I have two sales companies that consitute a control group. Each company sells the same product but different brands than the other. Each company has its own Standardized Prototype Document that is a clone of the other. Both companies have calandar year plans, but the one company did not come into existance (Company "B") until 6/15/99, thus they will have a short plan year ending 12/31/99. I am filing 2 separate 5500's since they have two serarate plan documents. I am fairly sure an Audit is not necessary for 12/31/99 5500 filing since Company "A" only had 50 employees on 1/1/99 and Company "B" didnt exist. (Company "B" will have about 85 to 90 EE's on 1/1/00)

Please confirm!

Also, won't two 5500's need to be filed for plan year end 12/31/00 and since 2 separate plans. Since separate plan documents are being used does an Audit need to be done for the 12/31/00 plan year end? If so, would you attach the same Audit info to each 5500 being filed for each plan?

I have two sales companies that constitute a Control Group. Each company sells the same product but different brands than the other. Each company has its own Standardized Prototype 401(k) Plan Document that is a clone of the other. The one company has 85 employees, the other has 50 employees. Must the plans be audited?

A CLIENT WISHES TO AMEND THEIR PLAN TO MAKE THEIR PLAN YEAR COINCIDE WITH THE CALENDAR YEAR, PRESENTLY THERI PLAN YEAR ENDS JANUARY 31.....

IF THIS PLAN IS AMENDED TO BE A 12/31 PLAN YEAR END, CAN THE PARTICIPANTS CHANGE THEIR ELECTIONS TO ACCOMODATE THIS SINCE THEY ORIGINALLY SIGNED UP TO HAVE DEDUCTIONS TAKEN OUT THROUGH JAN 31?

Our company has recently switched 401k plans and something just came to my mind. When money is deducted from my paycheck every two weeks and transferred to our accountant who transfers it to our 401k -- doesn't this take some time? Doesn't this time add up to a lot of time in the long run? I have read that by law you have until the 15th of the following month, and to be sure ours doesnt take that long. But doesn't even a few days every month over say 10 years mean a lot less earning potential?

So with this "logic" I'm going to approach our inhouse bookeeper and find out the skinny. My question is how long is too long? We are a small company with a brand new self-directed TD Waterhouse 401k plan. I believe we are relying on regular old mail to move money from us to the accountant (I dont think we wire transfer or do it electronically). Is there a way to show them how much earning potential we could be missing out on (I might need to convince them a bit). Also, what are our alternatives - is wiring money simple? Should our accountant be taking care of this?

Thanks for the help.

Jonathan

FACTS:

The C Corporation maintains an Employee Stock Ownership Plan ("ESOP") and has two types of stock. The first type has special formula dividend rights, no voting, but is convertible to common if dividends are not paid ("Preferred Stock"). The second type has all voting rights and may receive dividends if the Preferred Stock has first received its accumulative formula dividends ("Common Stock"). C Corporation currently maintains an ESOP that holds 25 to 30% of the C Corporation's Common Stock.

ISSUE I: IRC Section 409(l)(2) Compliance.

Is Common Stock held by the ESOP "employer securities" under IRC Section 409(l)(2)? Put another way, when determining whether the ESOP held stock has the greatest dividend rights, do you look only at stock with voting rights, or does the ESOP's stock have to have equal or greater dividend rights than the non-voting "Preferred Stock" has?

Would it make a difference if the outstanding Preferred Stock was not convertible to Common Stock?

ISSUE II: Correcting IRC Section 409(l)(2) Compliance Failure.

Assuming that ESOP held stock must have equal or greater dividend rights than the Common Stock and the Preferred Stock, would the exchange of existing ESOP Common Stock for a new type of stock ("Hybrid Stock") that has the same voting rights as the Common Stock, but has special dividend rights, where it first gets Preferred Stock dividends and than, if the Common Stock also gets dividends, it would get an additional dividend once the amount of the Common Stock dividend exceeds the Preferred Stock dividend.

For Example: Preferred Stock gets formula dividend of $1 per share; Common Stock gets dividend of $0 per share; and resulting Hybrid Stock dividend equals $1 per share. Alternatively, Preferred Stock gets dividend of $1 per share; Common Stock gets dividend of $2 per share; and resulting Hybrid Stock gets dividend of $2 per share. Basically the Hybrid Stock gets a dividend that is equal to the greater of the Preferred Stock and Common Stock dividend amounts, instead of getting both the Preferred Stock and Common Stock dividends.

I'm looking for any input on an issue with the Women's Health and Cancer Rights Act. I have a plan member seeking a precert for breast reconstruction under a plan that provides mastectomy benefits. The twist in this case is that her original mastectomy was performed 12 years ago, before her effective date with this plan. Pre-existing exclusion is not an issue in this case.

The original reconstruction used a saline implant, which is now causing constant pain due to contracture since the implant. The physician is proposing to remove the implant and perform a new reconstruction.

Having read the Act and numerous Q&A's, I see nothing addressing the issue of mastectomy performed prior to the passage of the Act or prior to existence of the plan. My inclination is to recommend it be covered, but it would be nice to have a cite or anything else to back it up.

Has anyone out there encountered this issue? I would appreciate any opinions.

What is the definition of an "unpaid" leave of absence? If an employee goes on STD or LTD, can they be allowed to change their benefit elections? Specifically, drop coverage because they cannot afford their share of the cost while on leave. I know the regulations state "a commencement of or return from an unpaid leave", but I am unclear if STD or LTD is technically an unpaid or paid leave.

