Following facts: Plan is top heavy and ADP of NHCEs is zero and ADP of HCEs is 1.8. ADP refunds will be given to bring HCEs to an ADP of zero. Is top heavy minimum 1.8% or 0%?

X sponsors a cafeteria plan for its regular employees and sales employees. As part of a new company initiative, X proposes creating a new cafeteria plan providing similiar coverages except that the employee's cost of medical insurance under the new cafeteria plan will be based on the employee's production. If X creates the new cafeteria plan effective July 1 and moves its ales employees out of the original plan and places them into the new cafeteria plan on that date, is this move permitted under the change in status rules?

I have been reading the posts on cross-tested plans where the rate groups are individual HCE's (doctors, etc.) and "everybody else".

Question for clarification:

401(k) Profit Sharing plan is Top Heavy. Employer will provide 3% top-heavy contribution to all non-key (and NHCE) employees, no need to make it a safe-harbor contribution, as the ADP test passes easily on its own accord. No ACP test, no employer matching contribution.

To the cross test: There are 26 rate groups: The 25 "HCE's" and everybody else. Everybody else is getting the 3% Top-heavy minimum. The other 25 rate groups may receive a PS contribution up to 9%, in order to meet the gateway. The question is can an individual "rate group" elect to have nothing contributed on their behalf (for various reasons, such as termination or retirement). Obviously this would have a great influence on the discrimination testing in favor of the other rate groups. If this is allowable, does the employer need a written election from the non-participating rate group? Can the 0% for 2003 rate group go back and elect 9% for 2004, if desired (and subject to testing, of course), or is the "opt-out" for 2003 considered permanent (such as an irrevocable opt-out for an employee initially eligible for participation in a qualifed plan)?

Hopefully this isn't too confusing. Thanks for any responses.

I just discovered that my client's dental insurance only allows enrollment upon meeting initial eligibility requirements. If they don't enroll when first eligible, they may not later enroll, even on account of a family status change. My first impulse is to say that this benefit would not be eligible to be included in their cafeteria plan. Is this one-time enrollment permissable?

I am sitting for the exam Dec 12th an am trying to find some more practice questions to work before taking the exam. Any help would be appreciated.

Thanks,

Carson

the sponsor got an independent appraisal last year and the value of the stock was 0. they are not doing any transactions ie. buying or selling stock. are they required to obtain a valuation each year. i don't see a valuation requirement in erisa unless you are buying or selling the stock.

I received from MHM Resources today their latest flex flash listing indexed figures for 2004. The 3rd paragraph states: "The exclusion from income provided through an employer or a Section 125 Cafeteria Plan also has a $10,390 limit for the 2004 taxable year."

I have been administering flex plans for over 5 years and have never heard of this one. Did I miss the boat completely or is this something new?

A Union Health Fund currently offers supplemental life insurance to the participants of contributing employers. The union now wishes to obtain this supplemental life insurance through another fund however, the initial health fund will still be collecting the contributions from the employer.

Does there need to be some agreement, like a participation agreement between the health fund collecting the contributions and the employers addressing the fact that the health fund will be collecting the contributions and turning them over to the other fund for insurance?

Any help is appreciated. Thanks

Just to confirm, an employer cannot maintain a SARSEP and 401(k) plan at the same time? The employer would have to term the SARSEP and start a new 401(k) plan?

Thanks.

An employer sponsors a profit sharing plan and a money purchase pension plan, both of which have plan years beginning May 1 and ending April 30. The employer merged the money purchase pension plan into the profit sharing plan on September 30, 2003 and amended and restated the surviving profit sharing plan as of the same date. The question is, what is the effective date of the amendment and restatement? Can it be effective beginning May 1, 2003? My understanding is that, because there was a money purchase pension plan involved, the effective date cannot be retroactive. If this is the case, the amended and restated profit sharing plan would be effective as of September 30, 2003 and the employer would file a final 5500 for the plan year ending April 1, 2004. Depending on the Plan language, the Employer might also need to make a contribution to its employee under the terms of the money purchase plan, too.

would an amendment removing the deferral feature from a 401(k) be an impermissable cutback of benefits?

Under USERRA does an employee continue to accrue vacation and sick time while that employee is out on military duty? Can you point me to some authority on this issue? The CBA does not address this issue.

Thank you in advance for your help.

Under USERRA does an employee continue to accrue vacation and sick time while that person is not working due to their military duties? The CBA does not address this issue. Can you point me to some authority on this issue?

Thank you in advance for your help.

Assume a plan has received a QDRO which directs the distribution of $10,000 to the alternate payee. The participant has an outstanding participant loan. There is sufficient cash in the account balance to make the distribution. However, the distribution of $10,000 to the alternate payee would cause the participant's loan to exceed 50% of his remaining account balance, which would be a violation of the plan's loan policy.

Any thoughts?

I see that ERISA Opinion Letter 94-28A (7/21/94) permits a loan from the participant to the plan in this circumstance so that the payment to the alternate payee can be done, but what if the participant won't agree?

Is there a deadline to establish a SIMPLE 401(k) for the current year, like there was on SIMPLE IRA (Oct. 1st)?

I thought I'd read somewhere that annual trustee directed 401(k) plans that only provided an annual statement to participants would have to begin sending statements to participants at least quarterly. Does anyone know if this is true or not?

Does anyone have any introduction material to cash balance plans? stuff like governement regulations, testing, limits and so on.

Thanks, Andrew

This may be simple, but let me know if I am not handling this correctly:

An LLC1 owns 100% of Corp A - and Corp A owns 100% of LLC B.

Also, LLC1 owns 100% of Corp C - and Corp C owns 100% of LLC D.

Also, LLC1 is owned 50% by Corp. X and 50% by Corp. Y.

LLC B and LLC D each sponsor 401(k) plans - no other entity sponsors a 401(k) plan. This is a controlled group of corporations-right? So-if the 401(k) plans sponsored by LLC B and LLC D are both standardized - we have a problem (because standardized plans must cover all employees of the controlled group) unless the 410(b)(6)© grace period (due to a transaction-per Rev Proc 2000-20) applies? Honestly, the LLC v. Corp distinction is confusing me as well as whether this is a Parent-Subsidiary or a brother/sister issue. Please help!

Would the answer be different if LLC1 was owned 42% by Corp W-and Corp W was owned 50% by Corp. X and 50% by Corp. Y?

Can non-deductible contributions in a QP be rolled over to an IRA account?

I am getting really confused. If I convert traditional IRA to a Roth, can I withdraw the contributions penalty and tax free before the Roth has been opened 5 years if I am over the age of 59.5?

It's not a "qualified distribution", but since I am over 59.5 it should not matter. Is this correct?