I have a self funded client that has implemented a drug screening process within the work place. Now they want to change the health benefits for Inpatient or Outpatient Substance abuse to 100% coverage if the individual voluntarily seeks medical help and only 50% coverage if the individual is caught in violation of the work place drug screening.

It seems to me that the individual whether voluntary or involuntary is ill and I feel that the client may be at risk for a discrimination argument in the future.

Can anyone advise if this 100 vs 50 would be legitimate or not?

WHAT IS THE TAXABLE WAGE BASE FOR 2002?

THANKS!!!

May an LLC which is taxed as a corporation (they checked the box) grant incentive stock options to its employees?

We are taking over a 401(k)/PSP where certain employees derive a portion of their annual comp. from projects subject to prevailing wage (Davis Bacon - D/b) done by the employer. In 2000, 1 of the D/B EEs was an HCE (6 HCEs total), and 17 of the 30 NHCEs received a contribution under the D/B method.

The employer calculates the contribution required under D/B for the EEs who are affected. The full amount of the contribution (up to 415 limit) is allocated to these EEs as an employer contribution. Other EEs receive an employer discretionary contribution (3% of comp. in 2000) allocated on a comp-to-comp basis to EEs with 1000 hours employed on last day of plan year. In cases where the D/B contribution of an EE was less than 3% he/she received an employer contribution in an amount to make his/her total contribution 3%. This scenario creates different rates of contributions. One resource I contacted said that each contribution rate is subject to 410(B) testing. The prior TPA indicates that the "offset" of the employer contribution with the D/B contributions is acceptable in spite of the varying rates of contribution and has used the ratio percentage test as the 410(B) testing method. The document contains no specific language addressing the D/B allocation method (only the comp-to-comp formula) described or the testing. Would appreciate feedback. Thanks.

I have a client with a SARSEP plan established several years ago. They/I want to keep the SARSEP plan and implement a employer-funded SEP-IRA plan alongside it, but client is not happy with current SARSEP custodian, and investment choices.

Knowing that "new" SARSEP plans are "verboten," is client stuck with current custodian or can the plan and SARSEP-IRA balances be transferred to a new custodian with better/cheaper investment options for future contributions? Schwab or Vanguard is what I have in mind. Thanks for any insights!

I have heard and read conflicting information regarding the inclusion of employer contributions to a cafeteria plan when determing the value to be input on line 5, schedule F. In the packet of instructions for the 2000 year, under "2000 Instructions for Schedule F", specific instructions, Line 5 states "For a Code section 125 cafeteria plan, the amount employees elect to have an employer contribute to provide for the benefits under the plan." This could be interpreted as being the amount the employee elects to have taken as a salary deferral, not including employer contributions. Are there any web sites or publications that provide a definitive answer regarding the inclusion of the employer contributions?

Annual interest credits under a frozen cash balance plan are based on Treasury +1, actuarial equivalence for a non lump sum benefit option is '83 GAM Unisex w/ 7%, and actuarial equivalence for the lump sum option is '83 GAM Unisex w/ interest at the 30 year Treasury rate.

When a participant terminates & elects a lump sum, the account balance is brought forward with Treasury +1; if the 30 year Treasury is >= 7%, he gets his current balance ; if it's < he gets his balance times A/B, where A= a life annuity rate at current age using the lump sum basis & B= a life annuity rate at current age using the non lump sum basis -

A/B is greater than 1 .

Since it's not the typical "whip saw" calculation, I was wondering if anyone has seen this particular methodology for the calculation of lump sums in a cash balance plan ???

Lincoln National Life is exiting from the "insured" medical reimbursement plan marketplace. Is anyone aware of other insurance companies that are currently in that marketplace?

In performing the concentration test, don't I look soley to the salary deferrals under the Section 125 plan? In the instant case, health insurance premiums are split between the employer and employee, with the employee's portion coming from salary deferrals under the plan and the employer's portion paid directly by the employer. The employers controller has taken the position that since the employer must report the total premiums paid by both the plan and the employer on Schedule F of Form 5500. the testing should be calculated on total premiums, not just those paid by the plan. I read IRC Section 125(B)(2) to relate the concentration test to benefits "under the plan".

Is antone familiar with CA brown law?

If so , would you elaborate or point me in direction of code cite

Thanks

Lexa

Is anyone familiar with California's brown law?

If so, could you elaborate; a cite would be nice

thx

Anyone hear of a plan feature that allows employer to contribute extra % of salary based on company performance to pre-determined bonus targets, or based on improvement over a historical base, e.g. like gainsharing except that instead of paying cash, company pays more into the 401K?

I understand EGTRRA 2001 permits the owner of a 401(k) to rollover the plan balance into a 403(B) effective in 2002.

Has the IRS issued any regulations on this provision of EGTRRA?

Must IRS issue such regulations before plan administrators may put the above rollover provision into effect?

Is a participant's ability to do such a rollover contingent upon either or both plans being amended to authorize these types of rollovers?

Is amending the plans as above or authorizing the type of rollover in question optional for either plan administrator?

Anyone have a solution:

Traditional IRA converted to Roth Ira in 1998 under four year rule

Taxes have been paid on 3/4th's of the amount

Current value (due to stock market) now 1/2 of original amount

Upcoming year will require payment of taxes on the 1/4 th amount that does not exist in account-- Any way to avoid the tax situation.

Recharacterize??

Withdraw all funds??

If anyone has a solution I would appreciate the info and the reference publication.l

I recently changed jobs and now my 401K is sitting in limbo. I was wondering if I can roll it over into a Roth IRA. If so since I have never had an IRA before what kind of an IRA do you suggest I roll it over into. Also is there a minimum that I must have in my 401K to roll it into a Roth IRA.

I work for a manufacturing company in Wisconsin. Because of the large increases in our health insurance from the past year and no relief in site from large increases in the future, my company is looking into a partial self-funding medical plan. We have 145 employees and insure most of them and there families. While we are not a difficult company to insure, we are not a young company. Average age here is 30-50 years old and we have a low employee turnover rate. Considering our size and age, would a partial self-funding plan be a good way to reduce our insurance costs. Also, what are the pro's and con's, and what surprises could we run into. We are working with a broker who we have been workking with for 20 years.

My client is interested in knowing the percentage of §401(k) plans that are operating on a calendar year plan year. I have provided anecdotal statistics based on my personal observations (90%+) but the client would like something more definitive when presenting to "higher ups". Does anyone know of any source for an accurate answer to my client's question?

Client dies at 75 and had not yet taken their full RMD distribution for the year. Beneficiary is a non spouse; I know the RMD is taxable and payable to the beneficiary. Does the remaining RMD amount have to be removed before or after the assets are moved to a beneficial IRA account.

Thank You.

Are unallocated shares within a leveraged ESOP considered plan assets? If yes, where would you report this amount on the 5500?

Let's assume that an employer has a high plan-imposed limit on how much highly compensated employees can make as elective deferrals. Also assume that the plan almost never fails the ADP test. The plan has historically stopped ALL contributions once the participant's compensation exceeds the 401(a)(17) limit (i.e., $200,000 for 2002). Most top execs max out on the 401(a)(17) limit by mid-March when a bonus is paid. The question is: if the plan introduces catch-up contributions mid-year, can an exec who has contributed the maximum $11,000 elective deferral and reached the $200,000 limit on compensation before the catch-up contribution is introduced to the plan, be permitted to contribute the $1,000 catch-up contribution shortly after it is introduced under the plan?