I am interested in any feedback from recordkeepers and other service providers that have been audited by the DOL. What were the expected vs unexpected issues that arose from the audit?

The DOL office conducting the audit is Boston, MA. The letter received is the initial request for documents with a checklist of 10 items to forward within 20 days. The audit years are 1995 - present. Requested items include:

1. Identify subsidiaries and affilitiates of the our company.

2. Identify all plans serviced.

3. All written guidelines.

4. List of all persons responsible for servicing the plan.

5. Copies of plan documents.

6. Copies of sample service / administrative agreements.

In our 403b plan, we have a group of employees who normally do not receive retirement contributions, however, they are not specifically excluded from plan participation in the Plan document. If one of these employees exceeds 1,000 hours, does that mean that we need to make retroactive contributions for those employees or would we do that on a prospective basis. If retro contributons should be given, would they be given back to the beginning of the calendar year or the employee's anniversary date.

(FYI, we monitor this group's hours to ensure that they do not exceed the 1,000 hour cap, but sometimes it is necessary to retain one of these employees for longer than 1,000 hours.)

Is anyone aware of a ruling or case that addresses the situation where a valuation for purposes of a gift for estate planning purposes is not consistent with an ESOP valuation. I recall that there was some guidance on this issue, but can't seem to find it. It seems to me that this should not be a problem as they are very different animals.

Appreciate any guidance.

We have a new group coming on with us and they have a Flex Plan. With their old carrier they had an automatic reimbursement feature where their claims were submitted through the regular health plan and anything that was not covered like deductibles would automatically be put through their Flex Plan for reimbursement through the Health FSA. It was my understanding that participants had to submit these uncovered charges to us with a request form that had a statement on the bottom saying that the claim has not been reimbursed elsewhere, etc. Do they have to have that statement every time or can they sign off on something at the beginning of the plan year so we can do the automatic reimbursement for them? Any regulations on this? Anybody have any information regarding this situation?

Can you help? I am working with a client with a loan taken out in 1986, met the $50,000 limit (which was probably less than 1/2 his vested account balance at the time) secured by his principal residence. The loan papers required that he annually pay accrued interest for the year (at what was probably a reasonable rate at the time)and one twentyfifth of the principal - obviously the loan period is 25 years.

All of this met the terms of the plan document at the time. Now the plan has been amended (let's hope so, right??) to require payments at least quarterly. Are his old loan provisions grandfathered in? or must we make quarterly payments of principal and interest based on the amended document and more recent law changes but contrary to the agreement he signed originally???

Individual converts traditional deductible IRA to Roth IRA in 1998 ($10,000). Individual elects 4 year spread of income ($2,500 spread over 1998, 1999, 2000, 2001).

Individual takes 100% distribution from Roth IRA in 1999 ($7,000) after experiencing an investment loss of ($3,000).

Question:

Is the individual's includible income in 1999 from the distribution and conversion equal to:

$7,500 ($2,500 originally spread to 1999 and accelerated $5,000 original spread to 2000 and 2001)

or

Something less considering the investment loss and total distribution of only $7,000?

If a participant in a qualified plan changes employment status from non-bargaining to bargaining and the plan does not include bargaining employees, is this a distributable event and if not, what is the participant allowed to do with the account? Is the account frozen or will the participant still be able to make changes. If the bargaining plan has its own plan, can the participant roll the assets into the plan?

Question 3 on the Schedule 'T' requests that we check "each statement" that describes the plan; however, the instructions say to check box 3a, 3b, 3c, "or" 3d. Can we check multiple boxes or should we check off just one box? If we are only checking off one box, what is the hierarchy for determining which box to check off?

How are SIMPLE matching and non-elective contributions being reported in question 4(e)? Are they both considered "non-elective" or how is this being treated?

If a Participant has already begun to receive annuity payments under a joint and survivor annuity, with his former wife as the joint annuitant, can a QDRO remove his wife as the joint annuitant? If it does, is it really considered to be "qualified," since one of the requirements of a QDRO is that it must "create or recognize the existence of an alternate payee's right to, or assigns to alternate payee the right to, receive all or a portion of the benefits payable with respect to a participant under a plan...?" In this case it would not create or recognize the former spouse's right to the annuity but would take it away. Is this the correct interpretation? Is there any authority (Regulation, Bulletin, etc.) that interprets this type of situation?

