Does anyone have a reaction to whether allowing former employees to participate in a nonqualified deferred compensation plan under the circumstances described below would cause the plan to fail to qualify for the "top hat" exemption under ERISA. The plan in question is a plan that allows executives with nonqualified stock options to defer receipt of employer stock upon the exercise of the NSO until the occurence of a particular event, such as retirement, or until a specified date selected by the participant. The employer has several former employees (all of which qualified as part of the employer's "select group of management or highly compensated employees" when they were employees) that have NSOs that it would like to allow participate in the plan. The employer does not aniticipate that many of its employees will participate in the plan (you do not actually become a "participant" in the plan until you make an election to defer receipt of employer stock upon the exercise of an NSO). Thus, if the former employees participate in the plan, they could constitute a fairly high percentage of the participants in the plan (e.g., 33% to 40%).

Any comments would be appreciated.

A vendor has suggested that our company establish personal care accounts for the employees. The vendor is suggesting that the employees use their health FSA monies for any medical expenses before such expenses will be paid out of the personal care account.

Can someone explain what is a personal care account (and how it works), and whether the employee can be required to receive reimbursements from the health FSA before receiving any monies from the personal care account (and ultimately, the insurance plan)?

I would appreciate if anyone could help clarify two issues:

1. Did EGTRRA repeal the special 415©(7)(B) "$40,000/$10,000" church employee election ? If not....does it really have any practicle implications starting in 2002 with the Sec.415 limit increase to 100% of comp. not to exceed $40,000?

2. Did EGTRRA repeal the special church employee rule that allowed such employee with AGI under $17,000 to replace their exclusion allowance with the lesser of $3000 or their includible compenastion?

Am i understanding page 3 in IRS Publication 571 (Rev. June 2001)?

My interpretation would be that if a self-employed minister is employed by a non-501©(3) organization and would like to participate in a church plan such minister must share a common religious bond with the employer (meaning the church).

If a self-employed minister is employed by non-501©(3) organization such minister could set up a 403(B) account on their own and decuct their contribution as long as they do not share a common religious bond with the employer ( meaning the non-501©(3) organization.

I would appreciate any input on this issue

1. Did Notice 2001-42 effectively extend the GUST remedial amendment period for prototype filers to 12/31/02? If a prototype is approved after 12/31/01, is the deadline still 12 months after the day approval is received?

2. Can a plan sponsor that uses a prototype still freely choose current or prior year testing for 2001 and/or 2002?

The deemed distribution regulations (1.72(p)-1) provide several examples which demonstrate the need to accrue interest on late payments. Specific examples include (a) interest accruals during periods when loan payments may be suspended (e.g., during a leave of absence), and (B) interest accuals as of the time a loan becomes a deemed distribution.

The question I am strugling with is this - Must additional interest accrue if a loan payment is made late, but before a deemed distribution would incur. For example, consider a 5 year note with monthly payments due on the first of every month. Under the terms of the note, there is a grace period which ends on the last day of the quarter following the quarter in which the payment is due. In this case, the note expressly provides that no additional interest need accrue if a payment is made within the grace period. In this case, the borrower makes a single payment of all amounts due in the previous quarter just prior to the last day of the subsequent quarter.

Is it permissible to draft a note specifically avoiding additional interest during the grace period? In commercial loans, this is routine. However, a commercial loan would not provide such a long grace period (e.g., most notes allow 10, 15, or 30 days within which payment can be made without additional interest or penalty). The extended length of the grace period in this note is clearly permitted under the regs., but it is it reasonable not to accrue interest during such an extended period?

Do you have any knowledge of a requirement (in the regs, or in the opionion of the IRS) that interest accrue on loan payments made within the grace period, but after a commercially reasonable period of time (e.g., 30 days). Alternatively, do you know the name and/or phone number of any IRS or Treasury employee to whom I might address this question?

Thank you very much.

I work for a local TPA and one of our clients was on strike for 3 months. They are now back on strike and the ones that were on strike didn't get paid at all. Is it a law that the client needs to do a catch up on those employees who have the Unreimbursed Medical and Dependent Care Account? The client wants to just drop those 3 months (7 Pays) and not do a catch up. Please advise.

