THE BUZZ
BREAKING 9-23-2010*article provided via planadviser.com
House approves bill allowing In-Plan ROTH conversions.
For tax years beginning after 2010, retirement plan participants will be allowed to roll over their assets into in-plan Roth accounts. The bill would permit amounts in 401(k), 403(b), and governmental 457(b) plans to be converted to Roth amounts within the plan, provided that only amounts that are distributable as an eligible rollover distribution may be converted. In addition, such conversions would only be permitted if the plan otherwise permits regular Roth contributions. the conversion amounts would be taxable, but would not be subject to the 10% early distribution tax under Code section 72(t). Also, in the case of 2010 conversions, the income generated by the conversion would be recognized over two years, starting in 2011, unless the individual elects for this income deferral provision not to apply. These conversion rules would apply to conversions after the date of enactment. since Roth accounts are not permitted in governmental 457(b) plans until 2011, the 2010 conversion rules only apply to 401(k) and 403(b) plans.
For more information on this and other retirement plan matters, please contact us !
BREAKING 7-7-2010*article provided via Tagdata.com
Pension funding measure passes house, signed by President.
Legislation that provides temporary pension funding relief for single- and multi employer pension plans was passed by the House on June 24, 2010 and signed into law by the President on June 25, 2010 (P.L. 111-192.) The legislation (H.R. 3962, The Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010) was passed by the Senate on June 18, 2010, after it was de-coupled from H.R. 4213, the American Jobs and Closing Tax Loopholes Bill. The pension funding relief provisions pay the so-called "doc fix" under Medicare.
The Act provides temporary, targeted relief for plans that suffered significant losses in asset values due to the steep market decline in 2008. the legislation provides single-employer plans with an extended period to amortize certain funding shortfalls. generally, for eligible plan years, plan sponsors are permitted to elect between two different schedules: a "two plus seven" amortization schedule, which provides for interest-only payments for two years after which seven-year amortization would apply, and a 15-year amortization schedule. Employers that elect the relief would be required to make addition contributions to the plan if they pay compensation to any employee in excess of $1 million, pay extraordinary dividends, or engage in extraordinary stock buy backs during the first part of the relief period. Additional relief is available to multi employer plans.
For more information on this and other retirement plan matters, please contact us !
BREAKING MARCH 2010*article provided by plansponsor.com
A bill making its way through the U.S. Senate could make
it possible to do a conversion to a Roth IRA within 401(k) plans.
According to a statement from Brian Graff, Executive Director/ CEO of ASPPA, an amendment to H.R. 4123 was adopted by unanimous consent that would allow distributable 401(k) account balances to be converted to Roth accounts within the 401(k) plan.
The statement notes that, under current law, the conversion to a Roth account is only available using a Roth IRA. While income tax usually would have to be paid in the year of conversion, but a special rule allows tax on amounts converted in 2010 to be deferred until 2011 and 2012.
According to ASPPA, the new provision simply allows a 401(k) plan to provide for Roth conversions within the 401(k) plan so participants can take advantage of Roth conversion rules without forfeiting the protection and advantages of holding savings in an employer sponsored retirement program.
ASSPA says that, without this proposal, many plans were considering changes that would make it easier for workers to take their retirement assets out of the plan and that the organization was concerned about the potential for leakage out of retirement accounts for workers who had no intention of converting to a Roth account.
Please call to discuss this or any other administrative topic! 209-572-7410 Sonia
EFAST2 IS NOW IN EFFECT
As the new year arrives, so do filing requirements imposed by the IRS. From this point forward 5500 must be electronically filed after being signed by a verified "filing signer" for almost all 5500s, there are some exceptions but for the most part your 5500 will now be digitally accessible to IRS almost immediately upon completion! For more reasons than one, we have found that this makes our clients a little uneasy. To get a more thorough explanation, please feel free to call us and ask to speak to an administrator! You can also go here www.efast.dol.gov to learn more.
2010 LIMITS IMPOSED BY IRS
The good news is they are going to remain the same as 2009! If you recall there was much debate about lowering the maximum's and allocation formulas ~ Click HERE to see the 2010 limits.
FALL 2009 NIPA CONFERENCE
Upon return from the convention in Chicago, we have learned some interesting details about parameters of the plan asset holdings and reporting beginning in 2010.
Real Estate Holdings as Trust Assets:
With the scanning of IRS Form 5500 being made a requirement in 2010. IRS personnel and auditors will have a much easier time reviewing tax forms and scrutinizing trust assets values, that in the past were more or less taken on an "as is" approach. This could create many problems for the Trust and plan qualification as now it seems certain these assets will need to be maintained and presented in a more thorough format with appraised values and the like. Our advice is be careful on determining what types of assets you want to obtain in the trust because the immediate future is about full disclosure and IRS ability to more readily see everything.
Call anytime to discuss the above mentioned issue or any other aspect regarding retirement planning and/ or plan design!
Valley Pension Services, Inc. is not a law firm and the advice and opinions provided on our website, is based on interpretation and derived from technical knowledge of plan design and plan administration. In no way does Valley Pension Services, Inc. try to misdirect or correlate topics and issues with intent to harm a client or potential client.
DID YOU KNOW?
You do not have to take your minimum distribution for 2009 !
The Worker, Retiree, and Employer Recovery Act of 2008 (Act) was signed into law by the President on December 23, 2008. The Act waives 2009 Required Minimum Distributions (RMDs) from Individual Retirement Arrangements (IRAs), 401(k), Profit-Sharing, Money Purchase Pension, 403(b), and certain 457 retirement plans. The Act does not waive any 2008 RMD due by April 1, 2009.
Please see our newsletter for more on this topic and many others! Or give us a call anytime!
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