Company A in state 1 owns Company B in state 2. A single 401(k) plan document covers both companies. Currently, the plan offers multiple investment options with Mutual Fund Family ABC. Company A wants to Switch to Mutual Fund Family DEF. Company B wishes to stay with Mutual Fund Family ABC. Does anyone see any problems with this arrangement? Any fiduciary or 404© issues? Would splitting into two identical plans make a difference? Thanks.

I converted my Regular IRA to a Roth Conversion IRA in 1999 in the amount of $109,627. I have 1999 earned income of $92,818. My accountant says that I am now ineligable to contribute to a 1999 Regular Roth IRA, because I have gone over the income limit. Unfortunately I already funded the 1999 Reg. Roth IRA in 2/99. He says that I have to take it out and pay taxes on its earned income and 10% penalty because I am only 53 years old.

We have recently taken over a 401(k) plan where the accountant performed the ADP/ACP tests for 1997, 1998, and 1999. While reviewing the tests, it appears as though the excess contribution refunds were calculated using the pre-1997 method (reducing the HCEs with the highest deferral percentage).

The document has not been updated as of yet for the changes from the GUST amendments. Our question is whether the prior year testing refunds should be recalculated using the method proscribed by the Small Business Job Protection Act or if we can leave the tests the way they are. Could we then include in the GUST amendment that the plan did not elect to use the new correction method for those plan years?

Has anyone dealt with the question of whether a sign-on bonus is compensation under a qualified plan? The employer offers a sign-on bonus to potential employees but the bonus is not received until the person actually becomes an employee and performs services for the employer. In other word, the bonus is not received until the service is performed. Also there isn't an employment contract. It seems to me that this enouhg to bring this bonus under the definition of 414(s) compensation-remuneration for services performed. I have seen cases where a sign-on bonus is not compensation subject to FICA taxes-but these are all cases where some individual (such as a baseball player) gets a sign-on bonus and the bonus is received regardless of whether the individual ever performs the service. Any ideas?

I have three prospects that I spoke with late last year that now want to set up new comp plans. Based on the recent IRS review of these plans, would it be prudent to wait until we receive more guidance before setting these up? I am working with a TPA firm (I am a broker and definitely NOT an expert in these plans.) for these plans and they keep telling me that there will be no or limited changes and that I should go ahead and set up the plans. My understanding is that there has been no guidance on what will or will not be acceptable. Has the IRS given any time frame in which they will let us know what, if any, the changes will be? If it is important, all of the plans I have proposed allocate a minimum of 5% to all of the NHCEs and max out the HCE. Any and all information will be very helpful. Thank you!

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Corbel is working on solving a problem we encountered when upgrading to V 5.0. We are using Personal Oracle 7 (which was upgraded prior to the Q5.0) on a stand alone system with plenty of memory (256) Oracle seems to be working a the data is there (we can check it using Plus 33) but when we try to run Q5.0 we get an error saying "28- Stacks Error" or Not Enough Stacks" Corbel has been on it since last week, we have been down since last Thursday and it is getting frustrating. Anyone else have any input ?

Thanks

John

I converted a traditional IRA to a Roth IRA in 1999. While I am eligible to do so, incomewise, the tax liability is too much for me. Can I recharacterize it and, if so, how? Thanks for the help.

I have a question for anyone who can direct me. Is there any requirement (federal or state, specifically Washington State) to allow new employees a grace period to select their initial health benefit plans? This concerns whether or not a company can require that enrollment forms be submitted immediately (i.e., 3 days) or is there some other time frame? This question does not go to eligibility, just how much time an employee must have to submit their enrollment forms.

Thanks!

If I read the PWBA Press Release correctly, it is clear that the 7/31/00 deadlines that would normally apply for calendar year plans is extended to 10/15/00 without the need to file for an extension.

Be careful that they are NOT extending an 8/31/00 deadlines (for 2/1/99-1/31/00 plan years) to 10/15/00 without the need to file for an extension. These plans still must filed for extension; of course, the extension can be to 11/15/00.

This caveat also applies for 3/1/99-2/29/00 (deadline 9/30/00) and for certain short plans years as well.

I represnt a LLP with a 401(k) plan. The plan failed the ADP test for 1999. The firm was slow getting the census to the administrator, so the excess has not yet been distributed to the partners. Does anyone have any ideas for avoiding filing a 5330 and paying the 10% penalty tax. I can't find any way to avoid it but thought I would ask. Thanks.

A final 5500 is being prepared for a plan. The plan merged assets into a successor plan with the assets transferring in June of 1999. A dividend of $35.00 posted to the account after the asset transfer. The dividend is still in the account. Can the final 5500 be prepared based on the asset transfer and can the late posting dividend be ignored? What should be done with the late posting dividend?

