Does anyone know what will happen to the 457 distribution rules if the "Retirement and Pension Act" becomes law. If my understanding of the current rules is correct, a participant in a 457 plan can begin to receive distributions from the plan without penalty at any age if they terminate employment. I have read somewhere that the rules may change to the method of other plans, whereby a participant would be assessed a 10% penalty if under 59 1/2 years old and begins to receive distributions from the 457 plan. Can anyone clarify this?

I'm looking for surveys related to DB and DC pension plans broken down by industry. Looking for ideas in plan design by industry. Any suggestions?

Is a plan required to give COBRA participants a 30 day notice of a rate increase? A self-funded plan did not complete rate negotiations until the anniversary date. Can the employer require the higher premium for COBRA participants at the anniversary date or is there a requirement for a 30 day notice.

One of our clients appears not to have notified a number of part time employees that they were eligible to participate in their 401(k)plan. I could swear I've read in an official (or at least semi-official) source how to correct this. But I can't find any reference to that now in my books (or on this BB). I believe the company must contribute the average contribution rate during that time to those eligible people.

Can anyone confirm this or (preferably) guide me to any relevant citation about this issue.

Thanks.

I have trouble totally understanding the BIS rules, if an employee only satisfied the YOS, so never contributed to the plan before termination does he retain the YOS at rehire, also, does he retain the YOS if the rehire is greated than 5 years. thanks for the help

Plans normally require that related matching contributions are forfeited if corrections are necessary as a result of failing the ADP test. But, would the following scenario affect this requirement such that forfeitures are not necessary?

A plan contains a match formula of 50% of deferrals up to max of 9% of eligible compensation. The plan fails the 1999 ADP test and refunds are processed (ACP test passes). Refunds are only necessary and distributed to participants who reached the '99 402(g) limit of $10,000 (and, some of these participants were paid comp in excess of the 401(a)(17) limit). If the ADP refund was small (less than $100 including allocable earnings), can an argument be made that a participant who deferred 9% (matched at 4.5% of comp) does not need to have match forfeited since his or her match only represents 3.13% ($5,000 match/$160,000 comp) of comp, less than the plan's maximum match of 4.5%? Or must the match on the deferral refunded be forfeited, no matter what percentage of comp it represents? I think what makes this result different than in prior years was most HCEs receiving refunds were those just over HCE comp limit and not those whose comp exceeded 401(a)(17). Your thoughts?

When running snap-shot nondiscrimination testing on a plan, how are employees who were highly compensated in the look-back year but no longer employed by the company treated? Are they disregarded for testing purposes since they are no longer eligible to participate in the plan?

I am trying to find an example of "Administrative Guidelines" to be used on the behalf of a 401(k) Administrative Committee. Would anybody know where I could locate an example?

An executive (living in a community property state)with a variety of stock options and deferred stock is in the process of getting divorced - is his employer potentially liable to the former spouse if the employer allows the executive to exercise stock options during the pendency of the divorce?

Upon distribution of after-tax contributions, a participant is taxed only on the income. Is the income subject to the 10% early withdrawal penalty?

Does anybody know of a good, comprehensive, benefits administrator, who offers all, including cafeteria plans,401k, payroll, etc?

I am currently using Intuit Quickbooks employee Administration, (formerly employeematters)

but they are a bit expensive, and I'm looking for alternatives.

We are generally operating under the automatic extension as provided in IRS Announcement 99-57 to allow an IRA to be recharacterized in most situations until the tax return due date plus extensions which is October 15 for most years. (There was a special IRS Announcement 99-104 that extended the due date to 12/31/1999 but that was a one year only extension that no longer applies.)

However, there is still the posibility of requesting from IRS an extension of time to recharacterize under certain conditions as is shown in Private Letter Rulings 200116053, 200116057, and 200116058.

The gist of these rulings is that IRS may grant an extension of time to recharacterize if:

(1) Each taxpayer was either ignorant of the rules for qualifying for a Roth IRA conversion, or reasonably assumed that a responsible financial institution or professional had properly recharacterized the conversion on time;

(2) Upon realizing the error, each taxpayer took immediate steps to remedy the situation and asked the IRS for relief;

(3) The tax year of the improper conversion was not a "closed" tax year.

The regulation that permits IRS to grant these special extensions requires that the taxpayer "acted in good faith." Acting in good faith is assumed (1) if a request for relief is filed before the failure to make a timely election is discovered by the IRS; (2) if the taxpayer failed to make the election because of intervening events beyond his or her control; (3) if after exercising reasonable dilligence, the taxpayer was unaware of the necessity for the election; (4) the taxpayer relied on written advice from IRS; or (5) the taxpayer relied on the advice of a qualified tax professional.

Private Letter Rulings may not be relied on but are merely an indication of IRS's thinking in a particular situation. The services of a qualified tax professional should be sought out.

Any thoughts on the following would be apprecitiated: Have a 75 year old retired attorney who established a defined benefit keogh plan several years ago. He is, and has always been, the only participant. He has been receiving distributions from the plan for the last few years but would now like to terminate the plan and roll everything over to an IRA. The plan still holds a life insurance policy with a cash value of about $100,000. Understand he cannot roll the policy to an IRA. He doesn't want to surrender the policy and doesn't want to take the tax hit on having it distributed. Is there a good way to terminate the plan, keep the policy, and avoid taxes? For example, could the participant buy the policy from the plan with other cash (perhaps taken from an existing IRA) and then roll all the assets (including proceeds from the sale of the policy) to an IRA in a lump sum?

My understanding is that 457 plans are not subject to ERISA title I, are not subject to bonding requirements, and are not affected at all by the new small plan bonding requirements for nonqualifying assets. Am I correct?

Where can I find a survey about how much employers are contributing toward health plans? Or, how much they are having their employees contribute.

Someone interested in using a Roth to start retirement and education funding for 2 children. Both have income. College financial aid not very helpful as far as rules and how it would effect child's income. Any help would be appreciated! Thanks!

gross misconduct under COBRA

A client has a PTO plan that includes vacation, holidays, sick leave and personal time. There are no maximums for accumulation and full carryover into future years. They want to restructure to manage costs. One possibility is to set up an integrated disability management program. Are there any suggestions re. how the PTO plan might be restructured? In particular, how to freeze existing accruals? How to set it up going forward?

Thanks...David

Does anyone know of any set rules with regard to providing defined benefit information for top executives for proxy statements? I tried the SEC website- and couldn't find anything, except some sample (1993-1994) Executive Compensation information for 3 companies. One sample included a range of benefit levels based on hypothetical salary and service and then separately identified the top executives with current average pay and current accrued service. A comment was included in this sample that the company was not able to "project estimated benefits at this time". Another sample pretty much had the same type of information.

Are there any specific guidelines (SEC or Accounting)on what should be included- ex. estimated benefit at NRA, assume salaries increase if project, or just current accrued information? I'm thinking this is a employer decision on how to present the information.

Thanks

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Where could I find a listing of state regs regarding payment of accrued vacation time at termination?