I have a client with a conventional DB plan, and a subidiary with a mirror plan. The only difference between them is special minimums that apply to accruals prior to a specific date. Client wants to merge. My question is what would be the appropriate effective date to do so: 12/31/2001 or 1/1/2002.

I think 12/31/01 is valid as long as we complete the amendment(s) by 3/15/2002. However, anyone see any downside to this? A merger as of 1/1/2002 would give us much more time to do all the paperwork, but it gives a one-day plan year. Does this mean I have to do a 5500, including a Schedule B for a one-day plan year? I think the answer is yes, but I looking for feedback on pros and cons of each alternative.

I know that during the remedial amendment period, you can basically choose whether or not to use the prior year or current year testing method with no limitations. What I would like to know is if the plan uses the current year testing method for the 2001 plan year (last year of the remedial amendment period - the plan will adopt it's GUST restatement in 2002), can the plan use the prior year testing method in 2002? Do any of the limitations apply to switching to the prior year in the 1st year after the remedial amendment period?

Any help will be appreciated.

Jane Freeman

Is there a possible discrimination issue if a plan sponsor starts a plan and allows all people employed as of a certain date to be 100% vested in all current and future contributions and the plan makes all new hires subject to a vesting schedule? The existing employees are not being credited with past service as they have only been employed for one or two years.

I think this is a current availability of rights or benefits issue. Does anyone agree or disagree?

Please help me with this question.

An employee participates under his employer’s 125 Premium Conversion and Flexible Spending Account. His daughter is currently being covered under his Group Health policy, but during the plan year becomes ineligible due to her age (19 and not a student).

The employee elects COBRA continuation for her health insurance. This employer’s plan document does allow for “Outside Insurance Premiums” as a pre-tax deduction.

Can this employee run his daughter’s COBRA premiums through any of his employer’s pre-tax accounts? Does his daughter still qualify as an eligible dependent?

I think no, but wanted to get other opinions.

Former member applied for a refund on Date X by personally delivering all the necessary forms to our offices (we date/time stamped, etc.). On Date X + 5 days, she started working for another covered employer. We denied her a refund because she was no longer "separated from service" at the time we processed her request (Date X + 10 days). Could we not honor her request because it was received when she was eligible for a refund? Thank you in advance for your analysis and opinions.

I have a tradional IRA - since 1986. I have invested $32,000 ($2,000 per year). Because my AGI was too high, most of those years I have paid taxes on approximately $28,000 (Form 8606) of that investment. The money is in mutual fund and is currently valued at about $53,000. The new tax laws now make it possible to invest $3,500 per year (I am over 50), but I want to move to a Roth IRA. I have heard that I can do this in pieces (years) - move some in each of, possibly, a 4 year period, so that I would not have an extreme tax liability in any one year. I would like to move, at least the $28,000 which I have already paid taxes on, this year and be able to invest this year's minies in the new Roth. That would still leave about $25K in the tradional IRA. I could also add $5K this year, and then move the remaining $20K over the next 3 years. Can I do this? Thanks

Has anyone had a chance to look at the sample employee notice for the new EGTRRA saver's credit for contributions to a 401(k) or IRA (IRS Announcement 2001-106)? Is it just me or is the first example that they use totally incomprehensible? If anyone has deciphered it, I would appreciate any help. Thanks.

An interesting Plan design possibility came up in discussion and I would like some feedback as to its legality. Employer has a safe harbor 401(k) plan with a 7/1 to 6/30 plan year. It seems the HCE could defer the 402(g) limit between July 1st and December 31st and then defer the 402(g) limit for the following year between January 1st and June 30th. Prior to the beginning of the next plan year, he could revoke the safe harbor election. The following year he would again go back to the safe harbor plan and defer the 402(g) limit ad infinitum.

Therefore the owner would achieve the maximum deferral each calendar year while only having to make the safe harbor contribution every other year.

Any thoughts?

Please comment on whether this example scenario makes sense: Employee marries at the beginning of year, after the open enrollment period. Employee wants to enroll dependents (who are step children) on to the Flex Dependent Care account.

Dependent Care SPD states that only decreases in coverage may be made for a change in status. In other words, no enrollment until the next open enrollment period.

