Can a service provider charge an asset-based fee to the Plan and not be considered a prohibited transaction? I know that Investment Managers can justify doing this for managing the Plan's assets, but it doesn't smell right for a straightforward service provider to do so. In addition, they are receiving a per participant fee for recordkeeping services.

Does the "no more than reasonable compensation" exemption apply in this case? In addition, the TPA does not have any revenue sharing agreement with the mutual fund companies to do this. I feel this may be problem, but I am hoping someone can tell me otherwise.

Thanks

Remedial Amendment Period.

Q: The regulations under Code section 401(B) state that the remedial amendment period applies to a plan provision, designated by the Commissioner, as a disqualifying provision, that is "integral to a qualification requirement" of the Code which has changed.

How much latitude does that give the employer?

For example, would the law change that requires 401(k) deferrals to be included in the definition of 415 compensation allow other retroactive amendments to the definition of compensation? {e.g. to change from a definition of compesnation permitted under section 415 to another)

Thanks, Casey

Has anyone heard if the IRS is planning to publish Publication 571 for use in preparing 2000 tax returns? The most recent version available on their web site is the 1999 version.

Thanks!

I'm sure I'm not alone in facing a number of problems with small plans with lump sum provisions that cannot meet the 110% funded current liability percentage requirement for a lump sum to an HCE.

Does anyone have a solution to this? Does anyone know a financial institution that is informed enough to handle the escrow or bonding requirement at reasonable cost?

With the low GATT rates and tanking stock market, this is going to get much worse before it gets better. Most of the plans that I handle that have lump sum provisions have this problem, even the ones that have been at the Full Funding Limit recently! How do you explain this to the small (10-40 employee) client, that's there's not enough money but they can't put the necessary money in?

It's been hard enough to convince these clients not to terminate their DB plans in recent years. Now the owners get older, they've provided benefits for employees, but they can't take lump sums!

Now I can't justify this ridiculous rule. Any suggestions?

Who do you think would win in a fight? IRA's or Hulk Hogan? I'm guessing the crazy IRA's will win by a TKO!!! Anyways if anyone knows any girls that want to talk IRA's please email me.

Mr. T loves IRA's. He invests in IRA's and thats how he affords his gold jewelry! He pitys any fool who doesnt have an IRA!

IRA's RULE

In a small SARSEP one NHCE defers 12% of pay. The SARSEP is deemed top heavy, so 3% must be contributed for each non-key employee. This puts our NHCE who defers 12% at the 15% limit for contributions. Does this mean that no additional "Employer contributions" may be made on behalf of the HCE, whose only contribution is a $10,500 deferral? He is at $170,000 compensation limit. My other question: is the 15% limit on contributions for each employee computed as 15% of gross wages including salary deferrals, or 15% of gross wages minus salary deferrals? Thanks for all help on this matter.

If an employee of a corp. earns $170,000 and defers $10,500 in a 401(k) plan; can the same person start his own profit sharing plan and contribute $25,500 if his net earned income from self employment is $200,00?

In the case of an unforeseen emergency withdrawal from a 457 plan, who would be acceptable as a dependent and what would be acceptable proof of dependency? We have a request due to funeral expenses for a parent. Would the employee have to have been providing at least 50% of the parent's financial support in order to consider the parent a dependent? Does the IRC provide an acceptable definition of dependent for these purposes?

In April of 2000 I had to remove excess contributions from my Roth IRA. My custodian figured up the amount with the earnings attributed to the excess contribution. However I choose for the withdrawal to be in mutual fund shares. They forwarded on the request to the mutual fund company, but by the time the mutual fund got around to the actual transfer the value of those shares had dropped.

So today on my 1099-R form my custodian claims I should pay tax on the amount they figured up, not the actual dollar value transferred 3 weeks later into the mutual fund.

My custodian claims for tax purposes I should use there "as of" date calculation. Is this correct?

