I have a corporate client (Company A) who acquired a couple corporations (Company Y and Z) during 1999. Each of these entities sponsored a 401(k) plan. The Plans sponsored by Company A and Y were standardized prototype plans, neither of which were amended prior to the corporate transaction to specifically exclude participation by employees of other members of the controlled group. It seems to me that walk-in CAP asking for reformation of the plans would make sense, since each group was covered by a 401(k) plan. Anyone have any experience with a situation such as this?

I am trying to determine the implications of impelementing a 401(k) plan given the following circumstances:

1) Parent company owns 100% each of 42 separate companies.

2) My prospective client is one of the 42 wholly owned subsidiaries.

3) My prospective client wishes to implement their own 401(k)plan, independent of any of the other companies.

My question is whether all the employees of the 42 companies must treated as if they are employed by the parent company for qualification requirements, coverage, vesting, benefit/contribution limits, nondiscrimination, and top-heavy testing? I believe that a number of the other 41 companies have their own plans, and I do not get the impression that anyone is looking at all 42 companies as a whole.

Thanks for your help!

An employer is thinking about establishing a cafeteria plan that is entirely funded by the employees. The employer will not pay for any premiums. All contributions will be made by the employees' pretax dollars. Can this be done?

An employee cancels her health care plan during our open enrollment and enrolls with her husbands plan from another organization. Several months later the employee is notified by her spouses employer that she must go back to her own employers health care plan. The reason listed is that her employers plan requires less than 50% employee contribution. If she fails to take advantage of her employers plan she will receive only 20% coverage under her husbands plan.

Is it legal for the husbands employer, a state government agency, to only offer 20% coverage ?

Would the employee be able to re-enroll immediately with her employers plan under the family status change guidelines ?

Am retiring from public school service next year at age 47. What are the tax consequences of distribution of 403(B)(7) monies at that time? What does section 72(t)(2)(A)(iv) state? Thanks.

I own a TPA firm that has grown from about 400 clients to almost 700 over the last 4 years. I expect there are many or you out there fortunate enought to be in a similar situation. We're still very good at what we do, but are having some difficulty managing the growth. Our structure is such that we have 13 administrators, 4 secretarial staff, 2 actuaries and my partner and me. Each administrator handles all aspects of his or her caseload and the average is about 60 plans each. We've never had any middle management and I'm not sure that's still the right approach. I am thinking of going to a "team" approach, perhaps better utilizing the strengths of each of my staff. Finding quality candidates is also tough. For those of you out there who have gone through this, what advice do you have? Are there changes you made as your business grew that really worked well? Have you created any task-oriented positions, such as a "5500-guy"? Any suggestions would be most appreciated.

If an employer filed the first Form 5500 for their Section 125 plan and used plan #999 or 001 instead of 501, should I try and correct the error or just let it go? Since the plans are tracked by EIN and plan number, I am afraid any attempt to get IRS to correct the number will just cause an additional plan to be created without removing the wrong number. Is there a number at the IRS to answer questions like this.

How about a number to find out if a Form 5500 has been filed?

(Refered from 403(B) Board:

With respect to an active minister (3yrs) contributing to a 403(b)plan. What would be "includible compensation" for purposes of calculating the MEA (Maximum Exclusion Allowance)?

- Base Pay

- SECA Reimbursement by Church (=7.65% including Housing)

- 403(B) Salary Reduction Contributions

- Housing Allowance

I have received conflicting opinions as to whether it should be 1) Base Pay only; 2)Taxable Income (Base + SECA), or; 3)Base Pay + SECA + Housing Allowance.

Thanks!

Also, the results of the MEA calculator we are using seem strange when comparing the MEA for 16500 v. 17500 income

($3,000 v. less than $1,500 allowed reduction/contribution)

I also see (IRS Pub 571) a Special Election for church employees in addition to the "any year limit" and "overall limit" which seems to be $10,000 each year to a lifetime max of $40,000. What counts in the $40,000 - the entire contribution in any year you choose to exceed the "general election" or the excess over the general election. I would assume the general election for a minister is never less than $3,000 (unless total comp for the year is less than $3,000). I also assume choosing this special election means the minister could NEVER choose the "any year limit" or "overall limit" - but could continue to use the general limit or "year of separation limit".

Finally, do you use fractional years of service in the calculation? e.g. 3.25 for 3 years, 3 mos service.

Thanks for your help and consideration!

[Edited by JThomas on 08-29-2000 at 09:50 PM]

I seem to remember a regulation or something that says that if an entity is a member of an affiliated service group at any point during the year, the entity is considered part of the group for that whole year. Can anyone confirm this for me with a cite? I can't seem to locate my source now.

