While it appears clear that an employer match that relates to refunded excess contributions can be forfeited, what happens if deferrals are refunded as a result of excess annual additions? What happens to the match that relates to these refunded amounts.

Two doctors (A & b) have separate practices, but they share employees and both are adopting employers of profit sharing plan AB. They decide to go their separate ways. Doctor A takes half of the previously shared employees with him, and Doctor B takes half of the previously shared employees with him. (None of the employees were physically cut in half) Assets are spun off from Plan AB to create Plan B, which has Doctor B's employee's assets. Plan AB now has the assets of only Doctor A's employees.

Doctor A wants to terminate Plan AB and start a new plan. For vesting purposes, he wants the new plan to exclude service before the effective date of the new plan. Everyone would start over again for vesting. Is this OK? It seems to me that it is not OK, but I'm not sure why.

Can distributions from two different DB plans sponsored by the same employer (and which have the same institutional trustee) be paid via a single check to a participant? If so, what is the authority?

I am just looking for closure on this issue.

Late in 1997, the state of Florida announced that its loan tax of $.35 per $100 (or portion thereof)applied to qualified plans. I remember panicking about this when it came out, but being unable to find anyone who was actually doing it (including our recordkeeper and trustee). So we employed the head-in-the-sand approach, because we only had a handful of our participants in Florida with loans.

Does anyone know what happened to this? Are plans actually doing it?

In our area we are seeing 25% to 45% premium increases for employer sponsored health insurance plans. As a result, employers are increasing the contribution of premiums by the employees. They are also increasing the deductibles from 250 to as high as $1500 per family member. As a result, employees are requesting that their Flexible Spending accounts be increased mid-plan year to help offset the increased high deductibles and the inceased out-of-pocket costs for loss of benefits (i.e., prescription coverage). Can the FSA be increased mid-plan year by the employees? How does the government audit this?

I have an employer who should be using the top 20% group for testing, but they haven't been. Is it too late to change for 2000 testing?

I have a 457 Plan where the participant and the beneficiary (spouse) are both participants and employees. If the participant dies, is the spouse able to transfer (for lack of a better term) that balance to his account based on the "like-plan only" rollover rules?

A Plan is top heavy for the PYE 12/31/2000 and will make a 3% contribution to all non-keys for the PYE 12/31/2000 on or before the due date for filing the 2000 tax return. Can we inlude this receivable contribution in employee balances as of 12/31/2000 for purposes of determining top heavy status for the PYE 12/31/01? Since the contribution is required, can we treat the Plan as if if were a plan subject to the funding requirements of 412 and include this contribuiton?

HIPAA Certificates in multiemployer plans: What is a "waiting period" for purposes of Questions 9 and 10?

A typical construction industry multiemployer welfare plan design conditions eligibility upon a number of hours of bargaining unit service on which contributing employers submit contribution reports and pay contributions. For example, a plan may require 800 hours reported by contributing employers (and paid) during a 5 month period. When this requirement has been met, the worker is enrolled in the plan. A worker with 160 hours per month obviously gets in after 5 months. But a second worker who puts in 65 hours per week will work 260 hours a month and become eligible after 2 months, and a third worker who puts in 100 hours per month may never get in, even if he works 10 years. Q9 and Q10 on the HIPAA certificate specify the starting and ending dates of the waiting period. Would you put the date of hire in Q9, and the date of eligibility into Q10? That would mean worker 1's dates are 5 months apart, and worker 2's dates reflect a 2 month waiting period! The third worker is still waiting after 10 years. Can the period between hire and entry truly be a "waiting period"?

Why am I worried? DOL Reg 2590.701-4(B)(2)(iv)(Example 6) shows how a subsequent employer's plan may impose a shorter preexisting condition period, or may be precluded from excluding any pre-existing condition exclusion, because of the HIPAA certificate the multiemployer plan gives the former participant. Thus, the new plan might incur extra costs. If the multiemployer plan does this wrong, the new plan might sue the multiemployer plan for those extra costs.

Just to make this interesting, please note that DOL Reg 2590.701-2 does not define "waiting period".

How are deferrals reported under a 457 plan for an independent contractor who receives only a 1099?

our small firm has employees interested in a 127 plan. we have a 125 cafeteria plan and 401k/profit sharing, but none of these administrators or plan document providers provide prototype plans. employees are simply seeking to gain tax free status for their qualifying tuition expenses. no employer contributions will occur. the employer is willing to administer and file the 5500 to support these student employees. any suggestions on where i can obtain a plan the irs has already seen and approved so i can avoid the time involved in "starting from scratch"?

We have several clients who use the 3% QNEC to meet the safe harbor requirements exempting them from the ADP/ACP test. I still always check that they really did put in 3% for all employees. I often find they don't, for various reasons, resulting in awkward year end person by person true up. I notice in IRS notice 2000-3, that no year end true up is necessary for the safe harbor match, if is is made on a payroll, monthly or quarterly basis. Does anyone know if this can apply to the 3% QNEC as well? Does anyone have a grasp on how picky the IRS is about having eveyone match exactly 3%?

thanks.

We currently have a profit sharing plan that has one life insurance policy we have just recently found out about. The policy has been in the plan since 1995, but has never been reported as an asset because we were never informed of its existance. The premiums for these years have been paid directly by the company.

We are currently in the process of removing the policy from the plan and transferring the ownership directly to the insured. Because of the size of the policy, it has been suggested that a policy loan be made equal to the cash value as of 9/1/95 (begining of plan). That money would then be invested in the insured's profit sharing plan account. The ownership of the policy would be transferred to the insured and he would then enter into a Split Dollar agreement with the corporation and continue to have the corporation pay the premiums.

Questions:

1.) Is this a possible scenario?

2.) What are the tax consequences for the insured?

Does back up withholding apply to pass through ESOP dividends? We (ESOP trustee) just received a so called C Notice requiring us to institute back up withholding on three participants due to their failure to properly report dividend income on their tax returns. Everything I have read indicates that no form of withholding, including back up, applies to 404(k) dividends. Has anyone else had to deal with this issue and if so how did you finally resolve it?

If a 403(B) is funded using custodial agreements, is the custodian required to give participants a disclosure statement (similar to disclosure statements required for IRAs?) If not required, is it common practice to do so? Cites would be helpful.

I am new here and have a question from my DH. He has a 401K plan at work and wants to quit work and open his own business using his 401K money. Is this possible? Thanks in advance.

In a defined benefit plan, could a bonus paid after dec 31st 2000, be included in compensation for the year 2000?

I think I have an interesting one .... Employee A belongs to Plan A and defers 10,500. Plan B acquires Plan A and Employee A defers $10,000 in Plan B; Plan A is terminated and Employee A initiates a rollover to Plan B.

Can excess deferral come from the rollover source or must the entire $10,000 excess come from the deferral source? Your insight will be appreciated.

What is the difference between an FSA and a self-insured medical reimbursement plan? They appear to have the same purpose and I am wondering if there are different circumstances when one should be used rather than the other.

One of our employees, who claims his parent as a dependent on his tax returns, wants to know why parents are not considered as eligible dependents under our medical plan. Can anyone offer a textbook definition as to why they are not covered? Are parents excluded as dependents in all Section 125 plans?