Can someone help me with a simple, sample calculation of an general test NAR for a 10C&C normal form and MVAR for a lump sum provision.

Let's say testing age is 65, and a participant is 64. The testing period is the current year, so testing service is one year. The person's test comp is $12,000 and he accrues $120/month (1%). The normal form is 10C&C. The plan pays lump sums using UP84 @ 6% with no pre-retirement mortality, so the lump sum value of the accrued benefit at age 64 is $13,926.79.

Let's assume we test using UP84 % 8.50%.

Can somebody walk me through the normalization of the accrued benefit of 1% on a 10C&C basis to a NAR, and then the normalization of the lump sum to a MVAR?

Thanks for any help.

Employer currently has a PSP. Employer has provided employees with a Safe Harbor Notice regarding the 401(k) which is to be effective April 1, 2001. Safe harbor notice basically says that 401(k) will be effective April 1, 2001, and that Employer will satisfy the safe harbor by making the 3% nonelective contribution. Employer now has run into administrative problems as far as finding an investment manager to handle the investment of the deferrals and the 3% safe harbor contribution. Current investment manager says it can be in place by June 1, 2001. Can employer now tell employees that the 401(k) (and the safe harbor contribution) will not begin until June 1, 2001 and send out a new safe harbor notice before May 1, 2001?

I do not know terribly much about medical reimbursement plans, but have a client that wants to know a bit more. They want to set up a medical reimbursement program and wish to know how it works.

I assume employee contributions, like 401(K) are withheld from pay. Where do these contributions go? When a physician asks for payment up front, how does the participant get reimbursed.

Where can I get the "basics".

Thanks.

With regard to "wrap around" plans (ie. non-qualified plan working with a 401(k) arrangment), there are a couple of PLR's out there that state that a participant must make his deferral election by December 31 of the prior plan year in order to "satisfy the 401(k) cash availability rules."

what would happen if a person decided to enter the non qualified plan in the middle of the plan year without making the prior year election?

I have an association health plan, with several individual employers participating. My question is, Who should offer COBRA, the Employer or the Association?

Can a Plan that has immediate eligibility for deferrals apply a eligibility requirement for Employer Contributions (i.e. Safe Harbor Non-Elective or Safe Harbor Match) of "The first day of the Plan Year following completion of 1 year or service" be considered a Safe Harbor Plan?

Can a plan elect to use prior year ADP testing but current year ACP testing? Seems to me the answer should be no, but I can't find authority.

What is the employee 401(k) contribution limit for 2001? Did it change from the 2000 limit of $10,500?

Treasury regulation 301.6057-1(e) requires that statements be provided to terminated participants with a vested account balance no later than the date when the SSA is due. The plan administrator must provide participants with a statement describing the deferred vested retirement benefit to which the participant is entitled. The description provided the participant must include the information filed with respect to the participant on schedule SSA.

I am having a difference in opinion of what should be disclosed to the participant in this statement. The regs. indicate that the statement contain the "participant's information" in the SSA, that being: SSN, Name, if DB plan - Form of Benefit, frequency and the payment amount; if DC plan - vested account balance and, if applicable, # of shares.

This information is found in the Participant Financial Statements (PFS) provided to all participants. To the extent the PFS is provided within the applicable timeframe the requirements have been met. Right?

However, another person thinks that the employer information must also be disclosed in the participant's statement, i.e., SSA Items A, B, C, D, 1 through 3c. I don't concur. However, if this too is required, this information is contained in the SPD and as only as participant has the PFS within the timeframe the requirements have been met.

Thanks!

An employer maintains an ESOP and 401(k) plan. The ESOP diversification rules allow participants to diversify their assets by transferring ESOP funds into another DC plan maintained by the employer. Two questions:

1. Does the ESOP need language to allow a transfer out of the funds and does the DC plan need to have language to allow the transfer in?

Do any protected benefit rules apply to these funds or do they come over to the 401(k) "clean" as rollovers do? The ESOP does not allow withdrawals, so when the funds are transferred in to the 401(k) are withdrawals not allowed from those funds?

