I have a client who accepted a rollover check on 6/24/00. The check (which was dated 4/27/00) was drawn from another qualified plan and was made payable to the trustees of the new plan. The Plan Administrator proceeded to obtain investment instructions, etc. Today is 7/5/00 and the check is now ready to be deposited to the trust. Do I have a problem with the 60-day rollover rule?

A participant has a deferral account balance of $6,000; $4,500 in deferral and $1,500 in earnings. He takes out a loan for $2,000.

Some time after the loan, he is eligible for a hardship distribution. Assuming that the account balance has not changed, how much can he take as a hardship distribution? The account now has $4,000 in other investments and the $2,000 loan balance.

Can he take the full $4,000? The $6,000 account balance less the $1,500 earnings, that must stay in the plan, equals $4,500.

Or, is he limited to $2,500? The $4,000 in other investments less the $1,500 in earnings.

I believe that he can take all $4,000 of the other investments. The $1,500 in deferral earnings that must stay in the plan is still there, invested in the loan note.

You are 73 and you die. You are single and have three sons aged 41-46. Your IRA has $2,300,000. You have to pay estate tax but can the balance be tranferred to the heirs and they can pay it as they take some kind of minimum distribution thru their lives?

I am 68 years old and in good health. I have $1,500,000 in a traditional IRA all in stocks. I am debt free and need very little to live. $25,000 yearly is all I need to be happy and take care of all needs. I have three sons I want to leave as much as I can when I pass. Uncle Sam is not one of them. I plan to sell off about $250,000 in 2000 and another $500,000 Jan 1, 2001. I pay the taxes in 2000 and pay witholding for the $500,000 and both come to about $300,000. I then convert $750,000 to $800,000 to a Roth and I pay the $320,000 out of the personal account. I leave it alone for 5 years. Say it grows to $1,500,000 and the estate deduction is $1,000,000. Is this estate tax immune from estate taxes?

A man dies is Sept 99. His estate is valued at $975,000. Included is an annuity valued @575,000 which gained $275,000 since started and a IRA worth $125,000. The estate taxes of about $77,000 are paid. I assume he now has to pay income tax on the $275,000 annuity gain and then IRA of $125,000 for a total of $400,000. that means a tax bite of $160,000. Question? Can you distribute the 00,000 to the heirs ( who are in a lower tax bracket)and let them pay the tax as income for this year?

A new SIMPLE 401(k) Plan is established 7/01/00 with the proper notice to employees. The employer elects the matching formula. For determining the match amount, is it comp from 7/01/00 to 12/31/00 or the entire calendar year? In other words, an employee may defer 3% from 7/1 to 12/31, which is 1 1/2% of annual pay. Is the employer match 100% of the 6 month deferral (1 1/2% of pay) or 3% of calendar year pay? The employer wants the latter result. Alternatively, could the effective date be 01/01/00 to include full-year comp? Thanks.

I have a Governmental Organization that is interested in setting up a VEBA for Post Employment Health Benefits. Are there any limits on how much an employee and/or employer can contribute on an annual basis?

What is the order for correction when a participant violates more than one limit?

(AA limit, 402(g)limit, 415 limit)

Also when violating the AA limit, does the money get adjusted for the ADP test or is it left in the test?

A competitor for providing bundled DC Plan services recently approached a client with the offer of free ancillary services for senior executives. Basically they told the client that if they moved their DC plan they, the competitor, would provide senior executives of the company with free comprehensive financial advise. This advice would cover both plan and personal investments, as well as insurance needs. This seems to me to violate ERISA particularly with respect to using plan assets for the sole benefit of its participants. I explained to my client that if the competitor provided the advice to all plan participants there would not be a problem. However, by limiting it to a particular subset of the plan population I believe a violation would occur Was I right?

In reading a response to another question, Carol Ringwald mentioned that having IDA's in a plan can cause headaches with 5500 filings.

We have several daily plans that allow some employees to have a PCRA (Personal Choice Retirement Account or IDA)while everyone else is participant directed. This is the first year we have done this. What kind of problems will we encounter with the 5500's for these plans?

