Can a plan provide that if an employee withdraws from a particular offering period, he is suspended from participating in next following offering period? I am unsure if this would violate Section 423(B)(4).

My belief is that as long as the rule applies equally to all participants it would probably be ok - but not sure.

Thanks.

Is anyone aware of a company by the name of "fairsource" or "faresource" or "forsource" or something similar to these names that provide health plan services such as premium billing, automative enrollment, COBRA, etc.? Thanks in advance.

We have a participant who want to be reimbursed for a Curves membership. Curves is a facility that combines weight loss counseling and fitness although it seems that the main thrust is fitness. (please see http://www.curvesforwomen.com/category.cfm/2).

IRS officials have informally indicated that health club memberships aren't permissible even with a dr's rx, but then there's the recent Rev. ruling that says expenses of a weight loss program prescribed to treat a specific disease are for medical care and are deductible.

Participant's dr. has indicated it is medically necessary that she lose weight to control her blodd pressure and her high BMI. Should we have the dr. prescribe a specific course of treatment to lose the weight?

Really interested in other's thoughts on this...

Compliance questioner

I question the calculation of an Employer early ret benefit for an individual.

Facts:

Gross AB = $ 1,000

ERF age 55 = 0.75

net early ret payable = 500

Arguement:

EE AB determined with projection of account to age 65 = 200

Net AB = 1000 - 200 = 800

Net early ret ben = 800 * 0.75 = 600

Result:

Allege that the net early ben is too low.

Plan apparently computed offset based on an immediate annuity using accum cont at time of benefit payment.

Any thoughts, observations?

gary

I'm trying to determine whether an employer may make any sort of a disability contribution to a highly-compensated, disabled employee who works part-time for the employer after disability. I'm not finding anything on point other than Section 415©(3)©, which leads me to believe the answer to my question is clearly "no." My understanding of the rule set forth in Section 415©(3)© is that an employer may make "disability contributions" on behalf of disabled non-highly compensated employees at a rate determined by the disabled employee's compensation determined in the year prior to the time of disability. Although it is does not appear on the face of the statute that such contributions can be extended to cover highly-compensated employees, I've heard it suggested that disability contributions can be made to all disabled emplouees as long as the plan documents provide for the continuation of contributions on behalf of all permanently and totally disabled participants for a fixed or determinable period. Anyone hear of this or agree with this? Are there any Code sections or other guidance that you know of? Given that the disabled employee is still employed, I realize I probably have an issue with respect to the definition of "permanently and totally disabled" under Section 22(e)(3).

Debate re- whether a plan needs to file for a determination letter -

Ann. 2001-77 indicates an employer can rely on the

opinion letter only if it has not added any terms to the approved Prototype and has not modified any of the terms of the document other than "choosing options permitted under the document..."

As with most, the Adoption Agreement we use has an "Other" box which can be selected and the option written in. For example, if a plan wants quarterly or monthly entry dates the "other" box is selected and the entry dates written in.

Would you consider this adding to or modifying the terms of the plan and thus file for a LoD, or would you view this as still choosing an option under the plan, albeit the "other" box that needs specifics written in, and not file and can the plan rely on the opinion letter?

Does a match that is deposited into a non-qualified deferred compensation plan need to be taxed for FICA purposes? If so, how would it work if there was a graded vesting schedule?

A partcipant elects and receives a hardship distributiion. The suspension period is six months. What is the re-entry date?

This plan has dual entry (January and July). Would he resume immediately upon completion of six months suspension, or would he resume on the entry date following satisfying six months of suspension?

Example: Hardship distribution 7/15/02.

Would he resume on 1/15/03 or 7/1/03?

I cannot find anything that clarifies the re-entry requirements.

What is the timeframe on employers remitting the participant contributions to be deposited to their SARSEP accounts? Meaning the participant payroll deductions. Is it 15 days or 30 days?

My company is selling all of its stock to another company. Our ESOP owns approximately 1/2 of the company stock. The buyer is proposing to pay ALL shareholders (myself (as well as other employees) from stock option exercises, all other shareholders AND the ESOP) with a portion of the sales proceeds in a promissory note with a 2 or 3 year term. Evidently the terms of the note are going to provide that only / I guess balloon payment .. may be reduced if my company (as sold) does not continue to perform at some specified level.

