Two thoughts. Could an Employer with only HCE's(four Owners 25% each) establish a 401(k) Plan? If so how would you test? I sapose you could set it up as a safe harbor.

Second, what if a Plan lost all NHCE's due to termination or quit. If Plan was using current year method and ther were no eligible NHCE's how would you test.

If your ADP for NHCE is zero, if you test at lessor of 2+ or 2* the result would be zero.

Any thoughts?

We will be looking to hire new 401(k) plan counsel. We can come up with questions to ask on our own but were wondering if there was anything out there already. Basically, looking for around 10 "must ask" questions to prospectives. Thanks!!

[This message has been edited by Dave Baker (edited 05-26-2000).]

We have a client that currently maintains a defined benefit plan that it wants to terminate. Current distributions options are limited to annuities. The client wants to require active participants to transfer the lump sum value of their accrued beneft to the replacement plan, most likely a 401(k) plan. I did not think a plan sponsor could do this but another consultant has suggested the plan be amended to add a lump sum option and anyone who elects it must have their balance rolled to the replacement plan. My question is can this be done and if so, what is the citation that permits it? Also, could the plan be amended instead to offer the direct transfer to the replacement plan as a distribution option? I would think it could but if not please let me know why not. Any other suggestions would be welcomed as well. THANK YOU!!

Ex-spouse signed away her surviving spousal rights to her ex-spouse's retirement plan after taking 50% lump-sum. It was an erisa plan. She had a QDRO. Now she is claiming there was fraud, stating her ex-spouse lied a out assests and she is entitled to some or all of his retirement. I have been named as the surviving spouse by the plan. We were married at the time of his death (last yr. 5/27/99) She has been denied twice by the plan. Now I understand her attorney is asking the plan to interplead the funds into federal court and let them decide. What can she do? How far can she go? She has no proof of fraud, there divorce was 12 yrs ago

We have a self-funded welfare plan. The TPA sends a check register for claims processed and we in turn cut a check for the claims from general assets. A reserve is set up but actual reserve monies are not deposited. Is an audit required by a CPA firm to be attached to the 5500 or can we prepare the 5500 ourselves without an audit.

A question employees considering participation in our 401k plan frequently ask is can we show them how their net pay will be affected by participating. Does anyone know of a tool for showing this to employees. Employees may contribute from 1% to 15% of gross income and the employer match is 50 cents on the $1 up to the first 4% the employee contributes.

A group of companies are all part of a parent -sub control group, but maintain 2 different 401(k) plans. Readings say that all employees of a control group are treated as if they are employed by a single employer for certain testing purposes.

Question:

1) Are both plans combined for ADP/ACP testing purposes ? or, are they treated as separate plans for ADP ?

Thanks

Company has a 125 self-insured medical/dental plan. Employee premiums are pre-tax. I am confused (yes I'm rather new to the benefits arena) concerning the benefit--if any--that goes to those employees that opt out of the medical/dental.

I am having trouble finding any guidance on what constitutes "costs directly related to the purchase of a principal residence for the employee (excluding mortgage payments)" under the safe harbor standard for hardship withdrawals.

Can anyone help me? What would those costs include? Down payment? Closing costs? Costs to construct a house?

My employer terminated an existing 401(k) plan at 12/31/99 and transfered our assets to a new plan on 3/9/00. How long by law, does an employer have to transfer the assets into the new plan?

We are consulting a company 401(k) plan whose last audit was performed by another CPA firm in 1995. The plan has been filing Form 5500s since, but has attached the audited statements of the 1995 year to each filing, and has not engaged an auditor for the years 1996 - 1998.

We have been engaged to audit the 1999 plan year, for which we will also audit 1998 in order to issue comparative statements, but 1996 and 1997 are still in question. We want to advise them on the potential penalties that may be imposed as well as provide them with any options they have under amnesty provisions to correct this. We are aware that there is a $1,100 a day penalty for failure to file Form 5500 with the DOL (including filings that exclude material information), but have not been able to locate any "come-clean" provisions.

