We just took over a 401(k) plan. The plan is made up of a controlled group of corporations. The prior administator was filing a separate 5500 for each member of the group. I have never seen a situation like this before. How do I correct it?

Any input is appreciated.

Do new small plan audit rules apply to plans that file a Form 5500-EZ?

Is anyone aware of automated or semi-automated software for preparing benefits communications information (e.g. SPDs and other employee communications)? I have a client who is a TPA and is interested in beginning to provide communications.

A participant elects $2000 in a medical FSA at the beginning of the plan year. He claims expenses in excess of the $2000 within the first month of the plan year. The next month, he goes on FMLA. He revokes his election as his FMLA is an allowable family status change. When he comes back from leave, he does not elect to resume his medical FSA contributions. Does the company have any recourse, since they are out the bulk of the $2000? I can't find anything on this except that the company has to allow him to come back in. What if he chooses not to come back in? Can the company make him?

A highly compensated employee who is at the Section 415 limit and has reached normal retirement age would like to transfer the lump sum equivalent of his accrued benefit into a new money purchase plan being established for all of the employees. The existing plan allows for in-service distributions on or after NRA. Assets under the plan are sufficient enough to allow the distribution. The defined benefit plan may be terminated after the transfer or before the transfer, if possible. The intent is for the

distribution to be a transfer and not a rollover. The defined benefit plan is not subject to PBGC rules.

I have a client with an underfunded DB plan. The oldest HCE wants to retire and take a lump sum. After explaining the restriction he is willing to take payment of the unrestricted amount.What election forms does he have to be given? Is he in fact electing a single-life annuity? He would have taken a lump sum if it could have been paid.The plan's normal form of benefit is 10c&l,plus there's the QJSA requirement.What happens if he dies?

Can a school with a cafeteria benefits plan require some employees to purchase (expensive) health insurance through the school, while others (covered by spouses' health insurance) can opt out, or must it let all employees choose where to get their health insurance?

Here is my situation: I have a client who has sold his business and wants to terminate his Profit Sharing Plan. Ten years ago, his father passed away and he has been receiving minimum distributions along with his brothers ever since. There is still a significant amount of money in the father's account. What other options are available besides a taxable distribution of the account to the three sons? Any info will be GREATLY appreciated.

After several contacts with IRA specialists at the IRS, I have been advised I will owe 10% additional tax on a non qualified distribution that I have considered. In 1998, I converted from IRA to a Roth. I have not had any other Roth activity since and have included 25% of the conversion in my 1998,1999,2000 and 2001 taxable income. I was over 60 years old at the time of conversion. I was considering a partial distribution of the conversion amount(say 25%) in 2001 because it would not result in any incremental taxable income. Further, I assumed that being over 60 years old was valid exception to the 10% additional tax rule under section 72(t). I can not find any clear support in tax publications for the IRS advice I have received. Anyone have actual experience on this issue?

We have an employee out on military leave for a period of 11 months. Her family has not made payment for dependent coverage since December. Is there any law that requires us to provide coverage at no cost to her family during her leave. COBRA notice was sent and no response was ever given.

We have a client with a 9/30 yearend, on corporate extension, must make the er match by 6/15. Year ending testing required returns for HC to pass ADP/ACP tests based on a 100% employer match. Now the owner has decided to add an additional $25,000 to the original match amount. (Now, 117% match!) With this addition, again not passing ADP/ACP so we will forfeit the additional match %'s for the HC's (too bad) but, additionally this extra money is causing about 10 415 violations in the NHC's. Don't we need to return the deferral money first to pass 415? Then I expect we will have more kicking over 25% once the first wave is cleared. Any suggestions? I told the owner he would have been better off paying himself a $25k bonus!

An employee, participating in a cash or deferred arrangement ( 401(k))that is part of a profit sharing plan takes a hardship withdrawal and is suspended from making contributions for 12 months. Additionally, if the cited employee is also making deferred contributions to a medical reimbursement account, it is my understanding that deferred contributions to medical reimbursement account must be suspended as well. Is this correct??

What kind of recent experiences have you had with a

Department of Labor ESOP Examination? A client is

about to undergo an ESOP examination, and we would

appreciate information from anyone who has recently been through the examination process.

I admit that I have not read the Supreme Court's decision to deny cert. in the Erie County case. However, I haven't been able to figure out why Erie County wasn't rendered moot by the Supreme Court's decision in Kimel v. Florida Board of Regents, 120 S. Ct. 631 (2000). Kimel affirmed an Eleventh Circuit Court of Appeals decision finding that the State of Florida had immunity from suit by a group of university librarians claiming violation of the Age Discrimination in Employment Act (ADEA). How is the Retirees Association able to able to maintain its ADEA action against Erie County?

