Any comments on this new notice?

Does anyone have any recommendations for a nondiscrimination software package?

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Anybody know what is the purpose of IRS Reg. 1.411(d)-2((a)(2)? In the context of a DB plan? In the context of a DC plan?

I am looking for a copy of IRS Notice 87-13 regardiing the exception of the 10% premature withdrawl penalty from a qualified plan to a participant who has separated from service upon attainment of age 55.

Have a situation where a participant terminated employment about 10 years ago( she's also a trustee) and now she is 57 and wants to take money out of a profit sharing plan that allows for distributions, but she doesn't want the 10%.

The way I read 72(t)(2)(a)(v), the plan has to have an early retirement provision, which this plan does not. Even if the plan did, I believe she would have had to have terminated (separated from service)AFTER attaining age 55 AND elected an instalment payout in order to not have the pre-59 1/2 penalty apply. He seems to be hung up on the "retired" language. A terminee is not a retired participant unless he has met the requirements for normal retirement.

The accountant is telling me this couldn't possibly be correct; he postulates that since she is NOW over 55 that she can take a distribution w/o the penalty. I don't see how this has any bearing on the intent of the law.

I have an employer who missed including a small payroll in his monthly 401k deposit for Jan of 1999. The error wasn't discovered until the year end reconciliation was being done in Jan of 2000. The employer immediately deposited the contributions to the trust. They will submit a 5330 for 1999 to pay the excise tax. Are they required to file a 5330 for the 2000 year and again pay an excise tax because the amount remained outstanding as of 1/1/2000? Also, should the employer contribute lost earnings and how should the earnigs be computed?

Can a Defined Contribution plan (Age Weighted in this case) provide for ALL eligible participants to receive a Top Heavy minimum 3% contribution as opposed to only non-key eligible participants???

Is it possible for a portion of a distribution made from a Minister's 403(b)account to be designated as "Housing Allowance" and so avoid taxation. If yes, what sorts of requirements would need to be met? If this is possible, would the distribution typically trigger a 1099R on the entire amount? Any comments would be appreciated.

Has anyone heard of combining employee elective deferrals and company matching contributions when performing yearend nondiscrim. testing? For example, instead of performing an ADP and an ACP test separately, you would add the employee elective deferrals and the company matching contributions together and then divide by comp. to obtain a single percentage. Is this possible, and if so under what plan provisions. Thanks

Due to administrative error active participant receives entire cash equivalent of his accrued benefit before retirement;participant is still active and it seems to me that his current accrued should be determined by subtracting the current annuity equivalent of the cashout from his accrued benefit calculated as if he hadn't taken the cashout? Any thoughts on this ??

[This message has been edited by Don N (edited 06-06-2000).]

An employee retires early at age 50. Is reemployed at age 55. Pension is suspended. Let's say he does not get Suspension notice.

He retires again at age 58.

If suspension of benefits notice is not given, then the pension would be act increased. However, my understanding is that it would be the age 50 early ret pension that would be act increased. And this pension is less than the final AB, since the final benefit uses more years of service and does not have the large early ret reduction factor.

Does this make sense or s/ we be act increasing say his final pension? Clearly if a person is over age 65, quite often the act. increased amount is the larger amount, but it appears this is not necessarily the case for an early retiree, unless we are act increasing the accd ben and not the early ret reduced ben. Any thoughts on this would be appreciated.

Final regs allow a medical plan member to drop coverage midyear to join spouse's coverage due to spouse's open enrollment. Assume spouse had previously been eligible to join own group plan but did not. As a late enrollee the spouse has not revoked an election. So should employee be allowed to drop coverage and join spouse's plan?

I have a Corp where 3 doctors have individual policies that the Corp is paying premiums for & noone else in the Comapny. It is not a group policy.

I have 2 questions

1) What constitutes this as a medical plan?

2) Are the premiums deductible by the Corp under 162

3) Are the premiums paid on behalf of the Corp taxable to the individual doctors?

