A VEBA providing post-retirement medical benefits has been paying the employee portion of premiums for medical insurance for retirees. If the medical insurance pays a dividend of which the attributable portion is placed into the VEBA, what is its tax treatment for UBIT purposes?

My company terminated the Flexible Spending Account on December 31, 2000. There was about $1,500 left in one person's account and they overpaid the limit on another person's account. They refuse to refund us because I am asking for the full $1,500 not the balance that is actually left in the account. I feel they had made an error in overpaying and should be held responsible for getting that money back. Do I have legal recourse to obtain this balance?

We sponsor a standardized prototype plan. We have just found out a client also maintains another plan. What are the GUST determination letter filing responsibilities of this client? I know that they cannot rely on our notification letter when it is received.

We recently changed administrators mid -year and were told by the new administrator that they were not responsible for completing the 1099's or 945 for the distributions that were done prior to them taking over. The response was to go back to the old Administrator to have that done. Is that the norm?

In 1999 an employer established a cross-tested safe harbor 401(k) plan. A 3% non-elective contribution was calculated and intended to be allocated along with a small discretionary employer contribution on behalf of the one owner in accordance with the cross-test feature. However, while performing the annual recordkeeping for 2000, it was discovered that neither the 3% non-elective contribution nor the discretionary amount was ever contributed to the plan. What is the effect on the plan's safe harbor status? Can the employer make-up the delinquent contributions and earnings under the SCP program, as they are within the correction period, and preserve the safe harbor status? As an additional note, the plan would not pass the required ADP test in the event the safe harbor status is revoked.

Under the new, simplified Required Minimum Distribution (RMD) regulations:

1. If the RMD is being paid to a participant and a spouse more than 10 years younger, and the spouse dies, does the calculation change to using the uniform table, or do calculations continue as if the spouse had not died, or how are future RMDs calculated?

2. If the participant changes the beneficiary to or from a spouse that is more than 10 years younger, does the calculation change based on the new beneficiary?

3. If the participant dies after the Required Beginning Date (RBD), are calculations of RMDs to a spouse beneficiary different depending on whether the uniform table was being used or the rules for a spouse more than 10 years younger were being used?

An employer requires employees to submit medical claims to the employer who then submits them to the TPA for processing. Are there any regulations preventing this practice or would this fall under the privacy act. What good reasons can we give the employer for ceasing this practice. They don't see actual medical records but do see medical diagnosis, etc.

A Plan allows an emplyee to receive his early retirement benefit in the form of a lump sum. The Plan says that the lump sum is the present value of his benefit. It does not use a defined term like Accrued Benefit, for example.

Do you think the lump sum s/b the present value of immediate benefit or present value of age 65 deferred benefit?

That is how much is open for interpretation and/or what is correct or most logical approach?

Gary

Over the past couple of years we have amended 401(k) profit sharing plans to allow immediate entry for 401(k) and matching contributions but require a 1 year wait to participate in the Profit Sharing portion of the plan. Most of the plans have been large so there was no top heavy questions. However I now have a couple of small top heavy plans that want to use the immediate entry for the 401(k) and match portion but do not like the idea of qiving these short service EEs top heavy minimums.

Can we exclude them like we do for ADP/ACP testing.

I can find nothing in the 416 regs.

My husband left his previous job on Dec 31, 2000. He was aware of an upcoming 401K blackout that was to begin on Jan 1, 2001. The company made it very clear that there was a firm date for filing changes in employee fund allocation. We made our fund selections and left it at that. Now, nearly 4 months later, the newly selected fund adminstrator (a VERY large & well repsected Wall Street firm) refuses to end the blackout. According to my husband's former employer, they are even suing the new administrator to release the funds. Like everyone else in the market, we have lost a lot of value in this account (we can only assume as we have never received a statement to indicate what was transferred!)

Do we have any other recourse? What constitutes negligence on the fiduciaries' part? Could they be suing just to cover their butts?

A 401(k) plan uses the "safe-harbors" for both purposes relative to hardship withdrawals. As we all know, one of the "safe-harbor" hardship events is the "purchase of one's primary residence." What are your thoughts relative to a participant who applies for a hardship withdrawal in order to purchase "land" on which he plans to build his primary residence in the future? I sort of remember this issue coming up at a conference but I am still researching and hoped that maybe someone could shorten my search.

A 401(k) plan uses the "safe-harbors" for both purposes relative to hardship withdrawals. As we all know, one of the "safe-harbor" hardship events is the "purchase of one's primary residence." What are your thoughts relative to a participant who applies for a hardship withdrawal in order to purchase "land" on which he plans to build his primary residence in the future? I sort of remember this coming up at a conference but I am still researching and thought that maybe someone can shorten my search.

Under what conditions may a non-profit church organization establish a nonqualified plan? Thanks!

Is there any similar program to the CPC / QPA program that is focused mainly on executive compensation? Thanks for any leads.

We have a client that has a 12/31 EOY valuation date. We performed the 12/31/2000 valuation according to normal schedule. This was to determine the contribution for the 2000 PYE.

On 3/31/2001, the client froze accruals and terminated the plan. (Single participant - not subject to PBGC).

How do calculate 404/412 costs? would we use a 12/31/2001 valuation date and prorate charges and credits? Or should we use a 3/31/2001 valuation date (which is now technically the last day of the plan year).

Do we calculate interest on the charges and credits to 3/31 or 12/31?

An employer intended to create a SIMPLE Plan and filled out the appropriate and correct documents to create the SIMPLE Plan. When the employees went to the trustee to fill out the appropriate documents to establish the IRA, the trustee provided them with the wrong forms and therefore, the employees established a SEP IRA. The employer made contributions to what he thought was a SIMPLE IRA, but the trustee reported the contributions on Form 5498 as SEP contributions. The trustee would like to correct this mistake (i.e., have the employees signe a SIMPLE IRA agreement and report the contributions as being made to a SIMPLE IRA). Any suggestions?

Suppose an employer with a calendar year plan timely provided the 3% nonelective safe harbor "might notice" to their employees, then mid-way through the year followed up with the supplemental employee notice declaring that the 3% nonelective contribution definitely would apply for that plan year...

At the beginning of the year, the employer was making discretionary matching contributions equal to 3% of compensation. When the safe harbor supplemental notice was distributed mid-year, the employer stopped making the match and started making the 3% nonelective contribution instead.

The 3% nonelective contribution must be made based on compensation for the entire year, correct? If the document contains a discretionary match, was it permissible for the employer to cease the discretionary match mid-year? Could those matching contributions be "reclassified" to satisfy the 3% nonelective contribution requirement? Thanks.

Widow was told that she is not entitled to the previously paid death benefit should have been paid to the employer instead. How did she get the money if she wasn't the beneficiary? Subsequently, the market dropped and she doesn't have it the original amount? Thus far, the non profit organization has not produced the documents that says she is not the beneficiary. Who is liable? What can she do? Does she have to pay for transfer fees also? They have treatened her with litigation. What does she do now?

An owner wants to buy a REIT held by the profit sharing plan of his company. Is this a prohibited transaction? Is there any way for him to own 100% of the REIT (his profit sharing source share of the REIT is currently over 50%)?

Forfeitures were used to reduce employer match in the same year rather than the following year as per the document. Is that a problem? If so how do we correct the problem?