My client, a city, participates in the state PERS. The city picks up the mandatory employee contributions. The city and the employees' unions would like to agree that the city's PERS contract will be amended to improve benefits, and that the employees will pay the amount of the increase in the city's contribution.

They'd like to let employees pay this "cost-sharing" on a pre-tax basis. Could it be treated as a salary reduction pick-up? Section 414(h)(2) requires that picked-up amounts be "designated" as employee contributions. Can the city make such a designation on its own even if PERS does not treat these as employee contributions?

Failing pick-up treatment, could these contributions be excluded from income as deferred compensation under section 457? That seems like a stretch to me, but maybe it would work.

Thanks for any opinions or ideas.

When trustees pay for legal services (or accountant services etc.), what steps do they have to take to ensure that those services are reasonable? Do they have to audit their bills to ensure that they are not overbilled? Must the bills be detailed? What are the benefits of having a consulting firm provide this service?

I'm getting myself confused here. The employer's taxable year ends 9/30. The P/S 401(k) plan's year ends 12/31/01. The employer fails ADP and wants to make a QNEC for 12/31/01. The QNEC should be deductible in the employer's taxable year 9/30/02 because that is the year it is paid. Correct? The ER has already filed tax return for 9/30/2001.

Any P/S contribution for the 12/31/01 would also be deductible in 9/30/2002? When would the 12/31/01 contribution have to be made?

Smaller not-for-profit employer (approx. 100 employees) currently makes one check out per month to 6 different 403(B) provider/vendors, reflecting that month's deferrals/matching contributions.

Employer normally has 2 payrolls per month; sometimes 3.

This would necessitate 12 to 18 separate checks per month for the small Business Office staff to oversee.

Seeking opinions as to whether requiring 2 or 3 separate rounds of checks to the 403(B) vendor/providers is reasonable to expect under the circumstances, or whether the employer can meet the standard with one or two rounds of deposits.

Is it legal for a DB plan to offer only NRD annuities (including QJSA) but offer lumpsum cashouts at any age (with spousal consent).

Specifically, legal is telling me that if the plan offers option for immediate LS, that you must also offer immediate QJSA. I.e. you could have a 35 yr old who could elect a monthly annuity.

Any confirm is welcome (or just a lead where to start researching...)

Thanks.

Our company has an ESOP and has been bought out. Are there any rules on what share price I must accept? Must I sell? The majority shares are controlled by a single person who is the CEO. The buying company is a foreign company that is NASDQ listed.

I've always seen DROP plans associated with governmental entities. Is it possible for a company to establish such a plan?

401(k) Plan currently has 2-6 graded vesting with 100% vesting at ER, age 55. Want to remove 100% vesting at ER - is that a change in vesting schedule, which would grandfather all current participants, or is that an ER subsidy that can be removed for participants not yet age 55?

Has anyone begun amending their plans for EGTRRA? I know we have until the end of 2002, but I'm concerned about violating the anti-cutback rules if we wait that long. Thanks for the input.

As part of a plan audit on a new comp plan for a sole proprietor with 2 additional participants, the IRS agent is telling me that the sole prop is limited to 15% (reduced for self employment tax, etc.) of his compensation. I replied that his position would be true if there were no other participants, but that because there are, he could get 25% (reduced for self employment tax, etc.). The agent is still insisting that the lower limit applies. Anyone have any suggestions or agree with the agent? Why?

I have a client, in California, with a commissioned employee. Occasionally the employee does not receive high enough gross wages to cover all of their deductions, including health insurance. The client wants to wait and take a cumulative pretax deduction when the employee has sufficient gross wages. However, they were told by their attorney that they could not do this because it violates ERISA. Though I am currently checking with the state to make sure this doesn't vioalte any state labor or insurance laws, I did not see anything (even in ERISA 3(1)) that indicates this violates ERISA. Has anyone encountered this before? Also, if anyone is aware of any issues specific to California, that would be helpful.

Thanks!!:confused:

I am confused about the accelerated vesting schedules due to EGTRRA. If a plan currently has a 5-year graded vesting schedule do they have to amend it to a 6-year graded schedule or can they continue with the 5-year schedule because it provides for faster vesting? (I realize that the employer also could amend to the 3-year cliff to make the employees even better off if they would choose).

