Can anyone explain 401(a) plans? I understand you can use this plan with a 457 plan for employer matches, however, when I called a couple mutual fund companies they have "never heard of such a plan". Are there any investments that can not be used in the 401a? I'm just feeling dumb calling all these places and no one has heard of this, where can I go? I am in Missouri.

Company A acquired Company B. Both have 401(k) plans. Company B's plan was not terminated prior to the acquisition. Company B employees are now participating in Company A's plan, and Company B's plan is inactive, awaiting some sort of disposition.

Company A has now learned that Company B's plan has big problems, definitely some prohibited transactions, possibly disqualification issues.

Company A's plan does not want to accept any portion of the assets in Company B's plan, but may be forced to accept at least the elective deferrals in a trustee-to-trustee transfer since A's plan is a successor plan.

Can anything be done with B's deferrals other than transferring them to A's plan?

Thanks.

In a plan that covers only Salaried employees, can Hourly employees be excludable due to 500 hour/ last day rule?

If an Hourly employee has satisfied the age/service/entry date requirements for the plan, but terminates employment with less than 500 hours in a plan with a last day requirement for a contribution, is the employee excludable?

The rule seems to be that the 500 hour/ last day rule can only be used to make an employee excludable if the employee does not get a contribution "solely" because of the failure to meet one of those requirements. Since the plan described above would cause the employee to not get a contribution because of being Hourly, that would seem to indicate the employee should be includable.

However, some sources seem to indicate that the 500 hour/last day rule can be applied before considering any other reasons like employee classifications.

Self-funded company wants to try to control costs by capitating payments to providers. Asks the TPA (which provides a network of preferred providers) to negotiate a capitation scheme that other self-funded payors will use as well.

Is this allowable? If it is allowable, what is it considered? I don't think this is an insurance arrangement but I don't know. Comments?

I just found out that I will be laid off in August (After I train my replacement) due to a recent acquisition of another firm. Although my vested balance is not a lot, less than 5K, I dread the thought of paying taxes if I opted for a full disbursement. I am a full time student as well and I think I will be taking the next few months off of work so I will not be able to rollover to a new plan. I was considering rolling it over to a Roth IRA and hoped that someone could give me some suggestions for doing so. I really don't know a lot about the procedures and didn't want to sound like an idiot in my appointment with a financial advisor. Any Feedback is appreciated!!

Other than Publication 502, does anyone know of any other information regarding expenses that can be reimbursed under a medical FSA? Specifically, we are receiving questions regarding cosmetic dentistry - such as bleaching, caps, bonding, etc. Since cosmetic surgery isn't an allowable expense, is cosmetic dentistry? Any ideas on how we could determine if caps are cosmetic or not?

Mary

I'm working with a pension plan that includes a social security level income option form of payment. This provision is an old grandfathered optional form of payment, and, you guessed it, I don't have access to that prior plan document.

What I need to know is - does 'the law' require that we give the participant the right to submit either actual FICA wages or a copy the Social Security Award letter to use in calculating the optional form of payment?

Thanks.

Can an employer allow a participant to have a Self-Directed account "frozen" to any new money, and not allow the rest of the employees to have one? Any cite?

My wife is a nurse and was injuried at work. We have been paying our health insurance to the hospital since June of 2000. As of April 2001 my wife received a certified letter terminating her employment with the hospital. We then received the forms for Cobra. On the form is a termination date. We contacted the hospital and they informed us that they would input the date. They said our Cobra payments started in June 2000 and will be ending November of 2001. My understanding is that Cobra starts after termination, not unable to work under Doctors orders. We have never signed anything from the hospital pertaining to Cobra. Do we have grounds to fight this?

County hospital authority had a defined benefit plan that was convered into a cash balance pension plan many years ago. Effective 1/1/99, assets of cash balance plan were transferred to new profit sharing plan. Accounts in cash balance plan were fully vested, but no annuities were purchased to fund benefits and participants were not given an election to receive a distribution from the cash balance plan. Instead, assets were transferred "en masse" to trustee of PSP plan. The old cash balance assets in the PSP are not subject to payment in the form of required survivor annuities. PSP doesn't even mention the old cash balance plan. We were retained to update PSP for GUST. However, I am reluctant to do so because I do not know "how" the cash balance assets were transferred to the PSP in the first place. I know the cash balance plan was not subject to PBGC standard termination filing, but I didn't think you could simply turn a defined benefit plan into a defined contribution plan. Certainly can't do that with a single employer plan. Can one argue that cash balance plan was merged into the PSP? That argument would not "work" for non government plan because a merger of a DB plan into a DC plan is a de facto termination of the DB plan and when a DB plan is terminated (de facto or "regular") one must make distributions or purchase annuities to provide the distributions. Any ideas on the authority for transferring the assets from the cash balance plan to the PSP? Authority for elimininating the annuity form of distribution?

Does anybody know the IRS position as to whether a retired "disassociated priest" (for example, one who left the church with permission to get married) can use the parsonage allowance exclusion under Code 107?

