We have a self-insured Short Term Disability program. Currently benefit checks are cut by an outside vendor. We are considering bringing the payment procedures in-house within our payroll system. We are wondering what impact these in-house disability payments will have on 401(k). Would the disability benefits be eligible for pretax 401(k) deductions and corresponding company match contibutions?

If you have a similar STD arrangement, how do you handle 401(k) for those benefits?

Assume an IRA holder closes out his IRA account for $10,000. The check is made payable to the IRA holder. Which boxes are checked on the 1099-R?

Under IRS Notice 98-39 and 2001-9, non-electing church plans are now subject to non-discrimination testing. What employees must first be considered for purposes of the testing,i.e. same as for 401(a) plans for purposes of minimum service and hours?

Example: church plan contributes 7% of pay, but only to employees who work full time (30 or more hours per week) and who have been employed 3 years as a full time employee.

Are churches subject to a maximum waiting period of 1 year (2 years with 100% vesting) now same as for other 401(a) plans?

Is a church still exempt from having a written plan if the employer monies are contributed to a 403(B)(7) account along with the employee's TSA salary reductions?

Under a self directed account plan, does the plan administrator have to offer the alternate payee the opportunity to self direct the investment of the alternate payee's share when the intention is to pay out the share immediately. The plan received a QDRO in December, and was at the time undergoing a change over. All accounts were held in money market investments. When hold period expired the participant's account was invested per his direction. The alternate payee was never given an opportunity to direct. Payment is to be made now to the alternate payee? Is there a problem?

Just for my clarification:

I have a client (a sole-proprietor, with no employees)whose Schedule C income is $218,000. What is the maximum SEP contribution that can be made for 2000? Is it $25,500 (15% of 170,000) or $22,174 (13.0435% of 170,000)?

Thanks for any replies.

An employer has a Defined Benefit Plan and a Profit Sharing Plan. Both plans effective 1/1/97. The DB plan excludes service prior to the effective date for vesting service. The Profit Sharing includes all service. Is this allowed?? If not, I assume i would have to count all service in the DB plan.

I started a new ROTH IRA on 1-3-2000 with a $2000.00 contribution.(I have other, separate ROTH IRA's that I started in prior years with other accounts). At the end of 2000 I found that I must modify my contribution since my MAGI is over 95k - being single and all. My calculations showed that I can have a maximum contribution of $1630.00.

I understand that I have an excess contribution of 370.00. On 12-31-00 the value of the ROTH IRA that I contributed to was only worth $1137.00. It even went down a little more since then. I read a message that explained about the new calculation method to use " notice2000-39 "and if I am understanding it correctly ( question ) then my net income for the ROTH IRA in question is a loss of ($863.00)

863 = ( 2000 x (( 1137-20000 / 2000 )

can I assume that the calculated loss of $863.00 for this ROTH offsets the $370.00 that I must adjust to satisfy the excess contribution. If this is correct then how do I report this or do I even have to ? do I need to have the trustee do anything ? I can't seem to find any examples the really explain the step by step details that one must do .

thanks in advance to anyone that

can help this poor weary tax payer.

Is anyone familiar with the "dual relationship" doctrine that discourages provision of certain types of health care (e.g., psychiatric/drug counseling) between co-workers, where the caregiver and the patient are both employed by the health care organization that sponsors the [ususally self-insured] group health arrangement??

Does Federal income tax withheld on a traditional to Roth IRA conversion get subtracted from AGI in calculating MAGI? If no, what happens to this withholding on a recharacterization?

I have a client who maintains an irrevocable rabbi trust in connection with their nonqualified plan. The rabbi trustee, a bank, has recently decided that they don't want to make benefit payments any longer to participants; rather, they want to return the money to the employer and have the employer make the benefit payments. This seems to me to defeat the purpose of maintaining a rabbi trust, but we are faced with very few alternatives if the bank is insistent and so far they are. Of course, we could switch trustees but the employer does not wish to do this because the bank also is the trustee/recordkeeper of the qualified plan which works in tandem with the nonqualified plan. I am curious to know whether the bank's position is common or whether this position is unique to this bank or this particular situation, and what, if any, problems this would raise if we went along with the bank's position. Any comments would be appreciated. Thanks.

Since I'm over the threshold of AGI and cannot add money to my Roth IRA, may I use the accumulated dividends within the Roth to buy stock, which would remain in the IRA ?

In a leveraged ESOP with a "mirror" loan, can the interest rate(the AFR 5.59%)paid by the ESOP to the corp. be lower than the interest rate(8%)paid by the corp. to the bank? Loan proceeds went from the bank to the corp. to the ESOP. The bank charged the corp. 8% while the corp. charged the ESOP only 5.59%, the AFR at the time. This will allow the ESOP to pay off the loan faster.

The IRS auditor currently auditing the corp. says the rates

have to be the same(8%)under IRC Sec 482-2(a).

We are arguing that ERISA and Sec 4975 take priority over 482 and that the ESOP can pay a lower rate(which will benefit all participants in the ESOP).ANY HELP WOULD BE

GREATLY APPRECIATED--THANKS!!

In 1998, I took advantage of 4 year averaging by rolling a number of IRAs to Roth IRAs. The tax on these roll-overs is spread over 4 years.

In 2000, I moved out of Ohio to another state. The Ohio State Tax Report, Fall 1998, page5 states:

"With respect to individuals who are Ohio residents at the time they make the roll-over but then become nonresidents during any portion of the four year period: such individuals must file the IT-1040 for the four year and "situs" to Ohio (for purposes of computing the nonresident credit) the "spread-out-over-four-years" income." Ref: Ohio Revised Code, section 5747.01(A)

It is not clear to me if this "situs" means that I will have to file to Ohio for a credit because I'm now a nonresident. I can imagine that I would have to pay tax on this roll-over income in two states. Any comments you might have would be appreciated.

raf5de6k@yahoo.com

This is a question about processing payroll when an employee participates in both a cafeteria plan and a 401(k).

Does the amount of cafeteria plan contribution reduce compensation for the purpose of calculating the 401(k) deferral amount. For example, employee makes $20,000 a year and puts $2000 into a DCAP. The 401(k) deferral election is 10%. Is the 401(k) amount $2000 or $1800?

Further, if there is an employer match in the 401(k), which amount is it calculated on?

Very new to 403(B) world! Can you have definition of compensation in doc to exclude salary deferrals? What would be advantage to this if there is no p/s and match is capped at 4% of comp? Also, I assume adp/acp testing is basically like 401(k)testing? Thanks!

Does anyone have a plan in which the only compensation is commissions? How does the plan operate? What special considerations should be given to a plan that has irregular compensation because all compensation is based on commissions?

For any of you that deal with several plans that invest in an institutional account, how do you allocate interest from the "float" in the brokerage account for the minimal time that money is in the brokerage account before getting invested in funds? Does all money in every fund share equally in this interest? Does it matter what source (profit sharing, deferral, etc.) the money is in as to whether or not it shares in the brokerage account interest?

I have a client who says the regs have changed regarding reimbursing expenses for weight loss and visits to the nutritionist. We have not been reimbursing for weight loss unless there is a previously diagnosed medically related condition.

Does anyone know where I can find the regulations on the Graham-Leach-Bliley Act that is coming online this Spring/Summer or what it pertains to?

Does anyone know where to find data on the average vesting period and method for small (<50 employees)businesses?