In the pages showing the new compliance information on the EEOC, the portion that discusses whether or not benefits are equal includes the following:

"In some cases, it may be clear from the face of a benefit plan that older workers are getting lower benefits than their younger counterparts on the basis of age.

EXAMPLE - Employer R offers employees life insurance coverage valued at 50% of their base salary at age 55. The plan states that employees will lose 5% of that payment each year, and will be ineligible for coverage altogether once they turn 65. These benefits are explicitly tied to, and reduced because of, the recipient's age.(9)"

QUESTION: If this is the case, then if my (now former) company offered life insurance to all employees at 1x salary but dropped that to only 50% coverage after age 65. Would that not be considered an unequal benefit? (only one flat rate was charged to the company, nothing was age based in the fees).

Also, Same 65 year old would be automatically vested in the 401 (k) plan, otherwise vesting would be 20% per year service.

Any comments? Are these two practices permissable?

DB plan participant dies in service. The non-spouse beneficiary receives a lump-sum distribution equal to the present value of what would have been future pension payments to the deceased. Is there any way this non-spouse beneficiary may defer taxation on this distribution?

My questions concern removing excess contributions from a one owner/employee Money Purchase Keogh plan for 2000 (calendar year). I'm trying to make sure I understand all the tax ramifications.

I checked the information on page 13 of the 1999 IRS Publication 560. It seems to say that the distribution will not be taxable if the plan administrator is notified by March 1, 2001, and the excess, plus earnings, are distributed no later than April 17, 2001. The information I found appears under the subheading "Elective Deferrals (401(k) Plans)." Is this also application to excess contributions made to a Money Purchase Pension Plan?

I also want to make sure I understand the rules for issuing Form 1099-R. Must the plan administrator issue a 1099-R for 2000 or 2001 to report the distribution of excess deferrals? The 1099-R instructions are confusing as well about which distribution code should be shown in box 7. Distribution code "E," denoting excess IRC § 415 contributions seems applicable to the excess, but says that it may not be used in conjunction with any other distribution code. Thus I assume the earnings are reported on a separate Form 1099. If the earnings are distributed in 2001, will they be reported on a 2001 Form 1099 and thus be taxable in 2001? If a separate Form 1099-R is used to report the earnings, which distribution code should be used in box 7, Code 8 or Code P? I believe such a distribution, while taxable, is not subject to the 10% early distribution penalty under IRC § 72(t).

We have a client who is 50% shareholder of a S-Corp. The S-Corp is 50% owner of a LLC. The client has W2 compensation from the LLC. The LLC has no qualified plans or SEPs. The question is, can the client contribute to a SEP sponsored by the S-Corp. If not, what about the LLC??

I was terminated due to medical restrictions from my doctor. I was offer COBRA Insurance (which was to be paid by the end of that month to cover the following month), and I decided to pay the monthly premiums. What I don't understand is why I have to make my checks out to the company and not the Insurance company. My ex-employer states that I must send the money to them. How can I find out if the amount I send them is the amount I am supposed to be paying and if I can send it directly to the Insurance company. This will be my third month of payment, and last week I received notice that the amount has gone up $20.00/mo. to start this month. I called the BCN Insurance Co. and they had no information for me. I was told to ask the company. I would appreciate any information on how COBRA works. Thank You

I believe all of the following statements are true regarding changing a vesting schedule. Does anyone disagree?

Any participant with 3 years of service must be given the choice as to which schedule to vest under.

The vesting percentage of a participant cannot ever be lowered by a change in vesting schedule.

The new vesting schedule can apply to all new participants if the amendment changing the vesting schedule is worded that way.

The plan amendment may provide for whichever schedule give the participant a higher vesting percentage in each year, but is not required to.

A plan can adopt an amendment that specifically states that any employer contribution made after the effective date of the amendment would vest under the new schedule, regardless of the participant's vesting percentage under the old schedule (or at least, no guidance specifically prevents it).

A plan participant has asked a financial institution to open up self-managed investment account related to his qualified profit sharing plan. The participant wants to invest in certificates of deposit with the financial institution. Does the financial institution need special authorization or instruction from the plan trustee in order to open the self-directed account, or is the language in the adoption agreement indicating that plan investments are to be paricipant directed sufficient? Furthermore, how would the self-directed account be titled, i.e. [name of retirment plan] f/b/o [name of plan participant]? Generally, just how involved does the plan trustee/administrator need to be when the participants are allowed to set up their own self-directed investment accounts? Any insight would be greatly appreciated. Thanks.

A self-insured plan will drop coverage for an ee's spouse upon divorce. If ee does not notify plan administrator of divorce immediately, other than COBRA issues, what legal implications if plan document is silent on notice procedures? Administrative issues involve the premiums paid vs. any claims paid during the period. Do state insurance laws usually address this issue?

The Trust has taken a maximum loan on a life policy so that the participant may roll the proceeds to an IRA. The Trust then does a change of ownership from the Plan to the participant (the participant wants to maintain the policy). When the policy is surrendered by the participant, is the outstanding loan amount then taxable to the participant?

