1. A client is considering a "severance pay plan" funded solely by employee pre-tax dollars, and payable upon any termination of employment. If the employee dies before termination of employment, the deferred compensation is "forfeited" and instead the employee receives a death benefit under a split dollar arrangement. (Alternatively, if the employee terminates prior to death, the split dollar benefit is lost).

While there is no formal guidance, the informal guidance provided by the service in PLR 199903032 seems to strongly suggest that a benefit payable on _any_ termination of employment likely will not be considered a bona fide severance pay plan (especially, it seems, if the plan is funded solely through employee pre-tax deferrals).

Are tax exempt employers adopting plans like this?

2. Assume the Service decides this is a deferred comp plan subject to section 457(f). When is the "severance" benefit taxable? Is there a substantial risk of forfeiture until the employee actually terminates employment, because the severance benefit is forfeited upon death? Or is there immediate taxation, because the employee can choose to terminate at any time and receive the severance benefit?

3. I should be doing real estate closings.

Thanks-

card

The State of Washington has sent a letter to the administrator of a 401k plan requesting payment for back child support. Can the state force a distribution without filing a DRO and getting a QDRO?

Could this be treated as a hardship withdrawal and taxed to the participant?

It seems to me there may have been some legislation on this issue acouple of years ago, but I can't find it.

Thanks.

Are SIMPLE IRAs subject to the 415 limits?

Client allows loans for the standard "hardship" reasons. Participant applies for a loan for the reason of "preventing eviction" and gives her employer a letter from the landlord stating that $xxx is due to prevent eviction. The employer issues loan for $xxx.

Subsequently, the employer receives a garnishment order for payment to the landlord in the same $xxx amount. Participant confesses that she did not give the loan proceeds to the landlord but did use the money to acquire a new residence - which would be another acceptable reason.

Any thoughts on what to do with this? Have the participant sign off on modified paperwork? Or, if the employer received adequate supporting documentation for the loan when originally issued, does this type of subsequent info have to be considered at all?

This client likes to play very much by the book... not to imply that the rest don't

Does anyone exlcude terminees who terminatate for misconduct from COBRA coverage?

what do you classify as gross misconduct?

The plan has most of its investments in a mutual fund company. Two of the trustees have decided to invest their own retirement money in investments outside of the mutual fund company. (Plan doc allows for other investments as approved by the trustees). One is now wanting to invest in some apartments- are there specific forms/paperwork that the DOL requires to include real estate as part of plan assets? I've been assured that this investment can be valued annually.

Thanks in advance for your help.

Rachel

We have a plan that is debating about going to either a 401(k) Safe Harbor Plan or a New Comparability Plan. The eligibility for the current profit haring plan is entry on Jan. 1 after 18 months of service. Can we maintain this eligibility or do we have to reduce to 1 year of service for either Safe Harbor or New Comp.

Are you required to send a tax notice to participants prior to offeting their loan after termination? (I would assume so because it is eligible for rollover)

Does a participant need to consent to an "in-service" distribution to offset their loan? Example: Participant is 60, has defaulted on his loan, and plan allows in-service distributions. Does he need to consent to the "in-service" to pay off (offset) his loan? Are we required to send the tax notice? Also, if he does not consent and it goes past the cure period, do we now have to deem the loan?

Thanks for your help.

We have a cafeteria paln with dependent care & health care spending and pre-tax medical premiums effective 1/1/2004

Can the plan be adopted anytime before the end of 2004?

Or must it have been adopted priro to 1/1/2004?

We are an LLC

Can VP of HR execute plan document if not a member of LLC

Who tyically should sign the doc? must it be an officer ?

I'm a first-time participant in a flexible spending acct this year; we put in $750 for my son's cleft soft palate operation, which ended up costing less than we expected. So it would appear we may have thrown away some cash, but here's the twist:

My company's health insurance this year switched to a group called Definity that works through a regular PPO (Beechstreet), but essentially gives you an account, called PCA, that is used to cover the first $1,500 of the $2,000 deductible. AND, unlike flex spending, money you don't use from your PCA carries forward to next year.

