Am I correct in what I am about to say?

A Welfare Benefit Plan can never be a "separate legal entity", therefore a group medical Blue Cross insurance policy cannot be issued by Blue Cross to a Welfare Benefit Plan (as owner)..... it can only be issued to the Employer (as owner).

While this question may be academic by the time I retire (in about 35 years), I still would like to know the full tax consequences of Roth IRAs. I have heard it said that Roth IRAs distributions MAY be counted as income when figuring out tax on Social security benefits. I have been parsing through IRS Publications 554, 915, and 590, as well as the Social Security Website, trying to figure out if distributions from Roth IRAs are counted as "tax-exempt interest" towards calculating taxes on Social Security Benefits, but am frustrated. Anybody have a solid answer or a reference for this question?

Steve D.

I have recently attended a 401(k) seminar and was told that a participant was considered to be vested a year if she/he worked 1000 hours or more during his/her plan year. Does anyone know if this is the correct way of determining a participants vested percentage? Or is it determined by the hire date and term date-a year being 365 days employed at the business?

A Plan says that for payment of a lump sum the lump sum shall be determined as follows:

Section 5.1

"The equivalent lump sum value of an annuity shall be determined by applying the factors published by the PBGC for distributions in the calendar month preceding the Ret. date."

Section 1.2

The Plan def. of Act. Equiv. is 8% and 83GAM table.

A person retires on 5/1/99.

What assumptions (w/r/t interest and mortality) would you use to value the lump sum?

Gary

Does anyone know if the 411 post normal ret age accruals apply to State Plans? i.e. for a teachers plan? I thought there may be something in ADEA that might require a gov plan to apply 411 post NRA accruals.

This has to do w/ receiving the greater of AB or age 65 act increased AB.

Gary

We have a 401(k)/PS plan that terminated at the end of 1997. At the time of termination, there was approximately $6000 in forfeitures. The plan document states that forfeitures must be reallocated. Instead of being reallocated, the forfeitures were sent back to the employer. This mistake wasn't discovered until this year. Our question is can we correct the forfeitures through the EPRSC?I believe that it is too late to correct using the APRSC, but is the VCR program available for this?

One of our clients has a terminating defined benefit plan and a profit sharing plan. The defined benefit plan only has three employees. What types of plans may they roll the DB assets into? For example, SEP, SIMPLE IRAs, etc.?

I need help with cashing out a 401K. I quit work 2 years ago to go back to school after vesting 10 years in a 401K. I have been fighting with my former employers ever since to cash out. I finally got them to send me the lump sum paperwork to sign to cash out. Now what happens. I haven't heard back from them for over 30 days. How long do I have to wait? Are there any legal options I can take? I have weighed my options heavily and yes this is what I want to do. Please help.

When can a plan review account balances to determine involuntary cash-outs for balances under $5,000?

A large company is constantly looking to payout terminated employees who leave with account balances under $5,000. Can a plan that is valued daily, review balances daily and payout when balances go below $5,000 due to investment loss?

Thank you.

I have a client whose 11/30/99 contributions were not deposited until 1/15/2000.

1) Are the penalties and interest owed on the contributions to be added to the amount of actual contributions, reportable as "Current Value of Asset" in Part III of the Schedule G of the Form 5500?

2) Is it correct that the client is only required to file one Form 5330 in year 2000 for the amount of interest owed on the 11/30/99 contributions?

I'll put this question here since I can't find a better board. The 457 limit of $8,000 is reduced by elective deferrals to 403(B) and 401(k) plans. Can a school district maintain a 457 plan and a money purchase pension plan without district contributions to the mppp reducing the 457 limit? Example: Can a $100,000 administrator defer $8,000 in the 457 and receive a $4,000 mppp contribution?

Plan provides that participants who separate from service and are rehired within one year will be given credited service from the termination date upon return for benefit calculation purposes. Plan is amended to eliminate the credited service restoration upon rehire (vesting service still applies). Any anti-cutback issues with amendment? Why or why not? Would the answer change if a lump sum payment was made upon termination before rehire occurred?

Are there any laws (discrimination or otherwise) that would prevent an employer from making an employee's contribution to the medical plan based on gender, age and/or smoking status?

Hello, I changed jobs halfway through this year and am not eligible to contribute to a 401(k) until next January. I did contribute in my prior job (through June). how much can I put into my preexisting roth for 2000? I will make about $100,000 this year. Also, can I open a new Roth (that one has high fees), or am I now making too much money? Can I also start a regular IRA, or is there one limit on such contributions? thanks, Jrein

If employees are enrolled in individual short term disability and/or cancer protection plans (not employer sponsored group plans), but have the premiums deducted via payroll deductions, can these deductions be taken out on a pre-tax basis?

