There is a requirement to conduct a nondescrimination test for Dependent Flexible Spending Accounts. Is there a similar requirement for Medical Spending Accounts? If so how do we go about conducting the test?

Are there special restrictions or regulations to consider when reducing or eliminating benefits (medical, DB or DC plans) for employees of a company with fewer than 50 employees? What if the small company is a limited partnership but its employees are being paid and receive benefits from the parent company?

Due to the rising costs of health care we are being forced to take a look into some cost saving measures. My first obstacle is we are a Unionized shop. Secondly, we offer two health care plans for our employees; an HMO and a POS (of which we are self-funded). I am looking into the possibility of offering an "opt-out of medical coverage" incentive, spousal carve-out, etc. We do not have a cafeteria plan in place at this time, just our section 125 flexible spending. I am looking for suggestions, examples, and any other ideas that have worked for your companies.

Employer wants to allocate discretionary p/s contributions monthly. I want to know what problems this could present. Seems to me we may have to use the general test to determine if contributions are discriminatory on annual basis. Any thoughts?

I have an excess contribution to return that is less than $100. The IRS requires this to be taxable in the year it is distributed, regardless of whether or not I have met the 2 1/2 month deadline. Is there an excise tax on this de minimus amount to the employer?

Employee handbooks - is anyone putting their affirmative action statement and AA designee within the company - into the policy handbooks? How about the new privacy policy statement?

RKThompson

A 401(k) plan has discretionary profit sharing, and the owner wants to do quarterly allocations and deposits of a 4% ps contribution. Employees have seperate accounts and investment control. As of the first quarter the owner has over $170,000 comp for the quarter. Can the allocation to the owner be $170,000 x 4%; or must the $170,000 be pro-rated. If it is not pro-rated, the owner gets his full annual ps allocation in the first quarter, and everyone else gets their contribution in four quarterly pieces.

Here is the issue: Employer has one non-union and three union defined benefit plans. The non-union DB plan is overfunded by a substantial amount while the union DB plans are underfunded. Employer would like to transfer some of the excess assets from the non-union DB plan to the various union DB plans? Has anyone advised a client on this issue and, if so, did your client obtain IRS approval of such a transfer vis a vis a private letter ruling?

Can a plan that has used permissive disaggregation and current year testing change in the next plan year to use prior year testing and not use permissive disaggregation?

I have been trying to understand Notice 98-1, and it appears to me that this is possible, although the disaggregation change would constiture a "plan coverage change." It appears to me that this would mean the plan could treat the disaggregated groups as the "prior year subgroups."

Has anyone done this before?

Have a situation where client deposited during the year amounts to a profit sharing plan in excess of 15% IRC 404 limit. For sake of argument, let's say that $50,000 was deposited during calendar year 2000, while $35,000 was actually limit when salaries for 2000 came through (guess he was in a hurry last summer to buy EToys @ $70).

Question is how handle contributions physically made during year but not yet deducted. Instructions to 1999 Schedule I say to not show contributions attributed to 1999 year in Column (a) (on form, this is "beginning of year" column). Nothing further mentioned as far as end of year asset value not including contributions not attributed to 2000 year, nor is anything mentioned in instructions for item 2a (contributions).

How would you handle this situation? Not deem advance contribution as an "asset" so only reflect amount being deducted in 2000? Show total contribution in end of year assets and employer contribution (but seems inconsistent with beginning of year assets not reflecting not-yet-deducted contributions)?

BTW, I know about 10% excise tax on nondeducted contributions - not the issue here.

Thanks for any input on this question.

2 yrs ago my ex-employer set up health ins for company employees. Monthly premiums paid by company. Owner refused to put me on ins because I was over 40 and smoked. Said I was covered under husband's ins and didn't need this ins.

Each time I questioned him about getting on ins, he told me to wait til company was in positive cash flow. I called ins broker and she advised me that I could sign up anytime. I did just this in Dec 2000. On 1/19/01, employer recvd adjusted bill for my ins (only) for both Dec/Jan. He said he was not paying it. 30 mins later I was laid off.

Partnership sponsors a calendar year 401(k).

The partnership is on a 4/30/2000 fiscal year( just found out this is possible) and filed for extension until 02/15/2001

Deferrals for non parteners participants were made on a payroll basis during the 2000 plan year.

Parteners want to deposit their deferals for the PYE 12/31/2000 in February 2001. They did that in previous years and was told by previous TPA that is OK. Their argument is that they don't know the partnership profit until just before the extension deadline.

Any comments re the legitimacy of above situation greatly appreciated.

Is there any downside to designating a spouse as primary benefitiary and children as (equal or otherwise) secondary benefitiaries with the view that the spouse could choose to disclaim and allow the Roth to pass to the children? I could see this as an attractive option to allow some additional flexibility at first spousal death. And, is there any practical time limitation on disclaiming?

I used to be a member of the IBEW Local #280 and participated in the Cascade Pension Trust Fund. I have not contributed to the plan for over five years nor have or can any of my employers contribute to the plan.

I want to rollover the funds that are in the account. The plan administrator says that I am over the $5,000 dollar amount, therefore rollover or distribution is not permitted.

The problem is that my money that is in there is detorating for the reason that there is now monies being put into the account.

Anyone have any ideas of legal rights?

Help!

I would like to know the difference between a regular IRA and a Roth IRA, the AGI limitations and the benefits and/or disadvantages between each other and if I can contribute to a Roth IRA after I max out the contributions to my 401K plan.

Existing tiered allocation plan defines several classes.

QUESTION 1

Some of the classes recieved a dollar contribution to be allocated proportionally to the class members compensation(comp on comp). Other classes contribution was allocated as a flat dollar amount per class participant. I beleive this is OK, but I would like some reassurance that I am not wrong.

QUESTION 2

One of the classes has as sole participant the wife of the owner. As such she is HCE. The census shows her with over 1000 hrs and $0.0 compensation. Therefore she got no allocation and only 50% of HCE were benefiting under the plan. As such the plan passed the tests. However, it would have failed them if the wife was benefiting.

The plan sponsor claims that the TPA and accountant blessed the situation. However, it seems to me that the "trick" would not fly in an audit. Any comments?

As an alternate solution: wouldn't be better to give the wife a salary and exclude her as a class? (Yes, I know they don't like to pay FICA)

Thanks for help.

-A partnership is sponsoring a 401(k) on a calendar year basis.

-The partnership has a fiscal year end of 4/30/2000(yes, it is not a mistake, I found out that it is possible even though until recently I did not know it)

-As every year, the partnership is on extension and will file the partnership income tax return just before 2/15/2001.

-All participants deferred during 2000 excepting the parteners. As every year they will make the deferrals close to the fiscal year end.

In a nutshell thy were told by previous TPA that is OK to defer in February 2001 for the plan year end 12/31/2000. This is 2 1/2 month after the plan year end.

Any comments about the legitimacy of above situation?

PS: The partnership is an accounancy firm. They claim that they never know the partnership income until close to the extension date

Thanks.

We have an employer who adopted a money purchase pension plan effective November 1, 2000 with a 5% contribution. When the Company computes its 2000 contribution does it take into account only salaries since November 1, 2000? the plan defines compensation from the first day of the plan year, not just when the employee became a participant. In addition, is the $30,000 limit prorated for 2 months of the year?

Can i enroll for cobra on-line? What is the adress?

I have a cross-tested 401(k) profit sharing plan that failed the ADP test. We are returning excess contributions to the HCEs. Do we have to include the returned amounts in the HCES benefit percentages when running the average benefits test?