Company A sponsors a 401(k) plan and owns 100% of company B. Company A has 25 full time employees and company B is a leasing organization that has 5 full time employees and roughly 300 temporary employees. The temps are paid by company B and perform services on a short term basis for other employers. Most if not all of the temps work less than 1000 hours for the year. In reviewing the AA the plan currently does not have an age or service requirement (immediate entry). The current administrator is supplied census data for all of the employees for company A & B (including temps), however the temps are not included on the tests. The only deduction I can come up with is that the current administrator is applying a 1000 hour requirement (which is not in the document) to keep the temps out of the plan which we do not agree with. Am I missing any other way that the temp employees could be kept out of the plan? Based on the fact that most temps only work short term assignments I can't imagine they would ever be considered employees of the recipient employers.

Head of a large HMO dies and goes up to heaven.

He's met at the pearly gates by St. Peter...who says:

"Okay...you can come in....for 3 days. Then you have to go to Hell."

I'm looking at page 500-i of the EBIA Cafeteria plans manual, under Other Coordination of Benefits Issues. It looks to me like a traditional health plan could claim a right to COB with an HRA or even with an FSA. I am talking about situations where the spouse has a traditional plan through her employer, and the other spouse has an HRA or FSA with his employer.

We have a situation where the spouse has a traditional plan, and the other spouse (other employer) has only an HRA or FSA. The language in the HRA/FSA says it only pays after all other available coverage. When I go through the NAIC COB rules and my State's rules, there doesn't seem to be anything to prevent a traditional plan from claiming COB rights against an HRA/FSA.

Does anyone believe that a traditional plan would not be able to claim COB rights?

Thanks.

Employer provides paid military leave, including benefits. Employee wants to drop spouse and daughter from health insurance plan because they now have TriCare. (This will result in more supplemental pay for employee.)

Would you permit this under your cafeteria plan or do you consider TriCare "governmental coverage" which would preclude this change?

While we would like to accommodate, we're having a hard time with the consistency of this request as the military leave has had no effect on benefits cost or eligibility. If TriCare is just any other "group coverage" (the military being an "employer"), the consistency conundrum is resolved.

Any thoughts (and cites!) appreciated.

Can a minister participate in a cafeteria plan? Can he or she receive reimbursements from a 105 medical reimbursement plan? The minister receives a W-2, but is subject to the payment of self-employment taxes.

Are P.S. 58 Costs taxable each year in a nonqualified deferred compensation plan as they are in a qualified plan? If so, how are taxable P.S. 58 Costs reported each year? If not, how do P.S. 58 costs affect a nonqualified deferred compensation plan (or do they not have any effect)?

I have an employer who had their own 401(k) plan through 06/30/02. They became part of a PEO and it's multiple employer plan on 07-01-02.

When performing the ADP / ACP testing for 2002 do they have two tests or one?

I don't have all the info. on the change but they instructed us they merged into the PEO's multiple employer plan in mid year.

I'm of the opinion its the employer's plan and all contributions for the entire year must be tested as one, but I'm not sure becuase they left to go to the PEO and adopted thier plan. The PEO is telling them to have us test the first six months and they will test the last six months. I may be way off base but this doesn't seem right to me.

They are also top-heavy for 2002 and I would certainly think they are required to make a top-heavy contribution for the full year.

Any thoughts would be appreciated.

Will be funding a Roth IRA for the year 2002. I am not sure if a local saving bank ( TCF ) would be a good place to place this account. I would also like some info. on a good rate of interest on this type of account.

thank-you

Must a financial advisor qualify as an investment manager under ERISA (e.g., be a registered investment advisor) in order to exercise investment discretion over a participant's account in an ERISA-covered plan? I have my own thoughts but would appreciate any thoughts or experiences you may have.

Has anyone had any experience with an employee failing to notify the employer that he had filed an 83(B) election and the consequences of such failure for the employer and the employee? In our situation, the employer was not notified that an employee had filed an 83(B) election; therefore, the employer failed to report W2 taxable income for the employee, and the employee failed to pay taxes for such income. How does the employer correct this mistake? What are the tax consequences for the employer and the employee in this situation? Thanks.

