Would like some ideas on how others handle college students that decide in August that they are not going back to school in the fall.

We have employees complete Dependent Eligibility Status Forms in May stating whether or not their college age child is returning to school in the fall.

If they say they are returning we continue their active status. In August they call to say their child has now decided not to return. We term their coverage back to 5-31 but now - technically we have a late notification situation.

Some comments please as to how you handle these situations.

Does a Top Heavy plan need to provide a TH minimum benefit to EEs that have not satisfied the age requirement? I have a plan with 21 & 1 as the eligibility with 3 EEs age 17. I do understand that EEs that work 1,000 hours and are employed on the last day of the plan year are required to receive a TH minimum allocation. Please advise. Thanx.

A plan offers employer stock as an option in its 401)k) plan. (thinly NASDAQ traded) It has been little used. The employer wants to change to employee directed brokerage accounts for employees who purchase company stock. The account would be limited to company stock, traded quarterly. The employer would reimburse each brokerage account for commissions. Question: Does anyone see a 404© or discrimination issue? Can the fees be reimbursed, or is this considered a company contribution? Could this also be discriminatory? Thank you.

When determining the small benefit cash-out amount in a DB contributory plan are employee contributions part of the vested accrued benefit. If not, could you direct me to the Code site.

Would Schedule C be required to report the asset charges (if greater than $5,000) deducted from the assets of a 401(k) plan by an insurance company? Seems like this type of charge is similar to a mutual fund company investment management fee which I have never seen reported on Schedule C.

Has anyone reviewed the deduction and funding issues with respect to the new HRAs? Specifically, I am looking into setting up an HRA for current employees to fund their future premiums that will be used for individual policies following retirement. It does not appear that the Employer may receive a current deduction for the contributions to the HRA until after retirement when the employees begin tapping into the HRAs for their health insurance premiums. However, the contributiosn to the HRA and the later use of the HRA money to pay premiums on retiree health insurance would not be includable in the former employee's income pursuant to 105 and 106. I would like to find a way where the employer can take a current deduction for contributions to the HRA that will not be used to pay medical premiums until later. I don't want to use a VEBA because nondiscrimination rules will apply.

To make catch-up contributions for 2002, eligible participants must anticipate exceeding one of the following annual limits:

1.) Before-tax contribution limit of $11,000,

2.) Aggregate contribution limit of $40,000, or

3.) Plan A's contribution limit of 25%(max plan limit) of participant's eligible earnings in any combination of before-tax and/or after-tax contributions.

Plan A's main concern is that a participant who becomes eligible mid-year and then sets his contribution limit at 25% could potentially claim that they were not given the opportunity to meet the plan imposed limit for making a catch-up contribution because they were not given the full year to meet requirement.

Plan A's has the following questions: If a participant becomes eligible mid-year how does the plan year limit apply in terms of satisfying a plan imposed limit? Does any regulation or provision require a full plan year for allowing participants to make a catch-up? Is the catch-up determined from eligibility or for a full year? Do you pro-rate the limit? Do you need to measure the catch-up to allow a full year?

Please let me know if there is guidance available from your resources.

I have a pooled PSP that terminated in 2001. All cash was distributed to participants in 2001. There are 4000 shares of an LP that have a zero value. The broker for the LP stated the LP is still a viable corporation but zero value. Basically, owners of the LP ran off with the assets.

When preparing the 2001 5500, the value of assets at YE is zero. What should I do with the LP? Do I continue to file zero value 5500, which might generate letters from PWBA, distribute zero value LP to one person (ie. owner, which doesn't sound like a good idea)?

The company I work for is a Trust company and we hold the LP on our system. They have to be distributed off at some point.

I don't think it's a viable request to ask 15 participants to find someone to hold shares of an LP that are worthless.

Please help!

A self-employed taxpayer with no employees established a SIMPLE plan in 2001. He has made a small contribution in 2002. However, he can contribute much more in 2002 to a 401(k) plan. A taxpayer cannot have both a SIMPLE plan and another retirement plan in the same year. But why wouldn't this work: Establish a 401(k) plan for 2002. This makes the SIMPLE plan invalid; therefore, he would have to take a distribution of all 2002 contributions to the SIMPLE.

FYI, taxpayer is over 59 1/2 . He can establish a single 401(k) plan with Oppenheimer at a cost of $15 per year. There is no 5500 reporting required until the asset value reaches $100,000. (I mention these so they will not be response issues.)

