A 401(k) plan currently allows "participant loans" for "parties-in-interest" participants. By this I mean that loans are only available, basically, to participants who are also employees. This approach is described as being permissable in DOL Information Letter to Gordon H. Mattson dated May 4, 1995.

The Sponsor is exploring the idea of opening the availability of "participant loans" to retirees. Retirees are not "parties-in-interest." Again, referring to the Mattson letter, the DOL does not have a problem with opening the participant loan availability to "non parties-in interest" as long as it is available to all "non parties-in-interest" participants.

I sort of remember hearing or reading something for DOL stating that DOL felt it was imprudent to have a participant loan extend beyond a participant's normal retirement age without pledging outside collateral. I cannot find anything in print on this point. I was hoping that someone could shed some light in this for me.

Can Title I 403(B) assets be held under a trust agreement or are they required to be held in only annuities or under custodial accounts? Cites would be VERY helpful.

We have a client, who is a non-profit organization running a SARSEP plan. Their accountant has told them that they were not allowed to accept employee deferrals into the plan since 1997. He said this was a rule that came down for non-profits only. Is this true? If yes, where can we get more information? IRS Pub 590 does not mention anything like this.

If a governmental money purchase plan has only employer contributions is participation in the plan mandatory or may employees elect not to participate in the plan? I've heard that participation is mandatory in this case, but I haven't been able to find any supporting authority.

Can someone tell me (or direct me) to what information I must capture to be sure I have everything I need for 401k/403B discrimination testing?

I have a question that I guess is based on technicalities.

The new COBRA regs state that a "qualified beneficiary" must be allowed to change plans if they move out of a HMO area into an area that doesn't service HMO and that the employer has another plan (i.e. PPO, indemnity). Well, what about a former employee who is not yet a "QB." Said employee termed mid January, has HMO benefits thru 1/31. During Jan., she moves to FL, out of Kaiser California HMO area. She would be effective for COBRA 2/1 and wants to enroll in Aetna HMO which the employer offers. Employer (who is a COBRA admin. company) says no, you elected Kaiser during open enrollment and can't change. My question is: is this correct because she wasn't a QB when she moved? If so, could she just elect HMO coverage for the month of Feb., even though it's useless to her, and then change to Aetna in March? She's pregnant, so that's the issue.

Any help/ideas/suggestions are much appreciated!

On Schedule R - We are counting distributions for lump sums, rollovers, and residual distributions only. Is this correct? Should we be counting hardships too?

An employee terminated from employer about 50 days ago, and did not elect COBRA coverage, but now wants COBRA coverage.

His prior employer told him that he can get medical, but not dental. He was told that the COBRA election period for medical coverage is 60 days, but the COBRA election period for dental coverage is only 30 days. Is this correct?

An S-corporation maintains a one man DB Plan. He has 30,000 in salary for 2000. His required contribution for the year is $60,000. His S-Corp income is also $30,000. How much can he deduct from the business? Can he take a loss of $30,000? Or can he only deduct the $30,000 from his profits?. Section 172 seems to indicate that you can't deduct net operating losses. What is done in this situation?

When are plan sponsors required to provide SPDs to alternate payees? Is it immediately after a QDRO is received and accepted? Or only when requested or when new SPDs are issued?

question: We have a group that has 4 Flexible Spending account participants in it. (1 employee has Dep. Care & a Medical Acct. & the other 3 participants have Medical Accounts.All are clearly non-highly comp employees. There are no officers or Keys participating.Only these 4 employees.Do we still have to do a discrimination testing for 4 people who are clearly not highly comp? Is there a min./max. # of participants to do a testing? Please advise. Thank you.

email: cglass@bcbsde.com

I've contributed last year to our new 401-K. Filing single (not married), gross income $50K, adjusted $31K. Can I contribute to my existing Traditional or Roth IRA (would like to put $2k in either before I file, for TY-2000)?

Carl

A mortgage broker would like to start a qualified retirement plan and invest a portion of the plan's assets in mortgages that his firm puts together. Is this allowed?

If it is allowed, how acceptable would it be for him (or his firm) to receive the commission from the resulting transaction?

We have received, on behalf of a client, a positive letter ruling from the IRS that permits the client to do a late recharacterization of their improper 1998 conversion.

A key factor in the discussion was that the request was made prior to the IRS coming after the taxpayer. This concurs with my previous discussions with the IRS that they would be more lenient with taxpayers who voluntarily come forward rather than wait for the IRS to come to them.

Has anyone heard of the IRS contacting a taxpayer on an improper conversion since the 12/31/99 recharacterization deadline? I'm wondering if the IRS is trying to give taxpayers as much time as possible before they take action.

I have a question about filing taxes for 2000 related to converting a rollover IRA to a Roth IRA. Like a fool, it seems, I had 20% withheld for taxes on the conversion. I have received 3 1099-R forms related to that conversion.

In my tax software, I have entered everything that I thought was needed but the outcome is way out there. I need some advise.

For simplicity,

original amount = 50,000

amount withheld = 10,000

Isn't the original 50,000 supposed to be applied to my AGI? And a 10% penalty on the 10,000 for early withdrawl?

I can't figure out where this is supposed to go on the forms. Has anyone else had these problems and can anyone help guide me?

I understand that the IRS will soon be publishing model amendment language for 401(a) plans and Employer-sponsored 403(B) plans so that participants in these plans can take advantage of the new simplified RMD rules annount 1/12/2001. (see the article on PPCNet.) The article states that "Qualified plan sponsors that want to follow the 2001 proposed regulations when making distributions for 2001 and later years should adopt the...model amendment."

My question is--what about a non-ERISA TSA plan where the plan provisions exist only in individual annuity contracts? How will these plan be updated to reflect these changes? Will the insurance company need to draft an addendum to the annuity contract?

Anyone have any thoughts on this? Our plan participants are already starting to ask. Thanks!

I am hoping someone out there can give me some advice. I have a friend who is an insulin-dependent diabetic. She is currently covered under her mother's plan, but is about to reach maximum dependent age. This dependent is employed, but makes very little money and has no benefits. The mother, daughter, employer and plan are all in New Jersey.

I believe she could: take COBRA, buy individual coverage, or possibly qualify for Medicaid or some other assistance program. If anyone has any suggestions as to how to proceed or anything to watch out for, it would be most appreciated. Thanks very much.

We have a client with a plan that currently runs on a calendar year. The accountant is asking us if he can change his client's defined benefit plan year to 1/1/2000 to 11/30/2000 and pro-rate the deduction to 11/12ths. Then the next plan year would be from 12/1/2000 to 11/30/2001. He would also like to take this deduction in 2000. We realize this would kill any 2001 deduction. Is this possible??? And if so, where can we find it in writing?

I inherited a profit sharing plan. My 3 children (under 18 yrs. old) were secondary beneficiaries. I've been told by the plan that I can take all the money out or leave it in. If I leave it in I'm not allowed to make my husband the beneficiary. They won't give this to me in writing. I can't understand why I can take it all out & do whatever I want with it but can't leave it there and change it to my husband. Is there any place I can get info on this?

Can an employer who is ending a SEP and starting a SIMPLE IRA add the SIMPLE contribution to the existing SEP funds?