Is an employer required to allow employees to continue to contribute to a medical FSA after they have been furloughed/terminated? How does this work?

Currently we are allowing employees to continue their contributions to a medical FSA to the end of the benefit year

We are sponsoring a document for the first time. Essentially we are putting our name on a document of a major provider. Although the provider applied for IRS approval prior to 12/31/00, we did not apply until last month. The provider tells me we can still use the Certification specified in Rev. Proc. 2000-20 becuase they applied prior to 12/31/00. The provider says it is irrelevant when we applied for IRS approval.

Is this correct?

If a safe habor plan (match method) offers catch-up contributions is it required to match those catch-up contributions to stay within the safe habor of 401(k)(12)?

A "super-integrated" plan allocation currently integrates at $70,000 and has a " last day" requirement.For the 12/31/01 allocation the plan sponsor wants to increase the integration level to $85,000 and eliminate the last day requirement.I don't think I have a 411(d)(6) issue with the prior allocation basis. Anyone agree/disagree?

We are in the developmental stages of creating a salary administration plan. Can anyway point me to useful resources in our journey (for example salary surveys, how to create salary ranges etc).

I have a client who left a company a number of years ago and rolled his sizeable retirement plan balance to an IRA. He will be 70 1/2 in mid 2002.

He started a new company, which started a profit sharing plan in 1996. We have just done our GUST/EGTRRA amendments, and the plan allows a participant to defer minimum distributions until the participant actually retires. He is no longer a 5% owner but is still employed by the company.

Would a rollover of that conduit IRA into the plan allow him to defer RMDs to actual retirement?

A side issue is that in the event of his death, the distribution options in an IRA might be more favorable, but does anyone know any reason this would not work?

Thanks.

Client employed new tpa to handle 401(k) plan. All plan funds to be moved to new investment manager/company. Employer directed old investment co to cut check to move the funds. Employer sent check to tpa so tpa could get money to new investment co as per tpa's request. TPA lost the check and did not tell employer for some time. Employer talked to tpa and tpa gave excuses as to why the money had not shown up. Meanwhile, employer got stop payment orders for the checks and had the old investment co to cut a new check. The funds have been uninvested in any manner for 2 months. Also, deferrals have not been invested for that same 2 month period. Besides the tpa liability, would it be worth it to go through the dol vfc program regarding the noninvesting of the deferrals?? Also, would the IRS take the position that a prohibited transaction has occurred with respect to the deferrals??? Any other comments or suggestions appreciated.

Any proscription on contributing "matching" contributions to a governmental 401(a) profit sharing plan based on participant deferrals to a governmental 457(B) plan? This would be similar to matching 403(B) deferrals in a 401(a) plan.

I know that the 401(m) regulations say that the contribution is not a matching contribution if the "match" is based on the 457 deferral. But I cannot find a reason for disqualification. Government 401(a) plans don't need 401(m) to be able to contribute different amounts to different participants.

The company I work for is a getting ready to spin off from the parent company. In doing so they are changing our retirement from and ESOP to a 401k. They are telling us that they are only going to roll over the vested amount from the ESOP to the 401 which is my case will only be 10%. Is this legal? Are there any government guidelines that I could reference?

Must all plans in a controlled group match catch-up contributions if catch-up contributions are matched in one plan maintained by the controlled group? What is your interpretation of the proposed Regs?

If we're merging the mp into an existing ps and preparing the amendment and 204(H) in a timely fashion, any need to do a SMM (summary material mod.)?

Does a 3% safe harbor non-elective contribution count as part of the total allocation for an HCE when comparing total allocations for the 1/3 allocation gateway? For instance, if a plan was providing the 3% safe harbor non-elective contribution to all employees (the only contribution for NHCE's), the HCE's then would be limited to 9%. Does that 9% include the safe harbor contribution the HCE's receive or can they get 3% safe harbor plus 9%?

