When calculating the 3% match for a SIMPLE plan do you include deferrals under a 125 plan as part of compensation?

The definition of compensation in the code says Wages as defined in Code Sec. 6051(a)(3) and §6051(a)(8).

6051(a)(3) references the definition of wages for income tax reporting purposes under Code Sec. 3401(a). I scanned this code section and I don't think it includes cafeteria deferrals. This would make sense because there is no income tax withheld on pay deferred under a cafeteria plan.

6051(a)(8) references elective deferrals under §402(g)(3) and §457. §402(g)(3) covers 401(k) deferrals, SAR-SEP deferrals, 403(B) deferrals and SIMPLE deferrals. 402(g)(3) doesn't include cafeteria deferrals. Once again, this makes sense since the purpose of 402(g) is to impose a limit on compensation deferred under various retirement plan vehicles and this limit doesn't apply to cafeteria plans.

Based on this I think the match shoudl be calculated on gross minus cafeteria plan amounts. Most of the time I see it calculated on gross including the cafeteria amounts. Does my reasoning look correct. Thanks for any insights you can provide.

Is there anything wrong with the following transaction?

Trustee and participant in a small non-participant directed plan wants to make a loan to his brother (not a participant). The loan amounts to 70% of the total assets in the plan. Is this a prohibited transaction?

My thought it is not because the brother is not a party in interest as defined by the statutute. However, my thought is that it violates some the prudent investment standard, even if the loan is made at a reasonable interest rate and with other acceptable terms.

SECOND REQUEST -

are there any comparable provisions under ERISA and the SEC that deal with PARTY IN INTEREST rules????

Has anyone heard any good HIPAA stories or seen any good political HIPAA cartoons...especially Administration Simplification? I've been asked to dress up a HIPAA presentation with some humor. Frankly, I don't see anything humorous about this, but then again, maybe I'm just too cynical.

Can I transfer my variable annuity funds to

my Roth IRA funds without penalty?

If yes, what form(s) to use?

If not, then what penalty will I incur if I just

withdraw my annuity funds and put them in my

Roth IRA?

Thank you.

Not all state laws automatically conform to changes made in federal law. With this in mind, I'd like feedback about how practitioners are handling the limits in those states which need to adopt conforming laws. Are you going on the assumption that the states will conform? Are you being cautious and not permitting participants to take advantage of the increased federal limits until the state actually adopts conforming laws? Are you still calculating limits using the 3 tiers even though EGTRRA eliminated the MEA portion?

Is there some rule of thumb used on sending compliance testing reports to clients? Which reports are recommended? Which would you not send? Thanks!

My firm is sponsoring a new prototypedocument that has been updated for GUST. Our old prototype document was under a different company (Sponsor) name. Our company name has since changed. Since we are obviously no longer supporting that document, does anyone know if we have to notify the IRS as far as informing them that the old document is no longer supported/used by us? Otherwise, wouldn't it look like we are still maintaing a document that is not updated for GUST.

Any thoughts are appreciated.

Can anyone tell me if they know if the MEA calculation is repealed for the states (specifically California) that do not yet conform to EGTRRA - I would think that it would still apply (as horrible a thought that is). In addition, I think the lack of conformity also stops you from contributing to both a 457 & 403(B) - any words of wisdom on this?

Scott

An employee has medical coverage under his employer's fully-insured group medical insurance plan (Blue Cross).

I realize that the plan is an ERISA plan, because it covers employees.

Here's my Question:

If Blue Cross informs the employee that it will not pay his entire medical claim for "any" of the following reasons ..... then can the employee sue Blue Cross (for payment of the actual medical charges) in state court -or- "must" he only sue under ERISA in federal court ?

1. Not medically necessary.

2. The medical fees are excessive and far above the usual fees charged by other medical providers.

3. The medical services are for a pre-existing condition, not covered by the employer's policy.

Note: The employee only wants to sue Blue Cross for actual medical charges (not any punitive damages, nor pain & suffering).

I work for a PEO and we have Co-sponsorship Agreements in place and in our Co-sponsorship Agreement is a clause allowing clients and their employees to enroll in our Cafeteria Plan Section 125. Is there a law that requires PEO's to offer the Section 125 when co-sponsoring a clients benefits? OR if you offer the Cafeteria Plan, can we exclude the Section 125 Plan?

Is there any reason a c-corp of lawyers couldn't have a loan provision in a standardized document? I can't think of any, but the original questioner seemed doubtful.

Has anybody heard anything further on when the IRS plans to release the revised Form 5310? I have heard the deadline to use the old form has been extended to March 2002 but would like to use new form if it will be available in the near future. Thanks in advance for any information.

We've got a client that allows participants that have account balances of at least $10,000 the opportunity to self direct their accounts. Another client is thinking about adopting this policy also but only allowing those participants with balances of at least $25,000 to self direct their accounts. Is there any problem establishing a threshold this high for self direction to occur?

I have reviewed information on all of the "Big 5" on the new content requirments for health plan SPDs. Each of them has failed to address the "provider listing" requirement.

I have contacted the DOL with question and requested an answer by phone " a complete provider listing is required as part of or an attachment to the SPD".

However can not find anything in writing to that effect.

I need to provide info to client regarding this. One client is one the of "Big 5".

Any help?

I am looking for a health care coverage plans for small not for profits. Chicagoland area.

Does anyone have any experience with moving a 403b over to a 457 plan? What are the conseqeunces and costs? How difficult is it? Thanks.

Good Day All.

Can anyone offer some guidance on this please

Do the PARTY IN INTEREST provisions under ERISA have any analogous rules governed by the SEC?

as always, thanks for any relevant thoughts.

How will disbursements from a 457 Governmental Plan be reported in the future? There is disagreement as to whether distributions will be reported on Form 1099-R or W-2.

Previously, distributions were reportable on W-2. With new portability rules - it is assumed that Form 1099-R will now be required. We have not received firm confirmation as such.

Lastly, if the 1099-R is to be used, what of annuities in payout under settlement provisions of the contract? Would these also begin being reported on Form 1099-R? We have a running second conversation that these would be continued to be reported on Form W-2, regardless.

With the mad rush of merging MPP's with existing Profit Sharing plans, we were looking for some clarification.

Our stance is not to step up the vesting once the MP is merged with the PS Plan and to track as a Money Purchase source for J&S reasons. We use a prototype, the question is when someone is paid out of the PS plan and has a non-vested interest in the MP source, what happens to the forfeitures? I didn't see anything in the document that references that. Does it become a forfeiture like the Profit Sharing? Follow the what the document says about non-elective contribution forf?

Thanks