If permissable under the plan document, can the tax imposed under Section 4979 for excess deferrals/match refunded from a 401(k) plan after the 2 1/2 month deadline be paid from the plan's forfeiture account?

Are health benefits ever taxable? Especially supplemental plans that pay cash directly to the individual based on an indemnity benefit without coordination of benefits -- thereby leaving a possibility of someone receiving more than they paid toward the medical services. Thanks!

A client of mine provides retirement and investment services to companies and high-net-worth individuals. He asked me if they could set up a group health plan that could include some of these self-employed or retired individuals -- possibly under the guise of an "association" or some other collection of people. I told him that while this is not my area of expertise, it is my understanding that a group of people cannot form an alliance solely for the purpose of buying insurance.

Does anyone know if there is a way for a group of people to buy a group health plan. Especially if the group collectively has no major health problems. Can they enjoy the cost savings of "spreading the risk" by forming a group?

If not, what reasoning or regulations support the inability to do so?

Thanks!!!

A golfer is in a competitive match with a friend, who is ahead by a couple of strokes.

"Boy, I'd give anything to sink this putt," the golfer mumbles to himself. Just then, a stranger walks up beside him and whispers,

"Would you be willing to give up one-fourth of your sex life?" Thinking that the man is crazy and his answer will be meaningless, the golfer also feels that maybe this is a good omen so he says, "Sure," and_ sinks the putt.

Two holes later, he mumbles to himself again, "Gee, I sure would like to get an eagle on this one." The same stranger is at his side again and whispers, "Would it be worth giving up another fourth of your sex life?"

Shrugging, the golfer replies, "Okay," and makes an eagle.

On the final hole, the golfer needs another eagle to win. Without waiting for him to say anything, the stranger quickly moves to his side and says, "Would winning this match be worth giving up the rest of your sex life?"

"Definitely," the golfer replies, and he makes the eagle.

As the golfer is walking to the club house, the stranger walks alongside him and says, "I haven't really been fair with you because you don't know who I am. I'm the devil, and from this day forward you will have no sex life."

"Nice to meet you," the golfer replies, "I'm Father O'Malley."

What is the 402(g) limit for an off calendar year end? Plan year end is 1/31/2003.

Company Z owns 72% of Company A.

Wife owns 3.75% of Company A.

Husband owns .03% of Company A, 1% of of Company Z.

Kids owns 99% of Company Z, but no direct ownership in Company A.

The kids are attributed 71.28% of Company A (72%*99%), is this ownership further attirbuted to Parents. I'm thinking that this is not considered double attribution, but I'm not positive.

I'm trying to determine HCE status.

Ok - got a question from an auditor. They're doing a full-scope audit, and have to review "reportable transactions," even though a Schedule of Reportable Transactions is not required (all investments are participant-directed).

Neither the client nor its recordkeeper has this information, and act like the auditor is crazy for requesting it.

My question (on behalf of the auditor) is this - when the new rules came out for what goes on the Schedule of Reportable transactions, was there also some guidance on retaining the information on the transactions (even though it doesn't get reported?) I can't seem to find anything on point.

Thanks!

If the IRA participant dies & was the co-trustee of his family trust, which is the beneficiary, does the trust use the co-trustees social security number, or should she obtain a tax identification number?

An employer has a prototype plan document. In order to receive a matching contribution, a participant must be employed on the last day of the plan year. The plan does not pass the 410(B) test for the plan year. The plan document does not address what to do if the plan does not pass the ratio percentage test. Usually, one can bring in terminated participants until you pass the test or run the average benefits test. Is there a problem with doing this if the plan document doesn't have any provisions regarding this?

Union members were mistakenly included in 403(B) plan. Can the plan be amended retroactively to correct the error and exclude the union members making it as if they had never been in the plan? What of the IRS?

When a participant rolls their balance to a new employer plan and it includes a loan balance, how is that loan transfer balance reported? I didn't think you could prepare a 1099-R showing a loan as a rollover, or do you show the entire balance as a rollover, code "H"? Thoughts??