Employee of company "A" resigns to work for company "B"in a like employement postion. At his date of termination from “A” he is 80% vested (six years of service) in the company “A” 401(k) plan and takes both EE and ER vested matching funds in an IRA rollover. After six months at company "B" he enters the company "B" 401(k) plan. 4 months later company "B" his current ER agrees to buy company "A" his former ER for stock. In the purchase agreement company "B" agrees to recognize all years of service for all employees at company "A". The transaction is completed 14 months after the employee left company "A" and joined company "B". However company “B” now says that only current company “A” employees will have prior years of service credited. We contend that since the employee went from A to B directly, the employee should be credited with all years of service at both A and B and therefore 100% vested in all ER contributions. Any ideas? Is this not common? It would not be a major concern however the outcome is $15,000. to the participant.

I have a sticky situation that needs some insight.

A 401(k) plan that my firm advises recently changed third party administrators. When the new TPA reviewed last years activities, it was discovered that a terminated EE received approx. $10,000 too much. It was also found to be a human error by the former TPA.

The clients point is that the TPA needs to put the money back in the plan and if they choose to attempt to recover, it's on the former TPA. The former TPA is balking, claiming the plan sponsor needs to recover the money.

Anyone with advice or experience?

I have a fully insured 412(i) plan which is terminating this year and the client will not pay the annual premium. All insurance contracts are annuities with about a 4% return.

To be a 412(i) plan, premiums must be paid timely and therefore this plan no longer satisfies 412(i) and is therefore no longer exempt from the minimum funding standards.

My question is what about the actuarial valuation and Schedule B.

If I run an actuarial valuation, I'll have to select a funding method and use reasonable actuarial assumptions. If I select Individual Aggregate and use a 4%interest assumption, the normal cost would be about the same as the premiums. Is it reasonable to use a 4% interest assumption since all $ are invested in annuity contracts paying about 4%?

Is there anything else I need to consider?

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We have several instances where employees are wanting to add their children to benefit plans who are currently residing in another state (Mexico) and are coming to live with the employee. Often times the employee is not married to the father of the children so there is not a custody change or divorce situation. I believe this qualifies as a qualified status change under the "change in residence" provision.

Question is: What type of documentation can be asked for that would be credible and proove that the child(ren) will be relocating on a more "permanent" than temporary basis? We wish to eliminate the situation of having dependents bouncing back and forth and in and out of coverage.

What do others currently do to obtain this type of proof?

Any suggestions would be much appreciated!

Help!!

My dad wants me to start up a Roth IRA, and I don't know where the best place is to do it! What are good companies to go through and are there advantages/disadvantages to any of these companies?

Thanks so much ...

Following up on an earlier strand, is there recent word from the IRS that it now agrees with the Martin v. Comm'r case (96 TC 814) and will leave unchallenged NQDC plans which allow participants to wait as long as possible during the deferral period before electing the form (e.g. lump sum or installments) in which distribution payments will be made?

A client has indicated to me (without any citation or other direction) that this may be the case. Anyone have any input?

Hello,

I am a recent college graduate and I don't have much experience with IRA's. While I was able to put a lot of money into Mutual Funds as I was growing up, this is the first year I have money that I know I will not need for school, or whatever life throws my way. I wanted to convert $2000 of my Janus Mutual Funds into a Roth IRA, but when my dad did my taxes for me, he found that I was only able to get a regular IRA. Can anyone tell me why?

Here are my circumstances, I was in school until May of 1999 and I had a paid internship from Jan. 1999-July 1999 where I earned about $6,000. I earned an additional $1,850 at a job at my university, and about $1,600 from Nov 1999-Dec 1999. I have no student loans, everything has been paid through scholarship or part-time jobs. I was married in August, the marriage isn't going well so we are filing our taxes married filed seperately. He made about $17,000 last year. So all in all, I estimate that I made about $9,500 last year, plus whatever I made from my mutual funds. With capital gains taxes I'll have to pay about $700 in taxes, but if I do the regular IRA I will get about $300 of that back. My question is-what is preventing me from getting a Roth IRA? This is what I would prefer. Thank you for your help!!

We are trying to find general policies concerning cell phone use. Many of our employees are given phones as part of their benefits package. Does anyone have any good resources for policies for a high-tech internet start up?

We recently assumed administration for a sponsor's mpp and p/s plans (separate documents). Their accountant has been filing one 5500 for both plans, using combined data. Should we start filing separate returns? If yes, how would we do this? Show assets being transferred out and into the other plan? Won't the IRS ask questions?