I realize that companies are permitted to make rules that are more restrictive than the IRS regulations on change in status, but this SPD provision is insensible. It practically means that any new dependents must wait until the open enrollment period, unless one had the foresight to sign up for some Flex coverage, and then change the amount under change in a status event. (In this case the formerly single employee was not even eligible to sign up for dependent care because he did not have any dependents during open enrollment!) Perhaps the company doesn't want the administrative burden of tracking mid-year elections? (But, the company must track those who leave mid-year.)

Is the company miscontruing the cafeteria rules (perhaps thinking of health care Flex instead??)? Comments? What does your company do? :confused:

Can I use the money from the sale of inherited land to fund a Roth IRA or other tax deffered account? (ED IRA OR 529)

This will mean the difference between DCA over the next 12 months or lump sum in January!

Thank You

We file a Schedule F for the cafeteria plan benefits with our health benefit plan Form 5500 rather than filing a separate Form 5500 for the cafeteria plan.

Is this ok?

I need some guidance on if/how I need to file for my employers health plan.

According to documents received from the insurance company, our plan is a self-funded group contract. We pay the insurance company a "premium/fee" each month based on the number of employees we have. A portion of this fee is funded by our employees. And, we are billed monthly for the benefit checks the insurance company writes each month. We have about 25 employees.

According to 29CFR 2520.104-20, it would seem that we may be exempt from filing form 5500. However, I'm not sure that reimbursing the insurance company for claims paid qualifies us under item (B)(2)(ii) of that section (discusses benefits being paid solely from the general assets of the employer). I am leaning towards being exempt since it would seem we are just hiring the insurance company to administer the plan rather than having them "fund" it.

Any thoughts?

We have read many of the messages from the message board regarding whether an MPP contribution must be made in year of plan termination/merger. However, we are not sure we fully agree with the analysis of a standardize plan. Our standardized prototype says if you terminate, you must work 500 hours to receive a contribution. This would mean then that someone who received a contribution last year, is eligible in the current year, employed on the last day of the current year and worked only 300 hours would receive a current year contribution.

Therefore, under our standardized plan, if we terminate the MPP after the first of the year, we feel that an MPP contribution will need to be made based on compensation up until the termination date even though participants haven't worked 500 hours.

Is this correct?

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01-07-2002 12:36 PM

Does anyone have any information/source material on California's reported non-conformance with recent federal changes on IRA and 401K deductions? Any advice on how to manage the state/federal discrepancy, potential problems and liabilities, prospects and/or timing of change at the state level etc.? Why am I seeing virtually no information on this problem?

Under the new rules effective 1/1/2002, can a government employee (city) rollover or transfer an amount from her city-sponsored 457 plan to her city-sponsored 401(a) defined benefit plan to purchase years of service (from when she was working for the city but was not participating in the DB plan) towards retirement eligibility while she is still working for the city? That is, assuming the DB plan accepts such a rollover.

Under the new rules effective 1/1/2002, can a government employee (city) rollover or transfer an amount from her city-sponsored 457 plan to her city-sponsored 401(a) defined benefit plan to purchase years of service (from when she was working for the city but was not participating in the DB plan) towards retirement eligibility while she is still working for the city? That is, assuming the DB plan accepts such a rollover.

If an Employee is terminated and elects COBRA continuation coverage and then is given severance pay provided he signs a general release, does the signing of this general release give the Employer the right to terminate the Emoployees COBRA Coverage?

We have updated to Relius version 7.0 with the new 8.5 Crystal Reports. I have many "custom" reports that I keep in my Crystal Directory. Is there an easy way to update these reports from the old Crystal version? I started to open each report, verify the databases, and update, but it seems to me that there ought to be an easier and faster way to do this. Any ideas? Thanks in advance.

What do you do when an employee refuses to set up an IRA?

:confused: Well, the lines have been drawn in the sand here. We have both an e-mail monitoring and an internet tracking software in place (2 unrelated pieces of software). Our IT department selected and implemented without any input from HR or any written policy in place.

Reporting is worthless in both pieces of software and HR is peeved because we can SEE the abuse, but because of the poor reporting, there is not really enough written documentation to do anything about it.

What does this mean? Time (already) for new software. I've seen ICaughtYou.com, but what other solutions have you seen out there or what is being done where YOU work???

Thanks in advance for any help I can get...