I’d like to know how other organizations handle new employees who are on their initial probationary period. In one of our departments they earn less during their initial 90 day probationary period and are then given a raise once they complete their probation. Another department favors paying the same rate during and after the probationary period.

Carlos Rivera

Chief Financial Officer

Cooperative Home Care Associates

Crivera@chcany.org

What do other organizations start entry level employees at – both experienced and inexperienced. We have been in the low $20’s but there is some thought that our minimum entry level starting salary for inexperienced workers should be $24,000 per year. Any thoughts?

Carlos Rivera

Chief Financial Officer

Cooperative Home Care Associates

Crivera@chcany.org

We have a one-man mp plan we want to restate to a ps plan. Originally, we thought we would make the effective date 1/1/02 for the restatement and have the assets renamed as of 12/31/01 so we could do a final 5500. Now we are thinking we can't have the one-day lag period. If we restate and retitled the assets effective 1/1/02, would we have to do two 5500s for the mp plan? One for '01 and a final for the one day in '02? I think I am just confusing myself. This can't be that complicated. Help!

Another "who is the beneficiary?”

An IRA plan document has the following default provision, if the IRA owner died without designating a beneficiary for the IRA.

The IRA owner’s spouse, is any.

If there is no spouse, the IRA owner’s children, per stirpes, in any

If there are no children, the IRA owner’s estate

The Participant designated his spouse as the beneficiary of the IRA. No contingent beneficiary was designated.

The spouse now wants to disclaim the IRA assets. Who should the assets go to?

I’m thinking, since a beneficiary was in fact designated, the default provisions do not apply, therefore, the assets are passed to the deceased’s estate, not the children.

Employee who was a participant in employer's 401(k) plan terminated employment September 30, 2001 and was rehired Dec. 1, 2001. Employer will meet the safe harbor by contributing the 3% non-elective contribution. Since the e/ee did not incur a one-year break in service, then the e/ee will receive 3% of comp. from Jan 1, 2001 to Sept. 30, 2001 and from Dec. 1, 2001 to Dec. 31, 2001, correct?

With a plan year that ends June 30, how do limits such as the 401(a)(17) limit apply?

In other words if someone starts on January 1,2001 and is making $340,000, I would assume that they have exhausted the limit this calendar year on June 30, 2001 and that compensation is zero (for pension purposes) in the last six months of calendar 2001.

In the first six months of calendar 2002, they would only be allowed another $170,000 and then another $170,000 in the last six months of calendar 2002, and another $30,000 in the first six months of calendar 2003. Yes?

Thanks in Advance,

Johnny

Employer's 401(k) plan provides for age/service req's of 21 and one year with participation retroactive to first day of plan year. Plan year is a calendar year. Compensation is taken into account for all purposes for the entire plan year. Plan allows e/ee's to defer up to 7% of compensation. If an employee has not been deferring but now wants to max out his/her $10,600 deferral limit, can he/she elect to defer the entire final paycheck to be cut 12/31 if that paycheck is less than or equal to $10,600? The e/ee makes well above 170,000. From a reporting perspective the W-2 would of course reflect deferrals equal to the $10,600 limit. Any comments or suggestions appreciated....

An IRA owner named his living trust at the beneficiary of his IRA.

He is now deceased. The trustee of his living trust claims that there is a provision within the living trust that permits the trust assets to be moved/credited (not sure of the correct term) to a QTIP trust.

As far as I know, the assets must be reported under the name and tax ID number of the beneficiary(federal law). However, I am not familiar with trust laws. Is it permissible, according to trust law, for one trust to be named the beneficiary and the IRA assets to bypass that trust and go to a another trust that is established though directives of the first trust?

The company I work for is in the process of changing 401K plan administrators. On 10/12/01 all employee 401K assets were frozen to make the transition. As of 12/28/01, we have still not been granted access to our accounts to make any fund changes. What is the maximum time limit that 401K plan participants can be legally "locked out"?

For purposes of this question, an employee is not able to receive a lump sum payout because of 1.401(a)(4)-5(B) and plans to work until he dies. The plan provides that a surviving spouse may receive either the account balance converted to an annuity based on her life expectency or a lump sum.

Please confirm that the surviving spouse is also restricted from receiving a lump sum because she would be receiving a death benefit not funded by life insurance on behalf of a restricted employee.

Are there any options other than:

(1) take an annuity,

(2) provide a surety arrangement fro 125% of the lump sum amount pursuant to Rev. Rul. 92-76; or

(3) amend the plan to add a new distribution option that is an annuity with a cash refund feature.

