I have read through IRS Notice 2000-3 relating to Safe Harbor 401(k) plans, but have the following question regarding an existing 401(k) plan who wishes to adopt the safe-harbor provision.

Can an existing 401(k) plan still adopt the safe harbor method for the 2000 Plan Year? I read that for 2000, this must be done prior to May 1st and is retroactive to the beginning of the plan year. I see the reason if safe harbor matching contribution method is used, but what if an employer elects the 3% safe harbor nonelective contribution method? Can this be done as late as December 1, 2000 if notice is given to participants prior to this date?

Thanks

JFV

Can anyone give a cite to back up position that terminating 401(k)plan that files form 5310 is "frozen" until receipt of IRS approval?

Have a client that wants to continue to make distributions to terminated participants.

Thanks.

Our company uses QuickBooks Pro 2000 - we have established a Premium Only Plan back in June. When we viewed our 941, it is not showing the correct amount on line 3. Basically, it is taking out the 401k contributions, yet not the pre-tax amounts for medical and dental.

When we set up our medical and dental, we set it up as a POP Plan. Yet now it states it is for use with the DELUXE payroll service only of QB (we have Basic) to have this feature be correct. We just need to know how to set this up correctly so it will report all figures/taxes accurately.

HELP! Please let me know what I am doing incorrectly so our taxes and books will be accurate!

THANKS!

Married couple rolled traditional IRA into Roth IRA in 1998. They have now divorced and as part of settlement wife received a portion of the Roth IRA. She wants to withdraw $5,700 to pay off credit card debt. Does she fall under any exemption of the 10% penalty?

In a quarterly-valuated 401(k) Plans, Plan participants who leave the employment of the Plan Sponsor can take a distribution in the quarter after they leave. As recordkeeper, when the quarter is over, we do the valuation, mail out the statements, then mail termination packages to all participants who left during the quarter, receive the forms back from the participants, then have the trustee issue the check. This process means that participants usually get their checks in the middle of the quarter after they left. So an employee who terminates April 15th, for example, would probably get his check around August 15th. Does anyone have a good way to speed this process up?

While we hate to focus so much time on an issue that is not material to most participants' retirement benefit, we have several Plan Sponsors who have high turnover and are on quarterly Plans. We spend a great deal of time fielding phone calls from terminated employees who want their money NOW. Going to daily valuation is not an option in this situation, for many of the reasons in the daily vs. quarterly debate that are outside the scope of this question.

After all of the recent media hoopla regarding the passage of H. R. 1102 by the House On July 19th, there has been no follow-up about its current status or its next step towards passage. It passed with a +100 vote veto override margin.

Anyone have any info on the progress or lack thereof on the Portman-Cardin Bill? Obviously the political convention season is upon us and that slows the process.

Any info is appreciated.

Regards,

Dave H.

Corporation A terminates its 401(k) plan. Employee Z rolls over the distribution from the 401(k) plan to IRA J. Corporation A is sold to shell corporation B. Corporation B becomes Corporation C. Employee Z is the sole owner of Corporation C and rolls over the amount from IRA J to Corporation C's 401(k)plan. Is this a related rollover?

Client has Sub-S Corp, owned 25% each by himself and 3 over 19 children. The Sub-S Corp (4 employees, all owners)will receive management fees from two LLC's (5 employees in one and 8 employees in other) which Sub-S owns 100% each. If the Sub-S installs 401(k) plan, do they have common control to where the other two LLC's have to be covered?

My query is:

Are the severance pay package offered by an employer eligible compensation from which employee 401(k) contributions can be made?

A law firm opened a branch office in another state. They hired four employees to open the branch, two attorneys and two support staff. The firm wants to allow these four individuals to participate in the flexible spending account (FSA) plan (unreimbursed medical) immediately, even though they normally make new hires wait one year. Their rationale goes something like this: This is a new office and they want to treat these people as if this was a new plan making everyone eligible as of the date the office opened and then subject new hires to the normal rules.

There are about 50 employees at the main location.

Has anyone ever seen this done? Any justification for this treatment? I would appreciate any thoughts you may have.

What about actually setting up a new FSA plan for the new location, with no waiting period, then amending or merging the plan later?

A client received what appears to be a routine notice of a DoL audit of a medical plan. There is a question on the document request list dealing with rebates of premiums. Has anyone had experience with the DoL taking a postion re: what should be done with a premium rebate (allocating it among past participants v. using it to pay future premiums)?

What is the view among participants of providing a wellness service (information, chats, resources, expert counseling) to members through a web-based environment? If properly promoted, would employees embrace this method of learning about smoking cessation, nutrition management, pre-natal care? Do you see them being attracted to the confidential nature of this approach? Thanks for your comments.

Is it possible, when allocating gains, to use "weighted balance (beginning year base)" in a Plan which has transfers between investments in mid-quarter? I value the 401(k) accounts each quarter, and this past quarter all investments had losses, and QT will not allow me to post the loss because it will not accept a negative balance in this participant's account (all funds in a participants's investment account were moved to another investment in the middle of this quarter). I would like to find a way to give this person their share of the loss from the investment they had for the first part of the quarter and "move" the loss to their new investment.

Sole proprietor became C corp 1/1. If corp sets up unit

benefit DB plan can service with the sole prop be counted as past service for benefit purposes? Owner was only employee of sole prop for 8 years and had no qualified retirement plan. Corp has 4 employees.

How long do we have to keep most benefit records such as enrollment forms, plan documents, SPDs, etc? Is there a good on-line resource for this?

Dentist client uses temp service, but the service requires that all temps be on the Dentist's payroll from day 1. The Dentist withholds taxes, pays FICA etc. Dentist pays the agency a fee each month for these temps. If one of these temps is hired by the Dentist on a permanent basis, what is the date of hire?

An employer decides to change all of their insurance carriers (health, life, dental, etc). They provide for an open enrollment period mid year, which does not coincide with their open enrollment for cafeteria plan. Is this a problem, or is this considered a change for which employees can make a corresponding change in the cafe plan? This is a premium only plan.

Thanks.

What regulations, if any, restrict employers from requiring that employees bear the financial responsibility, in whole or in part, for expenses incurred for activities (such as travel on Company business) undertaken at the explicit request or direction of the employer for the employer's benefit?

Can an employer penalize an employee for declining to engage in an activity when said activity would require the expenditure of personal funds which the employer has established will not be subject to reimbursement?

Doesn't such a policy amount to defacto wage garnishment?

I have someone who is taking a distribution of their after-tax contributions and associated earnings. The earnings are included as taxable income, but I can't find guidance on whether there is a penalty tax on those earnings? Can anyone point me in the right direction? Thanks.

As a TPA, we are considering offering daily recording in addition to balance forward. We would prefer to outsource the daily valuation, 800 # and quarterly statements and retain the document and othe compliance work. Anyone know of a vendor providing this service? Thanks.