I have a client with a daily valued 401(k) plan which allows individual brokerage accounts. The owner now wants to direct an investment into undeveloped real estate. It would be in his directed account and he would bear the risk. Does anyone have any good arguments I could use to talk him out of this, besides the usual annual appraisal requirement, taxes from plan assets, etc. Thanks.

Money Purchase Pension Plan wants to amend to reduce the contribution from 15% to 10% of compensation. The employer, however, wants this reduced percentage to only apply to new employees (hired in 2001). Is there a problem here? This is a governmental entity, by the way.

For Family Life and Family AD&D coverage, does your plan document contain provisions for age reductions? If the answer is yes, who does the age reduction pertain to; the employee, spouse or dependent or all? Thank you for your responses.

We've done an internal survey of our employees and have found that there is a great interest (our office is mostly business casual and there is some professional dress) in a dry-cleaning pickup and delivery on site in our offices. We tried one and didn't like it much. Can anyone recommend a good service in the Seattle area?

Due to error in compensation estimates, I have contributed excess money into my SARSEP account for year 2000. After 31 December 2000, I have changed my job and my new employer does not offer SARSEP but has a 401(k) managed by different institution.

How do I correct the excess contribution to my SARESEP. Any help we be appreciated. Thanks

I have a small amount of money in a "municipal pension" from a previous employer. I just started (Jan. 2001) a new Roth IRA for the 2000 tax year. Can my Roth IRA now absorb that amount from the previous pension ? I assume it will need to be turned into a Traditional IRA, then into a Roth. Just wanted to be sure...

Public School District qualified defined benefit plan, with an existing determination letter was used as a one time offer "window" plan retirement incentive several years ago for a specific group of retirees. All benefits have now been funded and annuities have been purchased for all participants. The plan still has assets left over. What danger to the plan sponsor and its fiduciaries are involved in keeping this plan open? Also what are the steps necessary to terminate the plan?

My employer started a 401K plan (Y2000) with no matching and the mutual fund family does not seem that well known. Is it worth participating ? What if some of the funds are known ?

Due to the lesser control one has over the contributions as compared to say ROTH IRA, is it advisable to contribute given that there are no matchings ? I feel I might be better off forgoing this benefit and simply investing after-tax dollars myself, say in good large cap stocks. Any opinions ? Thanks.

I understand 2% shareholders of an S corporation are not eligible to participate in a 125 plan sponsored by the corporation. I believe spouses are excluded as well because of stock attribution rules.

My client has a premium only plan for its employees' health insurance. Is the adult child of the shareholder, who is a bonafide employee, eligible to participate in the 125 plan for health insurance premiums?

My question relates to changing IRA beneficiaries. The owner of an IRA died in 1999 where his wife was named as beneficiary. His wife subsequently died in 2000. She named her 3 children as beneficiaries. One of the children wants to see if he can disclaim his inherited portion of the IRA and name his daughters as the beneficiaries of the original owner's IRA (their grandfather). Is there any way he can do to this and how? Would the recently announced proposed changes in IRA distribution requirements have any effect?

Has anybody had to address whether contributions to dependent care expense reimbursement account and medical care expense reimbursement account (that are part of a cafeteria plan) satisfy the requirements of the Service Contract Act?

The DOL is taking the position that because the participant will forfeit some or all of the amount in the account if the participant does not submit a sufficient amount of claims (pursuant to the "use it or lose it" rules of cafeteria plans), that violates the Service Contract Act.

The applicable regulation dealing with benefit plans in general (29 CFR Section 778.215) does not expressly mandate this result. Also, I think that it is significant that the regulation dealing with contributions to tax-qualified retirement plans (29 CFR Section 778.214) does not require that the contributions be fully vested immediately, only that the contributions be irrevocable.

Thus, it seems that as long as the forfeited amounts are required to remain in the cafeteria plan (e.g., used to increase benefits for all participants for subsequent years), the Service Contract Act should be satisfied.

Nevertheless, I can understand why the DOL is asserting its position.

Does anybody have any views on this matter?

We are a new TPA with growing business but our account receivable is almost one-fourth of our revenue which seems relatively large. Does any TPA out there have any suggestions on how we can collect better? We are thinking of having each administrator follow up on receivables of his/her assigned plans. Any inputs (pros and cons) from practioners about this idea?

What are the consequences for not complying with the ESOP Diversification Requirements? How would you correct this error?

When an employee gets a severance package that allows salary continuation through payroll for three months after the last day of work, what is the termination date or the qualifying event date for COBRA purposes, the last day of work, or the last day of severance pay? For the duration of the severance payments, is the "employee" still considered an "employee?" The employer will pay 70% of benefit costs for duration of severance.

My understanding is that QNEC contributions for NHCEs can always be used towards satisfying top-heavy minimum contributions. Is that correct?

Which year does the QNEC contribution get applied to for satisfying the top-heavy minimum contribution in the following situations:

Plan year is calendar year and plan is top-heavy every year.

Plan fails the ADP test for 1998.

To satisfy the ADP test, QNEC contributions are made to NHCEs as of:

1) September 15, 1999

2) December 31, 1999

3) March 31, 2000 (with interest under APRSC)

In each of these 3 cases, does the plan sponsor have a choice of which year's top-heavy contribution to apply the QNEC contribution to, or is there a specific year each QNEC contribution must be applied to?

Hi,

I am looking for information as to ESOP plans and S corporations. What are the advantages and disadvantages of setting an ESOP plan for an S-corp? The stocks do not trade so how do you set up the ESOP plan. Does is provide any tax deduction? Does ESOP interfere with retirement plans?

Does anyone use interactive web-based sites for providing benefits information to employees on complex issues, ie. stock options?

Employer A currently sponsors a profit sharing plan and is top heavy. Employer A uses the services of a leasing organization, Employer B. All employees of Employer A are leased through Employer B to Employer A. Employer B sponsors a 401(k) plan with liberal eligiblity requirements. The 401(k) plan of Employer B is not top heavy. Two employees of Employer A are ineligible for the profit sharing plan for the 2000 plan year, however, they met the eligibility requirements for Employer B's 401(k) plan but are not currently deferring any amounts. Under normal circumstances, if both plans were sponsored by the same employer and were top heavy, Employer A would have to provide a top heavy contribution for the two employees that were ineligible for the profit sharing plan but met the eligiblity requirements for the 401(k) plan. With the leasing organization scenario, does Employer A have to provide a top heavy contribution for the two ineligible employees?

How do Companies incent employees to invest 401(k) contributions in Company Stock? How do they keep employees from diversifying into other funds after getting the incentive? Is it easy to administer/communicate? Any survey info available?

Thanks for any info...

I am new to the 403(B) world and have a question regarding the return of excess deferrals when someone exceeds the 402(g) limit. Is it necessary to reduce the lifetime to date amount to reflect the amount of the return? I have not been successful in locating the answer to this question.