We have a balance forward 401(k) plan that has company stock. Participants are allowed to change investment allocations quarterly which is clearly spelled out in the SPD. Am I understanding the new rules correctly that they would not have to provide any black-out notices?

Can a non-owner employee who is over age 70 1/2 participate in a SIMPLE IRA. I can not find anything other than the IRA rules apply.

A plan has a discretionary match based on "a percentage of a participant's deferral contributions." The plan has a last day of the plan year employment requirement for the match.

The employer decides to match 50% of all deferrals. Is there any reason that the minutes have to be in place by the end of the year? Since you are "following" the discretionary formula I don't see any "cut-back" issues (like there might be if you tried to impose a "cap" if one did not exist in the document) if you decide on the match sometime in January or February. I have a TPA insisting that the minutes must be in place by 12/31.

On a related issue I am now seeing documents where the discretionary match is based a percentage of the participant's deferrals, but the document specifically provides that the employer also has the right to a discretionary "cap." This is a major protype provider. I guess the IRS saw no "definitely determinable" issue here? I noted some prior discussion on this board stating that you could not have discretion in both the matching percentage and the cap because of definitely determinable concerns.

We have several 401(k) plans that have a 500 hour requirement for allocation purposes. The EGTRRA amendment was adopted in December, 2002. I understand that for purposes of the allocation, we must limit compensation to $170,000 in order to avoid 411(d)(6) issues but for discrimination testing purposes can we use $200,000?

Can an employer prepay an employer contribution, put it into an employee account (not a pooled account, a segregated account under the employee's name) and then withdraw that amount if it comes to pass that the amployee is not eligible to receive the contribution (due to last day rule. etc.)? The employer will not take the money back out of the plan, they plan to move it around to other employees who will be due the employer contribution in question.

If the plan doc says that only employees with 500 hours get a contribution, isnt it a defect to put money in an employees account at the beginning of the year?

cites would be helpful if anyone has any

thanks a lot

Has anyone had any experience with an employee failing to notify the employer that he had filed an 83(B) election and the consequences of such failure for the employer and the employee? In our situation, the employer was not notified that an employee had filed an 83(B) election; therefore, the employer failed to report W2 taxable income for the employee, and the employee failed to pay taxes for such income. How does the employer correct this mistake? What are the tax consequences for the employer and the employee in this situation? Thanks.

Can you calrify the family attributin rule? We have a few interpretations floating around but we're not sure which is correct:

1) Grandparent owners can attribute ownership to grandchildren

2) Owner can attribute ownership up to grandparents

Question: At what point is the minority valuation discount for an ESOP eliminated? Background facts:

ESOP owns 42% of company (including voting) stock.

Other minority owners (not related to majority owner) own 3% of company stock. Majority owner owns 55% of company stock which is in NE. Majority Owner is in mid-70's and works less than 50% of time. Executives within company make almost all op decisions. Majority owner has a written retirement plan with the company to sell his stock to the ESOP upon his retirement (plan indicates written notice should be given by CFO to ESOP of election of owner to retire). Majority owner has announced his decision to employees (not in writing) to retire within 18 mos and requests all processes be initiated to make that happen (he has initiated an MAI full appraisal on the property-costs split between ESOP and Owner, meetings have been held between attorneys for owner and ESOP, outside valuation experts have prepared a valuation on the business, a sale/transfer date has been verbally agreed to by all parties to be 5/2003). Based on situation facts and since control transfer has been verbally agreed to, can the ESOP valuation for 12/31/02 be valued without a discount? Thanks for any help.

Is it possible for an employee to make SIMPLE and work for a separate employer and make contributions to that plan as well?

Company A's 401(k) PS Plan currently requires 1 Yr of Service, 1,000 hours for eligibility. Plan Entry date is the first day of the year in which eligibility requirements are fulfilled. Thus, entry is retroactive. Company A would like to amend its plan such that Entry Date is now the following January 1 or July 1.

Will such an amendment only affect those hired after the date of amendment, or will those existing employees as of the date of amendment who have not yet fulfilled the 1 yr, 1,000 hours be subject to the new Entry Date as well?

Thanks.