Thanks.

An employee now age 65 went to work for a large corporation in Sept. 1962 and quit to take another job in December of 1975. The company had a defined benefit plan during this entire period. Under ERISA rules would this employee be eligible for any benefits?

I have a client whose attorney insists that mutual funds only recently became approved for use in 403(B) plans. I would appreciate any references to authority for their use in such plans. Thanks.

What legal, research and general advice do you recommend before entering into exclusive agreement with a lasik surgery provider that wants to market exclusively to your employees and offer them financial assistance? They've developed a waiver form for employees stating they will not sue the co., its officers, etc. or the provider. What fidicuary responsonibility does the employer have?

I recently left state employment to take a job with the federal government. I have a balance of about $15,000 in my section 457 deferred compensation plan with the state. I have been informed that I must now elect one of the following two distribution options: (a) immediate lump-sum distribution, less 28% withholding tax, or (B) I must state the year I wish to begin receiving annuity payments (the year selected can be changed only once in the future and the change must be to a later date). The problem I have with the annuity option is that I am only 32 years old and am unsure when in the future I would want to begin receiving annuity payments and I don't like the inflexibility about changing the date to begin annuity payments. For example, if I now choose to begin receiving the payments at age 65, but I become ill or disabled at age 60, I wouldn't be able to change the annuity payments to an earlier date. For that reason, I am leaning toward selecting a lump sum distribution, but would be interested in learning any strategies to reduce taxes on the distribution. I know that a 457 cannot be rolled over into any other type of retirement plan tax free. I would also like to put some of the distribution into a Roth IRA and would like to find out if there are any exceptions to the $2,000 yearly limit in this type of situation.

Need info on moving my electronic pension deposite to another finanical insitution. Started receiving my pension

in 1985 so all of my previous contacts and addresses may

not be correct. Need a start from some where to get the

proper forms to make the change. Thanks.

With respect to an active minister (3yrs) contributing to a 403(b)plan. What would be "includible compensation" for purposes of calculating the MEA (Maximum Exclusion Allowance)?

- Base Pay

- SECA Reimbursement by Church

- 403(B) Salary Reduction Contributions

- Housing Allowance

I have received conflicting opinions as to whether it should be 1) Base Pay only; 2)Taxable Income (Base + SECA), or; 3)Base Pay + SECA + Housing Allowance.

Thanks!

I am casting about for general input from TPA's and other self-funded players. Has anyone had to address the question of out-of-network providers rendering services at an in-network facility? This hardly ever seems to be fully addressed in the plan documents I read, amd I was wondering how other people were handling it.

How many visitors to this forum have seen the 8/21/00 issue of Pensions & Investments, p.49 "Fewer Express Confidence"?

The articles highlights several recent surveys that say that participant confidence in their investing skills is declining, that the addition of more fund options has not done anything to improve participant asset allocation, and that, in general, many participants are still clueless about appropriate asset allocation.

This is after almost two decades of advancements in "educational" efforts like interactive software, video, Internet, colorful workbooks, etc. This is one of the first articles that I have seen that shows what I have suspected for a long time - "educational" efforts have maxxed-out. It not only doesn't get any better than this, but things seem to be going backwards (according to Vanguard)!

This could have profound liability implications for plan sponsors in a few years. Consider the cover story on the most recent edition of Plan Sponsor mangazine warning plan sponsors to prepare for a rising trend in participant litigation. (What would a good plaintiff's attorney say is the opportunity cost to a worker who's made dumb or inappropriate (uninformed) investment choices for 20 years? Probably some six-figure number.)

And this is all happening at a time when the latest must-have items on the 401(k) wish list are more tech funds and brokerage windows!

Let's get a lively discussion going on this. Comments anyone? Certainly everyone must have some views on this...

Is it permissible to amend a profit sharing plan right now to add a year end employment requirement for the current plan year that ends on 12/31/00? The regs under Section 411(d) seem to refer to cutting back benefits that have already accrued. I thought I heard or read somewhere that this couldn't be done for a plan subject to Section 412 but it could be done for a PS plan. Any thoughts, cites, opinions are welcomed.

PBGC Regs state that the Form 500 must be filed "on or before the 180th day after the proposed termination date". This clearly sets the outside limit. Is their anything preventing a plan from filing the Form 500 prior to the proposed termination date (ex. simultaneous with the Notice of Intent to Terminate)?

Has anyone ran into the following situation? Using the receivable function (on a share basis) to cary forward a contribution into the next year. Upon working on the next years allocation you notice the client submitted the payments over a period of months so there are multiple share prices. How can this be easily settled? Thanks! JimP