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).]

After speaking with a COBRA "firm", several providers and a Section 125 administrator we are not getting clear answers. First, the assumption here is that the vision program is purely a discount and is absolutely not insurance.

1) Does a discount vision plan fall under COBRA?

2) If the employee pays part of the cost, is it eligible for inclusion in a premium only plan (Section 125)?

3) Is a 5500 filing required?

Your feedback with any supporting information would be appreciated.

Thanks!

Upon my retirement 5 years ago, I instructed my employer to roll over my 401k and pension plan funds into an IRA. I was told the entire amount was transferred. 2 days ago, I learned that the entire amount was not transferred and $10k remained in the plan. I have never received a statement regarding any benefits remaining or whether there were additional funds in the plan. Now, my former employer just wants to give me the remaining balance. In the interim, I have lost the use of this money. The IRA I rolled the initial proceeds into has done very well and I would like the difference in interest between the plan interest(more like a loss in interest)and the interest I would have made if all the money was rolled over, as instructed. Do I have any recourse? Can anyone refer me to specific ERISA provisions to review before I consult an attorney. Also, the same thing happened to several former employees.

i know of a participant who was employed with employer 1, terminated & rolled employer 1's monies into qualified plan of employer 2, has now terminated employment with employer 2, rolled monies out from employer 2's qualified plan (including monies from employer 1's plan) and into ira. she is now re-hired with employer 1, and wants to roll monies from ira (qualifed plan 1 and qualified plan 2) into employer 1's plan again. the participant's tpa states that the ira monies are not pure (plan 1 and plan 2 have been mixed)and cannot be rolled back to employer 1's plan; however, other parties disagree, as both sources are qualified plans. any thoughts on the status of this 'conduit' ira & the feasibility of rolling the ira monies back into employer 1's plan?

[This message has been edited by amy darnell (edited 05-24-2000).]

[This message has been edited by amy darnell (edited 05-24-2000).]

We all know that governmental plans are not subject to ERISA. We administer plans for municipalities and have tried to create a customized template plan that extracts all the ERISA language that does not apply. There are a couple of problems with this: 1) The attorney fees that are associated with the writing and annual review of these plans are significant 2) finding a qualified attorney that understands the differences between a governmental plan and an ERISA plan 3)The pension administration software available is tailored towards ERISA plans and requires major customization to make work for non-ERISA plans.

Interested to know what other governmental plans are doing. I am finding out that the majority of plans - especially at the local government level - are just using the "boxed" erisa plans anyway.

I think this is especially true for those governments who have turned to participant directed investments for their 401(a).

Even though this opens the governmental agency to rules and testing that they are not required to do, it offers other advantages. We are interested in finding a Document Service that can provide annual IRC updates and help with plan amendments, but can only find through and ERISA plan.

Would appreciate any comments on this matter.

Here's the scenario. Employer gave a safe harbor notice indicating that the 3% safe harbor contribution would be made into the monoey purchase plan. The MPP, however, has an integrated formula, 3% base w/ 3% of excess. The employer intended to use the 3% base as the safe harbor contribution. The employer, however, has passed the ADP/ACP tests w/out consideration of any Safe Harbor provisions. Can we simply consider our Notice as "bad" and leave the 401(k) plan as it is w/ passing the ADP/ACP tests and leave the MPP contribution as it is? Of course, the 3% base MPPP contribution should be 100% vested because of the notice to the employees. We would like to avoid the ER having to put in another 3% into the MPPP.

What rules apply with respect to return of mistaken employer contributions under a 457 plan? Are the rules the same as for a qualified plan subject to ERISA?

My organization is seeking to contract with an online custom investment advice provider to benefit a growing portion of our 165,000 401(k) plan participants . We are considering Morningstar, MPower and Financial Engines. Would anyone care to share experiences/opinions on these providers? Also, if you have any recommendations of other potential providers, I would be grateful for your input. Thanks.

For the past several years, the employer has not withheld enough from participant's salary for the cafeteria plan. A new controller has taken over and discovered this error. Can the employer now withhold the additional amount needed to cover the cafeteria plan deductions?