Can employees who have not completed a year of service be excluded from coverage testing if the plan does not require service to enter the plan?

Heard recently that the self-directed brokerage option will allow plan participants to choose any brokerage to his or her liking. How would this be accomplished? Who would process the tax reporting? How would exchanges into and out of the SDB account and the Core account be facilitated?

I read that CPI is 3.5%. This was just released today. I think this means that the 2001 415/402g limits can be calculated. Has anyone calculated the dollar limits for 2001?

I have a question regarding which receivable contributions need to be included in participant account balances for the Top-Heavy test. It is my understanding that a Profit Sharing contribution for the 12/31/00 plan year end that is not deposited by 12/31/00 is not counted. However, any contribution required due to minimum funding needs to be counted in the Top-Heavy account balances. My question is, would I need to count any 401(k) deferrals which are for the plan year ended 12/31/00 but are not deposited by 12/31/00 need to be included in the participant account balances used for the Top-Heavy test?

I work in a daily environment and am trying to eliminate "backdating" as many transactions as possible.

I would appreciate any input. Thanks.

How should the exclusion of an eligible employee from a safe-harbor 401(k) plan be corrected? Which IRS correction program should be used (APRSC, VCR)?

What are some of the typical cost of living adjustment methods you have seen applied to retired employees benefits in a DB plan? Other than tieing the adjustment to the CPI are there other typical methods used and do you see them generally applied to individuals who have been trired for 5,10,15 years and are there varying amounts applied depending on how long the individual has been retired?

I have a client who has a profit sharing plan with my firm. The plan was established using a regional prototype document. The client just informed us that last year he started another profit sharing plan with a different firm using their prototype. He now wants to terminate the original plan and consolodate it with the new plan. It appears as though he didn't inform the new TPA that he had an existing plan. Both plans have the same 3 digit plan number but are filing seperate 5500's.

Can he terminate the original plan, or would a merger of the two plans be the best course of action?

I work with non-profit retirement plans (namely, 457s, 403(B)s, and 401(a)s). We've come across an issue of verbiage recently and were wondering if someone could assist us with the real differences b/w transfers (i.e., from one 457 plan to another) and rollovers and the where we can find the accompanying definitions.....I thought 401(a)(31) was a good place to start, but there's been a bit of dissnesion of whether it actually references rollovers, transfers, or both. If you were defining the two for clients, how would you describe each and what source would you have them reference?

A federal district court recently dismisse claims by current and former employees of First Union that the firm's practice of limiting investment options for its 401(k) plan to its own mutual funds viloated ERISA. Does anyone have a cite for this case? I want to read the actual opinion and not merely commentaries.

Does anyone know where I could find the q's for the 64OASDI disability rates? I've looked on the Society web site and the SSA but couldn't find them.

If anyone has them, and would be willing to email them, any form would be fine -txt, lotus, excel

thanks

An employer adopted a non-ERISA 403(B) plan which provides solely for salary deferrals. Upon an internal audit it was discovered that the employer was in fact making employer contributions for eligible participants for about 3 years. How does the employer correct this? Can this be corrected under Section 5.02 (1) of Rev. Proc. 99-13 as an Operational Failure? Operational Failure being defined in Section 3.05: (10) Any other failure to satisfy applicable requirements under Section 403(B) that ....results in the loss of section 403(B) status.... and is not a Demographic Failure, an Eligibility Failure or a failure related to the purchase of annuity contracts.... If this can be corrected using Rev. Proc. 99-13, how is this accomplished operationally? by a letter from the employer to remove the contributions? by a letter signed by the employee and the employer (this seems logical since the employee set up the account)

An employer with an existing profit sharing plan wants to wait until mid-year to add a 401(k) safe harbor provision. This is permissable under Notice 2000-3. My question is in the first year does the employer have a choice between using the matching formula and the nonelective formula or is the employer stuck with the nonelective formula? I can't find anything that says the employer is stuck with the 3% nonelective, but it really doesn't seem consistent to allow this employer to choose and require that the employer with an existing 401(k) plan use the nonelective if safe harbor adopted mid-year.

The 5 year period for CONTRIBUTIONS to Roth IRA's starts at January 1 of the first tax year a contribution is made. So, if the first contribution was made 1-1-2000 (for the tax year 2000) then the 5 year period would be up 1-1-2005. There is just one 5 year period no matter how many years contributions are made.

But how about CONVERSIONS to a Roth? I don't know for certain if there is just one five year period - or if a new five year period starts each year a conversion is made? I have looked for an answer to this but cannot find where it is specifically stated. If anyone can direct me to a source I would appreciate it.

I have a dentist client who has 5 part time employees. Dr. is a 100% shareholder of an S Corporation. He would like to provide a 125 plan with a FSA and DCAP option. The question was posed to me, that since the doctor will occassionally take a month or month and a half off each year to travel, and since the employees are all part time. How would they be able to continue wage reduction without income.

I want to make sure that this would qualify as a change in employment status. Therefore, my plan document would say something to the effect that, in the event the doctor takes an extended vacation of a week or more, the employees are deemed to be out of work, and thus a change of employment status has occured, whereby a cease of wage reduction can take place until the time that their employment begins again.

p.s. there are no HCE and no Key Employees

Would this be ok?????

I am starting to see employers wanting to charge more for family coverage if the spouse has alternative coverage available. For example, say single coverage is $ 100 per month and family coverage is $ 200. However, if your spouse has other coverage available but you want to still elect family coverage, it is going to cost you $ 225 per month rather than the "normal" family rate of $ 200 per month.

I think you can do it because (1) it does not discriminate on sex, age, health status, etc and (2) the J.C. Penny case upheld "head of household coverage." So it seems this should be OK. Also, I do not think it is an eligiblity issue so the carrier really should not have any say assuming you satisfy the participation standards.

Any thoughts?

When the spouse of deceased 401k participant receives a lump sum distribution, how is that taxed? Does the date of death have any relevance or is it 20% of market value on valuation date?

Does the pending repeal of the combined 403(B)/457(B) deferral limitation (in pending pension legislation) create plan design opportunities for 403(B) plan sponsors who wish to circumvent the 402(g)limits for applicable employees? For example, if the repeal is passed, could an employer who maintains an exisitng 403(B) arrangement simply establish a 457(B) plan as well, so that employees who are capped at the 402(g) elective deferral limit of $10,500 (indexed) could defer up to an additional $8,000 (indexed) in a 457(B) arrangement (assuming that the other limits that apply to the respective plans do not come into play)? I suspect that this is not the intent of the legislation, and that the repeal would only apply to plans of unrelated employers, not the same employer, but I want to make certain that I am not ignoring a plan design opportunity here...

What does the industry consider as a normal black-out period when converting a plan from one recordkeeper to another? How much would this change if the plan decided to sell all assets before making the move? What if the custodian was also changing? Thanks, JimJ

If you are aware of anyone who might be interested in a new position with a TPA firm in Denver, we have 2 excellent opportunities, and we would appreciate you for passing this message along or letting us know who we might contact. The first opening is for a Daily Valuation Plan Consultant, and the second, is for a Director of Daily Valuation. I will be happy to provide greater details to anyone who is interested. Relocation assistance is available. Thank you!

What are the rules with respect to COBRA and bankruptcy? Can a company who files chapter 11 terminate its welfare plan before filing to avoid COBRA obligations? What about situations where there is a liquidation and no one is left around to administer COBRA? Any help would be appreciated.

Thanks