In 1998 I converted a regular IRA to a Roth IRA and took advantage of the IRS's provision to spread the taxes over four years. This year, 2001, is the last year in which I will pay taxes on my 1998 conversion.

Is the 1998 conversion amount (appearing on line 15b on my 2001 Form-1040) excluded from the $100,000 modified AGI limit test to determine if I am eligible for a 2001 Roth IRA conversion?

I realize a 2001 Roth IRA conversion is excluded from the test, but I was not sure if a 1998 conversion (applicable to this year) was also excluded.

Private not-for-profit employer with a non-ERISA 403(B) arrangement wants to add employer matching and discretionary contributions, and thus needs ERISA plan document.

But, employer wants new contributions to go to existing TDAs. I.e., no group annuity contract or other group investment account for the plan.

Is this kosher? When it comes to defining distribution, loan, and hardship withdrawal terms for the plan, should it not simply defer to the language of the applicable TDA?

And what about Form 5500 reporting? If the employer hires an employee with an existing TDA balance of $30,000 from prior employment, and begins contributing to this TDA under the plan, does the employee's entire balance count for purposes of the plan's Form 5500 reporting, or does the employee get a zero balance upon joining the employer?

Any and all comments are welcome.

Will appreciate any insight! My husband retired, chose prescription under Cobra. I therefore enrolled at my work for medical coverage (which at the time did not have prescription coverage, or so we thought) and the following month (retirement time for my husband) enrolled my husband for medical through my work plan. My work BC/BS representative has now informed us that prescription coverage is mandatory and billed work for such. My question: does my husband have to take the prescription coverage through my work plan, even though it costs 2 1/2 times more plus co-pays are more than double than Cobra? Can't he choose to continue his prescription through Cobra without losing medical coverage at my work? The representative - matter of factly said - if he chooses Cobra for prescription he would have to drop medical from work and pick it up through Cobra (even though the eligible time period has passed) or drop Cobra and take the prescription through work.

A law firm that dissolved years ago continues to maintain a profit sharing plan, primarily because it would be better protected in the event of a malpractice claim. The plan has an active administrative committee that has succeeded to the employer's powers; the trustee is a bank.

The IRS is reputed to believe that such a plan is not qualified, but I am not aware of any published authority on point. Is there any such authority? If not, is it reasonable to expect that an IRS audit could be settled without plan disqualification or serious sanctions?

Client has a plan where all assets may be self-directed. Participant (partner) wants to take all money in accounts in plan and purchase a single parcel of real estate. His account will consist then, of this single piece of real property (vacant land, no UBTI). Problem is, he also wants to purchase a portion of this property personally, i.e., the title to the property will be in the trust (about 75%), for his benefit and in his own name personally (about 25%). I don't like the smell of it. Sounds like a PT, but can't put my finger on it--possible fiduciary breach--dealing w/plan assets in fiduciary's own interest? Any comments? Thanks.

We have a participant that made an extra 15 loan payments for his loan. He should have stopped paying the loan back in August, but continued paying through November. What happens to the extra payments? Return? After tax contributions?

Must leased employees be covered under a SEP? i.e. a medical practice that leases all of its employees? If yes, can you offset for contributions made by the leasing company?

Let's assume we have a top heavy 401(k) plan with an 60 year old owner who does not defer because he does not want to have to make the minimum top heavy contribution. Can he make a $1000 catch up contribution for himself and a -0- deferral whereby avoiding making a top heavy contribution? (Assume the plan allows for catch up contributions). Does the max deferral have to be hit before you can allow for catch up contributions??

We are about to have our first telecommuting employee and are unsure about how to handle issues like sick leave and other leave time. This employee will work at home most of the time, coming to our office no more than two nor three time per month. Should we handle leave time differently for the person working from home? I would appreciate any help I can get on this. Thanks

Hello,

I'm trying to perform a pension calculation and I can't seem to find out if it is necessary to apply compensation limits. Please see below for the year and the compensation amount:

1983: 318,333.36

1984: 321,249.96

1985: 367,500.00

1986: 650,000.04

1987: 525,000.04

Please let me know if any limits should be applied to the compensation. Thank you!

