Form 8935

[phlgreaser]

Us airways mailed me an IRS form 8935 yesterday. Included was a NOTICE OF AIRLINE PAYMENT ROLLOVER RIGHTS UNDER WORKER, RETIREE AND EMPLOYER RECOVERY ACT OF 2008. Does anyone know why this form was mailed out?

 

[autofixer]

It was as clear as mud to me.

 

[mike33]

Us airways mailed me an IRS form 8935 yesterday. Included was a NOTICE OF AIRLINE PAYMENT ROLLOVER RIGHTS UNDER WORKER, RETIREE AND EMPLOYER RECOVERY ACT OF 2008. Does anyone know why this form was mailed out?

I believe it had to do with the 1st BK where the pension plan was terminated and the Law of 2008 wasn't enacted yet. The company sent checks out of the $ that were in the pension. It was a short lived period thru the "Schofield" era.

Now that the new law is in place they are giving you the opportunity to put " Like Monies " into a ROTH or something of equivalance. Thats what I get out of all the Jiberish.....

 

[FWAAA]

mike33 is right. You have until June 23 to contribute the amount in Box 1 to a Roth IRA if you want to - and that might be a good idea.

 

[Kev3188]

At NWA, we just got them as well. For us, what it essentially meant is that any money received via the IAM's selling of unsecured BK claims could now be put into a Roth IRA as a result of some legislation passing. In a nutshell, whatever money we had received, wouldn't count against the maximum annual contribution amount you can make to an IRA.

Here's a brief blurb that may help. I'm not sure how it "translates" into what is specific to US, but hopefully, it helps a little...

"A new law passed in December allows eligible active and former airline employees to contribute the amount of certain bankruptcy-related payments to a Roth IRA.

A Roth IRA is an individual retirement account that allows contributions on an after-tax basis. The earnings on a Roth IRA are generally tax-free when you take a distribution in accordance with the Roth IRA rules. A traditional IRA only allows for before-tax contributions.

Eligible employees and retirees must have been a participant in the airline’s defined benefit plan, which was terminated or became subject to special airline funding rules under the Pension Protection Act of 2006. Income and funding restrictions, which normally apply to Roth IRA contributions, will not apply under this special provision for those eligible.

A letter from Rob Kight, v.p.-Compensation, Benefits and Services, has been mailed to the homes of all employees and retirees eligible to make contributions to a Roth IRA under the provisions of Section 125 of the Worker, Retiree and Employer Recovery Act of 2008. While no actions are required as a result of this legislation, it may present a favorable tax opportunity, and eligible employees and retirees may wish to consult their financial or tax advisor.

The mailing also includes a form with personalized information, including the amount the employee/retiree received as a bankruptcy-related payment that is eligible for the Roth contribution."

 

[CaptBud330]

I contacted a tax adviser and brought my W2's. The numbers listed on the letter were reported as "unqualifed plan" line 11 on the W2. That amount was listed as taxable income and Federal taxes were withheld. The 2008 law states that that money should have been "qualified" and therefor not subject the traditional IRA rules that call for mandatory distribution at 70.5 and no taxes would be need to be paid when monies are withdrawn. Also, if the funds are converted to a Roth, that amount can be transferred to your heirs without paying taxes. Basically he said it was a no brainer. I personally will convert the the amount stated on form 9835 from my conventional IRA to a Roth.

 

[CaptBud330]

I just received this for US Airways retirement:

You are correct. These funds were already taxed. When moving funds out of a Traditional IRA, you may be subject to taxes and penalties. You may want to roll the amount over into the Roth from your current savings or investments since these already been taxed.

The amount reported on the IRS Form 8935 that you recently received was included in your earnings/compensation and already paid to you in the form of certain lump sum cash payments, stock option exercises, or in the form of restricted stock between the years of 2003-2006. Since you have already received these earnings or stock options, you are eligible to roll the amount on the IRS Form 8935 into a Roth IRA from your current savings or investments. Again, any personal savings or investments that you have are acceptable funds for this rollover.

Please note that you are not required to roll the amount into a Roth IRA. You are just given the option to do so. So you may do nothing at this time if you so choose.

Thank you,
Retirement Plans Department

 

[phlgreaser]

Thanks everyone.

 

[autofixer]

So this amount includes those worthless stock options we have? I am having difficulty with this, as I have not recieved anywhere near the amount of money that the form states...maybe that is it, the worthless stock options.