I work for a non-profit 501©3 organization that has a 403(B) plan with employer contributions, as well as a voluntary employee contribution plan. Can we convert to a 401(k) plan? Are there any advantages to having a 401(k) plan instead of a 403(B) plan? I am so confused.

Calling all actuaries! My question pertains to a plan using the FIL funding method. Once the FIL is fully funded, I know the plan is then operated as if the funding method is aggregate.

However, if the plan then becomes "underfunded", what is the course of action (i.e. does the plan continue to be funded as if the funding method were aggregate or is there an alternative)?

Employee A is hired January 2, 2001. During her first employment year which ends January 1, 2002, she works more than 1,000 and turns age 21.

Adoption agreement states "an employee will become a Participant on the Plan Entry Date immediately following or coincident with the date Employee completes the eligibility conditions."

If Entry Dates are January 1 and July 1, when does this employee enter the plan?

When did the Employee complete the eligibility conditions: January 1 or January 2?

This might seem a lame question but I'll torture you with it anyways.

If an employer offers more than one carrier for an insurance,can a COBRA participant change carriers? If so, are there any limitations put on this?

Thanks for any info.

Motor

We use a well-known software package to generate Volume Submitter documents. Now that approval has finally been received by our provider and language released, starting to generate volume submitter documents for our clients to comply with GUST II.

Given that IRS has now allowed sponsors utilizing volume submitter doucments to rely on the VS opinion letter (and not file for an individual DL), would like some input on dealing with the following:

Say your plan made an amendment effective 1999 to change a provision also available in the body of the VS document, but does not coincide with the GUST restatement year of 1997. What we have done in the past is to generate document using the pre-amendment provision, and then add "special language" to the document stating "Effective 1/1/99, . However, this is now a change to the VS document and I'm assuming that we would now need to file for a DL letter (although all language taken from VS source). What we were proposing to do instead is the following:

1) Generate first document with GUST effective date.

2) Generate second document incorporating change with amendment effective date.

Killing more trees this way, but now we have two documents that totally rely on VS language. Any ideas on whether this is a good idea?

It appears to me that the new Pub 590 has a fairly significant error in it regarding the new RMD rules. On page 30 near the bottom of the second column, it states that all beneficiaries should reduce their life expectancy by 1 for each year after the first distribution year. My understanding is that a sole beneficiary surviving spouse would use his or her current age to determine life expectancy in each year.

Which is correct? If my interpretation is proper, wouldn't this error be significant enough to require a corrected reissue of Pub 590?

An INSURANCE AGENCY partnership (with 3 partners) has a 401(k) plan for its employees.

The same three guys are also the partners of another partnership (INVESTMENT ADVISORY FIRM XX). All three of them are registered investment advisors.

The "Administrator" of the insurance agency's 401(k) is the INSURANCE AGENCY PARTNERSHIP (the employer itself).

The "Administrator" appointed one of the insurance agency partners as the "Trustee" of the insurance agency's 401(k) plan.

The "Trustee" then hired the INVESTMENT ADVISORY FIRM XX, to perform the investment advisory services for the insurance agency's 401(k) plan.

QUESTIONS:

1) Is there a conflict of interest in the above example?

2) If there is a conflict of interest ... then is it a conflict violation under the Internal Revenue Code --or-- a conflict under ERISA ?

3) Who is the "party in interest" in the above example?

In the current issue of the PPD ERISA NEWSLETTER devoted to cross-testing, an example is given inwhich the allocation fails the Ratio Percentage Test but passes the Average Benefits Test. It notes that the rate group tested satisfies the nondiscriminatory classification test because the NHCE benefitting ratio "at least equals the safe harbor percentage."

Given the NHCE concentration ratio in the example, PPD used the safe harbor percentage, not the midpoint. In the ERISA Outline Book, Tripodi states that the coverage ratio "must be at least equal to the midpoint between the applicable safe harbor percentage and the unsafe harbor percentage..."

I've always used the midpoint, but PPD's comment gives me caution. Can anyone explain the difference in the statements?