I know that "retired ministers" are eligible for the parsonage allowance exclusion under Code 107; however, I could not find in any of my research whether the term "retired minister" includes a disassociated priest. Would a disassociated priest be considered ineligible because he is no longer a "minister of the gospel" (i.e., he can no longer celebrate Mass or perform other "ordinary duties of a minister of the gospel")? Or would a disassociated priest be eligible for the exclusion because the parsonage allowance is paid as compensation for past services which were "ordinary duties of a minister of the gospel"?

Thanks in advance for any insights.

Strange, but true: Former HCE requested direct rollover distribution from plan to conduit IRA. Balance much > $5K. Check properly written and sent to custodian (small bank), but 6 months later not cashed. TPA cancels payment on stale check and reissues payable to custodian of IRA FBO Mr. HCE, as originally requested and remails. Check returned a month later by post office: Addressee unknown. (The custodian was aquired, changed names or went away -- we don't know.) Sent certified letters to former HCE asking what's up/what to do. Green cards come back, but no response. He's not missing, just not talking. (Probably just to mess with me.)

TPA says it's a taxable distribution because it missed the 60-day window on rollovers. Proposes to send 1099R for 2000 (date of original check) and put funds into plan's forfeiture account and offer to restore account if/when requested.

That seems wrong to me. Before you get to the question of whether 60-day limit applies to direct rollover, you have to decide if there has been a "distribution to the distributee". If not, there can't be taxable income and money should go back (or stay??) in former HCEs account and remain invested per his prior instructions, subject to plan rules, etc. I say there's been no distribution because (1) he didn't actually receive the money (check wasn't payable to him and he didn't receive it), (2) no constructive receipt (we can't make him take and he hasn't asked), and (3) no payment to/for his benefit or receipt by his agent or assignee, etc.

Problem: TPA has been using that procedure on NHCEs and is loath to change it now just because we noticed it on a much bigger amount.

If anyone's got some guidance here, please bring it on.

If an individual owns 2 corporations, can a qualified retirement plan be adopted for only one of the corporations?

I have a profit sharing plan which added a coda feature and an employer match provision to the plan effective 3/1/2000 (First day of Plan Year). This plan was top heavy for the 2000 Plan Year and is top heavy for 2001. The Company did not make any discretionary employer contributions last plan year and they did not for the 2001 plan year (2/28/01). The plan is already using a top heavy vesting schedule, and for the 2001 plan year refunds of excess contributions and excess aggregate contributons are required. Since the employer made matching contributions to the plan will they be required to make an additional top heavy contribution for the 2001 plan year???

If so, will I have to look at the matching percentages of all the non-key employees who received matching contributions?????

Assume a ERISA Welfare Plan sponsor does not revise its SPD and PLan to include the new claims procedures, etc. Assume the SPD is completely non-compliant. Moreover, assume the Plan never decides a benefit claim and always denies claims by default- (ie making no decision within the time periods set forth in the regulations).

What is the liability (other then paying benefits due and legal fees if a participant sues or if a participant requests and spd in writing and one is not provided as required)

I am trying to see what the motivation is for an employer to spend dollars to fix SPD and Plan documents if the risks are relatively small. Please comment on the risks.

Does anyone know if a plan is or is not allowed to designate different beneficiaries for different sources (1 beneficiary for 401(k) deferrals and a different beneficiary for profit sharing)? Any cite?

Hello, my husband has about $6000 sitting in a 401k plan from an employer he left 5 years ago (only was employed there for one year). We recently realized that we really need to start planning for our children's future college education (we have a 2 1/2 year old, a 10 month old, and new baby on the way, and we do plan on having more children later) Rather than dipping into our short term savings accounts to start college funds, we would prefer to roll the money over from the old 401K plan. My understanding is that in order to not pay a penalty, we would need to roll it over into an actual plan, not just invest in mutual funds. Any suggestions on a good plan to roll that 401K $ into for college savings? Also, we don't want the money in the kid's names because it could hurt their chances of receiving financial aid in the future.

Thanks for any feedback!

Interesting question for something just taken over. Plan starts in 1999 with short plan year. Deferrals and match are small with low participation (refunds made). No P/S made. Based on deferrals & match, plan would be top heavy. However, if full 3% top heavy is made only to the non-keys, this would make the plan non-top heavy. Since this is the first plan year, the P/S contribution should be counted.

The P/S contribution was not made within the 2000 plan year, so there are some corrections that have to be made.

Any thoughts as to whether the plan is top heavy for 1999?

Thanks!

Ervin Barham

Is anyone aware of a specific reg. or code which addresses "Layoffs" as either a separation from service or a distributable event? This is for a 401(k)/PS prototype plan with nonunion employees and the plan document does not specifically address the handling of layoffs.

Any insight would be appreciated. Thanks!

I am not familiar with 403(B)s...are there any GUST checklists out there specifically addressing required changes to 403(B)s?