A participant currently has her mother as beneficiary. The participant recently married and does not want her new husband as beneficiary at this time. If the participant does nothing, when will the new husband automatically become her beneficiary? Is it after one year of marriage? Thanks.

In the past, our FSA administrator sent us a monthly list of paid FSA claims and we paid that amount. They recently required us to change our funding method. Now, after each payroll, we send an amount equal to the employee FSA contributions. The administrator then pays claims from the contributions. Would this now be considered a "funded" plan?

I have an HCE (by ownership) that works for his company just like a regular employee. He does not take a salary from the company therefore he does not make any deferrals. Is he included in the ADP test?

Employer's (a LLC) tax year end is 12/31/01. The employer's MPPP and PSP year is also 12/31.

The LLC has extended its year 2001 tax return (Form 1065) to October 15, 2002 ....(and will in fact file the Form 1065 on 10/15/02).

MY QUESTIONS:

1) What is latest date that the PSP contribution, for year 2001, can be made by employer ?

2) What is latest date that the MPPP contribution, for year 2001,

cab be made by employer ?

Does anyone know if Prevailing Wages under Davis Bacon satisfy the 414(s) definition of compensation or do they need to be testing as an alternative definition of compensation under 414(s) using the compensation ratio test?

Hello all,

I wanted to know about the possibility of tax free and unpenalized withdrawals from Roth IRA for child's education in the same manner as up to $10,000 can be withdrawn for the first time home buyers. Hope someone has some knowledge on this subject.

Thanx.

Can anyone give me a green light on this? Employer provides a match that is stated in the plan as 100% of the first 4% of comp deferred, plus 50% of the next 2%. Employer has always based this formula on total comp, rather than the 401(a)(17) comp. In other words, with $210,000 total comp and maximum deferral of $10,500, under this formula, the match would be $10,500. If you use $170,000, match would be limited to $8,500. Of course, $170,000 is used for testing, etc. Any comments?

In 1998 and 1999, the company used prior-year ACP and ADP testing. In all other years (before and after 1998 and 1999) it used current-year. The plan (401 (k) Savings and Investment IDP) was amended prior to the GUST Feb 2002 deadline to say "Such testing shall utitilize the current year testing method as such term is defined in IRS Notice 98-1." The tricky part is that the fact that the company used prior year testing for 1998 and 1999 (we had assumed they had used current-year) was not discovered until recently, after the final GUST deadline.

What procedure should be used to correct this problem (i.e. include the fact that the plan used prior-year in 1998 and 1999)? Is there a remedy under Rev Proc. 2001-17? What would be the remedy under Rev. Proc. 2002-47? It is very important that we get this resolved before July 21st, as that is when Rev. Proc. 2002-47 goes into effect and possible remedies under 2001-17 could be altered. We greatly appreciate your help with this matter!

In 1998 and 1999, the company used prior-year ACP and ADP testing. In all other years (before and after 1998 and 1999) it used current-year. The plan (Savings and Investment) was amended prior to the GUST Feb 2002 deadline to say "Such testing shall utitilize the current year testing method as such term is defined in IRS Notice 98-1." The tricky part is that the fact that the company used prior year testing for 1998 and 1999 (we had assumed they had used current-year) was not discovered until recently, after the final GUST deadline.

What procedure should be used to correct this problem (i.e. include the fact that the plan used prior-year in 1998 and 1999)? Is there a remedy under Rev Proc. 2001-17? What would be the remedy under Rev. Proc. 2002-47? It is very important that we get this resolved before July 21st, as that is when Rev. Proc. 2002-47 goes into effect and possible remedies under 2001-17 could be altered. We greatly appreciate your help with this matter!

Can someone help clarify my thinking - I understand that contributions are deductible until the due date of the tax return, including extensions. What if the calendar year corporate tax return was timely filed in March and the TPA subsequently determined a larger contribution could have been made? The additional contribution has not yet been made to the plan. The TPA is advising the client to make the additional contribution prior to 9/15, amend the timely filed tax return and claim the additional deduction. My thought is that becaue the return was timely filed there is no more additional time to make contributions for the prior tax year. Any help out there?

Can a non-profit 501©6 company setup a SEP?

We all know an employer cannot have a SIMPLE plan and another plan at the same time; however, what would happen if the employer had a SIMPLE Plan and terminated it today. then tomorrow he starts a traditional 401(k) or profit sharing plan, effective for the current plan year? could the new plan be effective retroactive to the first day of the plan year.

I represent a governmental employer that maintains a FICA replacement plan for certain collectively bargained employees. The contribution is 7.5% of pay. The employer is grousing about it's obligation to still pay Medicare taxes. They don't understand why they can't reduce the 7.5% by the amount of the Medicare rate. I've just read that the IRS plans new guidance this year on "the application of the Hospital Insurance tax to employees covered under section 3121(B)(7)(F)". Does this represent a glimmer of hope for my client? Can anyone give me an idea of what the IRS guidance will involve?

If an employer wants to set up a safe harbor match under a 403(B) plan in order to avoid the 401(m) test, since 403(B) arrangements can not have a waiting period for employee deferrals, does that mean that you can not have any waiting period for the employer safe harbor component?

A basic question from someone having severe brain cramps.

Discretionary profit sharing plan requires a participant to either complete 500 hours of service or be employed on last day of the plan year to receive an allocation. Employer now wants to increase hours of service requirement to 1,000.

Assuming there are participants who have completed more than 500 hours at the time the amendment is adopted, can the employer make the increase to 1,000 hours effective retroactive to the first day of the plan year?

75 employee company w/ high utilization. Large renewal increase. Cannot move due to poor experience. Employer needs to curb usage of the group medical plan so he can go shopping next year. Wants to know what options he has. This idea seems to make sense but I would like some feedback.

We would raise the deductible from $250 to $750, lower co-insurance from 90% to 80%, drop the office visit copay and put a $150 dedutible in front of the Rx card. Drop the dental coverage. The savings are significant so we would establish an FSA program with a debit-card. The employer can make a contribution of about $500 to the each FSA account. At the end of the year, the use-it or lose-it provision gives the employer his money back if the employee doesn't use it. Even with the new HRA's the employer likes the Employer-Funded FSA better because he gets unused money back. It should take some presure off the group medical plan so he can establish better claims experience.

Anybody using this idea successfully? Any ideas, thoughts, suggestions?

P.S. Anybody successfully using Employer contributions in form of a "match". I know the 25% rule becomes an issue with a match but I would like to get some feedback.

Has anyone ever run into the situation where a SH NE source was incorrectly distributed along wtih 401(k) money in a hardship?

According to what I can find the correction method appears to be to request the funds back from the particiapart. One of the Q&As on plan correction indicates that it should not be necessary to have ER make up the distribution amount if the participant decides not to refund the plan as this would unjustly enrich the participant. The Q&A goes on to recomend that you file for approval with IRS however under VCO as this is not a safe harbor method of correction.

Has anyone submitted under VCO for a similar issue and if so what was the IRS response?

Thanks.

Dawn

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