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

If a SARSEP is nearing the 25 eligible employee threshold, can it PROSPECTIVELY amend its eligibility requirements to exclude more employees (e.g., require service in 3 of previous 5 years, instead of only 1 year), and thus sidestep ineligibility for at least a few years?

If a governmental entity has a grandfathered 401(k) plan, is that plan subject to ERISA (i.e., Title I) or is it exempt because the sponsor is a government (a political subdivision of a state)?

Controlled group situation. Employer A and Employer B 100% owned by the same person. Employer B adopts a plan yet employer A does not. Lets assume 410(B) is not an issue. When an employee transfers from Employer A to Employer B who has a plan, does the employee receive credit for the service with Employer A and therefore would not need to satisfy the eligibility rules and would already have years of service for vesting requirements? Would you consider prior year compensation when determining Highly compensated employees?

What items would fall under the definition of compensation for a church-sponsored 403(B) plan? Where could this information be located in the tax code?

Suppose a target plan converts to a profit sharing. Now they want to add in-service withdrawals. Are there any regulations specifically allowing (or not allowing) this?

For a qualified transportation fringe benefit plan, if an employee regularly reports to two different office locations every week, may the employee be covered for transit and parking expenses between his or her home and each office location? For example, on Mondays, Wednesdays and Fridays, employee X reports to Office 1 in City A. On Tuesdays and Thursdays, employee X reports to Office 2 in City B.

There are many questions about 414(h) pickups-

Can anyone offer a brief summary of what this is all about- and can a Government Plan offer a Money Purchase Pension Plan under 401(a) with a mandatory 3% pre-tax contribution? how would you set this up.

A plan has a target benefit contribution at year-end. The plan sponsor (employer) would like to submit a set dollar amount per month to the bank trustee to be invested. The actual allocation would still be an annual allocation but they would still like to remit funds to the trustee monthly. The money would be put into a suspense account, where the employer would direct the investments. In the case where the market takes a dive and they do not have enough in the account to allocate to all participants, they'd be required to submit additional money to cover the contribution. Would that additional money be deductible to the company? If the market went the other way and the account earned more than what was needed for the allocation, would the additional funds have to be allocated to all participants in the plan (not just those eligible for the allocation)?

Can the employer set up an account in the plan?

My suggestion has been to set up an account outside the plan, but the employer seems insistent on having the account inside the plan. Any suggestions?

Assuming that a sound pre-installation ESOP study has been completed (and confirms that an ESOP will satisfy the plan sponsor's objectives), what are the next steps that must be taken to actually install an ESOP? Assume that the plan sponsor is a C-corporation. Thanks.

I am currently participating in my company sponsored 401k, my wife is a teacher and has a403b plan. Are we eligible to open Roth IRA's in addition to our other retirement accounts?