I have a situation where a 401(k) Plan has an immediate entry for deferral purposes, but a 1 year wait (12 months, 1000 hours) for the Match. Circumstances with this plan have caused it to become top heavy. What we are trying to determine is that we have several people who work anywhere from 1 to 10 days per month (150 - 750 hours per year), but permanent employees. They do defer from time to time, but have never become eligible for any employer contributions nor have they ever accrued a year of service. Are they due top heavy minimum contributions?

Hi,

I was planning on starting a ROTH IRA for capital gains on a mutual fund for 1999. Is it too late to start a Roth IRA for 1999. I have already claimed the capital gains on my income tax and wanted to get the IRA set up for last year's cap. gains. Thanks for your help in advance. Great board!

Barbra

Does anyone out there know of a good reference, preferably online, for determinations of experimental/investigational treatment? This is a constant issue in our office, and we really need a reliable, up-to-date source for this type of information. Any ideas?

Any guidance, references on what health plans are suitable for very small employers?

I'm thinking about converting a traditional IRA and Rollover IRA into one Roth IRA(combine the funds). For tax purposes, I'm thinking that the taxable income would include all of market value of the rollover IRA and the portion of gain on the traditional IRA(would not include my $2000 dollar contributions since this was after tax dollars that I already paid taxes on). Does anyone have any info. or know where I can get an answer. I tried the IRS but all that was offered was the automated telephone messages..

Any guidance, references on whether cafeteria plans are suitable for very small employers? The only real benefit would be a scaled down health plan.

Our company has just begun administering our own flexible spending accounts. What tests do we need to perform for Non discrimination testing? If you can direct me to an online resource for the rules I'd appreciate it.

Facts: covered employee gives birth but fails to enroll dependent with 30 days (special enrollment period).

Issue: Is there an exception, express or implied, to the special enrollment period rule when enrollment of the newborn dependent would not affect the premium paid? In other words, can (or must plan sponsor permit) a covered employee wait until after the 30 day period has expired to enroll the newborn when the enrollment will not affect the premium amount?

Second issue: assume that covered employee in above example receives the required special enrollment rights notice after the birth of the child. Does the 30 day special enrollment period begin on the date he or she receives the notice?

Thanks

I have a client that would like to extend COBRA coverage for certain eligible retirees beyond the normal COBRA maximum period. In general, they would like to cut off this extension when the retiree becomes entitled to Medicare. If the spouse and/or dependents elect COBRA at the time of the employee's retirement, I believe I am correct in saying that the spouse/dependent would have a second qualifying event when the retiree becomes entitled to Medicare giving them the right to 36 months coverage from the date of the first qualifying event. But what if the employee is age 63 when he retires, i.e., the Medicare entitlement date is more than 18 months after the employee's retirement date. Do the spouse/dependents have this same right? It looks like the final regs. say they do. See 54.4980B-7, A-7© and the preamble. However, this doesn't seem consistent with the statutes. Anybody have any thoughts?

Would a terminating profit sharing plan that contains accounts rolled over from a money purchase pension plan formerly sponsored by the same employer (the plans were merged) be subject to notice requirements under ERISA Section 204(h)? I am thinking the answer is "no" because benefits aren't accruing under the PSP. Any comments welcome.

In completing the Schedule A for a Form 5500 for a profit sharing plan with individual ancillary life insurance policies for some participants, should I complete Part II which looks very similar to what I completed in the past or Part III since I said that the plan provides welfare benefits in accordance with page 14 of the instructions?

I'd appreciate some opinions on what constitutes a "more than de minimus" comp differential for 414(s) testing for DB plans.

If a DB plan excludes bonuses, for example, and all HCE's are at the dollar limit, therefore recognizing 100% of their comp, and the NHCE comp ratio is 98%, is this a violation of 414(s)?

Assume the plan is a safe harbor and wishes to avoid general testing.

I realize this is largely a matter of opinion, but I'd like to hear what standards others use. We tend to take a very conservative approach, i.e. any greater percent for HCE's may be a problem.

