We have a client who is a temporary staffing agency that sponsors a 401(k) plan requiring six months of employment in which the employee completes over 500 hours of service for eligibility. The employee may not have an assignment for a month or two after his documented hire date. The client begins counting the # of months of employment for eligibility purposes from the date the person receives his first paycheck and not the actual hire date. Is this correct?

Am I correct in my understanding that a nonelecting church plan is not subject to the $5,000 small cash out restriction and therefore is actually able to cash participants out regardless of the size of account balance(greater than $5K)?

Thanks for your feedback on this one.

Andmik

We have a client who had to pro rate compensation for the annual additions limit and a short plan year. When we ran the ADP test, the plan failed using the pro rated compensation. Can the plan use the participant's full compensation for the time the plan was in existence for ADP testing or do we have to use the pro rated salary? For example, a participant had total compensation from August - December of $125,000, but the pro rated salary for annual additions limit is $70,833. Which number do we use for ADP testing?

Is it possible for pension plan to distribute/rollover monies directly into an IRA to be set up in the name of the deceased participant?

client walked into my office this morning with his 5500 filings for the year ending 12/31/00 (due 10/15/01). [First MP, final DB (no Sch b)]

what do i look at to find how to mitigate his damage?

thanks for any guidance.

Earl

I have a client who is going out on maternity leave on December 1, 2002. She currently participates in the medical reimbursement and dependent care reimbursement accounts. She will be out on maternity leave for at least 6 weeks. The employer will pay her up to 7 days and then she goes out on disability. I have a few questions for the time she is on disability.

Also, her employer pays her insurance and will continue to do so the whole time she is out on the maternity leave.

1) Can she still submit claims for reimbursement after she goes out on disability even though she is no longer having a paycheck from the employer with deductions being taken out?

2) Can she sign up for the 2003 plan year at the open enrollment period in January 2003 or does she have to wait until she comes back from the leave of absence?

When I exited from the Message Boards yesterday, there was a pop-up ad on my screen that was advertising for the Human Resources Management Certificate through Cornell University. The courses are offered over the internet.

The program interests me but I am curious as to whether it would be worth it as a means of enhancing my knowledge and whether it is a program that is recognized by employers.

Have any of you heard of this program, or perhaps, have any completed the program? If so, any feedback would be appreciated.

Any help on the following issue would be great. I was injured on the job and was given a few choices on what to do with my 401k. After gathering some information, I decided to cash out my plan and take the 20% penalty to pay off bills I had accrued from my injury. I was told that due to my injury and being disabled I would not have to claim the income on my federal tax return for the year 2000. I had a few other plans that I cached out as well, that I did have to pay on. I just received a letter from the IRS saying that I am required to claim the income on my 2000 return. I am getting a mixed review of information from the IRS and other resources. I really need some help in determining whether or not I will have to pay the back taxes owed. Please help. Sign Confused Gimp. :confused:

Terminated employee applies for benefits. Application says account balance will be valued as of preceding plan year end (April 30). Application submitted in July 2002. Employee told that Plan has been amended and account balance will now be valued as of end of month in which application was received (July 31). Account balance on July 31 is $18,000 less than it was on April 30. Employee had no notice of Plan amendment until application submitted. Does he have any recourse? What if the amendment was adopted after he submitted his application?

If a participant incurres a change in status other than a birth or adoption, can the company allow the participant to change their medical coverage election retroactively to the date the change in status occured? I know reg 1.125-4 suggests that changes in salary reductions can only be prospective in this case, but if the salary reduction is not changed retroactively and the company pays the extra cost, can the participant's coverage change retroactively?

Must employer matching contributions that are made with employer stock be reported under Rule 16b?

I recently reviewed the instructions for the schedule B Mortality Codes and found them confusing. If the mortality assumption is the table published by Rev. Rul. 95-6 is the applicable code 9?

Any help would be appreciated.

-Rich

What is the best U.S. College Savings Plan for a retired 52 year old American, without a pension, to invest in for a seven year old Mexican student that will enable him to attend college in the U.S. or in Mexico, as he determines in the future?

I understand I cannot open an Educational Roth IRA since I am retired, and a 529 Plan would require a U.S. state school, correct? Any other suggestions?

Thanks. Susique76

Probably an easy question, but I cannot find an answer. If a plan sponsor is a member of a controlled group, is a possible partial termination evaluated on a plan basis or a controlled group basis? Any cites? (I have already searched the Message Boards for an answer.)

Just for reference and not on point, the only Q&A in the Gray Book related to partial terminations is Question 1995 - 22:

Multiple Employer Plans -- Terminations and Partial Terminations

Two corporations form an IRC Section 413© plan. Corp A has about 2000 employees participating; Corp B about 100. The regulations seem to say that, at least for termination and partial termination purposes, all employees are to be treated as if employed by one employer. Employer B goes out of business. Is there a partial (or full) termination? Must all employees of B be 100% vested?

RESPONSE:

For termination and partial termination purposes, all employees are treated as if employed by one employer. Thus, given the small percentage of total employees affected by B's going out of business, it is unlikely that there would be a partial termination requiring full vesting of B's employees.

Corporate officer is currently on a one-year sabbatical. The officer plans not to return to work following his sabbatical.

We are trying to determine whether we can classify this officer as an "employee" for income tax withholding purposes (W-2) and as an "employee" for qualified plan purposes while he is on sabbatical. I am assuming that Rev. Rul. 87-41 (20 factors) and the Darden case are the appropriate governing precedent as to these issues.

Two questions: (i) how does the one-year sabbatical + resignation immediately thereafter affect "employee" status for income tax withholding purposes (I am assuming that this fact would be included in the facts and circumstances test of Rev. Rul. 87-41) and (ii) how does the one-year sabbatical + immediate resignation thereafter affect "employee" status for qualified plan purposes.

The relevant plan documents do not address coverage in situations involving sabbaticals. I have looked for outside precedent covering situations where sabbaticals are followed by immediate resignation, but have not located anything helpful.

Citation to relevant statutory or judicial precedent would be greatly appreciated. Thank you.

Company A is a foreign company and owns Company B & C.

Company B is domestic.

Company C is foreign but owns domestic Company D.

Company B has a 401k plan for only Company B employees.

Is Company D a member of the controlled group for 401k plan's testing?

Would be grateful for an outline of basic steps in establishing a MEWA (forms, DOL, IRS and state requirements). Any publications that would be of help?

Question for you - My company owns multiple companies. We are a control group. Some of the companies have sheet metal workers union employees and are contributing to the SMW national pension fund. None of the union locals are the same - they are all over the country.

Question - If company A closes one facility, keeps two others. Do you look at just the one facility company A closes and see if there is cessation of operation - or - do you look at all facilities company A owns that participate in SMW Plan? Or to you look at company A, B and C locations and use the entire control group?

One Atty is saying you look at partial withdrawal on control group basis - anther says it is by locaton.

HELP!

Can a SEP have a short Plan Year?

1. Could a company start a SEP part way through an initial year and only fund on compensation earned from some point during the plan year and forward?

2. Can a company terminate a SEP during the plan year? This case is a SAR-SEP. So they want to stop deferrals at 6/30 and do all the testing on the short period.

Thanks for any feed back.

I am looking for information from other state-sponsored retireement plans on the issue of the Medicare part B premium.

Does your state charge your retirees who are eligible for Medicare Part A and B for the Part B premium?

If yes, does your state reimburse retirees for the Part B premium?

In full or at a percentage? Is the reimbursement mandatory?

Any experience in this area from other state practices would be helpful.

thank-you.