How is HCE status determined under IRC Section 414(q) for the first year of a calendar year 401(k) plan and no employees are 5% owners when there is no "look back" year?

Most of the new MRD prop. regs. have obviously been good news for IRA holders. However, the ability to do a spousal rollover looks to have been eliminated for some taxpayers. The added restrictions are:

1. The spouse must be the sole bene of the IRA

2. A trust may not be the beneficiary even if the spouse is the sole bene of the trust.

Source: new prop. regs 408-8 A-5

These are new conditions to 408-8. These new conditions fly in the face of PLR logic that routinely allowed spousal rollovers from a trust (assuming the spouses access to the allocation and the withdrawal of funds could not be blocked).

Some tax attorneys have told me that since A-5 only effects the "deemed election" you can still do a spousal rollover if trust is the bene. I don't think so: see 408-8 A-7 which speaks to the rollover issue and refers back to A-5.

I know for 2001 we have a choice between old/new pregs. but the Trust as bene issue to my knowledge is only addressed in PLR's with respect to rollovers.

Interested if anyone has any further information. Am I missing something??

Does anyone have a good, fairly brief, reasonably understandable definition of the types of Direct Filing Entities:

Master Trust Investment Accounts (MTIAs)

Common or Collective Trusts (CCTs) of banks,

Pooled Separate Accounts (PSAs) of insurance companies,

103-12 Investment Entities (103-12 IEs), and/or

Group Insurance Arrangements (GIAs)?

Definitions in Form 5500 instructions seem a bit complex - any way to tranlate them into "plain English" for plan sponsors looking to understand them?

Can anyone offer suggestions as to the best way to proceed establishing a new 125 Plan (POP and FSAs) for an employer whose benefit plans are on differnt plan years and may/may not coincide with the employer's fiscal year?

Can an employer establish a new cafeteria plan during its current fiscal year (as well as during the benefit plans plan year) (the 125 plan would be a short plan year) thereby allowing particpants to run benefit plan premiums through pre-tax? In other words the 125 plan's effective date would not coincide with the beginning of the employer's most recent fiscal year or any of the benefit plans plan years.

What is the maxium allowed dollar amount annually for medical reimbursement account?

I have a plan sponsor that has an existing 401(k) safe harbor plan using the 3% non-elective contribution. What they want to do is to have separate eligibility provisions for the 401(k) portion of the plan and the 3%. Specifically, they want to allow new employees to become eligible to start making salary deferrals immediately upon employment and become eligible for the 3% non-elective contribution after 6 months of service.

Can this be done? Are there any pitfalls?

Thanks

I have a client who is a leasing organization and has announced they will be closing their operation and terminating their sponsored 401(k) Plan. If a recepient employer establishes their own 401(k) Plan is this considered a successor plan which would prohibit the employees of this employer to take their benefits under the leasing company's 401(k) plan as a lump sum or IRA rollover?

I am just curious whether most governmental plans are filing for determination letters this year,(presumably for applicable GUST requirements or because they have never filed before)?

SFAS No. 88 requires accounting for a settlement if a)irrevocable action, b)relieves plan of primary responsibility for a pension benefit obligation, & c)eliminates significant risks related to the obligation and the assets used to effect the settlement.

I have a plan that purchased guaranteed life annuities for retired participants. However, the benefit purchased for each individual was approximately one-half of each retiree's total plan benefit. The plan maintains an obligation for each retiree. Based on the description above, I believe this is a settlement.

However, SFAS No. 88 Q&A #8 asks a similar question and the answer is no. It gives a specific example (different from my situation) where limited-term life annuities were purchased for participants, and the plan maintained some liability for those participants.

Would my situation constitue a settlement? Why or why not?

Is anyone aware of stand-alone software that automates the annual data collection process for small plans? It seems a good software package would facilitate having a relatively low-skilled worker to collect all the data, freeing up a lot of time for consultants, and the standardization would have side benefits too.

If no such software is available, is anyone out there interested in it? I may pay a programmer to have it developed.

Is speach therapy a reimbusible expense under Section 125?

I have a corporate client who contributed in excess of 15% of participant compensation in 1999. Client also had a 10% money purchase pension plan so excess contribution couldn't be allocated. Excess was held in a 415 suspense account with the intention of using it to reduce future years contributions. A 5330 was filed to pay excise tax on the nondeductible amount.

In the year 2000 there were no eligible employees except the owner. He did not take any compensation and now he wants to terminate the plan. My question: What happens to the 415 suspense account? Should it revert to the employer and would it then be subject to a 50% excise tax? Are there any other alternatives? All I can come up with is to keep the plan around and have the owner take comp in 2001 so that he can receive an allocation. Any other comments or ideas?

What is your practice pertaining to Copies D, 1 and 2 of the 1099-R? One of the copies of 1099-R that we ordered says "State Copy or Copy D for Payer." The 1099-R Copy D on the IRS website only says "Copy D for Payer." Does anyone else order copies that read state copy or copy for payer? Does everyone else send out Copy 1 and/or Copy 2? Does anyone send more than 1 copy of Copy 1 or Copy2?

May a reinsurance company quote specifics for different individuals based on medical statements? By this I mean a reinsurance company looks at the medical statements of all enrollees and offers an aggregate total which is quite high. Then the reinsurer breaks it down so that every one in the plan has a specific (say $50,000) except for one individual who has a specific much higher. This is more affordable to the company than the aggregate that was quoted. There is something about this that makes me uncomfortable. I would appreciate any thoughts or sites on this. Does it matter that the plan is self-funded and the reinsurer is issuing a policy in Ohio? Is it state law that regulates the reinsurer? What about HIPAA and non-discrimination?

If a plan is amended to incorporate a short plan year, must the amendment be signed before the end of the short year?

Employer has a calendar year 401(k) Plan. Can the employer amend to a SIMPLE 401(k) mid-year and avoid a top heavycontribution? I believe the answer is "no", any amendment would be effective the following January, but I am not positive.

I am 22yrs old i just sent $2,000. into Putnam Investments to start a roth IRA I want to know if it is mandatory that i make a contribution to the ira each year or is it optional. My second question is, is there any risk of losing the original $2,000. i invested. thank you

We have 2 manufacturing plants. One in California and one in Georgia. Because we have a high turnover in our Georgia plant we would like to set the eligibility time for sick time and medical for 180 days. We would like to set the eligibility time for our California plant for 90 days. Can we have differing eligibility times for the different plants? Please help me! I need to know this ASAP.

Thank you. Please e-mail me your answers at mbennett@expac.com

Can anyone tell me where to locate IRS Section 401(a)(4) and 401(a)(7) as it existed on 9/1/74? I need to find out what the pre ERISA minimum vesting standards were which are applicable to non electing Church Plans.