I am still a bit confused on payment schedules for COBRA payments. For example, if an employee terminates on 5/31, they have until 7/30 to make the first payment. When is the second one due? I keep seeing information that the first payment has a 45 day grace period and subsequent payments have a 30 day grace period. Does this mean the employee can always be a month behind in payments?

Can someone please explain this to me using my example - actually giving me dates, like the 1st payment is due 7/30, the second is due 8/1...etc?

is it a cutback or reduction in benefits to amend a plan so that the break in service rule is applicable? how does this effect the 5 year break in service rule?

Client started 125 plan and insurance benefits 2/1/99. 125 plan is a calendar year plan. Insurance benefits have a contract year = 2/1/YY - 1/31/YY. They had approximately 30 covered employees at the beginning of 1999. They have 160 covered lives at the beginning of 2000.

Looking to confirm that they are still considered a "small welfare plan" for 2000 because at the beginning of the contract year that ends in the 2000 calendar year (i.e., 2/1/99), they had less than 100 covered employees.

Perhaps more succintly, is the "beginning of the year" determinant the beginning of the plan year or the beginning of the contract year?

HELP!!

Is there any guidance that specifically notes whether a new owner can or cannot continue a 401(k) plan of a bankrupt company?

A company goes bankrupt and so no further salary deferrals are made. A few months later, a new potential owner wants to buy the company and reactivate the 401(k) plan. Is there any reason the plan must be terminated? Is there any reason the new owner cannot simply reactivate the plan immediately after purchasing the company? The new potential owner does not own any other companies.

What steps are necessary to reactivate the plan?

Any cites would be appreciated.

I have a client who filed the 5500 for their welfare plan/fringe plan last year, including Schedule A information for their various fully-insured welfare benefits, even though they had less than 100 employees covered at the beginning of the 1999 plan year.

Now we are doing the 2000 5500. They still have < 100 employees covered at the beginning of 2000. Can we just file a Schedule F (since they are small and fully insured) or will some red flag go up because they filed Schedule As last year?

Does anyone know for sure when the 415 limit increase (100% to $40,000) kicks in for non-calendar year plans? The Corbel webcast speaker's opinion is that it kicks in for plan years ENDING in 2002. I believe his opinion is based upon the COLA adjustments for IRC 415 being effective for plan years "ending in". If this is correct, that would mean 401(k) plans with a June 30 year end could start deferring 100% of comp now. However, I have also consulted with local ERISA attorneys and they do NOT agree. EGTRRA is not a COLA adjustment. Any other opinions out there?

What is the IRS rationale for only allowing Roth contributions if you file your federal tax return jointly when you are married (versus married filing separately)?

My husband and I each made a contribution for the year 2000 but now must take them out because we filed married filing separately. Is the penalty only a 6% excess tax penalty ($4,000 x 6% = $240) or do we have to pay a 10% penalty on top of that? If yes, is that 10% on the $4,000 or on the income earned on that $4,000 thus far?

Employee has a dependent child (age 19) on the group health plan. Dependent child will be getting married and is pregnant. My understanding is that the spouse and child can be covered under COBRA only if (a) the dependent child loses dependent status (which will happen under the terms of the plan when she marries) and elects COBRA; and (B) the formerly dependent child also elects coverage for spouse and child. In other words, the daughter's marriage is a qualifying event in that it causes her to lose dependent status, and hence group health coverage.

A related thread is:

http://www.benefitslink.com/boards/index.p...t=ST&f=4&t=6926

Employer X, who has maintained a 403(B) plan for several years establishes a 457(B) plan in 2002. For purposes of the utilization of the "limited catch-up" rule under Treas Reg. 1.457-2(f), would employees who deferred the maximum to the 403(B) in all prior years of employment be considered to have used up their prior year limitations, due to the coordination requirements for 403(B) and 457(B) deferrals that exisited prior to 2002? Or would such employees be considered to have used up none of their prior year limitations, since these deferrals were made to a 403(B) plan as opposed to a 457(B) plan? Treas Reg 1.457-2(f)(2)(ii) seems to imply the latter scenario, which would enable virtually everyone who is new to a 457(B) plan and is within three taxable years of the retirement age under the plan to defer double the exisitng 457(B) limit, beginning in 2002 ($22,000 in 2002). However, I have seemed some published guidance that would imply that the former scenario is correct (i.e., the 403(B) deferrals "count" toward the catch-up limitation, and thus employees who had previously maximized deferrals to the 403(B) would not be permitted to use the limited catch-up).

