Is it safe to assume that all 945 witholding can now be remitted on a quarterly basis based on the IRS release on 11/27/00 provided the plan does not go over the $2500 limit? I spoke with an IRS official who told that it was reasonable but that I should speak to a person in Public Affairs. The number she gave me was out of service. Anybody know anybody out there with a good phone number so as not to have to spend all day on the phone?

Take this for what it is worth. On the front page of the Wall Street Journal (Wednesday, November 29, 2000) and I quote "Now being sought: Private letter rulings for people who failed to recharacterize their Roth IRAs on time and now face huge fines or penalties."

Anyone heard about any recent private letter ruling actually being issued on this topic? If the IRS does abate the penalties, that would be a huge break for taxpayers and show a kinder and more gentle IRS.

Is it a Prohibited Transaction for the owner of a company to make a loan with proceeds from his participant directed account (401(k)) to an employee who happens to be an officer of the company and an HCE?

I feel a bit silly asking this, but is the distribution election form required to indicate the dollar amount of the account balance available for distribution? I've always thought that informed consent would certainly include knowing the dollar amount, but more and more I see boiler-plate forms with no amount.

Is there any authority that does or does not require the amount to be on the form?

Thanks.

We do very little with church plans? It is my understanding that the requirements of a church are as follows:

1. The church or association of churches tax exempt under 501©.

2. Substantially all persons included in the plan must be clergy, or employees of the church.

3. The plan can't be established primarily for the benefit of church employees who are employed in connection with an unrelated trade or business as described in 513.

Is there any requirements besides these?

One man (CPA) Defined Benefit plan with $800,000, no contributions since 1990 (no W-2 income, since he joined larger firm in 1990), non amender (1986 document), filed 5500EZ w/o Sch B but began checking "money purchase" box in 1997, now deceased (8/99) leaving 4 children (spouse predeceased) without beneficiary form. Children want to do nothing to correct everything, and just take 100% cash equally in 2000. Seems the cost and effort to correct may be outweighed by the practical solution, take the money and pay the tax today, agree or disagree?

Other than a 457 plan, can a local (city) government offer a plan where the city matches the employee's contribution and the employee not be taxed in the current year for this matched portion? Also, is there any "loop-hole" out there where a governmental employee can exceed the $8000 limit, keeping in mind that the city also wants to contribute? I saw something on the fact that the matched portion can be pre-taxed and the ee contribution is after-tax but deferred.

Is it more common to calculate an employer matching contribution on a payroll by payroll basis, or on an annual basis?

For example, assume employee A's compensation is $200,000, and she contributes 10% pre-tax. The employer matches contributions up to 6% of pay, on a dollar for dollar basis.

If the match is calculated on a payroll by payroll basis, the employee will hit the 402(g) limit after receiving pay of $105,000. So pre-tax contributions at that point will be $10,500, and the match (applied to 6% of pay each payroll period) will be $6,300.

If the match is calculated at year end, then the employee would have contributed just over 6% (10,500/170,000). The matching contribution would be $10,200 ($170,000 times 6%).

Which is more common?

r.

Company A acquires Company B. A maintains Plan X and B maintains Plan Y, both 401(k) plans. Company A would like to merge Plan Y into Plan X. However, Plan Y never received a determination letter, and Company A is cautious. So Company A decides to allow Company B employees to participate in Plan A, and further decides to freeze Plan Y pending it's decision as to whether or not to seek a determination letter for Plan Y, and whether or not to merge the plans.

While this is pending, Company B dismisses a large number of employees. The number of employees released would be significant with respect to Plan B but not Plan A.

The questions are:

1. Must Plan B participants be vested because there has been a discontinuance of contributions to Plan B?

2. If the answer to (1) is no (because either there is an intent to merge the plans, or because the pre-ERISA concept of substituting a comparable plan applies), then does the dismissal of employees require a partial termination analysis? With respect to which plan?

3. Should I change professions?

thanks-

rob

Within a cafeteria plan, is a stand-alone dental plan (not bundled with medical) considered a "group health plan"? What about a vision plan? LTD? AD&D? Do the special enrollment rights of HIPAA apply to these plans?

Two plans. A 401k which covers only owners and a cross tested plan which covers owners and all employees, the non-owners are all from a leasing company which sponsors it's own 401k. For average benefits testing should the non-owner employees' 401k contributions to the leasing company plan be included in the sponsoring employer's cross-tested plan??

Can a company merge an underfunded DB plan with a related (same sponsor) overfunded plan to eliminate the underfunding? The underfunded plan has already been granted a waiver of the minimum funding standard.

If a plan uses a cash basis to determine a Required Minimum Distribution (and there is an accrued contribution), is there a plan defect? The proposed regulation clearly states that an accrual basis should be used, but the regulation is neither temporary nor final, only proposed - so would the fact that the regulation is only proposed be enough to prevent using a cash basis from being a plan defect?

If a plan sponsored by a sole proprietor terminates 10/31 and Schedule C earnings for the year is $150,000, can pension comp be treated as 10/12 of $150,000, or must it be treated as made available 12/31, with no "comp" through 10/31?

Assume there are no large deductions ocurring after 10/31 such as a pension contribution, if that matters.

Tess was a precocious eight year old when she heard her Mom and Dad talking about her little brother, Andrew. All she knew was that he was very sick and they were completely out of money. They were moving to an apartment complex next month because Daddy didn't have the money for the doctor bills and our house.

Only a very costly surgery could save him now and it was looking like there was no-one to loan them the money.

She heard Daddy say to her tearful Mother with whispered desperation, "Only a miracle can save him now."

Tess went to her bedroom and pulled a glass jelly jar from its hiding place in the closet. She poured all the change out on the floor and counted carefully.