Thanks

Pat Insall

We have a plan with numerous participant loan in it. The employer asked that we "forgive" one loan that an active participant has on the books. (The participant is having financial difficulties.) The loan has been paid via payroll deduction. Can we just write off the loan and report it as a distribution? If in-service distributions were permitted (they are not in this plan), would that make a difference?

Any help would be appreciated.

Thank you.

A client of mine wants to recommend the following for employees that take after-tax withdrawals:

Take a distribtuion of after-tax money from the plan and rollover the taxable portion back to the plan thus avoiding any taxation. This will circumvent the recovery rules.

Is this legal? Would you recommned this process? Has the IRS ever addressed this?

Thanks!

My AGI made me ineligible to make a Roth IRA contribution for 1999, but for 2000 it will be much lower. So I made a traditional IRA contribution for 1999 in January, 2000, and a few days later converted it to a Roth (a year 2000 conversion). My IRA trustee has issued a Form 5498 for 1999 showing a $2000 contribution to a Roth for 1999. I have asked for a corrected 5498, and the initial response I got was that the Roth conversion before April 17, 2000 "recharacterized" the contribution from traditional to Roth, even though I did not request a recharacterization.

Am I correct in assuming that if I do not elect to recharacterize the contribution, that my intended scheme works - a 1999 contribution, followed by a 2000 Roth conversion?

My employer is not permitting employees to make contributions upon eligibility because they often are not timely in making the appropriate payroll deductions. Then they want people to just forget about it. This is a company-wide thing. Same thing is happening with the H&W plans. All are qualified plans.

Any ideas for how to correct failure to enroll an HCE in a 401(k) Plan when there were no other HCE's? Correction would be to give QNEC equal to ADP of employee's group. ADP of employee's group was 0 since no other HCE's. Employee was subsequently enrolled at next entry date (in different plan year) and deferred 4%.

Everyone is in agreement that the 3% of pay safe harbor non-elective contribution can pull triple duty: (1) be applied to Section 416 minimum required allocation for top heavy plans, (2) avoid ADP 401(k) non-discrimination test, and (3)be used for 401(a)(4) non-discrimination testing (popularly used in cross testing on a benefits basis).

Everyone also agrees that the non-elective CANNOT pull a 4th duty: Be used as the first 3% of pay base tier in the integrated PSP allocation formula because Notice 98-52 precludes its usage towards 401(l).

Question: If one is willing to do general testing to pass 401(a)(4) rather than rely on the 401(l) safe harbor, the "PSP" allocation (including the non-elective) is not discriminatory if it passes one of six (a)(4) methods: Two on a contributions basis (w/o permitted disparity and with) and four on a benefits basis (annual w & w/o PD or accrued to date w & w/o PD).

Could I use the 3% non-elective in my first base tier of the "traditional" integrated PSP formula if the plan passes 1.401(a)(4)-2©(2)(iv) [the annual contribution basis with permitted disparity method] for the year? Only the HCE would get the next tier of the integration formula (3% of excess pay). The HCE's are younger than the NHCE's, so cross testing on a benefits basis doesn't work.

It probably doesn't pass the smell test, but what does everyone think? Your comments would be very much appreciated!

Also, I would appreciate it if anyone could point me toward a quick primer in the area of government plans. Thank you.

We have 850 employees on a self-funded plan with a $50,000 specific and aggregate coverage. Our current plan design requires designation of a Primary Care Physician with a $15 co-pay and 80% for specialists. We are considering changing from a small TPA and several networks to a national company (UHC) with a plan design of $15 co-pay Primary Care Physician and Specialists. 90% in-network and 70% out-of-network for hospital and increasing prescription drug co-pay to 3 tier $7/$14/$25. How is it best to analyze projected costs? I have prepared a spreadsheet with expected fixed costs and attachment factor but all this seems based on enrollment remaining the same which of course it will fluctuate somewhat. I don't want to surprise the company with higher than projected costs due to an enhanced plan design. Questions: Any suggestions on how to best display projected costs, is there a trend in plan design for company's our size, does anyone have any experience with United HealthCare?