A client died December 1999. He was age 45, no spouse, and his father, age 74, is his beneficiary of his 401(k) account. What are the father's options? Can he leave money in 401(k) until 2004? Can he take 20% out of plan per year for five years? Also, since the father is 74, does he need to take out minimum distributions from the son's 401(k) account? Can the father now name a beneficiary of the account if he decides to leave the money in the 401(k) plan for five years?

I am in the process of researching a variety of employee assistance programs in order to offer this benefit to the employees at my company. By posting this message, I am hoping to generate some ideas, words of wisdom, and suggestions from others who have implemented an EAP. Please do advise me on where to start, what obstacles you encountered, what worked, what did not, and any other advice you can provide.

On my company's records, we have an account registered as a non-retirement account. However, it appears that the account should have been registered as a Traditional IRA. It was started with a transfer from another custodian 12 years ago. The client has been the recipient of 1099-DIVs each year and one 1099-B tax form. Does anyone know if we can correct this situation with the IRS? Since this client has been taxed on the dividends (which were reinvested into the account), could we consider them as cost basis in the IRA? Thanks for your help.

Do dependents have separate and independent continuation election rights under USERRA, like they do under COBRA?

Plan is subject to spousal consent rules, but failed to get spousal consent to several lump sum distributions. It looks like the accepted fix is to go to affected participants & spouses to ask for their consent, and give them the option of repaying the $ to the plan and receiving a QJSA. What if the spouse doesn't consent? The SVP correction method (in Appendix A of Rev Proc 2000-16) indicates that the employer must cough up the $ to pay the QJSA to the spouse, if the participant refuses to return the $ and the spouse refuses to consent. Seems to me there is little incentive for the spouse to consent, which could get expensive for the employer. Anyone have any ideas on how to handle spouses in this situation?

What percentage increase would be considered "significant" to allow for a change in a cafeteria plan? The Plan Document states only that a change can be made if there is a signficant change in premium but does not give any guidelines as to what amount qualifies as significant. Would a 10 - 12% increase be considered significant?

Is it LEGAL to advertise that a company has employee-paid medical, 100% paid dental and vision? Our company pays for the insurance premiums on these plans. We do not pay the co-pays or the deductibles. We are questioning the legality.

Employer failed to provide top-heavy minimum for past years. Plan is a 401(k) plan and employer makes matching contributions on a payroll period basis. In correcting the past failures, we have calculated the contribution amount, but are undecided as to the starting point for the earnings calculation. Does anyone have any thoughts? The regs appear to be silent and I cannot find any IRS guidance on this issue. Thanks.

Just took over a Plan that has been TH since 1996 and there has been no Employer contributions. Is CAP the only method of correction available?

A while back someone questioned a situation where the plan administrator was receiving EOB's and opening them before sending to the enrollee. I have a situation that is somwwhat similar. We are a TPA. Sometimes our self-fundeds ask us to provide special reports, such as a pharmacy analysis, to track drugs that might be overutilized or look for ways to cut cost by a formulary or 3-tier payor system. I advised the rep not to turn over this information until all names and socials were redacted. Since we assume all administrative functions by contract I don't think the Plan Administrator has any legitimate reason to know who receives what and for what diagnosis. Same thing with claims--they should just get the cost without need to know diagnosis of particular enrollee. Am I overreacting here? Although I don't think this is per se illegal, it certainly seems actionable under a few federal laws.

One response I have gotten here is that we have the self-funded client sign a "holds harmless" provision in the general admin contract but I think that is useless. I am looking for suggestions on how to limit our liability as a TPA if someone turns over this kind of information at the insistence of the company. Do we have any way to protect ourself or at least limit our liability?

Do the qualified plan eligibility rules apply to 403(B) plans for employer contributions? For instance, may a sponsor of a 403(B) plan who makes a 4% contribution require 3 months of service and more than 20 hours per week. Obviously, this is not permitted for qualified plans. Also, may the employer impose a last day requirement to receive the employer contribution? Thanks.

Can an organization pair a voluntary 403(B) for salary reduction contributions, with a SEP for employer contributions, and avoid any need for a plan document as well as a lot of administrative complexity?