Does anyone know if we are allowed to use the 1999 Form 5500 for a short plan year filing?

Thanks!

We currently administer about 75 local government 401a plans (2500 participants). The assets of all plans are invested in a professionally managed portfolio with no participant direction. We do annual valuations with the recordkeeping in-house using Quantech. We have several problems: 1) Quantech is an ERISA based system for private industry plans, which makes the valuation processing difficult. 2) The plan documents we are using need to be rewritten (see previous message posting) 3) We are at risk of losing our plans to more up-to-date participant directed plans. The state system is converting to this format, which local governments tend to follow and 4) We do not have the current staff to handle this type of administration.

I am currently researching the possibility of using a mutual fund company and/or a third-party TPA to all or some of the following: 1) Participant Directed investments and recordkeeping 2) Participant eduction 3) Provide a plan document that we could offer as a restatement that is either an ERISA document or a document that is tailored for governments taking out the unapplicable ERISA language and providng for amendments. 4) Possibility of using a 401(a) and 457 product together - so looking for someone that can help with the 457 product also.

We may consider doing all in a two-step process 1) fix the plans then 2) start participant direction - so does not have to be all in the same.

Our firm has programs that creates economies of scale by pooling small government together to offer products that they would not normally be able to access or afford on their own. We would like to maintain all client contact and handle parts of the administration where appropriate.

Interested in comments on what other small governments are doing. Suggestions on direct mutual fund companies vs. TPA. Are most governmental 401(a)participant directed? When coverting to participant direction - do most plans change their plan document?? Are there any statistics on the DB / DC split in LOCAL governments?

My previous employer has a SIMPLE IRA plan. He took the 3% matching option (i.e., all contributions are matched up to 3%).

However, rather than matching contributions each paycheck, he matches the entire year's contributions in one lump sum in April of the following year.

So, for example, my 1999 contributions were matched in one lump sum in April 2000.

I left this employer in May 2000. I shut down my Merrill Lynch SIMPLE and rolled it to a rollover IRA at Vanguard.

It never occurred to me to ask for the 2000 match when I left. What are my options now? Can I insist on receiving my 2000 match, and if so, how would I receive it (i.e., which account)?

Thank you.

As I read IRC section 401(k)(4), a public school district cannot maintain a 401(k) plan for its nonteaching staff. (The teachers are covered by a state teachers retirement program.) Therefore, a 403(B) or 457 plan are the only options. Am I interpreting this correctly?

I have a special circumstance that I am trying to figure out regarding whether I should convert part or all of my traditional IRA to a Roth IRA in 2000. First, let me list my facts:

1) Married, filing jointly

2) 1999 AGI of $145,000 and taxable income of $93,000

3) Currently have a contributory Roth IRA in both my and my wife's name with $2,000 contribution made to each in both 1998 and 1999.

4) Am covered by a 401(k) plan at work

5) Currently have assets of approximately $75,000 in a traditional IRA that was converted from a 401(k) at a previous employer

Now for the special circumstances. I spent most of 2000 working on an Internet startup that never went anywhere (hindsight is 20/20!). During most of the year I did not have any kind of salary, living off of a severance package I received from my previous employer (hence the high 1999 income amount). I ditched the startup in September of this year for a *real* job. Due to the short period of time spent working in 2000, my total reported income for this year will only be about $28,500. The job I have now pays approximately $120,000/year with substantial bonus amounts so I expect that my income will not be below the $150,000 for 2002 or following years. Now for my questions:

1) My 401(k) plan administrator only allows me to contribute up to 15% of my salary to my 401(k) through payroll deductions. I cranked up my deductions to the 15% max but that will only result in about $5,000 in contributions to my 401(k) this year. Is there any way to contribute a lump sum amount to the 401(k) to reach my 401(k) limit for this year if the administrator doesn't provide such an option?

2) It looks like the 15% tax bracket for married filing jointly will be around $45,000 this year. Since I believe my income tax rate will be in the 28+% income tax bracket after I retire, I would like to convert as much of my traditional IRA to a Roth IRA to be taxed at the 15% rate. How do I go about converting a traditional IRA to a Roth IRA? Does it have to have a seperate account or can I just transfer it from my traditional IRA account to my contributory Roth IRA account?

3) What's the deadline to make the conversion? I have some taxable mutual funds that traditionally distribute capital gains and dividends at the end of the year and I don't know what they will be. Would I have to make the IRA conversion before 12/31/00 and then recharactarize the amount over $45,000 before 4/15/01 to ensure my income stays in the 15% level?

4) Should I consider converting my entire IRA amount while my income is low?