Should you consider a Roth conversion?

Changes in tax legislation in 2010 will create opportunities for many investors to convert tax-deferred retirement assets to a Roth IRA, which may benefit individuals during their retirement years by potentially reducing income taxes, increasing retirement assets, and enhancing retirement income, in addition to providing estate planning flexibility.

When you convert to a Roth IRA, you currently must pay income tax on the full amount you transfer in the year of conversion. Should you convert in 2010, you can elect to spread the tax liability over two years (2011 and 2012).  All conversions made after 2010 will be subject to taxation in the year of conversion.

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Know What to Expect in Your 403(b) Plan Financial Audit

The Department of Labor (DOL) issued amended regulations eliminating an exemption granted to 403(b) plans from the annual Form 5500 reporting, disclosure and audit requirements under ERISA.  The removal of this exemption subjects ERISA-covered 403(b) plans to the same Form 5500 reporting and audit requirements as 401(k) plans.

Many plans face significant challenges, such as

• Establishing plan accounting records and proper controls,
• Identifying all participant accounts to be included as plan assets,
• Determining beginning account balances,
• Obtaining other financial information to be included in the plan’s financial statements,
• Obtaining an unqualified opinion on the plan’s financial statements from the independent auditor.

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Pesion Plan Audit Requirements

ERISA contains arequirement for annual audits of plan financial statements by an independent qualified public accountant.

Generally, plans with 100 or more eligible participants are subject to the ERISA audit requirement. The Department of Labor's (DOL) regulation (29 CFR 2520.104–46) establishes conditions for small employee benefit plans (generally those with fewer than 100 participants) to be exempt from the general requirement that plans be audited each year. The DOL amended the regulation in October 2000 to impose additional conditions for small pension plans to be exempt from the annual audit requirement. The amendments went into effect beginning in 2001. Download PDF file

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