I have a client that has 146 ee's. 1 ee is Owner/HCE, 28 are regular ee's. These 29 ee's are the only eligible ee's for health insurance. The other 117 are ineligible because they are part time or seasonal. What can we do to pass the NON-DISCRIMINATION CLASSIFICATION TEST? The safe harbor % is 20.75% and this company is coming up as 19.31%. They also have a lot of the p/t ee's on leave of absence. Please advise.

Phyllis Ostendorf

Aside from font, background color, general links in the menu bar, has anyone had any experience in customizing the Web module, successful or otherwise?

For instance, has anyone created a hotlink that is specific to the Plan of the logged-in participant? We'd be interested in having a hotlink to a report that lists the performance of funds specific to a Plan and a report that gives some information about the model protfoilios. A general link will not work for this purpose.

What about a hyperlink to the fund name listed an investment option in the main window?

We'd like to control the order on investment options listed in the main window other than alphabetically, i.e., US funds, foreign funds, fixed income funds grouped together. It'd be nice to show model portfolios in a separate group from the mutual fund options.

Our programmer is going to investigate the extent to which the web module can be customized. We'd appreciate knowing if anyone else has made any attempts in this regard.

Profit sharing, salary deferral/401(k) and matching contributions allocated to key employees are considered "employer contributions" for purposes of calculating the minimum 3 percent or 4 percent top heavy/super top heavy contribution. Are key employee after tax contributions included in this calculation?

Participant is retiring and received a quote for an immediate annuity of $3,500 for life only or $3,000 for joint & survivor (w/his wife as benef.). What participant wants to do is elect the $3,500 life only, but then direct $500 of each monthly payment towards the purchase of a life insurance contract which would provide the wife with survivorship income in the event of death of the participant. The term the insurance agent is using is "pension maximization". I am not finding much information in my usual reference manuals or internet web sites regarding a transaction such as this. My question: can this be done?

I would like to know the ramifications of changing the beneficiary of my 401k/IRA accounts from named individuals to a trust. I realize this is a broad question, so to narrow it down, I would like an answer based on my specific 401k/IRA beneficiaries and my specific trust. I will now explain these.

I have 401k and IRA accounts with my spouse as the primary beneficiary and four individuals as contingent beneficiaries. Likewise, my wife's 401k and IRA accounts have me as the primary beneficiary and the same four individuals as contingent beneficiaries.

In addition, my spouse and I have a joint trust (revocable and non-by-pass) with the spouse as sole beneficiary. Upon the death of the surviving spouse, the trust proceeds go to the above-mentioned four individuals or if deceased their survivors. It is the intent of my spouse and I that all of our assets be distributed as provided for by the trust. Thus, to get as close to the trust provisions as we can without naming the trust as the beneficiary of our 401k and IRA accounts, we have named our 401k and IRA beneficiaries as described above.

However, so naming our 401k/IRA beneficiaries may not result in the same distribution of assets as provided by the trust. If both my wife are deceased and one or more of the 401k/IRA contingent beneficiaries predeceases us or dies at the same time, then the 401k/IRA beneficiary form provides that the amount of those accounts that would have gone to those beneficiaries would instead be divided equally among the remaining living contingent beneficiaries. However, had the trust been the beneficiary of the 401k/IRA, that amount would have gone to the survivors of those deceased beneficiaries and not been divided equally among the living contingent beneficiaries.

What are ramifications of making the trust the beneficiary or contingent beneficiary of our 401k/IRA accounts? Can the trust be so designated? Does the trust have to be irrevocable at the death of the spouse who has the account in his/her name? Does designating the trust as the 401k/IRA beneficiary affect spousal rollover provisions? Does doing so mean the 401k/IRA must be emptied within five years? What are other undesirable results of making the trust the beneficiary?

I'm looking for assistance with an issue. This Company my friend works for has an employee stock purchase program setup that has it's stock purchase every 6 months.

Recently, just days before the first 6 month period ended, everyone (approx 100 employees) in the ESPP was told there were no shares available for purchase and the money that has been getting deducted from their bi-monthly paychecks was refunded with the June 30th paycheck.

The stock price has dropped to its lowest level in the past 6 months and has more than doubled in price since.

Is the refunding of their money (with no interest either) legal or allowed to be done ??? It was mentioned approximately 90 days ago by the company that there may be a problem with the program, but no details.

Looking for any assistance, guidance or referrals anyone can provide. Thanks in advance...

Hello - Does anyone have an Adoption Flexible Spending Account as part of their benefits program? If so, may I have a copy of your policy? And, how well has it worked for your organization? Any information on this would greatly be appreciated.

I'm kind of continuing the discussion that started in thread 10608, but am starting a new thread because the following issues did not come up. I'd like to hear other people's input on the questions below. When merging the MPP plan into a profit-sharing plan,

• do you need to requalify the MPP plan for GUST first?
  
• do all the contributions need to be made by 12/31/2001 if you want to merge the plans 12/31/2001?
  