I am in the process of drafting GUST amendments to an individually-designed DB plan which provides different benefit formulas for different groups of employees, but my question involves a non-GUST issue. The basic benefit formula in the plan provides that a participant's "annual rate" of retirement income will be x% of his final average compensation "at normal retirement date" times his years of credited service "at normal retirement date." "Normal retirement date" is defined as the first day of the month following a participant's 65th birthday. A participant can keep on working past age 65 and retire at a date later than his normal retirement date. The plan contains a suspension of benefits provision that appears to comply with IRC Sec. 411 and ERISA Sec. 203. However, it contains nothing expressly stating that a participant who is entitled to benefits under the basic benefit formula and keeps on working past his normal retirement date will continue to accrue benefits for his post-normal retirement age service. Nor is there any language stating that such a participant will receive the greater of (i) the actuarial equivalent of his normal retirement benefit computed as of his normal retirement age, or (ii) his normal retirement benefit using years of service (including those completed after age 65) and applicable compensation determined as of his actual retirement date. It seems to me that there may thus be a violation of IRC Sec. 411(B)(1)(H). A second benefit formula (applicable to a different group of employees) states that the "annual rate" of retirement income will be x% of the participant's final average compensation "at his normal retirement date or later retirement date" times his years of credited service "at his normal retirement date or later retirement date." This formula seems to comply with 411(B)(1)(H). Am I missing something about the first formula? Could a plan have a formula like that and still comply with 411(B)(1)(H)? It is my understanding that the plan got a TRA 86 determination letter. Any help or insight is greatly appreciated.[Edited by janie on 09-13-2000 at 05:01 PM]

An employer has just noticed that an employee was inadvertently not allowed the opportunity to defer at 1/1/00. The plan document states that a partcipant can commence deferrals on 1/1 and 7/1. Since this person was not given the opportunity at either of those dates, is there a problem with letting the employee commence deferrals now?

Obviously if we could allow the employee to defer now the employer is stuck with only a partial year correction under Rev. Proc. 99-31.

Thanks for you help.

I am new to Cafeteria Plans but have been administering Qualified Retirement Plans for years. I am going to be taking over the administration of our clients Cafeteria Plans and wanted to see what thoughts existing administrators have on software options. Any input would be greatly appreciated.

Does the IRS or the DOL have any definitive regulations (guidance)for a Loan Default? Does a specific amount of time have to pass before the loan is in default? Is a Plan Administrator the only person who can deem a loan in default? Thanks to all who can give guidance on this issue. DSW

I'm sure this has been asked before, but I can't find it.

If a brand new company starts 1/1/00 and has a plan effective 1/1/00 are there any HCE's in the Plan for the first plan year (Note that there are no owners participating in the Plan).

There are several officers (not owners) earning >80,000 in 2000. However, for the prio year (1999) there were no employees.

Are all participants considered NHCE's for 2000?

Nondiscriminatory classification test- 125 plan

1.Would full-time employees be considered a reasonable classification (i.e. 125 plan includes anyone eligible for medical but medical plan excludes part-timers)?

2. Who is considered benefiting,anyone who is eligible to participate in 125 plan or must it be those actually participating?

3.If the ratio % is below the unsafe harbor % does this automatically fail test or can one use a facts and circumstances approach?

It seems to me that this is a 2 prong test consisting of;

1) subjective classification test and

2)objective safe harbor test

Say 2) is met, i.e. ratio % is more than safe harbor %, when would 1) be not satisfied? Refer to question 1. above, I have an employer with a disproportionate share of part-time ees , almost 75-80% of non-highly workforce and 50% of highly workforce, but the objective safe harbor test is satisified since there are many of them , i.e, my concentration % is 96%

This question may be a mute point if part-time is a reasonable classification

I am reallly rambling now

and I thought pension coverage testing was hard, it just seems more defined I guess, making bright line testing easier.

Thanks for any input

Pat Insall, CPC

125 plan fails 25% concentration test for 1999 calendar year.

It is a premium only plan (POP) with medical premiums taken out on pre-tax basis of ee's pay

What is HCE taxed on , amount of pre-tax ee premiums withheld or maximum they could have withheld under highest option?

What are the mechanics of correction? amended 1999 W-2 including above amount and an amended 1999 1040?

Thansk

Two Questions:

1) Has anybody seen/heard of a DB plan using a df. of compensation for purposes of computing benefits which includes nonqualified deferred compensation? (assuming the plan can pass nondiscrim. testing, I believe the DB plan can use such a df.)

2) Any problem with including deferred comp. in the df of comp. but provide in the plan document that deferred comp. will not be included in any plan yr. in which nondiscrim. testing cannot be passed? Does this violate the definitely determinable benefits requirement of Reg. 1.401-1(B)(1)(i)?

Any thoughts would be appreciated.