I seem to remember that a public employer (state or local govt) can opt out of HIPAA on a yearly basis. Could someone provide me with a cite or analysis of this provision? Any experience dealing with a group that has opted out? I've got a group that wants to opt out but has no idea how to procede. Thanks

Any amendments around to switch a profit sharing plan to a safe harbor 401(K) rather than amending the profit sharing to a 401(K) and then adding safe harbor language??

Just wondering if someone had a simplified way to do this, like a Board Resolution.

We've successfully trained most of our clients to ask us before doing most things --- to avoid unpleasant surprises. Boy was I surprised to find out what this client did!

This is a 1 person DB plan, covering a married owner, about 45 years old. About $160,000 in plan assets. Nonstandardized prototype.

I find out that his business is doing poorly, so over the last 6 months, he paid about $80,000 from the plan to himself. Gee, that's nice, but now I'm not happy (and he's gonna be less happy when I tell him how deep he is in it).

Let's see. There is a loan provision in the plan (it's a C Corp), but I'm not aware of any loan documents being prepared (let alone spousal consent). Besides, $80,000 is greater than $50,000. And, he hasn't repaid any of the payments, if it even was a loan.

If he is considered to be actively employed, he's made a benefit payment before NRD. Oops!

Maybe he terminated employment before the first payment. (he hasn't taken a salary for several years). Well, the plan does allow for installment payments (as well as a lump sum and QJSA), but the actual payments were in random amounts at random times --- doesn't sound like installments to me. (Again, there's that spouse consent issue.)

So, let's talk about damage control. Disqualifying defects. Penalties. EPCRS. By the way, the brokerage firm is issuing 1099's for the $80,000 just about now.

(How did this happen, you might ask. I figure he called his broker and said "I need $_____ from my pension plan. Please transfer it into my personal brokerage account that you also have. Did they tell him it's not that simple? Did they tell him they'd be issuing 1099's? What do you think?)

So, before I break the good news about all this to him, what alternatives and ideas can we come up with. Yeah, I know they're all bad --- I'm just looking for the least objectionable ones available!

Like I said, we've trained MOST of our clients!

I opened a QRP (keogh) for my corp (California C-corp) at Schwab on 12/29/2000. It is a paired plan (MPP + PSP) with an effective date of 3/16/2000. I am the only employee in my company at this time. I chose MPP % to be 15 and PSP to vary from 0 to 10% based on flawed advice that Profit sharing contribution can only be made if there was 'profit' in the corporation.

It was a mistake and I would like to amend it as an 'error correction' to MPP 10% and PSP 0 to 15%. Schwab is telling me that amending the MP% 'COULD' disqualify the plan and that I should consult a CPA. I haven't deposited the full contributions yet. Just the initial deposit of $500 in each account(MPP and PSP) that Schwab required me to open.

Here are my questions:

1. What would be the grounds for disqualification? It doesn't make sense that a reasonable change should cause any problem, especially considering that I am the only employee at this time. (I have called IRS help line and am hoping for a call back from them in the next few days.)

2. Can I amend it so year 2000 contributions reflect 10% MPP and rest PSP. If not, can I at least change it for 2001.

3. Do the plan documents get sent to IRS? Since I am the plan administrator, could I not make reasonable changes and put it the company file. Isn't the role of Schwab merely that of a custodian? Should they care if it is amended?

4. Any pointers as to where I can get the skinny on what is the common sense approach to QRP and how it all works?

Thanks in advance.

1099R Question. I transfered a Roth Ira from one mutual fund company (Harbor Fund) to another mutual fund company (Vanguard) in 2000. The transfer was a Direct Transfer or sometimes referred to as a Direct Rollover. I did not receive the funds, they were moved direct from one trustee to another. Harbor has now send me a 1099R with a distribution code of 5J shown in box 7 of the form. I believe this is in error. If I was supposed to receive a 1099R is not the code wrong? Please advise. Thanks

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.