I have an ESOP that froze contributions and fully vested participants on 9/30/99. The Plan states that forfeitures occur following a 1-year BIS. At the time the Plan was frozen, the ER did not restore forfeitures for those participants who had not received a distribution from the Plan, were partially vested, but had forfeited their non-vested balance prior to having a 5-year BIS. On 9/30/01, the Plan terminated.

The question is whether or not forfeitures need to be restored for those participants who never received a distribution from the Plan, but whose non-vested balance was forfeited prior to their having a 5-year BIS, as of the date of freeze?

Thanks

If an employee starts working as a temp via an employment agency and then gets hired by the employer, when is the employees commencement date for purposes of participation etc.? The plan also excludes leased employees.

I believe it is the date that they are hired by the employer, not the date they start as a temp with the agency.

We are implementing a 457(B) plan for the top hat group of a non-profit organization. The plan document states that distributions must commence "on a date selected by the Participant during the sixty day period following Severance of Employment, unless the Participant subsequently makes a one time additional written election in accordance with Code section 457(B) to defer commencement of benefits to a specified later date.

Are these the only options for commencing distributions under a 457(b)top hat plan? Also,for the one time written election, does the person have to give the exact date they want the distributions to commence and is that irrevocable? For example, a person states he wants the distribution to start at age 67 and then he cannot change it?

I would appreciate your input!

How do most self-funded plans define dependent child eligibility particularly where a child or step-child does not live with the employee? Do plans cover step-children not living with the employee? We have our plan defined as primarily dependent upon the employee for support. Can we say that must be declared as a dependent on their tax return? Do other plans exclude step-children not living with the employee?

If a plan sponsor has 2 defined contribution plans, what contributions are included towards the cross-tested (5% or 1/3) gateway?

If there is a cross-tested 401(k) plan with a profit sharing feature, and a money purchase plan, do money purchase plan contributions count toward the gateway? Does this depend on whether or not the plans are aggregated for 410(B) purposes? What if the money purchase plan is the cross-tested plan?

Am I correct that QNECs and safe harbor 401(k) nonelective (usually 3%) contributions generally count toward the gateway?

What about top-heavy minimum contributions?

We are establishing a multiple employer 401(k) plan for an association of employers. Some of the employers now have their own single employer 401(k)'s; we'll be merging them into the multiple employer plan. Question: if a single employer calendar year plan is merged into the calendar year multiple employer plan at 5/1/02, do we have to aggregate the "old" plan and the new plan for testing purposes? Or can they be tested separately?Same people will be covered in both the old and new plans.

And ideas? Thanks!

a series of questions involving a qualified DB

plan which is to be normally terminated..

plan has a set of retirees (participants in pay status), receiving monthly benefit payment,

and retirees elected various J&s factors-

(by terms of the plan) when they retired.

Here are questions:

(1) Retirees are required to be provided annuities from a dol approved insurer, a a part

of the termination process... correct ?

(2) Under what circumstances can the value

of the annuity provided be different than value

of payment they are already receiving ?

(3) Do anuites- provided- have to match the j&s

factors in effect for those in pay status ?

(4) Under what circumstances - can retirees,

be forced to accept a lump sum in lieu of an annuity ?

(5) Plan has both pre-65 and 65 + retirees.

Pre-65 retirees were allowed to select and draw

their pensions immdiately. Can these participants,

be given annuities (reduced) - e.g., based on

lower age 65 deferred value/s. Put another way,

can a normal plan termination be used to effectively defeat 411(d) of the code, and essentially "cutback early retirees)" ?

I am a complete newbie to IRAs.

About me:

I am a 37 year old male US citizen working abroad in Frankfurt, Germany. I am employed by a German company.

I am married to a 32 year old employee of the US Foreign Service. My wife would also like to open a Roth IRA.

We file a combined US tax return. My wife pays US income taxes while I pay German income taxes. Because I earn less than the legal limit, I am exempt from paying US income taxes.

We have no children and do not plan on having any.

My wife read about the Roth IRA and it sounded great for us.

How can I open a Roth IRA and how can I contribute. I don't believe payroll deduction would be possible.

Thanks for any tips on how I can begin this project. If this is the wrong place to post such a question, please excuse me and direct me (if you would be so kind) to the correct forum.

Al Brandt