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

My employer maintains and makes contributions to a Money Purchase Pension Plan and a Profit-Sharing Plan. I do not make any contributions to the plan nor take any deductions. I was wondering if I can open and make contributions to a Roth IRA? Or does my participation in my employer's plan prevent this? What issues do I need to investigate?

Hope this is not too basic, but I have looked and can't find the answer.

Is it true that the ability to switch adp/acp testing from current to prior and prior to current is unlimited until the end of the remedial amend. period? So year 2000 and 2001 are still flexible and only have to eventually be documented.

Thanks!

Hi´,

I just had a question.If I were to trade my companies services for use of a one week timeshare,what would be the tax implications?Any information would be greatly appreciated.My address is mocm14@hotmail.com

Thank You,

Matt McDonald

HI,

I just had a question.If I were to trade my services for use of a one week timeshare and then use that week as an incentive for my employees,what would be the tax implications?Any information would be greatly appreciated.

My address is mocm14@hotmail.com

Thank You,

Matt McDonald

I have a client who is interested in investing a portion of his IRA in a L.L.C. The investment would be in the form of a note, which would outline the principal amount, interest rate, payment schedule, and so forth. The note is highly speculative in nature.

My belief is that this note, which from a fiduciary standpoint is probably not the best investment in the world, is still allowable under the IRA investment rules. The L.L.C. is not a "disqualified person" under IRC Section 4975 (therefore, not falling under the prohibited transaction rules)so that is not a consideration. I do not feel that the IRA is being used as security or being pledged as a loan, so it does not become a distribution under IRC Section 408(e)(4).

Anybody with experience or an opinion? Thanks.

I am getting conflicting information on shareholders in a cafeteria plan. Can a 5%+ shareholder participate in dependent care reimbursement under a cafeteria plan? It appears that some of the information I read indicates the shareholder cannot participate if the amount contributed exceeds 25% of the total amount contributed to the child care portion of the plan. Any clarification will be appreciated!

I've been told that terminated employees of a church plan - in this case the plan is 403(B) - can contribute to the account for 5 years after termination. Does this mean that they can defer income from a "for profit" business into their existing 403(B) accounts? Or is something getting twisted in the translation?

I've had a few DB clients request the DB "cost" for purposes of comprehensive benefit statements covering everything from pay to Social Security to fringe benefits.

Each time we struggle with the best way to communicate the DB cost in dollar terms that can be added to other benefit costs.

I've used the 404 cost / eligible comp x employee comp as an average employee cost, the pv of the expected increase in the accrued benefit in the current year, and a couple of other methods. Each of these has it's problems.

I wondering whether others have run accross this, what method they typically use, and what experiences have resulted.

The plan size I'm talking about is 50-1,500 employees.

I realize that some companies present only the benefits, not the costs, but for those who present cost, what method is typical?

I have a brand new client. I serve as the investment advisor for the 401(k) Plan. They have asked my help with a compliance issue. The plan has been in existence since 1997. In the plan document, compensation is defined as salaries PLUS bonuses, commissions and overtime. The client was under the understanding when they originally set up the plan that bonuses, commissions and overtime were EXCLUDED from the definition of plan compensation. The client has been basing deferrals only on salary and not including bonuses, commissions or overtime since day one. (It is also important to note the plan has a $0.25 match on the 1st 5% of comp.)

One of their non-HCEs who is paid partially by commissions, read the document and determined that she was not receiving the correct deferral. The plan document was amended in June of 2000.

What must the employer do now to correct this compliance problem? Will they need to go through VCAP or some other program? Will the employer be required to make up the missing contributions PLUS match for all affected employees? What options do they have at this point since this has been going on since 1997? (Please note that the employer's original intend was to exclude bonuses, commissions and overtime but the broker who did the original documents did not check the correct boxes.)

If a participant in a health FSA terminates employment during a plan year and, at the time of the participant's termination, has received more from the health FSA than he/she contributed, may the employer recover the "overspent" amount by withholding the amount from the individual's final paycheck.

For example, C participates in a health FSA. C elects to defer $3,000 over the course of the plan year (to be contributed through equal payroll deferrals). In February, C submits a claim for $3,000 to the health FSA for recoverable medical expenses. In April, C terminates his employment. At the time C terminated his employment, he had only made contributions to the health FSA in the amount of $1,000. Unless his employer can withhold $2,000 from C's final paycheck (or require him to repay the plan in some other fashion), the employer has lost $2,000. What are the employer's options, if any, to recoup the $2,000?

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?