I have a controlled group consisting of corporation A,B,and C,each of which sponsors its own plan for its own employees. None of the cg members costitutes a QSLOB,so my coverage,participation,and non-discrimination testing must be done on group-wide basis. My understanding of the testing process is that I'm testing on a "per plan" basis,i.e.,in testing Plan A, I'm only considering those non-excludable employees of Co. A who accrued a benefit or received an allocation as "benefitting". The employees of Cos. B and C are considered as not benefitting under Plan A,even though they they are benefitting under their own respective plans.Is this the correct way to perform the coverage and (if applicable) the participation tests.

A second question: If Plan A,B, and C individually are safe-harbor plans,is my testing complete? Or must the accrual/allocation rates be tested regardless?

Let's say a plan sponsor of a profit sharing plan has elected a discretionary provision in her plan with a pro-rata on comp allocation formula. If she can afford it she makes a contribution but if she can't then she won't. I know Treas. Reg. §1.401-(a) isn't violated and the service doesn't have a problem (last I heard) with this election.

Now let's say the plan is a 401(k) plan with a match. The match contribution requirement is discretionary as in the profit sharing plan. But the allocation formula is 10% of salary deferrals up to a discretionary percent of eligible compensation.

Does this "double discretion" violate the "definite formula" provision of Treas. Reg. §1.401-1(a)(2)(ii)? If so, is there a correction available?

A plan is anended to a cash balance plan a few years ago. All that exists are amendments and resolutions, but no restated document. The current docs are w/r to the prior traditional pension plan. The conclusion is that the plan has been significantly changed with extensive papre trails of changes, but no doc. Is there a law against this, when it is to such a large extent? The amendments and resolutions are barely comprehensible due to how lengthy and confusing they are. Any comments out there?

Plan provides opening balace using a relatively high interest rate. As a result there is signinficant wearaway. Are there specific rules against this or is it just tough luck to the employee?

This is w/r to a cash balance plan

This past April, I had a traditional IRA with contributions I had made for the 1998 and 1999 tax year. I had happened to contribute to one mutual fund for the 1998 tax year, and a different mutual fund for the 1999 tax year. In April (around the 5th of the month), since I couldn't afford to convert the entire balance of the IRA (1998 + 1999), I only wanted to do a partial recharacterization of my 1999 contributions to a Roth IRA. My financial institution, First Union, told me that this transaction would have to be based on the entire value of the IRA (contributions + growth from the 1998 fund), not just the contributions I made for tax year 1999. This seemed to agree with what I have recently read on your co-sponsored Rothira.com website: "If you have an account where some assets have increased in value while others have decreased in value, you cannot get the benefit of the decrease by only recharacterizing the losers. The account is viewed as one big pot, and the computation is based on value, not on specific identification of assets."

I filed for a four month extension for my taxes. When the Roth account was finally set up, it was May, but First Union made a mistake by recharacterizing the share amounts of the wrong fund. I left those shares in the Roth account, and had the other fund's shares recharacterized to a Roth. This went through in June, but a representative told me they would be backdated to April 11, 2000. Currently, I have an IRA worth roughly $1700 and a Roth IRA

My question is: When I calculate my 1999 taxable IRA contributions/conversion amount, should I use the value of the funds as of April 11, or the value at the individual dates that the funds were converted by First Union? Also, am I to base the partial conversion on the total value of the fund shares converted, minus the basis for my 1999 (post-tax) contributions and the ratio for my non-deductible 1998 conversions?

A company's stock is traded over-the-counter and listed on the NASDAQ bulletin board. Does this satisfy the definition under Treas. Reg. section 54.4975-7(B)(1)(iv) of "publicly traded" for purposes of the ESOP requirements of a put option and an annual valuation and the prohibition against a right of first refusal on ESOP stock?

I can't find any guidance on point. The closest I have found is a PLR which says that stock traded on the "pink sheets" is not "publicly traded" under that definition. However, the "pink sheet" system is not the same as the NASDAQ bulletin board.

Based only on a reading of the definition, my thought is that the bulletin board constitutes "publicly traded," but since it will affect the way the company's ESOP must be administered, I would like something a little firmer to go on, such as any sort of IRS interpretation, written or oral.