Thanks

Sherry

A self-employed taxpayer with no employees established a SIMPLE plan in 2001. He has made a small contribution in 2002. However, he can contribute much more in 2002 to a 401(k) plan. A taxpayer cannot have both a SIMPLE plan and another retirement plan in the same year. But why wouldn't this work: Establish a 401(k) plan for 2002. This makes the SIMPLE plan invalid; therefore, he would have to take a distribution of all 2002 contibutions to the SIMPLE.

FYI, taxpayer is over 59 1/2 . He can establish a single 401(k) plan with Oppenheimer at a cost of $15 per year. There is no 5500 reporting required until the asset value reaches $100,000. (I mention these so they will not be response issues.)

Thanks

Sherry

Received Aetna's health insights newsletter for the summer of 2002 describing the online registration process and benefits. When I tried to do so, I was told the "system" didn't know me. Sent an e-mail to Aetna and response stated that "navigator" has only been available since the beginning of the year and "My Company" has not as yet signed on. Any insight????

What happens if a terminating defined benefit plan satisfies retired lives liability with the purchase of annuities and the insurance company subsequently goes bankrupt? Do the payments to the retirees continue at some level?

A self-employed taxpayer with no employees established a SIMPLE plan in 2001. He has made a small contribution in 2002. However, he can contribute much more in 2002 to a 401(k) plan. A taxpayer cannot have both a SIMPLE plan and another retirement plan in the same year. But why wouldn't this work: Establish a 401(k) plan for 2002. This makes the SIMPLE plan invalid; therefore, he would have to take a distribution of all 2002 contributions to the SIMPLE.

FYI, taxpayer is over 59 1/2. He can establish a single 401(k) plan with Oppenheimer at a cost of $15 per year. There is no 5500 reporting required until the asset value reaches $100,000. (I mention these so they will not be response issues.)

Thanks!

Sherry

What rules do governmental defined benefit plans need to follow regarding breaks in service? Are they to follow 411a6d as written (compare the service with the number of breaks) or are the rules more liberal because it is a government?

I know that a sole proprietor cannot participate, but an employee who is the spouse or child of the sole proprietor can participate if they meet the eligibility requirements of the Plan.

Is this still true, under a controlled group situation where the other entity is an LLC owned by the sole proprietors five childern-20% each.

Thanks, Joe

Has anyone terminated a 403(B) plan? I understand that it is not a termination as in the case of a 401k since plan assets are already in participants accounts, etc.,

I have one and am going to get a board resolution to stop contributions from employees and employer matching. This freezes it, but we have folks who have termnated employment several years ago still listed in the plan by the broker. Also do we still have to file 5500 after we discontinue.

FACTS

- We are looking to take on a plan that is a 401(k) with deferral and match.

- EE Money is PARTCIPANT DIRECTED

- Match money is TRUSTEE DIRECTED and is invested in COMPANY STOCK listed

on NASDAQ, with low trade vol.

ISSUE

The plan wants to take the stock out of the plan and change the match to participant directed.

1. How do we remove the stock from the plan?

2. What are the considerations or possible “hang ups”

3. Can the company buy the stock back from the plan?

Please give an opinion and site references and cases if available.

PLEASE RESPOND TO: BBAUGH@BENEFITPROS.COM

THANKS

Desire to talk to an organization interested in establishing all processes/procedures necessary for effective administration of 401k defined contribution plans offshore.

My wages are garnished (and will continue to be for basically forever) by the federal government due to old student loans.

I have an esop that I don't contribute to but my employer does. I am not eligable to receive the money from the esop until I leave the company. At that time will the esop be garnished like my wages are (10%) ? I don't believe they can garnish my 401k (which will not be much anyway), but am confused about the esop. Thanks for any help!

Let's say there's a 125 plan with an FSA and DCSA, funded by employee pre-tax contributions with a November plan year end. In the middle of the year (plan year), the employer decides it wants to put "flex credits" into the plan. Is there anyway to get some of these into the FSA and DCSA for the current plan year?

My biggest concern is the 12 mo coverage req. in Prop. Reg. 1.125-2, A-7 (B)(3), "Election changes to increase or decrease the level of coverage under a health FSA during the 12-month period of coverage are not permitted with respect to health FSAs."

However, to me it appears that the original election still holds (re/employee contribs), and now there's this "bonus" amount in the 125 plan, and conceptually it seems like it is basically like a separate "new" election for that portion.

Any comments?