X maintains a 401(k) plan for its employees. Included in the plan are a small number of Puerto Rico residents. The Plan has a separate provision for the Puerto Rico residents based on the Puerto Rico Internal Revenue Code provisions. Under Puerto Rico law, there is no nondiscrimination test for matching contributions. In running the test under US, can the Puerto Rico resident employees be excluded?

Participant dies in 2002. There are three primary beneficiaries, one of which is surviving spouse; RMDs are taken in year of death. In 2003, accounts are separated and survivng spouse rolls over monies into a new traditional IRA in his name (treats as own). Surviving spouse is over 70-1/2 and needs to take RMDs this year.

If a husband and a wife are both greater than 5% owners and participants in the same plan and the husband dies, can the wife "roll over" her husband's account balance into her account balance under the same plan as long as the plan document allows for rollovers?

Husband died prior to obtaining age 70 1/2 - wife will not be 70 1/2 for some time and would like to leave the money in the plan but not be required to receive minimum distributions.

Thank you.

I'm real confused. I recently attended a Corbel Seminar on Cross Tested plans, and I was sure that I heard that in a New Comparability Plan with a 3% Safe Harbor Contribution you could not have a last day requirement. Is this true.

We have a standardized plan that (as of 12.31.2003) will no longer cover all entities in the controlled group - so it turns into an individualized plan at 12:01am on 1.1.2004 (amended for GUST/EGTRRA on 12.30.2002). I am assuming that we have to submit this to the IRS for a determination letter by 1.31.2004 under Revenue Procedure 2003-72 - but am I wrong in that assumption? Is there anything else I should be worred about (e.g., are there amendments that should be made before we send it to the IRS for a determination letter-if we have to do that)?

Does the 7.5% minimum allocation limit apply if there is no participant overlap in the DB/DC combo, if no participant participates in both plans??

Ignoring the prohibited transaction issues, what are the tax consequences of selling appreciated property to your own IRA? And vice versa, what are the tax consequences of buying appreciated property from your own IRA? I have my thoughts, but I wanted to throw this out there and see what others think.

I've been asked to prepare a profit sharing proposal for a small engineering firm. There is not enough of a difference in ages between the two partners and the rest of the employees to make crosstesting work across the board, but restructuring might help. I'm thinking of putting the younger partner in one component plan, and testing on allocations, and the older partner in the 2nd component plan and testing on benefits. But CP1 does not pass the RPT. Does this mean that I have to have a reasonable basis for differentiating one partner from the other in order to use the ABT for CP1 to pass 410b? The plan as a whole will pass the AB%T.

In a medical spending account, does an employee need to submit a monthly claim for reimbursement if their dependent is in the middle of orthodontic treatment? I have a third party administrator tellling me that if I submit a copy of the ortho treatment plan, payment arrangement I have with the orthodontist and complete a request for continual reimbursement claim form, I do not have to submit this claim for reimbursement on a monthly basis. Under this plan, I will receive reimbursement every month (checks are cut once a month).

Is this permissible under Section 125?

Thanks

Has anyone seen a comprehensive list of OTC medications that sets forth what is reimburseable, what is not reimbursable and what is reimbursable only with a doctor's note? Aside from the items in the revenue ruling, many items are questionable. For example, what about contact solution? I have heard commentators say that it is both reimbursable and it is not reimbursable.

Cstrong

Question: IRA holder wishes to receive as a distribution a particular security held in his/her IRA account. I know that the amount of the distribution is calculated using the Fair Market Value of the security on the date of distribution. However, the question has arisen as to what the holding period (for capital gains treatment on future sale of the security) of the security is when it becomes a "personal" investment -vs- an IRA investment. I am under the belief that the holding period begins when the security is transferred; therefore, if you take the security out today and sell it tomorrow, the result is a short-term capital gain/loss at the personal level, even if the security had been held for 5 years in the IRA account.

Am I correct? Any replies would be appreciated.

I've heard that a 412(i) DB plan can be aggregated with a DC plan to satisfy coverage rules, but once aggregated for any purpose, it must be aggregated in all other cases where it is permitted. Assuming a 412i plan is aggregated for coverage, it appears it would need to be aggregated for nondiscrimination testing. In a recent ASPA Journal article, the author said that when a 412i plan is aggregated with a DC plan for nondiscr. testing, it will automatically fail. If this is true, doesn't this in effect, prevent a 412i plan from being aggregated with a DC plan? Thanking you in advance for your thoughts/responses.