We have a plan that requires employees to submit claims for reimbursement within 90 days of the end of the plan year, June 30. We sent a notice on June 15 informing employees of the approaching end of the plan year and that they should review outstanding balances and spend where possible to ensure they do not forfeit any of their plan elections. We sent out nothing before the end of the 90 day claim submittal period.

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The employee submitted a claim for reimbursement 120 days after the plan year. We rejected the claim as it fell outside of the reimbursement period. Although the plan description given to all employees at the beginning of the plan year describes the 90 day claim submittal period he is asking for an exception. He claims that the form used for submitting claims does not mention the 90 day limit and that no reminder email was sent.

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1. Can we make an exception for the employee? Does the IRS code prohibit this (which number)? Any idea what the penalty would be if we made the exception?

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2. Do we have any obligation to inform employees that the reimbursement period is ending?

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3. As we sent a reminder before the end of the plan year but sent nothing before the end of the 90 day reimbursement window are we potentially liable?

Is the Ogden Utah address used only for Form 5558, or are there other forms (5330?) that should be sent to that address?

I have an employee who is going out on maternity leave sometime next March. We are in our benefits open enrollment period right now. She had some questions regarding the Dependent Care Assistance Plan (FSA) due to her leave of absence. I told her that while she was on leave, she could not take advantage of the DCAP plan because the regs state that in order to use the plan, you have to be working. So her deductions will stop. I know that when she returns from leave (it will be FMLA) she can reinstate her benefits.

I have a couple of things I want to ensure I am thinking correctly on:

1. I told the employee to go ahead and make her annual DCAP election for the entire 2002 year (e.g. for her, it's $4800).

2. When she returns from leave, I believe she can change this election due to her family status change (e.g., she may not need $4800 for the year but maybe only $3000 now or maybe $5000 with the new baby).

Please advise.

:confused: I have seen in the 401(k) Answer Book that the safe harbor 3% nonelective contribution may be used for a cross-tested plan, but it may not be used for the first tier when a plan uses permitted disparity. (It does not list a cite.) I am wondering why it can't be used with an integrated plan. Any input is appreciated.

XYZ Company has, for decades, had employees pay only toward family plans. (Employee-only premiums were paid in full by XYZ Co.)

In the interest of saving money, XYZ is now demanding that employee-only participants begin paying a portion of their premium.

Catch: There will be no change for those employees in the family plans.

Example:

Fred, who is married, pays for his wife/kids insurance, but gets his own coverage free. (As it has always been...)

I'm not married and have no children, so, unlike Fred, I have to pay for my coverage.

Is this discrimination against single employees?

Employer has two plans: 401k with one year wait for salary deferral and 4% safe harbor match. Post EGTRRA, no discretionary match and no discretionary profit sharing in the 401(k) Plan. The second plan is a Money Purchase Pension Plan with a two year wait for entry and a 7% formula. EGTRRA now exempts from top heavy a safe harbor 401(k) using the safe harbor match. The MPPP provides the TH minimum (by election) in the MPPP. So post EGTRRA, would you agree that there is no TH contribution required in the 401(k) Plan for a nondeferring participant not yet eligible for the MPPP, but eligible for the 401(k) plan, even though under old rules the combined plans test topheavy?

Since the IRS requires the 401(k) Safe Harbor Notice to contain a description of certain plan provisions, do you think it would be satisfactory to indicate in the Notice that it is deemed to be part of the SPD and attach the SPD to the Notice or advise the participants to refer to the SPD for the Plan's details?

Rather than re-creating the wheel, would someone be willing or able to share a "boilerplate" request for proposal that we could use in a search for a vendor to provide 403(B) and 401(a) plan communications and educational services that would meet the requirements of 404c?

Please reply to kerryb@waushosp.org.

Thanks much!

An employee is hired 8/18/98 and terminated employment on 6/27/01. He was 25% vested upon his termination and took a distribution of his vested balance at the time of his termination. He was rehired on 11/9/01. On 11/16/01 the employer sent in the year end match - a portion of which went to him. Is the match paid out to him at 25% and he forfeits the rest or does it stay in his account and continue to vest? :confused:

I am looking for the 2002 compensation limit for grandfathered governmental plan participants. Earlier this year, a consultant indicated it would be $290,000...is this correct??