Our employer is a Sub S corporation. For FY 1999, we had a SIMPLE IRA. The Employer made a 3% contribution covering the first half of 1999, but to date has not sent in the 3% covering the last half of 1999. It is his belief that he can defer the contribution until he is ready to file his 1999 taxes, including extensions.

Is his assumption correct?

A few posts back, I saw where employers who do not make the contribution risk the employees contributions being declared as income by the IRS, which would certainly be a blow to the employees.

Carl C

The company I work for initiated a SIMPLE IRA plan on August 4, 1998. Contributions had been made until January of this year, when an employee leasing firm took over as our employer. While the leasing firm couldn't continue with our existing SIMPLE IRA plan, they did recently start a 401K plan for us.

I have a Traditional IRA, Roth IRA, and the new employee leasing firm 401K plan.

I would like to move the funds from the SIMPLE IRA to any of the other vehicles. Can this be done, and if so, are their any tax consequences on moving the funds to one plan vs. another?

I also heard that moving the SIMPLE IRA funds should be done after a certain date or holding period. Can anyone elaborate?

Carl C.

Our company offers employer paid medical, dental, std, ltd, and group life and dependent medical and dental is offered on a pre-tax payroll deduction. Our renewal was July 1 and we wanted to make some changes but due to TPA delays were not able to. Can we change the plan before July 1 next year to a cafeteria plan to include vision and supplemental life? We were thinking of offering "benefit dollars" and any benefit dollars not spent would automatically go into the flexible spending account we offer which includes unreimbursed medical and dependent care. In setting the benefit dollars we were also considering using the cost per employee from last year for fixed costs and claims. Any suggestions would be appreciated.

We have a self-funded plan with about 875 participants and a $50,000 specific deductible with a $100,000 deductible for one dependent child. Our contract until July 1 was a 12/15 and now the TPA has changed it to a 12/12 for specific and aggregate with the intention of changing it to a paid contract in 2001. Can someone explain the difference between a 12/12 and a paid contract? I am afraid we won't be able to change carriers next year because of this type of contract.

I am seeking recommendations for a Service Provider for a large (2,000 + participants) 401(k) Plan. Sponsor requires standard services (daily valuation, customer service representatives, interactive voice response and fully transactional internet capability).

There would be $0 to manage in assets - everything is in separate accounts.

Recognizing there will be recordkeeping fees,do you have any suggestions?

New DB plan effective 4/1/2000 with 9 month plan year, switching to calendar year 2nd year on. Plan sponsor is on Calendar tax year.

For section 412 minimum, charges & credits are prorated for a short plan year. I could not find such a requirement (or restriction) for Section 404 maximum, which implies that full Normal cost etc can be deducted!

Any one disagree, and if so why?

1. Where in the Code/Regs/Ruling etc can I find the medical expenses that can be reimbursed from a Section 125 plan? From general reading, I understand that the reimbursable expenses are those that can be deducted under Code section 213 (without regard to the 7.5% exclusion - but I can't find express reference!

2. Can a participant pay premiums from his/her Section 125 plan account for an individual health insurance policy to cover the benefits not provided by the employer's medical plan or if the employer does not have a medical plan?

Thanks for your help.

Anyone know where I could find an article or some information on SEC issues related to group trusts?

Thank you.

Our firm is located in Ohio and we are in the process of beginning to administer 401(k) plans. We are in need of testing and administration software but have no experience with any products or vendors. Any suggestions for reasonably priced products would be appreciated. If the vendor's web address is available, that would also be appreciated.

Thank you

Plan has 6 trustees. The space provided on the Schedule P for trustees names is not large enough.

I think that I should put as many of the trustees as will fit on the Schedule, and forget about the rest of them.

Another administrator thinks that I should file 6 Schedule P's; one for each trustee.

Another says to file 2 Schedule P's; one with 3 trustees on it; and another with the other 3 trustees.

My understanding is that only one Schedule P is filed for each trust. What are others doing in this situation. Thanks for your help.

May common law spouses be specifically excluded from welfare and pension plans? For example, assume Georgia recognizes common law marriages. Would it be allowable to have a health or pension plan maintained by a Georgia company exclude, by definition, spouses through common law marriage?

A client wants to offer prior service credit for acquisitions of key people and staff from other entities. It has done so in the past for those who came over through mergers etc. but now it wants to grant it to selected employees who will have no ownership interest in the new entity. They won't be HCEs (obviously) in the first year but more than half of the people who recieve the credit will be HCEs going forward. Does anyone see problems with this provided that there are staff members coming in with them (and they recieve the same credit)?

Assume Employer A and Employer B are sharing some employees.

Further, A and B are an affiliated service group.

Questions:

1. Compensation. It appears that, for purposes of determining contributions under any retirement plan maintained by A or B, only the compensation payable by the company sponsoring the applicable plan may be considered. See, eg, Rev. Rul 68-391. For example, In determining the contribution payable to Participant X in A's profit sharing plan, only the compensation paid by A to X can be considered (ie, the compensation paid by B cannot be considered). Does anyone know of any rule that would allow compensation from A and B to be considered?

2. Vesting: Is it allowable to count Participant X's service with A in determining whether he meets the hours of service requirements in B's plan for purposes of eligibility? vesting? contributions? It appears such service is counted for purposes of eligibility (see Rev. Rul. 67-101, 73-447 and 81-105), but we want to consider it for purposes of vesting and contributions as well.