. However there is a short answer- If the employee does not want to change the beneficary designation she should revoke the POA by notifying the agent of the revocation. End of issue.

A plan does not have to honor DROs issued prior to January 1, 1985 if there was no payout being made on that date. Section 303 of the Retirement Equity Act.

GB- The section of the tax code governing the non taxable status of the entity is important. Since public schools cannot be txos under IRC 501© they cannot sponsor a 401(k) plan. See IRC 401(k)(4)(B).

Unlike qualified plans there are no rules regarding disposition of forfeitures in a 403(b) plan because there is no tax deductible contribution. The employer is free to make any allocation of forfeitures as long as the 415 limits are not exceeded and there is no discrimination in favor of the HCEs or use the forfeitures to reduce future contributions.

I recently used the DFVC to file 27 5500 forms for a 403(b) plan because there is no IRS penalty. Cost is $1500 for small plans, 3k for large plans regardless of how many 5500 forms are filed. Filling out a 5500 form for 403(b) requires the same information except for the year. Only about 7 questions. But first confrim that employer is a np that must file 5500s and not a govt instrumentality. I would not recommend the excuse letter because the DOL will know that the er is and would likely target the plan as a non filer and impose penalities. The excuse letter will not be accepted because of the low Dol penalty for correcting 5500 failures.

GB: If you had read the IRC you would have noticed that public schools are not designated as tax exempt organizations under IRC 501© because state government entities are exempt from taxation under IRC 115. From your response it appears that you dont understand that public schools are a separate category of employer who can establish a 403(b) plan even though they are not TXOs.

GB: under what section of IRC 501© does a public school gain tax exempt status? See IRC 403(b)(1) for description of entites that can sponsor a 403(b) plan.

The participants are entitled to their account balances once they provide proof of identity and a valid ss#. The problem is how will the plan admin verify that someone who misrepresented himself as employee X has now given genuine proof that he is employee Y?

See IRS publication 590, P 59 (www.irs.gov) for use of Roth IRA to purchase first home. All earnings on Roth IRA are taxed as ordinary income.

I am assuming that both entities are tax exempt employers. A 403(b) plan must be sponsored by an employer tax exempt under IRC 501©(3) whereas a 401(k) plan can be sponsored by any tax exempt employer. A 403(b) annuity plan can exclude participation by employees who are eligible to participate in a 401(k) or 457(b) plan. 403(b) plan assets cannot be merged with a 401(k) plan assets. If the entity which which exists after the merger is a 501©(3) TXO, the two plans can continue operation without changing the participation rules for each plan with one exception. The 403(b) annuity plan would have to offer salary reduction to any employee of a 501©(3) employer who would not be eligible to participate in the 401(k) plan, e.g., employees who do not have a year of service. If the surviving entity is not a ©(3) employer, then only a 401(k) plan can be maintained.

My reference was to fiduciary duty for financial advisors under state law since ERISA does not apply to IRAs. It is also more than a customer service issue if the broker violated the company compliance policy by offering tax advice or by recommending a tax product to a cleint who is not eligible for such product. The brokerage will be responsible for failure of a broker to comply with compliance policy. Also is not an economically feasable option because the cost of submission will be greater than the penalty taxes involved - 6% excess contributions penalty plus 10% of any earnings on the contributons and ordinary income tax on the earnings.