Would appreciate anyone's thoughts on this subject.

Thanks in advance.

Cartoon in recent local paper (sorry…can’t remember which cartoon it was). Let’s see if I can describe it with the same effect as the visual.

Older couple in their living room. The husband is standing up, looking puzzled, reading what appears to be some sort of invoice. There are also dozens and dozens of boxes of “409” cleaner stacked up in the living room (assume that’s what the invoice is for).

The caption says: “Honey! You know that 401(k) we’ve been investing in all these years????!!”

I'm interested in how others handle daily accrual of interest in money market and bond funds. Is there a standard industry practice?

For example, if a money market fund pays interest quarterly, do you account for daily accrual of interest during the quarter, or do you only add the interest when actually paid? Do you handle bond funds differently than money market funds?

If a company has not been taking interest accrual into account, does the company need to take any actions?

Does anyone know if a person who has previously elected a life annuity choice, ( because realistically what other choices were available ) from their 457 plan at retirement - will they now have the flexability to amend the prior choice, given that they can now roll a lump sum into an IRA:

1) without tax consequences

2) be given greater choices in investments and payout options as compared to previous choices

It just seems that there would be some form of a window allowed for people that had no other choces before. Perhaps I'm the ignorant person and they did have other choices? Just trying to learn from this end.

Can anyone share some input with perhaps some reference material I can obtain?

Thanks - Shawn

Is it possible and allowable for an organization to operate both a 403(B) plan and a SEP?

There seems to be some confusion regarding when employer contributions to a health plan are included in the Line 5 total. This is a typical premium only plan. I have two separate references and they contradict each other.

The 5500 Preparer's Manual, pg 13-4, example 1 indicates that they are not. The PPC's 5500 Deskbook, example 9B-1, indicates that they are.

Here is the Preparer's Manual, --

An employer provided health plan costs $3000 per employee. The employer contributes $2500 to the cost of the health plan. The employees pay the remaining $500 in premiums through a Section 125 premium conversion plan. 20 employees reduce their salaries by $500 to pay for health care. There are no other payments or administrative expenses. When completing Sch F, this employer enters $10,000 ($500 x 20) on line 5.

The other example is more detailed, but seems to contradict this example and would state that the amount reported would be $60,000 (20 x $3000).

Any feedback on interpretation would be appreciated.

If a health insurance plan is not part of an employer's group plan (for example a self-employed individual's health insurance policy) is it a requirement that adopted children be covered under the policy effective as of the date of adoption? If so, what is the cite? If not, what is the cite?

Is a leave of absence a "change in status"? What happens if an employee takes a leave of absence, but never returns? Do pre-tax contributions, say for unreimbursed medical, cease at the time he/she leaves?

I've had employees take a leave of absence, but pre-pay their contributions until they return. I've never had the situation where an employee takes a leave of absence, but never returns to work.

Joe

Due to the repeal of 415(e) and the 2001 Act what are the funding limitations when there is a DC and a DB plan?

Have a client who finally submitted year end data for 12-31-00. They have a participant who stopped making loan payments in March 2000. Do we go back and issue a 2000 1099-R for the loan and have the individual amend their 1040 or can we issue a 2001 1099-R?

I have a question regarding valuation of employee stock in a 401(k) plan. Regulators are telling a particular bank that their current process does not comply with ERISA.

Their current process is that they get an annual valution, which they then convert to multiples of book ( a term I do not understand) at time of valuation, then use that as a multiple of whatever book is at time of transaction. Does this sounds proper?

Can a participant sign the spousal consent on their loan request on behalf of their overseas military spouse if he/she has a power of attorney?