Three times, even. The total had to be exactly perfect. No chance here for mistakes. Carefully placing the coins back in the jar and twisting on the cap, she slipped out the back door and made her way 6 blocks to Rexall's Drug Store with the big red Indian Chief sign above the door. She waited patiently for the pharmacist to give her some attention but he was too busy at this moment. Tess twisted her feet to make a scuffing noise.

Nothing.

She cleared her throat with the most disgusting sound she could muster. No good.

Finally she took a quarter from her jar and banged it on the glass counter. That did it!

"And what do you want?" the pharmacist asked in an annoyed tone of voice. "I'm talking to my brother from Chicago whom I haven't seen in ages," he said without waiting for a reply to his question.

"Well, I want to talk to you about my brother," Tess answered back in the same annoyed tone. "He's really, really sick... and I want to buy a miracle."

"I beg your pardon?" said the pharmacist.

"His name is Andrew and he has something bad growing inside his head and my Daddy says only a miracle can save him now. So how much does a miracle cost?"

"We don't sell miracles here, little girl. I'm sorry but I can't help you," the pharmacist said, softening a little.

"Listen, I have the money to pay for it. If it isn't enough, I will get the rest. Just tell me how much it costs."

The pharmacist's brother was a well dressed man. He stooped down and asked the little girl, "What kind of a miracle does you brother need?"

"I don't know," Tess replied with her eyes welling up. "I just know he's really sick and Mommy says he needs an operation. But my Daddy can't pay for it, so I want to use my money.

"How much do you have?" asked the man from Chicago.

"One dollar and eleven cents," Tess answered barely audibly. "And it's all the money I have, but I can get some more if I need to.

"Well, what a coincidence," smiled the man. "A dollar and eleven cents-- the exact price of a miracle for little brothers." He took her money in one hand and with the other hand he grasped her mitten and said "Take me to where you live. I want to see your brother and meet your parents.

Let's see if I have the kind of miracle you need."

That well dressed man was Dr. Carlton Armstrong, a surgeon, specializing in neuro-surgery. The operation was completed without charge and it wasn't long until Andrew was home again and doing well. Mom and Dad were happily talking about the chain of events that had led them to this place.

"That surgery," her Mom whispered. "was a real miracle. I wonder how much it would have cost?"

Tess smiled. She knew exactly how much a miracle cost... one dollar and eleven cents... plus the faith of a little child.

A miracle is not the suspension of natural law, but the operation of a higher law.

(Author unknown; thanks to Cindy L. Lambert for this contribution!)

I have a client who is terminating their plan. Approximately one year ago the plan went through a partial termination, since that time people have come and gone and the plan has accumulated a large sum of forfeitures. All partial termination rules were followed. Everyone involved in the partial termination was 100% vested. Now that the plan is terminating what can be done with the forfeitures? The plan document says you use the forfeitures to reduce the Employer contributions, but there haven't been any significant contributions to reduce the forfeiture account to zero. Any thoughts on this scenario?

When, if ever, is a Summary Annual Report required to be provided to participants in a Section 125 plan? I have seen an SAR provided for a POP when the health plan had more than 100 participants. Have also been told:

SAR is required for a Medical Reimbursement FSA plan.

SAR should be provided because a 5500 is filed.

SAR used to be required for any Section 125 but no longer.

SAR is required for the underlying welfare benefit plans but not the cafeteria plan itself.

The more I research this, the worse it gets. Any help would be appreciated including a cite. Thanks

We have a Profit Sharing Plan with a last day rule. Each employee self directs his own account. The employer prefunds the employer contribution quarterly directly into each participant's account. There have been occasions where we had to remove a contribution from a participant's account at the end of the year since the participant terminated employment prior to the end of the year.

We keep getting conflicting reports from various sources. Some say we are not allowed to remove contributions already deposited into a participant's account. Others say this is not a problem if it is explained to the participant. Which is correct?

I have a question regarding the laws on cobra. I terminated my position with a major New York based retailer on 11/11/00. I recieved my letter of continuing coverage (cobra) form on 11/26/00. I recieved three messages from Doctors offices on 11/28/00 saying my coverage terminated on 10/11/00. I went back to the letter recieved on Saturday and the date of termination states 10/11/00, however the date the letter is issued states 11/17/00. I have phoned my former employer notifying them that there paper work is incorrect, and causing me alot of embarrasement as well as emotional distress one Dentist wants 585.00 by the end of the week. They have been less than helpfull. I gave a letter of formal resignation effective 11/11/00 and have copies of this, and I was working for this company as a manager until 11/11/00 my last physical day of work was 11/09/00 and the 10th and 11th were vacation days. I have a terminally ill spouse, and I need any advice you can give me. I don't know if they are going to take care of this and correct the paper work, but even if they do they will have violated the 14-day rule for me to recieve a correct form. I'm not sure if I should send in the form I have, I'm afraid that(cobra) will bill me from 10/11/00 and I have already paid for coverage up to 11/11/00. Thanks for any advice you can offer!

Hello, I am trying to work on an academic (read graduate student) piece on the effect of the change of premium structures on employee opt-in insurance products. Specifically I am looking at dental insurance.

Right now I have a large dental insurance enrollment package from a large southern quasi-public organization (85 k eligibles, large public university system). This organization uses the simplest premium structure (EE, or FAM, with both inclusive of ortho whether you want it or not).

I am curious to compare how their employees select dental insurance compared to another organization that uses a more complex premium structure (Three tiered, ortho-optional rider, etc.)

Specifically, I am looking for raw enrollment data for a dental plans, I can do all the work from there.

If you are interested in helping a struggling (read starving) grad student out with his research, I can assure you, your help would be greatly appreciated.