I need your help! I thought that COBRA meant that you are guaranteed the right to continue your former employer’s group plan as individual or family health care coverage for up to 18 months at your own expense. Well, my husband's former employer was on United Healthcare. The company was bought out. We paid our first COBRA payment. I went to pay for a prescription today, which was denied. I call the company handling the COBRA benefits and they tell me, SURPRISE!, as of January 1st, when COBRA benefits began, you are now covered under AETNA. Now granted, the benefits are the "same," i.e. the same deductibles, etc. But only one out of the four doctors we use is on their provider list! Going the "out of network" route will cost us a considerable amount of money. Is this considered "same" coverage under COBRA law?

Thank you!

Kermit

An employer sponsors a SIMPLE IRA for 2000. His fiscal year end is 3/31. It is my understanding that the deduction for fye 3/31/01 would be all contributions made in 2000 (January through December). He would now like to establish a Money Purchase Plan as of 1/1/01 and take a deduction as of 3/31/01 for 25% of compensation paid from 1/1/01 through 3/31/01. Would he be allowed a deduction since he is also taking a deduction for a SIMPLE IRA? It seems that it would need to be a short plan year because if it is a full calendar year, the deduction would be taken 3/31/02 for the minimum funding requirement for 2001. Any thoughts on this?

Non-5% owner participant was hired at age 73 in 1996. Entered Plan in 1997. No MRD required for 1996 or 1997 since no account balance at 12/95 or 12/96. No MRD's have been made to date. Was he required to sign an election form to opt out of the 1998 MRD or does he automatically qualify for the post-SBJPA rules?

They haven't posted this one on the web site, so be aware-

the 5500 count report appears to be in error for

the item # of participants who terminated during the year with less than 100% vesting.

This is suppose to be fixed with svc pack 4.

I mention it here, because we just completed a valuation, and we go ahead and process as much of the 5500 as we can at this time. It would be easy to send the data to peak 1 and miss this one.

There is a detail report now available for this report, all you have to do is count up the YES that appear in the column. It looks like it is doubling the number.

also, a reminder of possible posting problems of splits. sometimes even though allocation percentages are entered, the system will not use them (or it will throw the $ into your default account if you have one listed). This is also supposed to be fixed soon.

We implemented an Automatic Enrollment (Negative Election) program nearly two years ago. Eligiblity is 90 days, and at that point the employee has 30 days to "opt-out". If they don't opt out, they are auto enrolled at 2% into a Stable Value fund.

The good news is that only about 5% of the eligibles are choosing to opt-out. The bad news is that less than 10% of those who were auto enrolled have either increased their deferral percentage above the 2%, or changed Investment elections.

My understanding is that our experience is not unusual, and my question is whether anyone has successfully tackled the problem of inertia in deferral percentage and investment elections.

Participant in a profit sharing plan terminated employment shortly prior to the Anniversary Date of the Plan. Participant's entire account balance was self-directed by participant. Plan document (a Corbel doc) provides for valuation of the trust assets as of the Anniversary Date. Plan has a reasonable amount of time before it must distribute the participant's account balance. Plan document provides, as you would expect, that self-directed accounts will be separate from the plan trust and will not share in the income, gain, loss, etc... of the plan trust, but rather will have its own income, gain, loss, etc... Participant is saying that he is entitled to the value of his self-directed account as of the Anniversary Date and not as of the distribution date, i.e., up to 180 days after Anniversary Date. Thus, given the stock market's performance, the value as of the Anniversary Date is somewhat greater than the value now. Seems to me participant would get whatever's in the self-directed account at the date of distribution and not as of the Anniversary Date. Anyone have any comments or observations? Thanks for your input.

What is the maximum Roth IRA contribution for 2001?

What is the tax benefit of opening up a ROTH IRA and would investing 4000 vs 2000 make a difference by Apr 16?

"Jay" applies for a job at Company X and the hiring manager makes him a verbal offer that includes salary and starting date. Jay will have to take a company physical before being hired. Jay is currently on SSA disability due to kidney disease (he takes dialysis three times a week, on his own time). Can he be denied employment because of: a) his SSA disability status; b) prescribed drugs found during his physical; or c) because he will be expensive to the medical plan? Does ADA apply to this situation?

I'm looking for information on "Opt Out" benefits offered for Dependents coverage. We are a small company (< 20 employees) and we are considering offering a monetary pay out for those who opt out of our group Medical insurance plan. Anyone with an opt out plan willing to share their policy? We're looking for ideas on structure and amount (ie: opt out benefit paid monthly/semi-annually/annually, 25% (??%) of current Co contribution for Dependents

insurance premiums, etc...).