What amendments must be made to a cafeteria plan document if we just had it restated in 2001?

Mike, age 72, (non owner) made $13,000 in 2002. He deferred 11,000 plus the $1,000 catch-up contribution. The employer has now decided to make a hefty ps contribution for the 2002 year. Many participants are upset because had they known . . .

What is the maximum ps contribution Mike can receive?

A father owns 100% of the company. His two sons also work for the company. Does attribution apply to both children or just one?

Can I create an Owner class for the father and an Other Highly Compensated category for the sons?

Are the sons required to get the same % contribution as the father?

What testing is done and how is it passed in this situation?

And if there are other non-family highly compensated employees, can I put them in a separate class and have an "all other employees" class as well? I'm feeling a bit over my head at the moment.

Can anyone point me to a resource that outlines the process for calculating a partner's compensation / dc retirement plan contribution.

A company has a profit sharing plan and added a 401k plan. At the beginning of the plan year there were 12 active participants and then 3 employees were layed off this month. Our plan administrator has informed us that this much of a reduction may have caused a partial termination of the plan causing us to have to vest these 3 employees at 100% whereas they would not have been vested at that level. They also informed us that we were on the bubble at a more than 20% reduction in active participants and that we may only need an opinion that the plan is ok. Does anyone have knowledge of this situation?

We have a multiemployer plan that uses a large bank as its "directed trustee." The bank maintains custody of the assets and provides the daily valuation software. This is a participant directed DC plan (with a negotiated hourly contribution rate). Although participant directed, the plan is not 404© compliant, nor does the SPD claim compliance.

When this plan was established in the mid-1990's the trustees opted to include the bank's stock as one of the eight or nine investment alternatives. Due to the relatively stable performance of the stock over the last few years, approximately 50% of

all plan assets are in that single security.

My (conservative) view is that this creates a serious diversification problem. Moreover, as the plan is not 404© compliant it seems the trustees would be "on the hook" if this

stock were to pull an Enron, WorldCom, etc.

We met with one of the bank's ERISA attorneys to address this issue. He indicated that this would not be a diversification problem since the stock has a long history of stable performance versus the S&P 500. He also argued that by making the actual decision to allocate their assets the stock, the participants would have great difficulty in stating a claim against the fiduciaries.

While this explanation made the administrator feel better, I know that the bank is not fiduciarily responsible for investing the participant contributions. I am also concerned about the inherent conflict in relying on a bank's attorney to provide advice about his employer's stock. I would appreciate knowing where others stand on this situation.

As long as I've been involved with the insurance plans, our plan year has been 11/1 to 10/31. But our 5500 shows the plan year as 10/1 to 9/30, except some of the Sch A's show the right year. I was told that at some point in the past, the plan year actually was 10/1 to 9/30, but since it isn't anymore, is there anything we can do to fix this so it's all correct in the future?

I am thinking that if it had been done properly back when the plan actually changed then a short plan year 5500 could have been filed for the one month, and then changed to the correct plan year from then on. But how do we do that now, since the change happened so long ago?

At least two PLRs (9608042 and 9418034) allow a spouse who is the beneficiary of a qualified plan to transfer the benefits to a beneficiary IRA (rather than rolling the benefits over into his/her own IRA).

I cannot think of any logical reason that the result should depend upon whether the beneficiary is the spouse. However, I have not found any authority one way or the other. Does anyone know of any authority either way as to whether a non-spouse beneficiary can do this.

In PLR 200244023, the beneficiary of a terminating plan took the benefits in the form of an annuity. Perhaps if the beneficiary IRA were permissible, the beneficiary would have done that instead. But it's possible the beneficiary in that case did not consider that possibility.

Okay, let's say an terminated employee elects COBRA (medical and dental) for himself and his family. Then decides he only wants dental for his family, so he calls and verbally cancels the medical plan effective 3/1/03. He then decides mid month that he wants to keep the coverage, but only for his children. The employer has not paid their portion to the insurer and the employee's grace period for payment has not been met. Can the employer reinstate the coverage?