Example: Custodian figures and reports $2,000 plus say $800 in earnings on the 1099-R.

The actual amount (transferred 3 weeks later) was $2,000 plus say $600 in earnings, because the value of the shares they were told to transfer has dropped.

So now I owe tax on $800 but only actually received $600 in excess earnings. Is this the correct way to look at a delayed transfer situation like this?

Hi,

I contributed $10500 to my 401K for the year 2000. I just got to know that I am considered as a highly compensated employee and that I can contribute only $7000 to the 401K. In essence my employer said that I will be getting back $3500 and I need to show it as a part of my 2000 income.

Now I know that I need to pay tax on that $3500. Do I need to show this as extra income for year 2000 and pay the tax with the 2000 returns? Or do I need to wait for IRS to let inform me? Basically I want to know how best I can handle this.

Also can I open an IRA and roll this $3500 over to that?

Ram

Can anyone please direct me to an illustration in a stock option agreement showing a paragraph indicating a cashless warrant provision. in other words, the verbiage of a cashless warrant provision.

would greatly appreciate any help.

thank you.

A friend of mine asked me for advice on a complicated problem she is having with her own COBRA coverage. She was laid off from a company that as part of the layoff package gave her two months salary and told her that during that time period her health coverage would be continued. After the two months she would be able to elect COBRA if she wished. The whole layoff was quite confused as the only HR person for the company was sick for the last few days of the laidoff workers' employment.

Six weeks later my friend had several health claims denied and it turned out that her company had meant that upon termination she could elect COBRA and they would pay the COBRA premiums for two months. So, she was without health coverage but was never notified of her loss of coverage. She can still elect COBRA now (though since she's about to move out of the service area probably won't) but seems to be stuck for the expenses she incurred while believing herself to be still covered by her insurance.

Obviously the company handled this very badly, but are they actually in violation of COBRA or other regs in any way? Or is the only possible legal argument here a breach of contract? She isn't sure whether she had any of this agreement in writing-- though she remembers signing a few waivers before she left the company.

Thanks,

Liss

Participant has an outstanding loan balance of $4,000 and wants to take a second loan of $1,500 - is spousal consent required for the loan? Would spousal consent be required if the second loan was $1,000?

When a corporation sells its entire interest in a subsidiary (which I believe is a distributable event under 401(k)(10)), and there was a 401(k)plan which covered only the employees of the subsidiary, is it better to pay everyone out and then terminate the plan? Or is it better to terminate the plan first? Or doesn't it matter?

I am in the midst of terminating client's PSP. The PSP is the survivor of a plan merger with client's former MPPP in 1991. No 204(h) notice was distributed when the plans merged. I am aware of a small number of court cases which seem to say that a 204(h) notice would be required in the merger context. I am considering the extent to which I may need to address the 204(h) notice issue with respect to the termination of the PSP. Specifically, if a 204(h) notice was required upon the merger, then technically the MPPP is still alive. Giving a 204(h) notice with respect to the termination of the PSP would seem to at least cut off the obligation under the MPPP as of the termination date. I understand that giving the notice may invite participant questions. Anyone dealt with this before or have any comments???? Thanks.

I opened a Roth IRA in 1998 with $32,000 and amortized tax payment over four years. With the 2000 taxes, I have paid taxes on $24,000. Because of poor stock performance, the Roth is now worth $24,000. I would like to avoid paying the fourth tax installment but would like to maintain the Roth. Can I recharacterize as a regular IRA and then convert back to a Roth without incurring additional tax liability? If I need to ask for an IRS ruling, how do I contact them? Thanks!

I am a British National, I have been working in the US for seven years. I have a 401K. I am returning to the UK for good. What are my options with my 401K? Do I have to retain it in the US till I retire or can I cash it in now?

I would like to begin making contributions to a Roth IRA. Is there anything wrong with investing in a small cap fund (growth or value) as compared to a large cap fund? I have 35 years until retirement. Thanks