I'm looking for help with the "consistency rules" under a 125 cafeteria plan that allow to have employees make changes mid year to an election if they have a life event and the change is consistent with the life event. If an employee gets married, we know they can add a new spouse to an HMO. If they say their new spouses doctor does not participate with the HMO, can we allow a change to our indemnity option. Are we stretching the consistency rules?

Can anyone provide cites or tax code reference that shows that distributions to a spouse via a DRO, rolled into a "Traditional IRA" not a "Conduit IRA" can be rolled back into another qualified plan as long as the "TIRA" never had other assets?

Next - is there a cite that says it cannot be done?

Suggestions? We have a client who will be recieving a distribution from her now ex-husband but would like to roll it into her existing 401(k) - can this be done via a QDRO distribution?

Employer's health plan was canceled for issuing bad checks. I was placed on disability due to a lung transplant and elected COBRA coverage. I filed out the forms and sent in six months premimums (six checks) October and Novembers checks were cashed. Now I learn from insurer that coverage for the group was canceled October 1st because employer submitted NSF check. I was notified in late December long after 62 days had passed. Now I am uninsurable. What rights do I have and how do I procede?

A matching contribution and safe harbor contribution were deposited to a participant's account by mistake. Should both deposits be transferred to forfeiture and used to reduce future contributions? Is withdrawal of these contributions a correction under EPCRS?

We have a 401(k) plan that has two participants that took hardship distributions, therefore they can not defer for a year. There plan however has individual insurance policies that their match money goes to pay the premiums. If these two participants do not defer and therefore do not get a employer match who is responsible for paying the premiums on the insurance policies in order that they don't lapse?

We have a self-insured prescription plan and are considering raising the copayments mid-year. The prescription plan is the same regardless of which health plan election the employees choose during open enrollment. If we raise the copayment structure, can we do a 'one-way' enrollment period in which we allow employees to opt out of our health plan in order to enroll in a spouse's plan? In addition, if we make a plan design change on the health plans that includes increase of copayment, would we have to allow an open enrollment period for employees to switch plans? And one more... what are the rules for mid-year design changes? How much notice must be given, etc.

How are life insurance contracts reported on Schedule A? Should the face value of the contract be reported on Line 3 or should the surrender value be reported? Am I completely off base?

Thanks

In a transportation plan, is it considered pay as you go like dependent care reimbursment or can it be advanced like medical reimbursement? Also, must a check be cut directly to the participant or can the participant have the employer may be the bill?

We have an LLC that has an IRA as a 4.167% investor member. The beneficiary of the IRA is also a common member with a .09% interest in the LLC. He does receive compensation from the LLC and participate in management. Does this constitute a prohibited transaction?

I'm a small administrator with plain vanilla plans. I have a plan that will fail the ADP test unless I borrow from the ACP percentage. Never had this problem before. ( I use ASC software and am confidant in the calculations and compliance, however - I want to be able to determine this process without the software.) Can anyone tell me specifically the process for the borrowing method? or where to find good data on it? Is it simply a documentation process, or are assets actually recharacterized or what?

all advice is greatly appreciated.

A former employee's eligible COBRA coverage time period will expire on February 28, 2001. The current employer will not allow her to enroll her spouse and dependent children until an "open enrollment" period in July, 2001. Is it true that the spouse and dependent children are eligible for 36 months of coverage? 18 months over the former employee's covergae period?

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joan s

Hi,

I converted a Rollover IRA in Sept, 2000 to a Roth IRA.

Since then, the value of the IRA has decreased 25%.

I want to avoid paying taxes on this 'lost' 25%.

It is now Jan 24, 2001.

An IRA specialist at Fidelity told me that I can recharacterize my 2000 IRA to a Traditional IRA.

However, I won't be able to convert the Traditional IRA

BACK to a Roth until January, 2002.

She said if I would have recharacterized by Dec 30, 2000, then I would have been able to reconvert to a Roth in 2001. I would just need to wait 30 days.

My question: Is this correct?

What is the shortest amount of time I can recharacterize my Roth conversion to a Traditional IRA, then convert the Traditional IRA back to a Roth?

Thank you very much for your help.

If the mandatory 20% withholding has not been done for a payout to a participant, how is the withholding (plus a 10% penalty) paid to the IRS? 8109? 945-V? I haven't been able to find the answer in the instructions or in Section 11 of Circular E. If I use 945-V, how will the IRS determine that that a portion of the money is for a penalty?

Thanks,

David

In 1983, the Supreme Court's Norris Decision revolutionized the way we calculate actuarially equivalent benefits by requiring the use of unisex or gender-neutral mortality assumptions. My question is whether a plan can provide that actuarial equivalence for benefits accrued prior to the Norris decision would continue to be determined on a sex-distinct basis and amounts accrued after the Norris decision would be based on gender-neutral mortality. Any cites to support an opinion one way or another?

My husband took a $25,000 withdrawal from his 401K plan in April of this year. He is 60 and was over 59-1/2 when he took the money. They withheld $4,206.05 for IRS. Roughly 8,000 of the withdrawal came from employee before tax. The rest came from Employer Profit Sharing. What will be the tax consequences be for this? He is still employed by the company. They did list it as a hardship withdrawal on the check receipt.

If I convert my rollover IRA to a Roth IRA and instruct the trustee to have 20% withheld for federal taxes, are the taxes considered a penalty distribution? Can I also, within 60 days, redeposit the amount withheld for taxes? Thanks

Jason Cooke

Does anyone have a checklist showing the steps involved in pulling a package together for the purpose of requesting an IRS determination letter for an individually designed plan that has been amended for GUST? I know that a notice has to go out to participants prior to submission, so I would like to see that (for ex) as part of the check list.

What is the feeling regarding the new 401(a)(9) regs where IRA beneficiary is the estate and the surviving spouse is the estate's sole executor and a residuary beneficiary with the power to allocate estate assets. Do the proposed regs change PLR 200032044 with regard to the spouse "inheriting" the IRA.

1) Proposed regs only specifically mention trusts rather than estates, but the regs do say that the spouse must be the "sole beneficiary" of the IRA. Does the trust rule apply to estates as well?

2) If the proposed regs apply to an estate as beneficiary as well, what do you think the risk is of a spouse inheriting" an IRA through an estate in 2001 given facts identical to prior PLRS? Since the only thing out there previously were PLRs with no precedential value, and since the proposed regs are the first formal "guidance" in this area, do you think there is a risk associated with such a trnasaction in 2001 even though the new proposed regs provide that distributions in 2001 can be under the old proposed regs?

FASB 87 requires the computation of the 'average future lifetime' for a plan.

A question has arisen, which I will try to use an example to clarify.

2 employees with future service of 30 and 0 (last one is at or beyond retirement age BUT still working so active).

What is the average future lifetime???

(30 + 0)/2 = 15

30 / 1 = 30

Something else????

We are finally getting an existing 401(k)Plan on track and changing from a 5/31 year end to a 12/31 year end. Question: I realize all the pro-rated limits in effect for the short plan year, but is the 402(g) limit also prorated??? (i.e. 10,500 to 6,125)...I understand the 402(g) limit to be a calendar year limit only. Part 2 of the question is if the 401(k) limit must be pro-rated, than how do I categorize the excess contribution/deferral the participant has already done for 2000??? He has not exceeded 10,500 for the 2000 year, but he has exceeded the 6,125 for the short plan year.