Corporation A sponsors Plan A (a 401(k) PSP). Corporation A is owned by equally by 4 MDs and has other employees. Plan A provides 415 max benefits to the MDs and signicant benefits to employees (assume 10% of comp.).

Corporation B sponsors Plan B (a PSP). Corporation B is owned equally by 2 MDs (2 of the 4 owners of Corp. A) and has no other employees. Plan B provides 415 max benefits to the 2 MDs.

The only overlapping employee/participants are the 2 owner/employees of Corp. B.

Assume that the Plans are operated as if there is NOT an ASG.

If it is later determined that there is an ASG, what are the potential issues and problems facing Plan A?

Clearly, Plan B has coverage, discrimination, and 415 issues.

But, what are the issues facing Plan A?

It seems like Plan A has potential 415 issues. It may be possible to include coordinating language between the plans to indicate that any excess is attributable to Plan B. Additionally, Treas. Reg. §1.415-9(b)(3) indicates that under certain circumstances the employers could determine which plan is disqualified.

Are there any other issues facing Plan A?

Ideally, if it is later determined that there is an ASG and the issues cannot be corrected short of disqualification, the parties involved would like the result to be disqualification of Plan B, but not Plan A (older plan, higher balances, more participants, etc.).

I am not looking for an answer as to whether this is an ASG but instead what will happen if it is determined to be in the future. The advice will be to seek a ruling on ASG status but I am considering the future if that route is not taken.

We're setting up a web site for our groups to view claim information on-line.

We are considering using a check box to allow an individual to object

to any other family member viewing their claim information, and not requiring

a signed authorization to allow them to do so. (In other words they have to

opt-out of this arrangement.) I have reviewed CFR 164.510 and believe

we have a valid argument in doing so.

Does anyone have experience with this sort of arrangment? Thanks.

Dealing with a participant who just returned from military service... USERRA seems to say that the make-up contribution is determined on actual rate of pay in effect at time of mil. service, or if actual rate indeterminable, then use preceding 12 months to determine rate of pay. USERRA aalso says that no earnings are due on the make-up contribution and no forfeitures need to be allocated. If the participant is there the first 2 months of the plan year and then returns after plan year end and actual rate of pay is undeterminable, does that mean that:

1) total comp. (=) 2 months' actual comp. amount (+) 10 months comp. based on preceding 12 months of comp. pay rate;

2) no earnings are computed on the make up contribution;

3) no forfeitures are allocated to the participant's account....?

I may be making more out of this than necessary, but just haven't dealt with the issue previously..... Thanks for the responses.

If a plan is self insured but being administered by a health insurance company, who would be the claim fiduciary, the plan sponsor or the insurance company? What would be the responsibilities of a claim fiduciary?

We post our Summary Plan Descriptions for the health/welfare plans on our employee intranet.

When we make a change to a plan, or eliminate a plan, how long are we required to keep the older version of the SPD posted?

If a cafeteria plan has never filed a Form 5500 since it falls under the exemption of being less than 100 participants and the assets have remained a part of the general assets of the corporation, must they file a final Form 5500 if they are terminating the cafeteria plan?

An employer with a current collective bargaining agreement with a union wants to drop health coverage due to financial problems. The collective bargaining agreement provides for health insurance to be provided to the employees after contributions are made on behalf of the employees. Can this be done?

Further, this same employer was making contributions for employees who are not union members. The employer wants to drop them from coverage and receive a credit for monies paid for these non-union employees. Is this a problem?

Any thoughts and/or direction would be appreciated

I have a pending controlled group situation in the offing and need to know just what issues need to be considered and/or addressed (this is uncharted territory for me).

The situation is thus: Corporation A and Corporation B are forming Partnership C (a partnership of Corporations A and B).

Corporation A currently sponsors a DC Plan. Corporation B currently sponsors a DB Plan.

Some employees of Corporation B will be splitting their time between Corporation B and Partnership C. Partnership C will likely also be hiring employees in addition to those individuals being "split" with Corporation B.

Don't even know where to start! Any any all input most appreciated.