Itzhak Perlman

Article from the Houston Chronicle On Nov. 18, 1995

Itzhak Perlman, the violinist, came on stage to give a concert at Avery Fisher Hall at Lincoln Center in New York City. If you have ever been to a Perlman concert, you know that getting on stage is no small achievement for him. He was stricken with polio as a child, and so he has braces on both legs and walks with the aid of two crutches. To see him walk across the stage one step at a time, painfully and slowly, is an unforgettable sight. He walks painfully, yet majestically, until he reaches his chair. Then he sits down, slowly, puts his crutches on the floor, undoes the clasps on his legs, tucks one foot back and extends the other foot forward. Then he bends down and picks up the violin, puts it under his chin, nods to the conductor and proceeds to play.

By now, the audience is used to this ritual. They sit quietly while he makes his way across the stage to his chair. They remain reverently silent while he undoes the clasps on his legs. They wait until he is ready to play.

But this time, something went wrong. Just as he finished the first few bars, one of the strings on his violin broke. You could hear it snap - it went off like gunfire across the room. There was no mistaking what that sound meant. There was no mistaking what he had to do. People who were there that night thought to themselves: "We figured that he would have to get up, put on the clasps again, pick up the crutches and limp his way off stage - to either find another violin or else find another string for this one."

But he didn't. Instead, he waited a moment, closed his eyes then signaled the conductor to begin again. The orchestra began, and he played from where he had left off. And he played with such passion and such power and such purity as they had never heard before.

Of course, anyone knows that it is impossible to play a symphonic work with just three strings. I know that, and you know that, but that night Itzhak Perlman refused to know that. You could see him modulating, changing, recomposing the piece in his head. At one point, it sounded like he was de-tuning the strings to get new sounds from them that they had never made before.

When he finished, there was an awesome silence in the room. And then people rose and cheered. There was an extraordinary outburst of applause from every corner of the auditorium. We were all on our feet, screaming and cheering, doing everything we could to show how much we appreciated what he had done. He smiled, wiped the sweat from this brow, raised his bow to quiet us, and then he said, not boastfully, but in a quiet, pensive, reverent tone, "You know, sometimes it is the artist's task to find out how much music you can still make with what you have left."

What a powerful line that is. It has stayed in my mind ever since I heard it. And who knows? Perhaps that is the way of life - not just for artists but for all of us. Here is a man who has prepared all his life to make music on a violin of four strings, who, all of a sudden, in the middle of a concert, finds himself with only three strings. So he makes music with three strings, and the music he made that night with just three strings was more beautiful, more sacred, more memorable, than any that he had ever made before, when he had four strings.

So, perhaps our task in this shaky, fast-changing, bewildering world in which we live is to make music, at first with all that we have, and then, when that is no longer possible, to make music with what we have left.

Current employee will become a non-employee consultant as of 7/1. He will cease to be eligible as a group health plan participant, but he'll have COBRA rights. Under the cafeteria plan rules, can he prepay his COBRA premiums on a pre-tax basis from his final paycheck? I think this is permissible, but isn't he limited to pre-tax deductions to pay for coverage during the current plan year?

April's CPI was released today. It stands at 176.9.

Regardless of what Congress does, if this figure doesn't drop in the next 5 months, based on the rules presently in place, next year's deferral limit would be :

11,000

the comp limit will be 180,000.

Smaller employer wants to offer some type of health care coverage to employees, not to exceed $10,000 per enrollee per year. Employer also wishes to self-fund because of low participation rate which is making it difficult to secure insurance. Any opinions as to what is best in this situation? I'm thinking that this may be a good defined contribution case--he can just give them the money to buy their own coverage. I'm not sure what the tax ramifications would be though. Also, can you offer a self-funded health plan with this low of a level of coverage? Opinions or references to sites discussing this would be appreciated.

As a TPA for a terminating 401(k) Plan sponsored by a PEO, my question addresses the successor plan rule. If an employer who participated in the PEO's 401(k) plan decides to engage the services of another PEO who also maintains a 401(k) plan, would the 401(k) plan of the new PEO be considered a successor plan for distribution purposes?

Can anyone tell me what the formula is, (if there is one,I'm new to this )for YEARLY annuity to lump sum conversion factors for any interest rate, in order to obtain the individual monthly (1/12ths)multipliers. (male /female& blended.) My employer has sent me several of these tables on occasion for a few various interest rates...I would like to be able to produce these "spread sheets" on my own if possible. ?