My wife owns a small but growing specialty store and I am thinking of "jumping ship" from my corporate job to join her full time. She currently has only one employee--my mother-in-law, who recently retired and is working part time. Other employees are less than 20 hours per week or purely seasonal. Our goal is to create a sustainable business that meets our needs, not to create the next Starbucks. But, once I quit my job, we'll have expensive COBRA premiums that will have to be paid with after-tax money. Buying into an HMO or low-deductible health insurance plan isn't an option, though, because my wife is Type I Diabetic. I want to avoid paying income and SSI tax on our health expenses. So, I think I've got a possible solution. Can anyone tell me if this makes sense given our situation?

1. Move from a sole propreitorship to a C-Corp to allow us to deduct the benefits we provide ourselves.

2. Buy high-deductible health insurance for myself and our two children from a private carrier. My wife would buy a similar policy from a state program that insures people who can't buy their own private insuarance because of pre-existing conditions. My mother-in-law has her own retiree health plan, but currently has to pay her part of this coverage with after-tax dollars.

3. Set up a 125 flex plan with an "Individual Premium Account", which allows employees to use pre-tax dollars to pay health insurance premiums of plans other than those offered through their employment. Thus, my health policy, my wife's policy thru the state and my mother-in-law's retiree premiums could be purchased pre-tax by our company.

4. Set up a Medical Expense Reimbursement Plan where the company would pay for deductibles and prescription expenses as they are incurred. These payments would be deductible to the company. We would be willing to provide this benefit for my mother-in-law, too.

Is this a good idea? It seems like it would work for us, but am I missing other choices?

I'd prefer not to run this arrangement myself. Any recomendations for a TPA who would be insterested in our tiny business? We're located in MN.

Thanks for your time and your input.

I'm looking for information on "Opt Out" benefits offered. We are a small company (< 20 employees) and we are considering offering a monetary pay out for those who opt out of our group Medical insurance plan. Anyone with an opt out plan willing to share their policy? We're looking for ideas on structure and amount (ie: opt out benefit paid monthly/semi-annually/annually, 25% (??%) of current Co contribution for employee insurance premiums, etc...).

We have a client that has two participants with outstanding loans. During mid year 2000 the client switched payroll providers and the new provider did not get the loans set up for payroll deduct, so no payments have been withheld or made since July. Since this is not the fault of the participants themselves, but an error on the part of the employer, we would like to get the payments caught up and avoid having to default the loans. What are my options with doing this, and what are the risks involved if we do not default the loans?

I'm looking for thoughts on the following beneficiary situation under a 401(k) plan:

While married, participant names spouse as primary and sole beneficiary on plan's beneficiary designation form. A few years later the marriage ends with a legal divorce. The divorce decree has general language that neither spouse will make claim to any portion of the other's retirement pension or savings plan benefits. The aforementioned beneficiary designation is never updated by the participant. Then, the participant dies.

Does the beneficiary form prevail? Or does the language of the divorce decree have an effect?

What if, instead of dying, the participant had simply re-married? What effect, if any, does this have on the "old" beneficiary designation that still shows his then ex-spouse as primary and sole beneficiary?

Thanks in advance for any thoughts or reactions.

Cole

I'm looking for thoughts on the following beneficiary situation under a 401(k) plan:

While married, participant names spouse as primary and sole beneficiary on plan's beneficiary designation form. A few years later the marriage ends with a legal divorce. The divorce decree has general language that neither spouse will make claim to any portion of the other's retirement pension or savings plan benefits. The aforementioned beneficiary designation is never updated by the participant. Then, the participant dies.

Does the beneficiary form prevail? Or does the language of the divorce decree have an effect?

What if, instead of dying, the participant had simply re-married? What effect, if any, does this have on the "old" beneficiary designation that still shows his then ex-spouse as primary and sole beneficiary?

Thanks in advance for any thoughts or reactions.

Cole

Employer can not locate participants to open an IRA account for the SEP. What are the employer's options? Does the money go back to the employer? Do they open another type account for the missing employee?

Any assistance is appreciated.

70 1/2 participant has requested full distribution, but has also requested that we not withhold 20%. He claims that his income is not enough to file tax return (even including distribution). Can we do that or is there a possibility that we could be liable for the taxes on that distribution? Is this between the taxpayer and the IRS, or are we required to withhold?

With the IRS Notice 2000-3, the plan sponsors were able to stop doing the safe harbor match provided they issued a notice atleast 30 days prior to the date the plan sponsor wanted to discontinue the safe harbor match.

Can a Plan however skip 1 quarter from doing the safe harbor match and restart the safe harbor match the next quarter? If they are allowed to restart do they have to make up the safe harbor match and also what about testing?

The notice only mentions that if they decided to stop doing the match then they would go back to testing for the entire plan year using the current testing method.

Thank you and Happy New Year to all the members!

I'm wondering whether I've missed the deadline for making a 2000 Roth IRA contribution. Is the deadline December 31 or April 15? Thanks and Keep Hope Alive.

Do plan sponsors or their service providers allow participants to convert their loans to coupon payment upon termination?