Me and a few coworkers are very nervous over this arrangement. We are unsure what that "note" actually means and the amount which we will be paid.

One of my friends works with the ESOP administration section of our HR group and we understand many of the associated ESOP rules and issues and this just doesn't "smell right."

Any insight / thoughts would be appreciated.

THANKS

Does anyone have guidance as to whether (and if so, when) these documents need to be restated?

I've seen different answers to this, but nothing definitive. Is it even necessary to restate them?

Any advice w/b appreciated,

thx,

David

If an employer who has a Section 125 switches health insurance carriers mid-year , are there any problems with adjusting the employee's contributions up or down in the plan?

An ASPA speaker here in Pgh. recently stated that there is a need to restate plans by an "earlier than usual" date, for things like:

- $160K DB limit used during 2002

- 25% P/S limit used during 2002

- no more mulitple use for 2002

So, for example, if your regular due date were 5/31/03 (based upon all the complex rules, certifications, one year rule, etc.), that you might have an earlier due date (such as 12/31/02, or the Er's tax return due date for '02, perhaps 3/15/03) to take advantage of these swell provisions.

Is this true? Any guidance w/b appreciated.

David

Do most firms track their time? Do you charge on purely timeslips, straight formula, or a comination of the 2?

For those that track time, do the administrators have billable hours goals each week? What are they? (ours are typically 28-29).

Just curious!

thx

David

Instructions on Schedule I says "Do not enter the value of an insurance contract that guarantees during this plan year to pay a specific dollar benefit at a future date."

Does this mean that cash values of any whole life policies (which are, of course, guaranteed) in a participant directed 401k or profit sharing plan are NOT to be included on 5500 Schedule I or H?

I am confused - I have seen some takeover plans where prior recordkeepers have included CSV of whole life contracts and others who haven't.

A self-funded group uses a UCR database. I understand that most groups use between 75-90th percentile. The database provider does not want to or does have information on what percentile the majority of groups or TPA's use. Does anyone know or willing to share? We use the 90th percentile and have for years without knowing whether or not the adjust.

I don't normally deal with 401(k) so forgive the terminology.

We have a Peo who is currently with a single-employer non-safe harbor 401(k) plan. The Peo had a five year cliff vesting but now has a 3 year cliff for the 2002 plan year. Most of the companys that are now under the Peo's umbrella had merged their plans with the Peo. If a company with a 6 year vested schedule merged with the Peo in 2000 (service for participants starts from initial employment with company not Peo) and went belly up this current year,What is the best way to approach distributions? forfeitures?

If a person had two years of service in the company, would he be vested on match 20%? or would he be 0% vested? or would all employees be automatically vested?

If there is a forfeiture, where would it go? back to the company (which no longer exists) who matched it?

Thank you

Company A adopts a company sponsored 401(k) plan effective 1/1/02.

Then, on or about 7/16/02 Company A joins a PEO and adopts the PEO's retirement plan at the same time discontinuing contributions to the CO sponsored plan adopted on 1/1/02.

The PEO plan is tested on a prior year basis for ADP/ACP.

IRS Notice 98-1 states successor plans are not treated as new plans for purposes of prior year ADP/ACP testing deemed 3% rule.

What percentage do I use, in testing the client under the PEO plan, for the prior year?

Any ideas or suggestions of further research sites are appreciated.

An employer group passes along the cost of administration of its entire benefit package (which is outsourced to a TPA) to employees, can the fee be payroll deducted pre-tax? Can it be identified as a separate line item, or does it have to be 'built in' to a specific benefit?

Current client with a profit sharing plan which contains a distribution restriction for terminated employees of attainment of normal retirement age. Client is considering adding a Safe Harbor 401(k) Match provision. Our research has been unable to find an exception to the current distribution policy as applied to the Safe Harbor. Are we correct in telling the client the current distribution policy will apply across the board in the restated plan? Deferrals? Match? As well as the Profit Sharing Portion?