I have two daughters presently in college and I would like to start a Roth IRA for them both. What is the mininum or maximun amount of money I would have to contribute on a monthly basis?

I am working with a Trust Company (A Holding Company) that is issuing a separate class of stock to a number of other smaller Trust Companies around the country that it is acquiring. We will be filing a consolidated tax return, but the acquired companies will maintain their idenity and operational control. The questions is can we maintain the separate benefit plans that these acquired companies presently have, and if so, do we have to aggregate them for testing purposes? What about employees; can they continue to be paid by their existing company, or do they have to go on the payroll of the Holding Company?

It is my pleasure to announce the Employee Benefits Congress 2001. Sponsored by the International Quality & Productivity Center (IQPC), Employee Benefits Congress 2001 will be taking place at the Sunburst Resort in Scottsdale, AZ, March 6-8, 2001.

The presenters at Benefits 2001 will show you how to leverage your benefits to become an employer of choice! You will learn how to use web technology to maximum advantage to not only transact your benefits business processes but also to deliver services quicker, easier and more effectively. These are just a few of the take-aways you'll learn at Benefits 2001.

For detailed information about Benefits 2001, please email me at marilyn.steinthal@iqpc.com. I will be pleased to get out to you our early-bird agenda. Sign up now for the conference and get an instant free workshop (value $400)! Email me and I will register you immediately!! Offer expires November 1st!

If you have an exciting story to share at Benefits 2001, please contact me immediately at marilyn.steinthal@iqpc.com!!

See you in 2001,

Marilyn Steinthal

Managing Director

973-812-5186

We have a calendar year cross-tested PS plan with a last day rule. On 10/2/00 ten employees walked out of the office leaving behind five HCE's and two NHCE participants. In order to pass the coverage test, I brought in the terminated participants who had the most hours and was able to pass coverage by giving contributions to six of the terminees.

For the cross-tested formula, I have three categories: 1 - physicians, 2 - actively employed staff members, and 3 - terminated staff members. Do the Class 3 employees have to receive a minimum 3% top heavy contribution if Classes 1 and 2 receive in excess of 3%? The plan is top heavy for 2000.

Suppose an employer receives a federal construction contract which requires it to comply with the Davis Bacon Act. Under the Davis Bacon Act, the employer is required to pay its employees a "prevailing wage." The employer would like to pay a portion of the "prevailing wage" in the form of a "bona-fide fringe benefit." Specifically, the employer will "contibute" an amount equal to the cost of single/family health insurance (whichever was elected by the employee). For all practical purposes, this means the employer gets a "credit" towards its payment of the prevailing wage.

In this case, the employer's health insurance plan, which is self-insured, has a COBRA premium rate of $142.51 for single coverage and a COBRA premium rate of $406.16 for family coverage.

Further, suppose the employer's work on this contract is seasonal so that some of its employees work nine months and are laid off the other three (only to be brought back in the spring). In order to determine an "hourly" charge for the fringe benefit contribution, the employer has assumed the employee works, on average, 140 hours/month for the nine month period of active employment. Thus, the hourly "single premium" charge is calculated as follows:

140 hours x 9 months = 1260 hours per year

$142.51 x 12 months = $1710.12

$1710.12 divided by 1260 hours = $1.36 per hour for single health insurance benefits

The employer would like to create an hour bank that will operate as follows:

       Total   DB     Benefit  Benefit  Current   Cumulative

Month Hours Hours Earned Cost Bank Bank

1 0 0 0 142.51 (142.51) (142.51)

2 0 0 0 142.51 (142.51) (285.02)

3 0 0 0 142.51 (142.51) (427.53)

4 150 150 204.00 142.51 61.00 (366.53)

5 160 160 217.60 142.51 74.60 (291.93)

6 150 150 204.00 142.51 61.00 (230.93)

7 160 160 217.60 142.51 74.60 (156.33)

8 160 160 217.60 142.51 74.60 (81.73)

9 160 160 217.60 142.51 74.60 (7.13)

10 140 140 190.40 142.51 47.40 40.27

11 140 140 190.40 142.51 47.40 87.67

12 60 60 81.60 142.51 (61.40) 26.27

Under this hour bank program, the employee must use the amounts allocated to his/her hour bank account to pay for benefits during the months he/she is laid-off (January through March). Is this permitted under the Davis Bacon Act? Specifically, does this violate the requirement under the Davis Bacon Act that fringe benefit contributions may not be used to fund a fringe benefit plan for periods of non-government work?

Finally, please consider the fact that non-prevailing wage employees for this employer are paying nothing towards the cost of health insurance.

I have some very basic questions about a Roth IRA:

1) I actively participate in an employment-sponsored retirement plan and make about $35k a year. Is a Roth a good choice? As far as I can tell it would be, but I've heard that contributing to a Traditional would really make no difference for me since not too much of it would be tax deductible under current rules.

2) I understand there are income limits affecting contributions to a Roth IRA. Let's say that I start a Roth and 20 years down the road (I will only be 42) I find myself exceeding the income limit, making me inelgible to contribute to a Roth. What happens to the IRA? Does it just stay a Roth, except I can't contribute, or would I switch itto something else?

3) Knowing something about my situation, is there anything else I should know?

Thanks

We are considering immediate eligibility for participation in our 401(k) Savings Plan, eliminating the current 6 month waiting period.

If we decide to make this change, does anyone know of any ERISA or other requirements that obligate us to ensure an employee can enroll and contributions begin within a certain time frame? Any suggestions/experience on this is appreciated.

THANKS!!

I've retired early and now make my living as an active, full-time private investor. I could qualify as "trader" for some of my activities, but I prefer to seek long-term capital gains, and marking to market would not help me at the present time. And, my expenses are not so large as to make Schedule C worthwhile.

