Miscellaneous Comments

1.   A distribution received prior to age 59.5 may trigger the 10% excise penalty. For example, in the previous example, if John Doe had rolled only the $40,000 (not $50,000) into an IRA, the $10,000 would have been subject to income taxes and a possible 10% penalty.

2.   Before 1-1-93 at least 50% of a distribution could be rolled into an IRA. Now there is no minimum percentage. In the previous example John Doe could have received the $50,000 from his employer and he could have rolled only $10,000 into an IRA. Naturally, the amount not rolled ($40,000 in this example) would be subject to income taxes and the possible 10% excise tax penalty.

3.   Those participants considering not rolling or transferring the proceeds should be reminded of the power of tax deferral. In the above example, the participant should be shown the tax-deferred accumulation power of $50,000 over $40,000.

4.   In all instances, clients should consult with their own legal and tax advisors since W.V.H., Inc. nor any of its employees, officers, independent contractors or directors are qualified to provide legal and or tax advice.