I believe this is an area which lacks IRS guidance. How does a plan sponsor apply the prior year testing method for the ACP if the plan has a discretionary match provision and in the prior year no match was contributed (assuming the testing year is not the first plan year)?

From what I've researched, it appears the HCEs would be unable to receive a matching contribution for the year being tested.

Any comments?

Could anyone point me to a website which would have a draft RFP to offer? We are interested in bidding out our Health TPA services and would like to begin with a skeleton RFP to customize, so we are not re-creating the wheel.

Thanks,

Kerry

kerryb@waushosp.org

Our 401(k) plan has a maximum deferral % of 15%.

We have several employees who have deferred more than 15% of pay for 2001.

What suggestions do you have for this?

Thanks

Are any of the new IRS rules for plan loans which are effective 1/1/02 required to be added to plan documents?

Trust as beneficiary or is it the Trustee

I submitted a customized beneficiary designation ( for my IRA) to a Bank. The form designated the Trustee of the Shelton …. Family Trust as the beneficiary.

The Bank is stating that the wording above means that it is the individual who is the trustee that is the beneficiary and not the Trust. Is this true? I have no experience with Trusts.

Thanks

Shelton

With the new HIPAA rules coming into play soon on protected health information, I have run across an interesting question:

Is the particpant health and claims information which is held by the insurance companies, claims admin, etc (i.e. "covered entities") a plan asset under ERISA? This information is very valuable and can be easily sold (and usually is).

Approximately five years ago my employer purchased a book of business from a party and hired approximately 25 people to service that book of business. The location of the servicing group was different from the original company (two branch offices.) We are employees of the same company, not a subsidary.

Our employer advised us that they decided that we would not be eligible for the ESOP because they were not sure of the viability of the new business activity. They continued to distribute shares to the other employees who were employed in the home office and not involved in this new business activity although some did provide some support, i.e. management, accounting ect.

It is my feeling that this is unfair discrminiation and there was no basis for excluding us from the program. We were told that the regulations were researched and it is permissable to exclude employees.

I am looking for specific information, regulations or citations about the basis on which the trustees can decide to exclude an employee or group of employees from participation.

FACTS: Employees of Company are enrolled in an HMO. Company pays 80% of premiums to HMO; other 20% must be paid by the employees. Until now, the employees were paying the 20% on an after-tax basis (the Company has not established a 125 plan).

The Company will now establish a Treas. Reg. 1.105-11 Medical Reimbursement Plan to provide pre-tax reimbursements to employees for co-pays, deductibles, etc.

Question: Can the Company provide for reimbursements under the Plan for the 20% HMO premium?

I would think yes, since Section 105 refers to 213, and 213 includes premiums as "medical expenses."

Can anyone else confirm my analysis?

Anyone aware of any continuing education courses out there that are specific to 403(B) plans? My firm consults on several hundred ERISA 403(B) plans, and I would like to further the 403(B) knowledge base of my staff. Although there are many reference materials specific to 403(B) (e.g., 403(B) Answer Book, et. al.) there don't seem to be many courses out there that are 403(B)- specific.

Any thoughts in this regard would be greatly appreciated!

If you're 65 years old and made conversions from your standard IRA to Roth IRA in years 1999 $10,000, in 2000 $10,000 and in 2001 $10,000 a total of $30,000. This total amount appreciates to $45,000 in 2003 which is a 5 year waiting period since 1999.

Can the whole amount of $45,000 be withdrawn in 2003 without penalty? If not how much can be withdrawn in 2003?

Does an insurance carrier need to provide a Schedule A to a plan that exempt from filing a Form 5500?

two employees were Key in 2000 under the Top Ten Owners rule. their balances were included at 12/31/00 to determine that the plan was top heavy for the 2001 plan year. those two employees are no longer Key in 2001 because of EGTRAA. are they entitled to a minimum top heavy contribution for 2001 because they are not Key or are they precluded from the minimum because their balances were included to determine the Top Heavy status for 2001?