Am I eligible to contribute to any sort of IRA, including a Roth IRA? Or, am I totally out of luck in terms of being able to contribute to any retirement program?

Thanks,

JSB

A plan provides a gross accd ben of 1.5% of FAP * CS (unreduced at age 62),

and an offset of 2/3 of the age 62 soc sec benefit.

Clearly a short service employee based on the formula above could have an offset larger than the gross benefit.

This seems ridiculous.

However, we don't see too many SS offset plans nowadays and I'm not sure of the restrictions. I've seen things like limited to 50% of gross benefit, prorations for service/proj svc, etc.

The Plan also says eff 1/1/89, the offset shall not be greater than what is allowed by law. My first reaction is that that means no more than say the 0.75% of cov comp per year, with adjustments for commencement prior to SSRA and differing SSR ages.

Any thoughts on what is specifically in violation w/r/t this formula and more importantly how this can be researched in greater detail.

Of course my understanding is that a plan need not pass integration to pass non discrimination, but this seems a bit out of hand.

PS this is a company that is a railroad company and I don't know if that is relevant in this situation.

Look forward to getting help.

I looked at Code Section 72(f), and still am not sure how contributions to a 403(B)(1) will be treated. Do those contributions form a cost basis in the contract - e.g., go in tax deferred and come out not taxed? Does it make a difference whether the contributionsa are voluntary salary deferrals, or employer contributions? Yep, I should understand the Code - but, in this case, am getting tangled up in the language, and am being asked questions about 403(B) for foreign missionaries for the first time! Thanks for your help.

Company X provides a cafeteria plan to its employees. Employees are permitted to elect annually the coverages they will receive during the following year. However, with respect to dental coverage, an employee's election remains in effect for two plan years, in the absence of a change in status. Is a two-year lockout a violation of the cafeteria plan rules? If so, on what basis?

Hi,

I am new to the whole Roth IRA concept. I was wondering if someone could answer me this: I have a mutual fund started through Janus and heard that you could dump your mutual fund into the Roth IRA account. Is this possible (or did I hear wrong) and how would this work?

Thanks,

Fia

Has anyone else run into terminated participants who are rolling money over to a new employers plan that requires a letter from the "old plan" that it is a qualified plan? By the way in both cases we've rec'd the request the money was coming out of a group contract with a major carrier!

We have a client that has been a chronic late-depositer of 401(k) contributions. They are currently being audited by the DOL re: 1997 and 1998 late deposits. They have yet to file a 1999 5330 for same reason. Turns out that after 1998, they paid 15% tax on entire payroll amounts that were not deposited (about $5,000). My understanding is that, normally, tax would be paid on amount not deposited multiplied by some (lost) earnings factor.

Has anyone filed an amended 5330 and gotten money back? Is this opening the plan for more scrutiny? I'd like to wait for resolution of current audit before filing 1999 5330. How significant are penalties for late filing?

A participant has requested a copy of the Summary Plan Description that was in effect for the 1988 (yes, 12 years ago!) plan year. The sponsor no longer has it. What obligation is the sponsor under to retain and/or provide an old Summary Plan Description? The participant has also requested (unsuccessfully) a copy of the SPD directly from the DOL.

How are people handling plan document updates for the final and proposed Sec. 125 regulations? Is there any point in amending for compliance with the final regulations (e.g., change in status for group health/accident/long term life insurance), and then restating when the proposed regulations are final? Or restating for everything now and doing a "tune up" amendment if needed after proposed regs are finalized? How about operating the plan in accordance with final and proposed regulations, before plan is amended/restated (then making amendment/restatement retroactively effective as of date procedures changed). Finally, what are the prototype document providers out ther doing??

A new client of ours has not filed a Form 5500 since 1994 for its cafeteria plan. It is entirely funded by employee salary deductions for medical and dental insurance premiums and has no trust. There have been several changes in controllers over this period of time, but I have been able to talk to one of them that was at the Company during part of that time period. He indicated to me that he contacted the IRS and they informed him of some obscure revenue ruling that exempted this type of plan from filing a Form 5500. Can anyone tell me if this is true?

We have a situation where a covered dependent lost coverage under our plan effective Jan. 2000 due to his ceasing to be a dependent under the terms of the plan (i.e., he turned 19 and was not a full-time student). As a matter of practice, when covered dependent turns 19, our TPA sends the dependent a notice that coverage is terminating and the dependent or the employee-insured needs to notify them with respect to whether full-time student status is maintained.

In this case, the dependent, who is not a full-time student, did not reply. We never sent COBRA election forms. Recently, the dependent and the insured have come to us and asked for COBRA. Can we give him COBRA now? Can we do it retroactively, assuming he pays the premiums?

Will a participant satify their Minimum Required Distribution if they withdraw the required amount from one source (segregated account) within their 401(k) plan? Given a plan has after tax contributions, you can see where participants could minimize their tax liability by withdrawing from just the after tax money. Would the 72 regs affect the proportion of the after tax withdrawal?

Can money purchase plan contributions be reported on a cash basis on Sch. H and/or Sch. I? Can the money purchase plan be reported on a cash basis but contributions to the plan reported on an accrual basis?

If a money purchase plan can report contributions on a cash basis, is it okay to show zero for contributions on Sch. H or Sch. I if the contribution for the 1998 calendar year is deposited in 1998 and the contribution for 1999 is deposited in 2000?

Answer I got from the IRS was yes, and zero should be reported in above situation (of course, 1998 5500 would have had to show both contribution for 1997 and 1998 if both contributions were deposited in 1998).

Does anyone use the "modified cash" method? What is this method?