• if you don't have a profit-sharing plan, can you just amend the MPP to a profit-sharing plan, or do you need to start a profit-sharing plan so that you can merge them?
  

IRA owner passed away April 14, 2001, at age 61. He had a 500,000 IRA. The estate was named the beneficiary. Son is sole heir and executor of the estate. Here are the questions: Since the estate was named beneficiary, must the IRA go through probate? Can the executor name himself beneficiary? If executor names himself beneficiary, may he take distributions over his life expectancy?

The employer offers health insurance to its employees and pays almost all of cost for single coverage and some of the cost for single+1 and family coverage.

It sponsors a 125 plan that allows employees to choose benefits and to allow for pre-tax payment of insurance not provided for by the employer.

However, the company pays 100% of the health insurance premium for some employees. I am confident that some will be classified as highly compensated participants under Code Section 125(e) and some will be classified as key employees under Code Section 416(i)(1).

Can this payment of 100% of the premiums for certain highly compensated and/or key employees pose a discriminiation problem? Can it be a problem under the 125 plan?

I guess the logical extension is "can an employer pay 100% of the premium for HCE's and 0% for non-HCE's" and does the answer depend on if the premium for non-HCE's is paid through a 125 plan?

I'm a pension actuary and this just sounds like something is wrong but maybe not.

Ok our client forgot to 1099 the recipient of a hardship withdrawal for the year 2000, as such the recipient didn't include that amount on his income tax return... no income or excise tax was paid on the money.

NOW what do we do? Do they issue a 1099 now and have the recipient amend his return? And in general what are the consequences for this mistake?

Thanks.

There are all kinds of contributions in a 401(k) plan... salary deferrals, matching, company optional, QNECs, voluntary after-tax, etc.

Which do I use or NOT use when determining a minimum contribution for the Non-keys in a Top Heavy plan? Ex. Do we count matching towards a non-key having 3% of compensation for his required top heavy contribution? What about the others?

Thanks.

I need some confirmation on a question.

Can an Employer make a contribution to an Employee's medical reimbursement account?

If yes, can that contribution only be made to certain Employees (mostly to NHCE's)?

If yes, can those funds in the medical reimbursement account be used to pay the premium for the Employer's group health care program?

Thanks in advance to anyone who can help me out.

I have an employee who is a Canadian citizen and is interested in joining the 401k plan. What happens when/if he returns to Canada? Does Canada have any kind of reciprocal plan or will the money remain here until he reaches retirement age? I also assume that he can pay the taxes and penalty and just cash out if he chooses.

The premium to PBGC was underpaid in 1996. My company received the first notice of this in April 2001. Almost 5 years later. Anyone have any suggestions on getting the interest & penalties waived? PBGC is not budging. The interest and penalties amount to more than the premium owed. I cant see paying for something the PBGC never notified me on. 4.5 years ago, I might of considered paying the penalites and interest, but not now. I believe I should have been notifed then not now.

I know the deferral limits for SIMPLEs changed to $6,500 effective this year and will increase in the future- but I can't find it anywhere that the employer contribution limit was also raised. Some practioners seems to think that it was- any comment? cites?

Without our knowledge, an owner-employee S-Corp shareholder took a loan from his plan in 2000. The new EGTRRA regs would exempt this transaction from the PT rules if it were to happen after December 31, 2001. In write-ups on the new rules, I have seen it said that the IRS will also waive penalties for these transactions made before 2002 if the loans would have been allowed had the new law's change been in effect throughout the period of the loan. However, I can't find any official documentation of this. Can anyone help point me in the right direction to determine if I have a problem?

I have a defined benefit pension plan (plan year = 3/1 - 2/28; funding method = FIL) that had been frozen since 3/1/93. We defrosted the plan as of 3/1/2000. My Unfunded Accrued Liability (UAL) and Normal Cost as of 3/1/99 were $0. In defrosting the plan, we made an assumptions change and amendment change which created amortization bases of ($237,025) and $771,392 respectively. Thus, my Remaining Unfunded Liability (RUL) as of 3/1/2000 equaled $534,367.

However, when completing the Schedule B for the 2000 Form 5500, my equation of balance is off by $20,612. This $20,612 is my credit balance from the 1999 Schedule B.

How do I correct my valuation so that the equation of balance is balanced?

Would it be legal for a third party to sign the 5500 based on information provided if the employer is not available to sign forms and file them on a timely basis??? If not, what would be result of such an event?? Thanks.

DB Plan has NRA of age 60 and 5th anniversary

Participant enters the Plan on 7/1/94

DOB is 9/15/41

Vesting service is 1000 hours

benefit service is 1/4 year for 175 hours

175 hours is needed to avoid a break in service

Participant never worked 1000 hours in any Plan Year

worked 200 hours in 2000

has not worked during 2001

I know that if this participant was still active on 9/15/01 he would be 100% vested and his NRD would be 10/1/01.

What determines if he is still active on 9/15/01? Does he have to have 175 hours in 2001 to earn credit and avoid a break or does he just have to working on 9/15/01?