Have a client who remitted $2,305 during 2001 as a contribution for tax year 2001. He contacted me in February, 2002 to indicate that he put in too much money. What he would like to do is redesignate (note: NOT recharacterize) $305 as a contribution for 2002 tax year. He has not yet filed his tax return for the 2001 tax year.

1. My analysis of the above situation is that an excess contribution has not occurred because he redesignated the $305 prior to the due date of the filing of his 2001 tax return.

2. No 6% penalty applies because the $305 has not met the technical definition of an "excess" contribution.

Do you agree or disagree?

In my research of the code, it indicates clearly that excess contributions are not subject to the 6% if the funds are physically withdrawn from the account prior to the due date of the return, plus extensions. Since I am redesignating the funds as a contribution for 2002 and not for 2001, these funds haven't met the definition of an "excess" contribution.

I am interested in your thoughts.....

One of our clients has a traditional IRA to which she made both deductible and nondeductible contributions. In January, 2001, she used this IRA to purchase a single life immediate annuity. She is trying to calculate what the nontaxable portion of her distribution is using form 8606. However, in order to complete that form, you need to know the fair market value at the end of 2001. Once she purchased the annuity, the fair market value went to zero.

Publication 590 makes it clear that the taxpayer must calculate the taxable/nontaxable portion of any distribution from an IRA with nondeductible contributions on form 8606. However, if there is no fair market value, form 8606 can't be used.

Should the client calculate the nontaxable amount using Section 72 annuity formulas with the nondeductible portion as cost basis?

Does anyone know where I can find a 127 plan document?

If an employee participated in the dependent care plan for 2001 and relized after the end of the Plan year that his daycare expenses were not eligible because his wife did not work, how do you handle rectifying the problem.

Do you issue him a 1099 for 2001 based on the amount withheld for daycare? Can you issue him a 1099 in 2002 for the 2001 calendar year? What is the correct procedure?

Thanks...

I have a company that has two PS plans. This ocurred because there are multiple locations and lack of communication, eg two plans were not the intended result. One PS plan, established years ago is only a PS plan and has no k provision. The second plan, only a few years old, has a k provision. The first plan has had no contributions for many years (so we don't have 415 limit issues etc).

The company desires to terminate the first PS plan and distribute the assets in accordance w/ the participant's wishes. Please forgive me, I do not have a lot of familiarity w/ the successor plan rules. In my reading, I have come across several references that the successor plan rules only apply to k deferrals. Is this correct? If that is the case, then I assume I can distribute my first plan w/o having to merge the assets into the second plan (the employer wishes to maintain the second plan).

Thanks for any help.

Does anyone know the number of active 401(k) plans in America today?

We have some relatively old documentation for our TSA Annuities. I am looking for more up to date forms that are used for TSA annuities.

I have visited with someone at the IRS, and he was as helpful as he could be. He did turn me on to this forum. Anyway, he let me know that some information was required in a plan document, but could only provide me some general information. I am looking for some guidance on what needs to be attached to the policy to make the annuity a 403(B) annuity.

The IRS man explained that the plan document should include contribution rules, rollover/portability rules, distribution rules, matching rules including top heavy testing criteria and eligibility rules.

Our old form had an Employee-employer compensation agreement, an employee request for Purchase of Tax Sheltered Annuity Retirement Plan, and Annuity Purchase Agreement and an acknowledgement.

I know some of the items referenced in the old form are way out of date. Can I get some feedback on what other companies have on their forms?

Thanks,

Facts: the plan is safe harbor for testing for 2001, but has an after tax source that must be tested in ACP. They Document states Prior Year Testing Method. For 2000 the ACP test included After tax and employer match.

Question: Using Prior Year Testing Method , comparing Current Year HCE ACP , which consists solely of after tax contributions, to Prior Year NHCE ACP, which consists of after tax and employer match, the ACP test passes. Is this Okay, since we are not comparing same sources of money? I haven't found anything that says it is not. The Test will fail miserably using Current Year method, and will fail in 2002 using Prior Year NHCE ACP ....the plan has mostly HCES contributing to After Tax.