Any information and/or suggestions regarding the best manner in which to advise this client are appreciated.

Scott E. Hall, MS/MBA, CPA

Vitale, Caturano and Company, P.C.

As the end of a plan year approaches, we are trying to decide whether or not to leave our current medical provider. Our employees seem to have their claims paid quickly and the variety of docs is sufficient to serve their needs. Our claim experience is quite high, we're self-funded and based on our (potentially) new broker, no one else wants us at the price we've been paying.

So, the problem is that our plan has been an administrative nightmare. Billings have been wrong every month. Employees are dropped and added without our approval. People who have never been employed here have appeared on our billings. In the past 4 months, we have received premium refunds which neither we nor the ins. company can substantiate! The company also has exhibited very poor customer service to our benefits administrator, sending incorrect information, etc.

The head of the HR department has said that if the employees are happy, we should just stick with the ins. co. and try to figure out a way to deal with the administrative nightmares...

The benefit administrator wants to wash her hands of this company and do whatever it takes to get our business moved elsewhere...

*How do you all weigh these kinds of concerns?

*Any advise for dealing with a really messed up ins. co. staff?

*Any recommendations for ins companies that are willing to look at a 200+ group with high claim experience?

Thanks so much!

Sheila K

If an employee is receiving SS benefits at retirement and spuose is receiving pension through government (CSRS), is the employee's SS benefit reduced due to her spouse's benefit. (The spouse is not receiving SS benefit). Help!

What is the tax treatment of a current year withdrawal of "after tax" employee contributions that were made to a qualified plan before 1987?

The participant wants to leave the earnings in the plan, but take out only that portion of his account balance on which he has already paid income tax (the "after tax" employee contributions made before 1987).

Thanks.

A company which is a C corporation is considering adopting a Cafeteria plan to accomodate basic benefits, i.e., insurance premiums, health expenses not covered, and dependent care coverage. They also have common ownership on a IRC Section 501©(3) foundation, which to date does not have any employees, but may end up with employees from the C-corp in the future. Can/should/may the foundation adopt the cafeteria plan, so that these employees can continue their pre-tax deductions upon transfer to the foundation? Any comments would be appreciated. Thanks.

this might be somewhat basic, but i need to know whether in a 401(k), if a distribution form that contains a waiver and spousal consent is dated more then 90 days ago, do i need to go back and get the form executed again? if so, what is the cite for this rule?

Has anyone heard of the "LIP Plan"? It involves life insurance inside a qualified plan.

Employers A, B and C are participating employers in a 401(k) plan maintained by Parent D. Parent D sells the stock of A, B and C to unrelated company E. Company E has been formed for the purposes of purchasing A, B and C and has never sponsored a 401(k) plan. Employers A, B and C will be participating employers in the new Company E 401(k) plan, which will be effective July 1, 2000, and Company E would like to adopt a safe harbor formula. Eventually, the assets in the Parent D plan attributable to employees of A, B and C will be transferred to the Company E plan. The initial plan year will be only 6 months long. It appears this would be okay so long as Company E's plan is not a successor plan. Successor plan is defined in Notice 98-1 as a plan where 50% or more of the eligible employees for the first plan year were eligible employees under another section 401(k) plan maintained by the employer in the prior year. I believe that since Company E is unrelated to Parent D, that it is not the same employer as Parent D and that its plan is not a successor plan to the Parent D plan. I would like to hear any thoughts you might have to the contrary.

I'm curious as to whether a plan that has a stated match can amend their document to reduce the match. I suspect there are protect benefit issues, but I'm wondering if this is feasible, particularly with a business that has come under hard times.

I don't know about NY, but I'm pretty sure that CA requires employee contributions to the State SDI plan, although the contributions are nominal.

[This message has been edited by Kirk Maldonado (edited 05-25-2000).]