One of our business units recently acquired another company who had offered their employees a PPO and an HMO option. Our company will now (effective 8/1/00) be only offering the employees at that site a PPO option only and will be eliminating the HMO plan. However, one of the employees who was on the HMO plan with the prior company would like to continue with that plan since his wife is pregnant and the HMO will pay 100% of the costs. They've decided that the best way to handle this if for the husband (who is our employee now) to take the PPO plan and the wife to elect COBRA so that she can continue the HMO plan. Once the baby is born obviously the baby can join the PPO plan, but can the wife also join the plan mid-year? Is that considered a qualified status change? If so, does it abide by the consistency rule?

Can a self-employed individual whose children are employed by the business establish an employer-funded medical expense reimbursement plan covering the children (and other employees of the business)?

Can a self employed individual whose children are employed by the business establish an employer funded medical expense reimbursement plan covering the children and any other emlpoyees of the business?

Does anyone know of a good ESOP training course?

Is a SIMPLE IRA plan a "successor plan" under the 401(k) rules?

Has anyone in the metropolitan NYC area implemented a TransitChek program on a pre-tax basis? It is a program we are looking to implement in the near future so I am looking for feedback (problems, solutions, etc.) Thanks.

When an employer reimburses participants for deferred sales charges by making a contribution to their account, does the plan document have to include language that permits this type of contribution? What is the contribution typcially labeled, miscellaneous?

On the 1999 Form 5500 Schedule T, it allows for reporting of the ratio percentages for disaggregated parts of a plan on the Schedule T itself without attachments. What do you do if a plan has a discretionary profit sharing source, but did not make a contribution for 1999?

In previous years, we completed an attachment for such sources and indicated that "No HCE's benefited". However, there is no where on the Schedule T to indicate that, for a particular source, no HCE's benefited.

Should a separate Schedule T be prepared for such sources? Or should the disaggregated source be listed without a percentage? with a 100% percentage?

Thanks for your help!

Suppose that a 401(a) plan of a bank invests the plan's assets through the bank's trust department. The DoL will take the position that the bank may charge "direct expenses" to the trust but not its standard trust fees. (If a customer walked in off the street with a trust account identical in size to the 401(a) plan, the bank may not charge its standard asset based money management fee.)

Why is the result any different for mutual funds? I keep reading articles (For example, see the Reish & Luftman law firm article on the First Union litigation.) That bank's plans invest through the bank's mutual funds and the bank receives asset-based money mangement fees from the plan.

If a bank is not permitted to keep an asset based fee when its trust department manages the money, why is it able to keep the fee when its mutual fund operation manages the money? [Edited by Dave Baker on 08-06-2000 at 10:50 PM]

Ltd is offered as a core benefit unde ra 125 plan.

It is after-tax

Does the fat that it is offered thru a 125 plan change the tax treatment when disability benefits become payable?

Thansk

Pat Insall

In part, Rev. Proc. 2000-16 Part III, Section 6.02(4)(B)(ii) states the following:

"Excess Amounts (whether arising from a section 415 failure or a section 403(B)(2) failure), adjusted for earnings through the date of correction, must reduce the participants' exclusion allowances by being treated as amounts previously excludable under section 403(B)(2)(A)(ii) beginning with the year following the year of correction (or the year of correction if the employer so chooses)."

If the Excess Amounts themselves have been left on employer records as non-forfeitable contributions/annual additions during the years they were contributed and continue to be counted as amounts previously excludable under section 403(B)(2)(A)(ii), does the Rev. Proc. statement mean that these same Excess Amounts are to be counted again as amounts previously excludable (amounting to a double-whammy), or should only the earnings through the date of correction be treated as "new" previously excludable amounts?

What is current thinking about compensation systems based on point factor systems? Further, what are benefits professionals doing to eliminate the use of grades for certain benefits such as office size, parking spaces, and similar benefits/perqs.

Can dependent and spouses group term life be offered through a 125 plan?

Pat Insall

Can one design a 125 plan as such

Employer will pick up 75% of benefits selected

Benefits offered medical, medical FSA & dependent care FSA

If ok, does anyone see any problems with this design?

Much thanks

Pat Insall