We are consulting with a calendar-year employer whose profit sharing plan is on a September 30 year-end. They are converting to a safe harbor 401(k) plan, and have asked our advice on changing the plan to a calendar year. "Conventional wisdom" seems to be to operate a 401(k) plan on a calendar year basis so employees can better understand and monitor their contributions and benefits. However, it seems to me that there may be some tax, financial, and/or administrative ADVANTAGES to having different year-ends for the plan and the Company.

Has anyone ever studied the advantages and disadvantages or do you know any good articles (or previous threads) on the topic?

Can after tax money in a state 401a plan be transferred or rolled over to an IRA with the pre-taxed money in the same 401a??

On the Gov. 457 question -- Can a Gov. 457 be rolled over to an IRA at all?? and after distribution has begun?

I just wanted to post something, since it's only been over a year since someone has. Go DB!

Substantially equal payments were calculated on an individual at the age of 43. Due to the decline in the market, the individual's balance has been reduced considerably. Based on the amounts of the distributions, the balance may be depleted prior to his attaining age 59 1/2.

Will the individual incur the 10% penalty on the distributions since he may not yet be 59 1/2, or is there an alternative method to adjust the distributable amount in order for it to continue beyond the required age of 59 1/2?

One of our clients has a plant in Georgia. About 75% the employees are Mexican citizens in the U.S. on green cards; the vast majority of these ees are not deferring into the 401(k) plan.

The way I read the regs, the non-resident alien exclusion would not apply.

Other than going to a safe harbor 401(k), which the client does not want to do, does anyone have a creative way to get by the adp test?

About the only thing I can come up with is to accept that the NHCE adp will be low, and go with prior year testing so the HCEs know exactly what they can defer.

Also, there could be a compensation adjustment to "make up" what HCEs want to put into the 401(k).

Thanks. Maverick

I have been seeing more and more physicians' practices, tiring of insurance claims, moving to a system whereby the patients pay the practice a flat fee up front per month for the year. That fee entitles the patient to receive physician services as often as needed during the year with no additional charge. The fee is not refunded if it is not "applied" to specific treatment during the year.

Query: May the patients make these payments on a pre-tax basis via a health care FSA (or through a cafeteria plan)? Because the payments are not directly linked, at the time of payment, to a specific provision of medical expenses that have been incurred by the partcipant, it seems like it would be hard to "substantiate" these claims.

Has anyone seen the arguments for or against this practice (i.e., the pre-tax payment of these expenses through a health FSA) articulated anywhere?

I have been seeing more and more physicians' practices, tiring of insurance claims, moving to a system whereby the patients pay the practice a flat fee up front per month for the year. That fee entitles the patient to receive physician services as often as needed during the year with no additional charge. The fee is not refunded if it is not "applied" to specific treatment during the year.

Query: May the patients make these payments on a pre-tax basis via a health care FSA (or through a cafeteria plan)? Because the payments are not directly linked, at the time of payment, to a specific provision of medical expenses that have been incurred by the partcipant, it seems like it would be hard to "substantiate" these claims.

Has anyone seen the arguments for or against this practice (i.e., the pre-tax payment of these expenses through a health FSA) articulated anywhere?

If a participant dies prior to required beginning date, but during the year of his age 70 1/2 (or during the following year), is any of the death benefit or remaining account balance required to be paid for the year of his age 70 1/2 and/or the following year as a minimum distribution?

For example, participant dies 3/1/02, one month before required beginning date. Spouse is beneficiary. Can the spouse wait 5 years to take a distribution or is a required amount due for 2001 and 2002?

I have a calendar year 401(k) Plan with only 3 remaining participants for which no contributions have been made for several years. The participants are husband, wife and son. The husband owns 100%. All 3 are trustees of the Plan. 35% of the assets are invested in real estate. Since all 3 are trustees, I assume a fidelity bond is not needed. Therefore, I'm wondering if the Plan would be exempt from the new small plan audit requirement which would be effective for their 2002 Form 5500.

Does HIPAA apply to 401(h) medical accounts of a qualified retirement plan?

I am working with a school district that wants to eliminate an unfunded defined benefit plan and replace it with a non-Erisa defined contribution plan. They want a 15 year vesting schedule (this goes back to the requirements of the original plan) and discriminate amongst the employees, ie. only certified teachers will be eligible. They also want the ability to post retirement fund for some members of the plan. First, can this be done legally and if so, what type of plan would work best ie. 403(B), 457 or 401(a)?

Good day,

Has anyone started to work on the new HIPPA standards. Are you creating a policy, revising one or what steps are you taking as these provisions continue in Limbo?

With the passage of EGTRRA, S Corp owners can now take loans from their retirement accounts.

Question - If a plan docuement for a 401k plan already allows loans within a plan, is it neccessary to amend the plan before the S Corp owner can take out a loan?

It would appear to me that this is just an operational issue and that if the plan already allows loans, as long as the loan policy is followed, nothing would need to be amended in order for the owner to take one out.

Thanks,

Ronnie Wasel

Gabbard and Company, P.C.

Does anyone have a good contact number to the PWBA or DOL that I can speak to someone about a DFVC issue?

Thanks,

Ronnie Wasel

Individual is filing for bankruptcy. She wants to withdrawal money from her 403(B) Plan. I know very little about 403(B) plans, but it seems to me, as with 401(k)'s, distribution rules are governed by the Plan document. Document probably sclosley resembles 403(B)(7) or 403(B)(11). Is this correct?

Also, with 401(k)s participants account cannot be attached in bankruptcy. Is the same true for 403(B)s?

My husband and I were married 10/99. He changed his IRA in May 01 to make me a joing/contingent owner, form supplied by Agent in Dayton, OH. My husband passed away 2/17/02. Now the company says that the Fed Reg do not allow a joint/contingent owner and they will pay to the previous contingent beneficiary, his sister. When he asked his agent about updating the forms and told him he had gotten married again and wanted to make me the beneficiary, they sent him a change of ownership form. We completed it and thought everything was Ok because we never heard any different from the agent. Who is the beneficiary?

Anyone have stats on what percentage of U.S. employers offer domestic partner benefits?

Is the trend still on the rise?

I represent a local government that sponsors a defined contribution plan. The plan calls for the local government to contribute a specified portion of the employees' salary to the plan. In some years the local government did not contribute the proper amount, it under-contributed by several percent.

We are in the process of submitting a VCP Application to correct 415 and 401(a)(17) violations as to certain participants. We would like to add this "under-contribution" problem to the Application. Our proposed correction method is to have the government "make up" the undercontributed amounts by making a "make up" contribution in the amount which was under-contributed.

The question is whether these "make up contributions" will be treated as annual additions in the year they are made or if they can relate back to the year of the undercontribution for purposes of 415.

Plan A (described below) is merging into Plan B (see below) on 6/30/02. How must Plan B count years of vesting service for Plan A participants (cites please)?

Thanks in advance!

_________________________________________________

2 401(k) Plans:

Plan A: 1 year of vesting service for each Plan Year in which participant completes 1,000 hours. Plan Year = 7/1/-6/30

Plan B: 1 year of vesting = elapsed time of 12 months starting from the participant's date of hire. Plan Year = calendar year.

Is a lump-sum distribution received from a school district's 457(B) plan (based on separation of service) prior to the participant reaching age 59 1/2 subject to the 10% early w/d penalty? I'm reading where non-governmental 457's are, but not necessarily governmental plans.

I thought EGTRRA made 457's subject to many gualified plan distribution regs...?