Our firm is consulting with a client about establishing a cafeteria plan for benefits the employees currently pay for after-tax. Management is concerned that a cafeteria plan would be a disservice to employees since it would reduce their Social Security benefits. We have provided some analysis, using data from the SSA website, showing that the impact on SSA benefits is minor (even for a older participants) compared to the tax savings.

Now the client is considering developing a cafeteria plan to take advantage of the income tax savings, but reporting the benefits for FICA tax purposes. I think it's strange, but I don't want to blow-off the client. I'd appreciate any suggestions on how to design the plan to minimize the impact on SSA benefits and/or convince the client to get past the issue.

Looking for some help in understanding the employer's required contributions in a Simple 401K plan.

If an eligible employee elects to not have contributions withheld from his/her salary, is the employer required to make any contributions into that employee's account?

Thanks for the help!

Can anyone direct me to a primer on 412(i) plans? I know that they are exempt from section 412,but what about other issues,like 415 limits,topheavy accruals,and minimum distributions?Thank you.

This year I converted my traditional IRA to a Roth IRA. This happened early November when the market was very low and I made contributions when the market was very high (97 - 00) I had a capital loss in the conversion. Both the traditional and Roth IRA were the same fund. Can I claim this loss on my taxes?

Participant retired January 4th and has elected to receive pension (DB Plan) as an immediate annuity ie first payment Feb 4th. Client (not the participant) is purchasing required annuity (10 C&C) from insurance company.

Participant will reach 70 1/2 in June 2002. Insurance company is saying the participant must receive a minimum distribution before we purchase the annuity.

My reaction (1) This is not a rollover distribution, but the purchase of an annuity to provide the participants required benefit.(2)we are distributing the entire annuity contract to the participant before she is 70 1/2, (3) I did not stop to do any caculations but at 70 1/2 the current monthly benefit payments should exceed the RMD

Did I miss something?:confused:

We just found out - by way of an obscure link on our company's intranet site - that they will be holding their promised contribution to our pension plan until 12.31.02 instead of making bi-weekly contributions as done in the past. AND if we leave employ before 12.31.02 - we lose their portion of the contributions!!

We're RIPPING mad!!

#1 because we'll lose anything we might have earned on that money during the year, while they collect interest on it.

#2 because if we leave (or get laid off like they did to people this year) on 12/30/02 we lose ALOT of money! and

#3 - almost as importantly, they have not notified us!! Someone accidentally came across a notation on the company's intranet site and passed it around.

Is it legal for them to change our plan like that - to withhold money they previously promised to us? And aren't they required under ERISSA to notify each of us in writing if they're going to do this to us??

Sympathy welcomed!! :mad:

what are the income limits for a roth in 2002?

johnny been

Participant is married to H1 at her annuity starting date and begins to receive benefit payments in the form of a QJSA. Participant then divorces H1 and marries H2. Participant then dies. There is no QDRO between H1 and participant.

Is there no survivor annuity payable? Or, do H1 or H2 have a right to the survivor annuity?

Thank you in advance for any response.

I am a Canadian citizen that has been working a Texas company for a 1.5 years and I am about to be laid off due to the lack of work. I am on a non-immigrant visa for Canadian professionals called TN (Trade NAFTA). Will I be eligible for a COBRA coverage if I stay in the US as a visitor? My visa is tied to my employment and I lose my TN visa the day I will be laid off.

Any help will be greatly appreciated.

A client is looking for a Trustee for an in-kind transfer from a qualified plan to an IRA. Assets include a mortgage. Anyone know trust company(ies) that will accept it?

Thanks.

The document for a particular plan defines compensation as w-2 earnings minus bonuses. A participant terminated and received severance pay. Should the severance pay be included in comp for the purpose of determining the 3% Safe Harbor contribution?

Thank You!

I have a plan with age 21 and 6 months of service eligibility requirement. The sponsor/purchaser is buying another company with a 3 month and no age eligibility requirements. The purchaser will give past service credit for service with the purchased company. So far no problem.