SO, it makes sense to me to ask Definity to let me cover the first $750 myself out of flex spending, but their rep tells me there's no way to do that. Is she right? Anything else I might think about doing?

I'd appreciate any help on this subject that I find so confusing.

I have a client whose CEO wants to make elective deferrals to a 457(f) plan. He completely understands that his elective deferrals must be forfeitable. The question is, can he make an annual election as to the amount of the elective deferral (in December of each year, he would make an election as to the amount to be deferred in the following calendar year) or does he have to make a one-time upfront election for all years of employment? We can draft the plan either way.

I have an employee who took 8 weeks of FMLA after the birth of her child and is coming back to work; she is eligible for 12 weeks of FMLA

Can she take the addiitonal 4 weeks as long as it's before the 12 months after birth?

Her parents from India are coming to visit for a month in the summer to see their little granddaughter and the employee wants to take the additional 4 weeks then rather than the 12 weeks now.

In determining Top Heavy for 2004,

determination year - 1/1/03 to 12/31/2003

12/31/03 determination date

It is not a new plan.

the catch up contribuitons for 2003, made by the key employees , are they subtracted out of the 12/31/03 balance?

Here's the scenario:

This is the first year that matching contributions were made. So last years 12/31/02 nondiscrimination testing did not involve an ACP test.

Matching contributions were made in the 2003 plan year however, so an ACP test will be done. What will be used for the prior year test percent? Will it be 0% or the default of 3%? I'm thinking that the 3% can only be used for a new plan in their first year of testing.

Has anyone come across this? thanks for the help.

Does anyone know of a free social security calculator, preferably one that could be used in Excel as a worksheet, if not as an add-in. I've tried to use the online calculators on the ssa.gov site along w/ the detailed calculator available for free d/l. Assumptions changes are not available for the online calculators and the d/led executable one is not that great, in my mind.

Thanks.

I know this topic has been discussed before, but I thought I would revisit it in light of the recent filing deadline for GUST restatements.

It's my understanding that an amendment to change testing methods could be made up until the end of the GUST RAP. For those plans that filed for determination letters by the end of January, is the GUST RAP now extended for 91 days after the date the determination letter is issued (per Reg. Sec. 1.401(b)-1(d)(3)). If so, can an amendment changing the testing method still be made within this timeframe?

We took over a Plan and discovered that they did not pay the 3% Safe Harbor contributions for 3rd and 4th Quarters of 2002. Last week, they calculated who should have received what and sent it in. But they passed the 12 month following the end of the Plan Year rule. What corrections need to be done? Is it similar to late EE deferrals? Any help on thsi one would be appreciated. Thanks!

If a PS Plan has a 21 & 1 eligibility but with a 401(k) feature eligibility of any and any, in doing the average benefit test of the cross-testing, do you include those participants eligible for the 401(k) but not yet eligible for the PS? If yes, please include citations. Thanks.

Roman

Here's a softball for you:

I'm a student, in the 10% income tax bracket. I have a traditional IRA valued at $200K, which I'd like to convert to a Roth.

At which rate will I pay tax on the conversion -- my present rate or the 33% marginal rate (as if I "earned" $200K + this year)?

Thanks for your help.

Hello,

I have a question that I am having a hard time getting an answer for and thought I would run it by--

I currently have a 401k account valued @ 200K and of that there is 19k in after tax dollars. I have contacted the administrators and was told that the plan allows for partial withdrawls and in order to get the 19k I would have to take 35k (19k in afer-tax and 16k in pre-tax)

I would like to roll this money into a traditional IRA (and understand that I would have a 16K tax event) and then convert to a Roth IRA.

The question is can I put both the pre-tax and after-tax dollars into the IRA since it is being distributed from a qualified plan? If so how do I report this on my tax returns.

Not trying to get the money but just trying to get it into a tax free growth vehicle with a minimal tax event.

Thanks for any responses