Retirement Scenario:
– Male – age 64 (good health); current estate size = $1.5 mil; married (wife does not work); 2 children
and 2 grandchildren
– Current employed and company has 401(k)
– Plan is to retire in year 2012
– Current AGI = $190,000
AGI in 2012 = $75,000
– Current Contributions to 401(k)
$15,000 pretax
$5,000 (catch up – pretax)
[u]$8,500 [/u](bonus – pretax)
[b]$28,500[/b]

[b]* Planning dilemma[/b]:
– 401(k) plan permits in-service distributions
– since turning 59 1/2, he has transferred a total of $51,000 from his 401(k) to an IRA
– since turning 59 1/2, the 401(k) has been returning his $8500 bonus contribution (due to top heavy
rules in plan) and he has paid tax on it each year and contributed the after tax amount ($5,000) to
his IRA mentioned above.
– his accountant has not filed form 8606 reporting the above cost basis, however the custodian has
sent him tax forms each year reporting the contribution and taxable amount in the IRA (not 8608
forms).
– his current employer 401(k) plan does not allow transfers from existing IRA’s into their plan

[b]- What suggestions are in order in this case?[/b]
– Transfer all IRA monies (pretax and post tax) to a Roth IRA in 2010 and pay taxes on pretax
money? His AGI is already $190,000 without adding these monies.
– Wait and do the above in 2012 when his AGI will be $75,000?
– Do nothing and take distribution from the IRA when needed? Tax consequence?
– Can he continue to contribute $5,000 after tax to IRA while working through 2011 if his AGI is
$190,000?