An employer would like to give a safe harbor non-elective contribution to all NHCE's in the plan. however, he also wants to give a 3% non-elective contribution, subject to the plans vesting schedule, to only the HCE's. I know that this would be permissable if the employer gave the additional non-elective contribution to all the employees but is it ok to just give it to HCE's? Does it have to be tested if it is not be given to all participants? If it is ok, I would also like to know the legal basis or rationale.

I am rephrasing this since no interest has been shown. I think my concern is a follows. If you do not make the GATT amendment, and the funding calcualtion is based upon the document provision (it is my understanding that itis the IRS posisition that you must do so) then when you retroactiviely amend, have you not created a non-deductible contribution for 2000 since you have perhaps used a benefit in excesss of the limit?

The GATT and 415(e) amendments appear desirable to do as soon as possible, however, are there required amendments prior to the extended GUST compliance date?

I have an owner only that has over $100,000 in his plan and hasn't filed a 5500EZ for 1997,98 and 99. He is planning on filing the 5500s currently but has some questions. Who would assess the penalties for the pre-99 filings?? If it's the DOL, is it too late to go through their VCR program?? For the 1999 filing, what kind of penalties can be expected?? Will it be similar to the IRS or will it be just handed down, no ifs ands or buts??? Any help would be appreciated. Thanks.

Does anybody have a cash balance trust that I could look at? I'm really in a bind. Thanks for your help. Ed

Has the IRS set forth any guidelines concerning a participant's ability to change a distribution option under

an unfunded nonqualified deferred comp plan. The current plan document states that a payout election may be changed if notice is provided to the Plan at least 90 days prior to separation. Is it permissable to amend the plan to reduce the notice period to 30 days prior to separation and not trigger any constructive receipt issues.

This multiemployer (collectively bargained) defined benefit pension plan has an accumulated funding deficiency. Does each employer participating in the plan have to file a Form 5330 Return of Excise Taxes Related to Employee Benefit Plans or can the board of trustees that act as plan sponsor file one 5330 on behalf of the participating employers. I know each employer has to pay their fair share of the excise tax- but does that necessitate individual filings of From 5330?

Thanks

Can Notices to Interested Parties be sent by email?

Hello Cathy,

Blaze SSI--- RTS System

When we have a test that is separated into subgroups due to excludable testing (Less then a year of service or age 21, or whatever the circumstance may be) Some of the employees are also coded with a 3 in field 61(because of different eligibility requirements). When we encounter this situation the tests includes the individual with the code on the ADP test despite the subgroup they may be in.

For example if Bob should be in subgroup 01 only, And is not eligible to receive a matching contribution but is eligible for an elective contribution a code 3 will be placed in field 61. We run a test based on subgroup 01 and he appears, as he should.

Now when running a test on subgroup 02. He also is listed on this test which he is not a member.

Is there a solution to this problem that we may be overlooking?

When excludable testing is performed is there an easier way that you know of to separate the data into two different test? (Over 21 and greater than a year of service) and (less than 21 or less then a year of service.)

Blaze confirmed that the field #61 is used regardless of sub-group. They say the only solution to this problem is for them to add an additional field doing the same as #61 but would not take precedent over any subgroup. There would be a charge if this were done. I would think this would be a common problem amongst users. The said they can not adjust the field 61 because some users may want it that way. Is there any circumstance that you may know of that you would run a test on a subgroup and want these coded employees to be added on?

Have you encountered this problem before?

Do you have any suggestions that may help?

I'm looking forward in hearing back. I'll keep you busy on this board. I'm surprised you don't receive many questions. Blaze is not the easiest program to use and there is so much that can be done that not many people know about.

Thank you for all your help,

Denis

Denis

I have questions concerning the IRC 529 program, the qualified college tuition plan that Schawb is offering to the public effective Dec. 15, 2000. It appears to say that the pre-tax contribution is allowed. Do you have any ideas of what kind of contribution limit imposed by the Code and how does it work?

Sorrry I have to post this question in the 401(k) section.

1. Can a plan terminate its loan program and call in all outstanding loans, deeming distributions to the borrowers who do not choose to pay the entire outstanding balance?

2. If so, are there any time restrictions?

3. Finally, if the plan terminates its loan program and deems distributions to those participants who do not pay, what becomes of the plan asset that is the loan note? There is no longer any loan program through which a participant could pay it back (even if he/she wanted to) but a "deemed" distribution is clearly not an "actual" distribution per the IRS regs. This leads me to think that the note has to hang around as a "plan asset" even though it can never be paid back. Any advice?

Has anyone had any expeience dealing with the new "Kansas City" office position of the DOL on plan expenses in a DOL audit? I'm interested in how rigid their approach is, are they willing to compromise, given the more lax standards they previously announced publicly? How about 502(l) penalties? Your experiences are appreciated.