If there are 100 or more participants on the 1st day of a brand new plan, is an audit required, or is there any exception for the 1st year of a plan?

Anyone else run into problems with the 410(b) includable/excludable employee lists when checking the "statutory exclusions" box?

If an employee is excludable from 410(b) testing because of age or service, in my thinking they should show up on the normal excludable list not the list for the seperate test of statutory excludable employees as excludable. Too many "exclduables" here!! Let me try again....

To make the question simpler, I think that if you run the 410(b) test and test the statutory excludable employees separately you should only have 3 reports:

(1) Includable EE's

(2) Excludable EE's

(3) Includable EE's but Statutorily Excluded

Why would you ever have a fourth report of Excludable EE's who are Statutory Excludables.

My problem is that I have a fourth report!!

As an example, one EE who was hired 07/31/2000 is on report #2 and another employee hired on 07/31/2000 is on report #4. Same hours, relatively same age (30 and 33).

Any ideas?

RE: Double dipping schemes under Code Sec 106-as discussed in EBIA cafeteria manual pg 251-employees pay total premium through 125 plan and employer then reimburses employees for part of what they paid on a pre-tax basis - has there been any IRS comment on these plans? Purportedly, the sellers of these schemes are now saying they offer "audit protection." Is there anything to their ability to make such an offer?

Can a us citizen working for a foreign subsidiary owned by a us corp participate in the parent's 401(k)? what determines whether or not he can participate? is it whether or not he has US source income?

what's your take on this situation: A firm uses a POA to sign Form 5500 for the Plan Administrator, then the person named on the POA has his secretary sign his name to the forms.

Is there any simple way to tell if ten year forward averaging would be beneficial without going through all of the numerical calculations? I have not dealt with ten year forward averaging previously and didn't know if there was any way other than running all of the numbers, e.g, comparison of '86 rates with rate applicable to beneficiaries??

Sole participant in Keogh plan passed away last year. Participant's two children are designated beneficiaries. Participant was born prior to 1936 and had keogh plan for many years. Plan trustee is considering an annuity for the two children. Looks as if ten year averaging may be applicable, but didn't know if there were some simplified way to see which is the better alternative. Thanks for any comments.

We have a client that has a profit sharing plan who recently converted from a C Corporation to an S Corporation and changed its year end from 1/31 to 12/31. Are there any special considerations relating to the profit sharing plan? Can we do a simple amendment to the plan and a Board Resolution to change the plan year to coincide with the Company's tax year?

Looking for articles or slides/presentations on post-NRA accruals.

Any IRS or employer info on rollover/transfer restrictions when rolling money between two different 457b's, when employee is employed with same employer`?

Both husband and wife are nearing 55. Net worth approx. 850,000 with husband self-employed in construction and wife is a school teacher considering going to part time work. Retirement accounts (state and 401k) approx. 40,000. Small money mkt investment worth 10,000. Husbands term life insurance 100,000. Wife's term life insurance 50,000. Cash on hand 100,000. Hope to retire or semi-retire in 10-15 yrs.

Financial Advisor advises the following:

Begin retirement acct. at work, matching 3% of employees contributions and each spouse contributes 6,000 per year (business is incorporated and both partners draw a salary)

Buy 750,000 to 1,000,000 universal life insurance each. Begin with 40-50,0000 payments first year, tapering off each year for 10 years.

Roll 401k into an IRA

Invest in nursing home insurance.

This seems like too much of our money is going into insurance. Are there smarter, but safe, alternatives?

I would like to see a compilation of the most generous DB pension funds, both public and private. PensionExchange which was bought by InvestorForce.com is no longer around. Does anyone know of a service that furnishes this information?

Best wishes,

Joel L. Frank:)

Can someone please help me understand what plan(s) are available to government entities. For some reason I was under the impression that municipalities could sponsor a 401(k). True? Not true? If not, what are the available choices for local government outside of a 457?

Thanks in advance

Admittedly an oversimplification, since governmental plans are exempt from ERISA but "qualified" nonetheless under the various code sections that apply including 401(a). Kudos, and thanks for reminding me to think before I type.