If anyone is interested in facts about the Enron DB/ESOP offset arrangement, see DoL Advisory Opinion 94-42A.

Can a Section 125 Plan limit the number of HCEs and Key employees when performing the nondiscrimination tests. I know in a qualified retirement plan you can limit the number of HCEs by using the top paid group and keys can be limited to the lesser of 3 or 10% of all employees. Do these same rules apply to 125 Plans.

Generally speaking, an employee who works 20 hours or more per week is eligible for participation in a 403(B) plan. This is the equivalent of a calendar employee with 1000 hours of service that the Service uses in all retirement plans.

In the real world, those of us who work full-time work 40 hrs., 5 days a week, which is 2080 hours. I realize the Service uses 1000 hours as the equivalent to 2080 in a calendar year, however....

....here's the twist, the Service also recognizes equivalancies for periods that are not 12 months of employment.

In any given school district, there will be full-time, 12-month employees (administrators, clerical support, and custodial staff) as well as full-time, 9-month employees (generally all certified staff).

Question: If 1000 hours is equivalent to 12 months, is 750 equivalent to 9 months for the certified staff? Ergo eligibility in a district 403(B) plan be offered and extended to employees as follows:

1) For calendar year employees, those that generally work more than 20 hours per week.

2) For school year employees, those that generally work more than 15 hours per week.

Since the TVC sanction for excluding a participant is not a cheap one, what are people doing?

Can a partnership provide a SIMPLE for its employees and have the partners do SEPS? I don't believe it's ok to do this, and I need to know where to look to find such in writing.

Our company has a rather lengthy Article in its Health Care Plan Document regarding the years of service that will be credited to employees of acquired companies. There is a concern that our plan document is becoming too lengthy (over 100 pages). Every time we restate the plan, we include all the sections of the Article dealing with service credit for employees of acquired companies. Our concern is that if an employee leaves an acquired company and becomes an employee of the acquiring company, he or she will assert that service credit should be measured based upon the acquiring company's service credit rules. We have several Health Care Plans. If the provisions are fully excuted, we are wondering if they have to be restated over and over again. My concern is that any employee who requests a copy of the plan document would not have knowledge of the provisions unless we restate them. As far as I am concerned, I think it is better to have a longer Plan Document and not risk having an employee be less than fully informed.

Any thoughts?

I'm considering creating an LLC and having my Roth IRA invest and become a 25% member. I would personally own the other 75%. Is this possible?

Can you amend an ESOP (actually a KSOP) to remove the stock provisions and just leave a 401(k) plan?

Here are the facts, as I understand them. The sponsor has a non-leveraged ESOP with 401(k) provisions. It was one of those start-up financing deals. The early facts are a little fuzzy as it wasn't our plan at the time. But as I understand it, the 11 or 12 initial employees received the ESOP contribution. After the initial ESOP transaction, no further stock was contributed. So, the initial employees have employer stock in their accounts. The sponsor does not intend to make any additional stock contributions.

What I am wondering is can the plan be amended and restated to remove the ESOP provisions and make it a regular 401(k) plan? The current stock that is held by the initial employees in their accounts would simply be treated in the same manner as a frozen investment option.

Any thoughts?

Does anyone have any experience working with DST and Trac2000 and who would be willing to share their experiences, good, bad, or indifferent?

Is there a users group or any other forum to gain general information on Trac2000 and people experiences? Thanks

Assuming I have a well diversified 401(k) plan that currently offers 20 different investment funds and I would like to get rid of a few funds that share very similar investment strategies in order to make the election process a little easier for the participants, can I, as the trustee, just do it?

In other words, say I have Windsor and Windsor II. Can I just tell everyone in Windsor that we're closing out the Windsor option and that all their money will be moved to Windsor II, unless they direct it otherwise?

Is there anything I need to be aware of? Are there any sites that state that I can't do this? I was sure this was not a problem, but I've heard from several people who said I couldn't do it.

What is the date I need to make a top heavy contribution by when deductibility is not an issue? Do I have 12 months after the allocation date (like a QNEC made to correct an ADP failure) or 30 days after the 404 period ends, like an annual addition?

Thanks

What date did the state withholding requirements become effective?

After Anthem Insurance Company demutualized last year, we received a check from Anthem for the cash out option. The employer pays 100% of the premiums for each employee.

The employer now feels entitled to the money that each employee received from Anthem. (Some of the employees that received money no longer work for the employer) Also, the employer received the exact same paperwork as each employee, therefor having notification of what was happening.

Six weeks ago, the employer sent out a memo to the employees stating that "while Anthem considers this money yours, you should feel morally obligated to pay it back to me"

As of 4 weeks ago, the employer started taking a $50.00/week deduction from each employee's paycheck to "reimburse" herself for this money. This deduction was not granted permission by any of the employees, nor is it a court ordered garnishment-meaning she just started taking the money because she wanted it.

Each employee was required to include the money in the 2001 taxes, being issued a 1099misc. form. The employer has no intention of filing her "reimbursement" in taxes, nor is reimbursing each employee for the amount of taxes they paid on the money.

Legally speaking, we were told that the money belongs to us because there is no retirement fund offered. According to the letter sent by Anthem along with the check, the money was to go directly to the employee or to the employee's retirement plan. That's basically how we ended up with the money.

