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Recent Pension Plan questions

I have a simple question about a formulation that has been

I have a simple question about a formulation that has been used to calculate my pension payment. The formulation/calculation is bogus.The formula is [ 1.7% X 8(b) ] / 121.7% (.017) is the company's pension multiplying factor to calculate a monthly pension amount.8(b) is the Accumulated Pay for my 10.2493 years of employment with Chevron - $161,312.73The result of multiplying these two figures = $2,742.316 ($2,743.32)The company then divided $2,743.32 by 12 (which they said they had to do to get a monthly amount) = $228.527 ($228.53)The order of multiplying the amounts masks the false reasoning. If the multiplication of the factor is done last, the calculation is obviously revealed to be bogus. Proof of this statement follows:10.2493 YEARS DIVIDED BY 12 ACTUALLY IS 0.854 OF ONE YEAR (NOT ONE MONTH).The company has acknowledged on the calculation sheet that my "Highest Average Earnings" ("HAE) is $2,031.21 per month.They have also acknowledged my 10.2493 years of service.The formula for figuring a pension amount is the "HAE" for a month X the years of employment X the factor!That would be $2,031.21 X 10.2493 X .017 = $353.91

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Stephen G.

Sr Financial & Tax Consultant

Bachelor's Degree

9,920 satisfied customers
Looking again at Bob's Fruit's and Fruit Washing, Inc. Bob's

Looking again at Bob's Fruit's and Fruit Washing, Inc. Bob's Fruit's (100% owned by Bob) contracts with Fruit Washing, Inc. (where Bob is also an employee but maintains no ownership) to wash their fruits for them. The two companies have a service agreement. Does this have any implications on the 401k/Profit share (OR a Defined Benefit Plan) at Bob's Fruits?

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Stephen G.

Sr Financial & Tax Consultant

Bachelor's Degree

9,920 satisfied customers
Can My son claim me as dependent? I live with him and he

Can My son claim me as dependent? I live with him and he pays close to 100% of my expenses.I made around $45,000 in capital gains in year 2016. I have $60,000 in capital losses from previous years.I received a lump sum from my pension plan for around $46,000 this week. I will rollover the entire amount into an IRA. Should I rollover this week or wait to do it in 2017? Or does it matter since I have 60 days? I believe to be claimed as dependent I should have earned less than $4,000.What line # on form 1040 is my income that should not exceed $4,000?Somewhere on form 1040 I should say the money was rolled over and I will be claimed as an dependent.

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Lane

JD, MBA, CFP, CRPS

Doctoral Degree

20,602 satisfied customers
Can I borrow/use funds from my ERISA pension plan? I need to

Can I borrow/use funds from my ERISA pension plan? I need to close on a home purchase and mortgage not complete yet. I need the funds for 2-3 months. What are the rules on this? Can I use the funds as for a real estate investment.

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bkb1956

Enrolled Agent, Paralegal

6,108 satisfied customers
If you pull money 401k/IRA purchase of a home or college

If you pull money for a 401k/IRA for the purchase of a home or college tuition, is it tax exempt?

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Lane

JD, MBA, CFP, CRPS

Doctoral Degree

20,602 satisfied customers
I work part-time,as a dentist-employee, dentist,

I work part-time,as a dentist-employee, for a dentist, Steve, and we talked recently about taxes for last year and he told me he gross $1.5 million and owed $96K in taxes. He fully funded the pension plan, which is set up as 401Ks, but if he funded his profit sharing plan, he could only write off 30%. I hope I got this right. What else could he have done, or can do, now to reduce the tax burden? Could it ever be reduced to zero? He did not buy any expensive equipment for write-offs during 2015.His CPA was pretty sick for most of last year, and no one else at the firm checked how Steve was doing. A separate bookkeeping office did the monthly reports, etc. What are your thoughts and suggestions?

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Megan C

Master's Degree

30,026 satisfied customers
If a US citizen earns employment income in Canada, Is CPP be

If a US citizen earns employment income in Canada, Is CPP be recognized as foreign tax credit as well?Someone says pub514 says it can't,Pension, unemployment, and disability fund payments. A foreign tax imposed on an individual to pay for retirement, oldage,death, survivor, unemployment, illness, or disability benefits, or for similar purposes, is not payment for a specific economic benefit if the amount of the tax does not depend on the age, life expectancy, or similar characteristics of that individual.No deduction or credit is allowed, however, for social security taxes paid or accrued to a foreign country with which the United States has a social security agreement. For more information about these agreements, see Publication 54.Someone says treaty paragraph 7 article XXIV overrides pub514, so it can be claimed as FTC on form 1116:Which is correct?If the person also has passive income, should CPP be prorated together with income tax between general income and passive income, or all CPP should be fully allocated to foreign tax paid for general income?Thanks,

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Rakhi Vasavada

Financial / Legal Advisor

Bachelor's Degree

4,152 satisfied customers
I want to transfer an ERISA pension fund from one brokerage

I want to transfer an ERISA pension fund from one brokerage firm to another. Does all the ERISA protections transfer with it? do I need to do anything else to make sure the funds and ERISA plan are up to date?

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Lane

JD, MBA, CFP, CRPS

Doctoral Degree

20,602 satisfied customers
Lane and I hope all has been well your way. Been very busy

Hi Lane and I hope all has been well your way. Been very busy here with tax season and I have a question below from a client. He was a Veteran and had all his student loans forgiven in January 2015. At this time he was insolvent but has a business and won't be insolvent in the future, however, what he read said that it is only the insolvency at the time (day before) the loans were forgiven that counts. I'm a little afraid to make these non taxable but was wondering if I could lean on you for a helping hand.Hi Jamie,Been talking to people and researching. This is the way everyone is doing it and not having to pay the tax bill.According to the IRS pub 4681 Form 982 is used for insolvency. The date at which the loans are forgiven is used as well as the figures PRIOR to that date.Because of the for Jan 27 2015, I do not have a house, bus assets or anything except debt. The debt is higher than the forgiven loan = insolvency and should bee 0 tax.I bought this software that calculates the Insolvency and just through some numbers in it that are close to being accurate and have attached the spreadsheet /software for you to look at.I think this will work. This is what other vets have used.I played with the spreadhseet attached and only filled out column E - the rest is what was already in there for example. Again Column E is me.Let me know what you think.Thanks!

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Lane

JD, MBA, CFP, CRPS

Doctoral Degree

20,602 satisfied customers
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