I am looking for an employer who covers InVitro Fertilization (IVF) in their health plan. Any ideas as to how I may conduct my search? As IVF coverage is expensive and unusual I was hoping benefits professionals may be able to help.

Thanks in advance,

Steve

We have a plan that the plan sponsor went out of business without notifying the plan recordkeeper. Participants are requesting distributions from the plan but we are unable to locate the plan administrator or plan trustee. It appears that the plan should be terminated but we don't have the authorized signatures to start the termination process and distribute the assets. Has anyone else had this situation and know how to proceed?

A participant has a deferral account balance of $6,000; $4,500 in deferral and $1,500 in earnings. He takes out a loan for $2,000.

Some time after the loan he is eligible for a hardship distribution. Assuming the account balance has not changed, how much can he take as distribution? The account now has $4,000 other investments and $2,000 loan balance. Can he take the full $4,000? $6,000 account balance less the $1,500 earnings is $4,500. Or, is he limited to $2,500? $4,000 in other investments less the $1,500 in earnings.

Just came across this interesting little tidbit in Reg. 1.415-6(B)(7)(ii), relating to whether an employer contribution made to a retirement plan (401(a) or 403(B))counts toward an individual's 415 limit for a particular calendar year:

"If, however, contributions are made by an employer exempt from Federal income tax under section 501(a), the contributions must be made to the plan no later than the 15th day of the sixth calendar month following the close of the taxable year (or fiscal year, if no taxable year) with or within which the particular limitation year ends."

Yet we have Code Section 412©(10), which tells us that employer contributions to dc plans must be made within 8 1/2 months (2 1/2 months, extended by regulation to 8 1/2 months) of the close of the plan year.

Let's say a tax-exempt sponsors an ERISA 403(B) plan with a annual discretionary contribution, and makes its 1999 contribution on 7/1/2000. Even though the Code deadline for that contributions is technically satisfied, does the contribution now count toward the 415 limit for 2000, not 1999, since the contribution was not made by 6/15/2000 (a potentially huge 415 limit trap for the unwary)? Or am I missing something?

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Mike W.

A participant terminates at age 65 with a high-3 compensation limit of $4,000 per month, obviously well under the dollar limit. Because he is terminated, his $4,000 can be increased with cost of living, say to $4,100. Therefore, his monthly benefit can actually be higher than his actual high-3 year average.

Can this cost-of-living-increased 415(B)(2)(B) amount (eg $4,100) be paid out in the form of a lump sum, or would this only be payable in an annuity form?

Thanks for any input!

Terminated employees are receiving severance pay for a period of 1 to 1 1/2 years. Could a 125 plan provide that the COBRA premiums can be deducted from severance pay on a re-tax basis?

An employer put in money each pay period to a discretionary profit sharing plan (single pooled account) at a rate of pay (say 4%) for all. Now, after PYE, he is told that some of the ees are not eligible. He still wants to allocate the 4% to the eligible employees. He could allocate everything deposited, but he doesn't want to. He would rather take it back or carry forward to fund next year's 4% contribution. Can he get the money out? Since this is not a true excess contribution, I can't find guidance on whether he can back it out, or what his options are. Any help?

I've been reviewing IRS Publication 503 regrading allowable Dependent Care expenses and don't quite get one thing in particular.

Under 'Expenses Not for Care' (subheading of 'Care for a Qualifying Person') the publication states 'Expenses to attend 1st grade or higher are not expenses for care.'

This means to me that expenses to attend kindergarten would be allowable.

However, under example #2 it says that money paid for kindergarten is not allowable,only the portion of money paid for the after-school program.

Is this contradictory or am I not getting it?

A DB plan has 7/1/99-6/30/2000 plan year. Plan defines comp as average of high 5 calendar years of comp.

Participant retires 10/2000 and earns $200,000. Is his comp limit for 2000 $160k or $170k?

Would the answer be different if he retired 6/30/2000 (and earned over either limit)?

Would it be of significant advantage for a small business employer (3 ees) to age-weight his PS and MP plans to minimize the contributions to the non-key ees? What kind of testing is necessary besides 415© and 401(a)(4)?