Thank you for your thoughts!

Is it legal for a company that is in serious financial trouble to "freeze" 401(k) plan assets of former employees who would normally be eligible to rollover the assets into an individual IRA? I have been told that I cannot touch the money, even though it is 100% vested.

First of all, what is the difference technically between a 403(B) Thrift Plan and any other 403(B) plan?

Secondly, I don't like the investment choices provided by the insurance company we are contracted with (annuities). Is it permissible by law to transfer contributions from my employer's 403(B) Thrift Plan to a different financial institution (as a trustee to trustee transfer, either into a traditional IRA or perhaps a self-directed 403(B) plan)?

I would not be eligible for a so-called 90-24 transfer because there is a small employer match (3%), but I would be vested immediately. If I'm significantly better off with a different institution, I might be willing to forego the 3% employer match.

I'm trying not to tie up my contributions in annuities. I was thinking of opting for a money market fund simply to hold my contributions prior to transferring them elsewhere on a regular basis. There seem to be no surrender fees, but the insurance company's booklets and prospectus don't actual mention transfers between institutions, only transfers between investment alternatives that they hold.

Your thoughts?

For purposes of this question, an employee (in the top 25) will not be able to receive a lump sum payout due to 1.401(a)(4)-5(B) and plans to work until he dies. The plan provides that survivng spouses receive the account balance converted to an annuity based on her life expectency or a lump sum

Please confirm that the surviving spouse is also restricted from receiving a lump sum because she would be receiving a death benefit not funded by life insurance on behalf of a restricted employee.

Are there any options other than:

(1) take a life annuity,

(2) provide a surety arrangement for 125% of the lump sum amount pursuant to Rev. Rul. 92-76

(3) amend the plan to add a new distribution option that is an annuity with a cash refund feature.

Thanks for your thoughts

Anybody know anything about the new "Stark" regulations that take effect in January of 2002, specifically regarding any effect on qualified plans? As far as I know, (and my knowledge is severly limited on this!) they do not supercede ERISA, nor the normal IRC rules and regs pertaining to qualified plans. They may have effects(major/minor - don't know) and cause employers to make changes to the entity structure and ownership arrangements in various medical practice situations, but that can be dealt with under the existing rules for qualified plans.

All opinions appreciated.

I need a refresher on withdrawing excess SEP contributions:

1. What is the deadline for withdrawing the excess without penalty?

2. What is penalty if the excess is withdrawn after deadline?

3. How are "earnings" treated, especially when the value of the SEP account is worth less than the contributions made (negative earnings)?

Thank you.

Question:

Our Cafeteria Plan Provider filed a 5500 for us, as did our 401K provider. It has just come to my attention that our medical/dental/ancillary provider does not file on our behalf. I am certain that I've missed the deadline. At this point can I file an amendment and include this other info on one of the 5500s that have already been filed? Should I bother? I am new at this and have no experience with completing this form. Our Cafeteria plan provider is different from our health provider, does this make a difference in amending the 5500? What do you suggest? We have one medical carrier and one dental/ancillary carrier, our plan has over 100 participants, employees do not contribute. Thanks

Anyone have any idea how long it takes to get approval of an entity as a nonbank trustee for regular IRAs under section 1.408-2 of the Regulations? Also, I would like to speak with someone at the IRS who knows about these procedures. If you have recently filed one and have a contact name, I would be very appreciative if you would share it. I have spoken to 4 or 5 IRS no-nothings and keep getting the run around or the wrong person. Thanks!

A New York Times article reports that some families of victims of the September 11 terrorist attacks are criticizing Marsh & McLennan for the way it proposes to fund its decision to provide 3 years of free health benefits for the families. Here is the article:

http://www.nytimes.com/2001/12/26/nyregion/26MARS.html

The fund was set up by the company to provide relief for the victims' families, but some family members say the health benefits should be paid by the company in addition to the amounts in the relief fund.

What is your opinion? Are these individuals justified in feeling cheated? Or does the source of funding obscure the point that the employer was under no obligation to provide any health benefits for the victims' families to begin with? What do the expectations of these family members say about employee benefits in general?

Can a plan document be amended by a firm that uses a different document provider? Should the plan be restated onto the document we sponsor? Thanks.

We are eliminating the option for a flat dollar election, and requesting that everyone change to a percentage. If they have been notified of this change and been given an opportunity to change to a percent of their choosing, can we go in to their account and make a blanket change to 1% for all who have a flat dollar election?