An employer has received several notices from the office of the Texas Attorney General-Child Support Division that the office of the Attorney General has obtained a child support order requiring employees of the employer to provide medical insurance to their children. In the notices, the AG office "requests" the employer to enroll the child in its health plan. The notices do not include a copy of the referenced child support order, however, and the notices themselves are not captioned as an "order" or "decree" of the AG office.

The employer has been taking the position that the notices do not constitute QMCSOs because they are not "judgments, decrees or orders" (under ERISA Section 609). Therefore, the employer has not been complying with the request in the notice to enroll the children. If the child support order were included, the employer would review it to determine if it were a QMCSO. Since nothing is included, however, the employer takes the position that there is no MCSO to review.

Is the employer correct in this position?

A client of mine had an ESOP in the early 80's. It was amended to become a Profit-Sharing Plan. The two sons of the founder were the only participants and have 100% of the stock in the plan.

One of the sons left the company to pursue other interests, and his stock holdings outside the plan were being redeemed.

Remaining participant son calls me up and tells me the corporation was disolved. What do I do about the $200k of "stock" I'm carrying on the books?

I have a portion of my 401k plan with my current employer in an after tax account, more than $4K. From the plan there are a few limited distributions options that I have however there appears to be no distribution restrictions on my After Tax contributions to this 401k plan except that I will owe taxes on any earnings on those after tax contributions if I take a distribution.

Can I remove the entire balance, pay taxes on the earnings and place them into a Roth in less than 60 days and not have to pay penalities on the earnings? Is there a limit to the amount that I can convert ($2K/yr)? If there is a limit can I take out the same amount and put it in a Roth for my wife, up to the limit, or can I only use those funds for my Roth, if at all?

If I had let's say $10K balance in my after tax 401K account($6K original/$4K earnings), can I take a distribution for the entire amount pay taxes on the $4K invest the balance in a Roth in less than 60 days an keep the $6k out with no penalties?

I'm sure I know this one, but can't quickly find authority and need a quick answer. We've got a client that completed the distribution of all assets on January 31, 1999, but did not let us know until after the close of the plan year (12/31/99 PYE). Actually, they just told us. Even though I've got a 12/31/99 plan year end, don't I really have a short year return with a plan year end as of the date of the final transfer out of assets? In other words, when is/was their return due? Thanks.

I have just reviewed a 401(a) Governmental Plan that has only required employee contributions. They are, however, being picked-up under 414(h). The interesting thing is that both existing and new employees have a 90 day irrevocable election to participate and have the option to contribute 5%,10%,15%,20% or 25%. The irrevocable one-time option seems to be permitted based on recent PLRs, but the various percentages all the way to 25% seem to be extremely aggressive. I can't seem to find anything regarding multiple percentages or even anything over single digits.

What is your take on this?

A sponsor with a cross-tested P.S. plan wants to make a "one time" P.S. contribution of $1,000 per eligible employee (10). This would be in addition to a $50,000 annual contribution subject to the cross-tested formula. On the surface, I see no problem with this since it is not discriminatory. Anyone see it differently?

If an employer adopts a 401(k) plan mid-year, is the participant deferral limit of $10,500 pro-rated for the portion of the year the plan is available? It is my understanding that the $30,000 or 25% annual limit is pro-rated.

Does anyone know of a quick way to find out if someone is a licensed insurance agent in Ohio? Web site or phone number would be useful.

Thanks

Client currently maintains a salary deferal only 403(B) plan and a separate 401(a) profit sharing plan. Client is considering maintaining just a single program - either by providing for the employer contribution in the 403(B) plan or by adding 401(k) provisions to the profit sharing plan. The client is not considering an employer matching contribution under either scenario.

I am not familiar enough with the pros and cons of 403(B) plans to determine which might be the better approach.

Any input from "403(b)ies" would be most appreciated!

"Parent" is the owner of a company which sponsors a profit sharing plan. "Parent" wants to switch plan's investments to "Son", who is a broker. Doable - or a prohibited transaction?

Would appreciate any input and/or references to PTE exemption or prior threads where discussed. Thanks!

An insured (as opposed to self-insured) group health plan has negotiated a new, higher premium rate with its insurer. May the plan, as a result, pass the premium increase on to qualified beneficiaries who are already receiving COBRA continuation coverage? If so, what notification must be provided to the qualified beneficiaries?