We were told that the deduction of the money from the paycheck

was a violation of the ERISA Act and that we would need to have a Declaratory Judgement entered.

Could anyone please explain this-and possibly offer any additional options to go back after this money? We are now finding additional employees willing to step forth and join the effort to stop the "illegal" garnishments.

PLEASE HELP!!!!

We have several participants with balances under $5000 that we are trying to cash-out. We have bad addresses and have already tried an address search firm to find them.

Do we have any other obligations to find them, or can we now turn the money over to the IRS?

Does the forced distribution have to be a part of the plan documents for under $5000?

The icon in this post is wearing shades, to protect the stupid!

I acquired a variety of nicknames from friends over the years. None did I ever want to lose more than "Doc" however.

No, it wasn't that I was in medical school, nor did I resemble anyone from the movies/other with that name. Instead, the horrible truth goes like this:

One of the very first people I knew to have a child was a friend of my sister's, one year younger than me and just married and out of high school. In sharing the news of her having discovered that the expected baby was a boy, I unfortunately announced in a group that "she had a mammogram and it's a boy!"

Only days later, this was followed by:

Somewhere right after high-school I developed an annoying inner ear sensation - much like water in your ear after swimming - that would come and go. Might've been my music preference, but my doctor has always attributed it to a dry inner ear. Regardless, again in a group setting, I was suffering from the annoyance of this sensation when I announced:

"I think I have water in my filopian (sp?) tube." Being of the male persuasion (which is also why I'm not sure I spelled "filopian" correctly), this of course is even funnier. I am quite sure I meant eustachian tube, the tube of the inner ear. And while I would like to claim they heard me incorrectly, everyone knows the horrible, horrible truth!

For an employer to offer a pre-tax dependent care plan and a pre-tax plan for employee parking costs, are formal plans required?

Also, are annual 5500 forms required, and should the employer hire an administrator to handle all of this? Thank you for any insight you can provide on these subjects.

I have family and friends in the car repair business - as well as the insurance aspect of the business - so I get my fair share of war stories. A couple favorites, in no particular order:

A gentleman with a very high-end car brought it in to be repaired, including some painting and therefore several hours in the extreme heat of the paint booth to cure the paint. The customer had forgotten his full trunk of that week's groceries he had just purchased and into the paint booth it went. Hours and several hundred degrees later, everybody in the shop knew what the customer had forgotten. Amazingly, the customer never did recall, until it came time to pick up his car, and by then there was no mistaking what had happened - not for blocks around.

There was another customer from out of state, who took his car on a "test drive" to be sure repairs were done to his satisfaction, and never did return to pay the bill. The shop staff attempted to track this guy down via family and friends, harassing (as much as is allowed) persons who would get word back to the customer just how angry they were and that they were "going to come after him." Well into this dispute, with threats and screaming phone calls between them, the local law enforcement showed up as they understood the shop to have a car belonging to this person. "We did, but he skipped out without paying" they told the police. "Well, if he ever comes back, don't confront him or make him angry, we're looking for him on homicide charges" they replied. To the best of my knowledge, they didn't collect on the debt - or ever call him again. I do believe the police in the other city eventually caught their man.

Just when you thought your customer service experience was a challenge?

An investor recently distributed 100% of his Roth assets (a Roth Conversion IRA invested in internet stocks) in order to claim the "miscellaneous itemized deduction subject to the 2% floor" (subject to AMT). Assume the investor's loss exceeds $150k and his AGI is 75k.

The investor specifically instructed the IRA custodian that the shares in his Roth Conversion IRA be distributed as share certificates (as opposed to taking cash). These two types of IRA distributions should not make a difference on his 1099 or his REGULAR income tax calculation (its still an early distribution subject to the 10% penalty as the assets are less than 5yrs old).

If the investor's "miscellaneous itemized deductions" are large enough to create an AMT, would these stocks have a "DUAL BASIS FOR AMT PURPOSES" similar to that of Incentive Stock Options? Could the dual basis (upon the future sale of the distributed stocks) help the investor reduce future AMT (or increase the investor's AMT Credit in any given year)?

My client is spinning-off two companies, one in a stock deal and one in an asset deal. Both the spun-off companies want to transfer the balances over to the new organization. How is this legitimately done? I cannot find anything in the Internal Revenue Code which permits this. In addition, how would discrimination testing be done?

Does anybody know any details about the proposal being developed by ASPA for a "DB-K" plan?

Craig Hoffman mentioned it in his written statement provided today at a House Subcommittee on Oversight of the Committee on Ways and Means ...

"[The Enron situation] highlights the need to expand and reform the private pension system. This need is especially acute with respect to encouraging plan sponsors to adopt and provide defined benefit pension plans.... ASPA is developing a proposal that combines the best features of 401(k) plans-- participant choice-- with the best features of defined benefit plans-- a guaranteed benefit. We call it the DB-K and we would happy to discuss it more with you."

(Full statement is here:)

http://www.aspa.org/archivepages/gac/2002/...n_testimony.htm

In the SPD or initial notice to participants, is an employer required to inform employees of their right to be notified of their COBRA rights within 14 days?