I know that IRC Section 401(a)(11)© exempts the money purchase plan portion of an ESOP from the J & S annuity requirement, which is generally applicable to pension plans, so spousal consent is not required with respect to the ESOP diversification election (unless otherwise provided in the plan document).

During 1999 I contributed 2k to Roth IRA. Because of my income level, I was in-eligible to make the contribution and I withdrew the investments purchased with the contribution on 4/17/2000. The value of the investment at time of withdrawal was $700, a loss of 1,300 (ouch!). I received a 1099-R showing a distribution of $700.

1. Do I show $700 on Line 15a and zero on line 15b (taxable amount)of Form 1040?

2. How do I reflect the loss on my return?

What if I had made a gain on the investment – would I show the gains on line 15b of Form 1040? If under age 59½, am I subject to 10% early withdrawal penalty?

I am getting different answers from different experts, so please give cite if possible.

Thanks for help.

Can a non-resident, legal alien, on a temporary working visa start a Roth IRA? Considering that I pay all required taxes as a US resident.

How do you set up a SEP using the 5306-SEP form?

A self-insured medical plan provides that the portion of contributions required to be paid by retirees is dependent on service. (e.g., if normally a retiree who had longer service had to pay only 25% of the premiums, a shorter service retiree had to pay 50% of the premium). Is this provision discriminatory under 105(h)?

The Regs under 105(h) (1.105-11) provide that providing different contribution levels for employees in a cafeteria-plan can be discriminatory under 105(h). See 1.105-11©(3)(i) ("A plan that provides optional benefits to participants will be treated as providing a single benefit with respect to the benefits covered by the option provided that (A) all eligible participants may elect any of the benefits covered by the option and (B) ... the required employee contributions are the same amount.")

For retirees, the regulations merely require the "type, and the dollar limitations of benefits provided to retired employees who were highly compensated individuals" to be the same for all other retired participants. Reg. Sec. 1.105-11©(3)(iii). Thus it appears that the inclusion of such a provision would not be discriminatory.

Does anyone have a different opinion?

Husband and wife work for different employers and are covered under their cafteria plans. Husband terminates employment. Since termination of the spouse's employment is a change in status event, can the wife (a) reduce or eliminate optional life, AD&D and (B) increase dental and still satisfy the consistency requirement?

With daily plans, should the non-vested portion of a participant's account balance remain in the investment funds chosen by the participant or moved to a money market fund after the participant has been paid out?

The situation is as follows: Participant has exceeded the 402(g) limit in two unrelated employers' plan. The NHC participant has requested the refund from his current employers' plan. Based on the research I have done - "if a non-highly compensated employee makes elective deferrals in excess of the annual cap to one or more plans of the same employer, then the excess deferrals are not taken into account in calculating that NHCE's actual deferral ratio". Does this hold true for plans of different employers? Any guidance would be appreciated.

Can anyone recommend a good investment company/TPA alliance program that is available for small plans? We currently have a relationship with an investment company whereby we do the administration (i.e. nondiscrimination testing, 5500, document, etc.) and the investment company does daily valuation record keeping, provides a toll free number, internet access, etc. The program is good, but its not avaiable unless certain asset/contribuion requirements are met. We are looking for similar type programs available to small plans.

Any help is appreciated.

Company A is the plan sponsor of a multi-employer plan. There are seven companies currently under the umbrella of the multi-employer plan. Company A no longer wishes to be the plan sponsor. Hence Company A wants to spin off all the seven other companies into separate 401(k) Plans.

What is the best way for Company A to get out of the administrative cost of not having a 401(k) plan?

How would company A report on the final 5500 form?

Who would take care of the non-discrimination testing Company A or the newly formed individual plan sponsors?

If all the seven companies do not wish to set up a 401(k) plan how do you handle the pay out of the employees from Company A? If we call it plan termination then we may run into successor plan issues. Is that correct?

I would appreciate if anyone has dealt with a multi-employer plan spin off to share some light on these issues.

Thank you and Happy Spring!

Did your company establish a 401(k) Investment Committee to meet the 404© regs? What exactly does your committee do and how often do they meet? Who makes up your committee - did you include an outside, independent advisor? What Investment Policy did you create?