 

[missthe727]

Thanks to everyone who posted for clarity. I get that we can roll it over into a Roth OR do nothing. I am assuming that since it is dated from 2003 that we already rec'd and were taxed on the amount in the box. However, I have to ask where they think I'm going to just get 600 bucks to put into my Roth. Like I have it just laying around or something????? I'd love to do it but I'm just trying to pay the mortgage right now.


It might have been nice if we had gotten some notice too. They basically give us about 2 months to do it. If I had about 6-12 months to save and then do it, I might be able to do some or all. How long have they known about this ???????

 

[CaptBud330]

I was planning on just transferring funds form my traditional IRA to a Roth but apparently it must be funded by investments or savings or there very severe tax consequences. I knew it was too good to be true.

 

[Old Guy]

I was planning on just transferring funds form my traditional IRA to a Roth but apparently it must be funded by investments or savings or there very severe tax consequences. I knew it was too good to be true.

If you are 59 1/2 you have no penalty. Your taxes would be your bracket. So what good is 8935? You paid taxes on something that you didn't get. So nice that the company did that for us.
So you pull it out of an IRA. You paid the taxes already, right?

O G :blink:

 

[CaptBud330]

I asked Retirement why I received a W2 for income I never received and paid withholding on some phantom income. This is the reply i just received. I'm still not sure if I will have to pay taxes if I pull $$$ out of the IRA and start a Roth with that money. Anyone know for sure?

You will not receive a check or a future cash payout. The amount reported on the IRS Form 8935 that you recently received was included in your earnings/compensation and already paid to you in the form of certain lump sum cash payments, stock option exercises, or in the form of restricted stock between the years of 2003-2006. Since you have already received these earnings or stock options, you are eligible to roll the amount on the IRS Form 8935 into a Roth IRA from your current savings or investments. Any personal savings or investments that you have are acceptable funds for this rollover.

Please contact your tax advisor for further inquiries on the tax implications.

You may call any financial institution such as Fidelity, Wells Fargo, Bank of America, Wachovia, etc… to open up a Roth IRA first and roll the amount from IRS Form 8935 out of your personal savings or investments and into a Roth IRA once it is established. A representative from one of those institutions will then instruct you on how to get this completed.



Please note that you are not required to roll the amount into a Roth IRA. You are just given the option to do so. So you may do nothing at this time if you so choose.

 

[Old Guy]

I asked Retirement why I received a W2 for income I never received and paid withholding on some phantom income. This is the reply i just received. I'm still not sure if I will have to pay taxes if I pull $$$ out of the IRA and start a Roth with that money. Anyone know for sure?

You will not receive a check or a future cash payout. The amount reported on the IRS Form 8935 that you recently received was included in your earnings/compensation and already paid to you in the form of certain lump sum cash payments, stock option exercises, or in the form of restricted stock between the years of 2003-2006. Since you have already received these earnings or stock options, you are eligible to roll the amount on the IRS Form 8935 into a Roth IRA from your current savings or investments. Any personal savings or investments that you have are acceptable funds for this rollover.

Please contact your tax advisor for further inquiries on the tax implications.

You may call any financial institution such as Fidelity, Wells Fargo, Bank of America, Wachovia, etc… to open up a Roth IRA first and roll the amount from IRS Form 8935 out of your personal savings or investments and into a Roth IRA once it is established. A representative from one of those institutions will then instruct you on how to get this completed.



Please note that you are not required to roll the amount into a Roth IRA. You are just given the option to do so. So you may do nothing at this time if you so choose.

I got the same verbage from HR. No one want's to answer the tax question. Any CPA's out there ? Call the IRS and you can get verying answers! :huh:

 

[CaptBud330]

I just got off the phone with the IRS. The amounts reported on form 8935 CAN be rolled over from a Traditional IRA into a Roth IRA. If taxes were withheld, no taxes or penalties will be assessed with this funding of the Roth IRA. If taxes were not withheld, the transfer of funds from a Traditional IRA to a Roth will require taxes be paid as normal income for the year the transfer was made.
I checked my W2's back to 2003 and in my particular case, federal taxes were withheld from the companies contributions. The transfer will not incur any penalties or additional taxes.
For your records, the IRS Pension and Retirement specialist's name and number is Mr. Pease, emp.# 431459