Since there are participants in the purchased company plan that will not meet the eligibility requirements of the purchasor's plan (all NHCE's), the purchaser wants to allow those participants in the sellers plan to be immediately eligible while not bringing all of seller's employees in through an open enrollment on 2/02/02, the closing date.

I've considered using partial open enrollment language such as "the eligibilty requirements are waived for any Eligible Employee who was employed on Febuary 1, 2002 and a participant in the Seller's Company's Plan." Is this permissible? Since the Purchaser is bringing in NHCE's that it could legitimately exclude, I don't see a problem. Can this be done with a protype? Should it be submitted?

One of my clients has an employee who was hired on 6/30/97. He met the 1 year eligibility period and entered the plan 7/1/98. He terminated 9/4/98 and took a distribution of his vested balance. I just found out that he was rehired in August 2001 and informed her that he should have been let back in the plan immediately. She doesn't want to let him back in until he has met his "year of service" again. Any way she can get away with this without risking the qualification of her plan?

Client's profit sharing plan has invested all of the plan assets into an investment variable annuity contract. the annuity contract is on a seven year schedule and provides for participants to withdraw a certain % of their account balance per year without penalty. If withdrawal is greater than that % certain penalties apply. Also, upon death, a participant's beneficiaries are entitled to market value of the account or the original investment value of the account plus a guaranteed % per year. Isn't there a diversification issue with respect to the sole trustee's potential liability???

Client's profit sharing plan has invested all of the plan assets into an investment variable annuity contract. the annuity contract is on a seven year schedule and provides for participants to withdraw a certain % of their account balance per year without penalty. If withdrawal is greater than that % certain penalties apply. Also, upon death, a participant's beneficiaries are entitled to market value of the account or the original investment value of the account plus a guaranteed % per year. Isn't there a diversification issue with respect to the sole trustee's potential liability???

Protection of Plan Receiving Assets from Other Plan in Merger or Spin-off

Assume that Company A, a Fortune 500 Company, is in the process of making a number of acquisitions. Company A maintains Plan X, a 401 (k) plan. What are people doing in each of the following situations to protect the qualification of Plan X: (a) Company A buys Company B and merges its Plan Y into Plan X; (B) Company A buys the assets of a trade or business of Company C, another Fortune 500 Company, where the trade or business employs 75 employees; © Company A transfers 30 employees of Company A's subsidiary, A-1, and wants to transfer their account balances under Company A-1's plan, Plan Z, into Plan X. Company A-1 has taken a number of aggressive positions on a number of issues involving Plan Z; and (d) assume the same facts as in example ©, except that Company A-1's CEO is transferred to Company A and only her account balance under Plan Z is spun off into Plan X.

Protection of Plan Receiving Assets from Other Plan in Merger or Spin-off

Assume that Company A, a Fortune 500 Company, is in the process of making a number of acquisitions. Company A maintains Plan X, a 401 (k) plan. What are people doing in each of the following situations to protect the qualification of Plan X: (a) Company A buys Company B and merges its Plan Y into Plan X; (B) Company A buys the assets of a trade or business of Company C, another Fortune 500 Company, where the trade or business employs 75 employees; © Company A transfers 30 employees of Company A's subsidiary, A-1, and wants to transfer their account balances under Company A-1's plan, Plan Z, into Plan X. Company A-1 has taken a number of aggressive positions on a number of issues involving Plan Z; and (d) assume the same facts as in example ©, except that Company A-1's CEO is transferred to Company A and only her account balance under Plan Z is spun off into Plan X.

Can an ESOP eliminate the 10 year participation requirement and require that a participant only attain age 55 prior to being given the diversification election right. The "rights, benefits or features" regulations specifiy that the diversification election is exempt from testing only for "qualified participants", so I am concerned about messing with such definition but I can't see how being more liberal would be discriminatory.

Can a Roth IRA accept rollover from a 401(k) Plan that includes after tax contributions?

Mkelly

One of our companies has a 7 year vesting schedule and with the new changes, it will have to go to a 6 year schedule. If someone terminates (for example) in January 2002 and the plan has not been officially restated yet, are they subject to the 7 year vesting or do they get to benefit from the new 6 year? Any help would be appreciated!