Individual account 401k holds employer securities. Voting is typically passed through w/ particpants directing trustee how to vote. Currently some participants want to attend annual meeting of employer w/ proxy in hand and/or to assign the proxy to a shareholder challenging employer management. Aside from the operational headaches, what legal/ERISA concerns for trustee with respect to operating in "best interests of plan" and issues of participant confidentiality?? Could we just issue a revocable proxy to the participant(s) and see what happens at annual meeting? Thanks

Please help settle this - Can a participant receiving severance pay on account of termination continue to actively participate in an employer's 401(k) Plan beyond their last day worked?

I think not, but a former colleague says its OK. I have a lunch bet on this.

Does a 204(h) Notice have to contain language that explains that future accruals will be reduced or need it just summarize the plan change without explicitly saying that there is a reduction in future accruals?

If an employer adopts a plan and elects prior year testing this year, and in November gives notice to qualify for safe harbor in 2001, and then in July 2001 decides to opt out of the Safe Harbor and be subject to testing, which would be current year, is the employer now stuck with current testing for the next 4 years?

[This message has been edited by Phil Schwartz (edited 05-16-2000).]

How are people incorporating the clearer, but still complicated, Health FSA rules in the '99 Proposed Regs into their administative forms?

For example, the facts of a particular case may permit a terminating employee to elect COBRA cont. covg. under the Health FSA for the remainder of the current year, but not permit such cont. covg. beyond that. Because a Health FSA that can so limit its COBRA liability must also offer another Group Health Plan (a HIPAA Excepted Health FSA), the scenario is as follows: a terminating individual is entitled to 18 mos. of COBRA cont. covg. under the "other" Group Health Plan, AND is entitled to "x" number of months of COBRA cont. covg. under the Health FSA for the months remaining in the current year. Therefore, in the section on the Election Form detailing the length of the cont. Covg., there must be a place for the election of "x" months under the Health FSA as well as a place to elect up to 18 months for the other GHP.

This is just an example, but doesn't this make election forms fairly complicated? Are others out there modifying existing forms for Health FSA options or creating separate forms for the Health FSA elections under COBRA? Thanks.

Is there any scenario in which you would need to report the cost basis of a mutual fund when processing a distribution? For example, if the plan allows for distributions in-kind and the participant rolls her balance (in shares) to an IRA. I know you need to keep track of cost basis for employer stock, but I don't think you need to keep cost basis for mutual funds? The issue has come up because our current recordkeeping system (Trustmark) tracks cost and we are switching to another recordkeeping system that does not store this information and we are wondering if we need it?

An ESOP, which by its written distribution policy, provides that distributions to participants who terminate employment (for reasons other than disability, death or retirement) will begin in the sixth plan year following the plan year in which such employment terminates has received a DRO from the spouse of a participant. The participant is over 50 years of age and has a significant account balance in the ESOP.

The ESOP document provides that an alternate payee will be eligible to begin receiving distributions under the ESOP as would any other employee who terminated service on the date the DRO was qualified. (That is the plan specifically provides that the alternate payee distribution options/timing will be determined as if such alternate payee was an employee who terminated on the date the DRO was qualified.)

My question is can the plan delay distributions to the alternate payee until the sixth plan year following the plan year in which the QDRO was qualified?

How does this "jive" with 414(p)(4)(B) "earliest retirement age" language? Since the participant is over 50 ... does the Section 414(p)(4)(B)(ii)(II) language provide that because the plan uses the 409(o) "ESOP extension" for distributions mean the alternate payee can be forced to wait for such a distribution?

How does this "jive" with 414(p)(7)(B) which provides for payments to be paid after the 18 month period during which the Alternate Payee could have received a distribution under the Plan ... i.e. 6 plan years following the plan out into the future?

I guess I am just concerned over the status of 409(o) "extended ESOP timing issues and the 414(p) rules.

As a related side note ... how is the diversification election handled in a QDRO situation. If the participant is eligible for diversification under the ESOP then:

(1) may the administrator "freeze" this right if a DRO is in process?

(2) may the alternate payee (after an account has been established on his/her behalf) then also diversify his/her portion of the account based on the participants service?

Thanks.

[This message has been edited by svatty (edited 05-15-2000).]

[This message has been edited by svatty (edited 05-15-2000).]

[This message has been edited by svatty (edited 05-15-2000).]

Does Reg. 1.401(m)-1(a)(3) mean that ACP testing never applies to collectively bargained plans? Or could someone give me an example of when an ACP test would be required for a collectively bargained plan?