[Reprinted below is a story posted anonymously on the Web.]

During my second month of nursing school, our professor gave us a pop quiz. I was a conscientious student and had breezed through the questions, until I read the last one: "What is the first name of the woman who cleans the school?"

Surely this was some kind of joke. I had seen the cleaning woman several times. She was tall, dark-haired and in her 50s, but how would I know her name? I handed in my paper, leaving the last question blank.

Just before class ended, one student asked if the last question would count toward our quiz grade. "Absolutely," said the professor. "In your careers, you will meet many people. All are significant. They deserve your attention and care, even if all you do is smile and say 'hello'."

"I've never forgotten that lesson. I also learned her name was Dorothy.

My wife and I have 401k's file jointly and have agi less then $100k. I understand I'm not eligible for a traditional IRA but am for a Roth. Assuming this is true I have the following questions

1. how much $$ to start a Roth?

2. Am I limited to one fund?

3. Or Can I est. a Roth as a stock portfolio that would contain the stocks I pick and choose as I find and buy them?

Has anyone figured out whether the $6000 deferral limit to SIMPLE IRAs will increase for 2001?

Has anyone seen a discussion on the PLR 200038051 issued earlier this year which discussed a 401(k) plan's violation of ERISA for failing to pay accrued interest to terminated participants for the period from the plan's most recent valuation date to the date of each participant's distribution? It has been my understanding that 401(k) plan distributions can be based on the last valuation date, as long as the length of time between the valuation date and the distribution isn't excessive. Our documents say that it is up to the plan administrator to determine if a new valuation is needed. Any idea if there is now a requirement to pay a certain interest rate?

In a top-heavy plan, if a non-key employee receives only the top-heavy minimum contribution of 3% of pay (worked only 100 hours during year and so did not qualify for full contribution), is that employee considered to "benefit" for 410(B)?

Reg. 1.401(a)(4)-2(B)(4)(vi)(D)(3)says, in part: "...the top-heavy formula does not fail to be available on the same terms as the other formulas under the plan merely because it is available to all employees described in §1.416-1, Q&A M-10 (i.e., all non-key employees who have not separated from service as of the last day of the plan year). The preceding sentence does not apply, however, unless the plan would satisfy section 410(B) if all employees who are benefiting under the plan solely as a result of receiving allocations under the top-heavy formula were treated as not currently benefiting under the plan. "

This makes it appear that employees should be treated as not benefiting if they only get the top-heavy minimum.

However, IRS alert guideling Explanation No. 5 says, in part "... However, if the plan is required to provide top-heavy accruals for the plan year, or if the plan takes future compensation increases into account in determining accrued benefits, the plan will have to be tested for coverage." Although this seems to refer to DB plans, it also seems to imply that top-heavy minimums would be tested under 410(B).

So if someone only receives the top-heavy minimum contribution, are they treated as benefiting under 410(B)? Are they left out of 410(B) coverage testing completely? Thanks for any opinions.

Can administrative fees from a plan audit be paid from the plan??

I recognize there is no such thing as a "normal" match to a 401(k) plan. It depends on the company size, their industry, whether or not there they offer other plans, their compensation philosophy (pay vs. benefits), etc.

Ignoring all of that, what is a "normal" match --- more specifically, in the internet, software, computer industry.

Admittedly, surveys can only provide rough guidance. But, I'll take what I can get.

(My starting point for a match in consulting situations is 50% for the first 6% of compensation. Gee, what a concept. And then I go up or down depending on affordability, etc. But here, the issue is not only affordability, but business competitiveness.)

Thanks

What is the Federal, State and local income tax consequence of a lump-sum death benefit from a DB governmental plan?

Thanks,

Joel L. Frank

Can a plan add a mandatory cashout provision if it has not had one before or does this violate 411(d)(6)?

Can anyone enlighten the group on the current status of the RSSA 2000/H.R. 1102 Tax Bill?

Not much to hear on it in the last several weeks.

Congress is now overdue to adjourn.

Thanks,

David H.

Can hardship withdrawals be taken from a SIMPLE 401K and if so, is each portion withdrawable 100%, including the mandatory match &/or non-elective portion?

If a deferred vested participant has been issued a Deferred Vested Certificate, been listed on Schedule SSA, is not eligible for payment currently, and has relocated without notifying the sponsor of address change, is there any required action on the part of the Plan Sponsor to locate them for SAR, SMM, or SPD distribution once a mailing has been returned as undeliverable?

I have just recently divorced and issued a COBRA notice from my ex-husband's Plan Administrator(he is a union employee).

Although the divorce decree orders that I retain medical coverage for our sons (2), my husband has verbally agreed to keep the children on his plan as he doesn't pay anything for their coverage.

I want to know if I opt for the single coverage under the COBRA plan, and the kids lose coverage later for whatever reason, can I then change my plan to a family plan and put the kids on my plan or would the kids have to take two single plans under the COBRA notice or can they take a family plan then?

I want to roll over a portion of my regular IRA into a ROTH in 2001 as part of my estate tax planning. To do this I need to keep my 2001 income below $100,000. How can I invest a considerable amout of cash for 2001 such that I can be sure it will yield no AGI income for the year? The two ways I have in mind are US Govt I bonds and CD's that expire after 2001. What else can I do?

I have a situation where a client is facing an audit and cannot locate copies of any documents prior to the current financial institution standardized document, adopted 6/1/97, which shows an original plan effective date of 5/31/85. in short, the "historical" documents can't be found, and there's no indication that a determination letter was applied for or received. Is there any recourse in arguing that ERISA section 107(106?) states that plan records need only be maintained for a 6 year period?

If a person owns exactly and nor more than 5% is that person an HCE? I.E. Is it a MORE THAN 5% owner?

Thanks for your help.

Can anyone suggest a website that contains information on the average (in dollar amounts) pension benefit offered by private companies' defined benefit plans?

Can the owner of a company that is an S corporation that uses a PEO for his employees participate in the PEO's section 125 Plan?

A Dentist with 5 part time employees, would like to offer a 125 plan with FSA and DCAP. The Dentist will take a month long vacation every year, therfore the part time employees are unable to make in money, therefore have no wages to reduce for the benefits. Would the part time employees be able to treat the vacation by the doctor as a change in employment status, and thus not worry about wage reduction until they come back to work? I am quite sure this would be o.k., but I would like to know for sure!!!

Thank you.

For a 401(k) plan, Code Section 401(k)(2)(D) makes it pretty clear that the cash or deferred arrangement cannot require 2 years of service for eligibility to participate in the cash or deferred arrangement. Is there any cite that makes it clear that a safe-harbor 401(k) plan cannot require 2 years of service to be eligible to receive the nonelective (3%) safe harbor contribution?