I know it's implied, but is there anything in black and white stating that the plan document must set forth the service which will be disregarded? Regs say "shall" take into account, but "may disregard the following service"..... So the implication is that if it's not in the document as being disregarded then it's counted. Just wanted to know if there was a positive statement in print to that effect??

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I am determining whether to represent a group of employees in an action involving a cash balance conversion. Do you have any suggestions on how administer payments from the named class members to start a "litigation fund"? There are about 50 to 100 individuals out of a class of 4000 who are willing to be named plaintiffs and pay a few hundred dollars? Should one of the ringleaders handle the administration? Should my law office? What are the ethical issues?

On the eve of converting to a cash balance plan, a company sold a division. The division's employees were offered a lump sum payment calculated a present value from the period of the employee being 55 years old (as opposed to 65) to the mortality table age discounted back. This is the present value of an annuity. Then this lump sum was discounted back as a lump sum value to the employee's current age at the date the division was sold. So if the employee was 44 at time of sale and had a mortality table age of 80, the calculation involved taking the monthly numbers payable from the period of his reaching 55 years to age 80 for a value of about $250,000. Then this $250,000 was discounted back as a lump sum to age 44 for a lump sum of about $140,000. THE QUESTION IS WHETHER USE OF AGE 55 INSTEAD OF AGE 65 IS PROPER? Use of age 65 produces about $240,000 instead of the $140,000 this employee was offered.

Can a non profit employer (nongovermental) establish an eligible 457(B) plan for a top hat group? Contributions will not exceed amount for which ineligible, 457(f) plan is required. Is this practical, where employer intends to make contributions as percentage of income, rather than to allow deferrals??

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Looking for information/experience/etc. on direct dental reimbursement plans. Everything I've found so far is either ADA backed propaganda or carrier backed propaganda!!!

Company A aquired Company B in 1999. Company A and Company B were unrelated prior to the aquisition. Service with Company B was used for vesting and eligibility. Employee A was part of Company B and earned over $80,000 with Company B in 1998. Employee A earned over $80,000 with Company A in 1999. Is the compensation from Company B counted as compensation for HCE purposes such that Employee A would be an HCE in 1999?

This is the only employee who would possibly be an HCE and of course the test for 1999 would fail. I don't think that this employee would be an HCE since it's not compensation from the "employer". Thanks for any answers.

Our Human Resources Department was informed that Blue Cross would not put all required SPD information in the health benefit "booklet" or certificate of insurance unless the employer has over 500 employees.

Is this a common response? If so, I would think that there are a number of employers out there who are not meeting SPD requirements for fully insured plans (especially those of under 100 lives who have no 5500 requirement). Do these insurance companies try and inform employers of their SPD requirements?

I have been read alot about Section 105 medical reimbursment plans being established for small employers..It seems they can be somewhat discriminatory and don't follow the "use it or lose it" rules as in a 125 plan. Can the experts here comment on the 105 plans, how are they different from 125's etc. Thanks.

Is it permissable for the employer to require that the employee be employed on the last day of the plan year if the employer makes the matching contributions over the course of the plan year instead of making the match at the end of the plan year?

I would like to set up education IRAs for my small children but have recently been told that a Roth IRA might be better. I have read a little about the Roth IRA but I don't see anywhere where it says you can get distributions for educational expenses for children or if you can even set up a Roth IRA for minor children. Can someone help me out with this. What is better, Education IRA or Roth IRA? My children are 4 and 1 now.

I converted a 401(k) to a ROTH in 1998. Since this is a taxable event I understand that it affects my AGI and that I have to pay additional federal taxes. On my Michigan state tax return I then used this same AGI and paid the additional tax at the state level as well. This year I have someone else preparing my taxes and they stated that I should not have included the additional taxable income resulting from the ROTH conversion on my state return. Is this true? I fear having to pay late fees and penalties if the person is wrong.

[This message has been edited by Kingsley (edited 03-14-2000).]

[This message has been edited by Kingsley (edited 03-15-2000).]

Does anyone know where I can get a list of Quantech users who also use the McKay Hochman prototypes?

We have a client who has a 401(k) plan and one of its participants is a retired man whom is up there in years, he has named his child as his beneficiary. What are that childs options for receiving his money in the event of his death? Is the only option a lump sum distribution?

Are SIMPLE plans susceptible to self-correction under APRSC/EPCRS?? E.g., an under-contribution for the 1998 plan year.

Employer contributed flat $300 per participant in lieu of 3% matching contribution.

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[This message has been edited by Christine Roberts (edited 03-15-2000).]

A plan is invested in a certain investment vehicle, which charges a surrender fee. The plan decides to switch investments. All the participants who are invested in the above mentioned investment vehicle are charged the surrender fee. The Employer wishes to make a special one-time contribution to the plan to cover the surrender fee and put all affected participants in the same position they were in prior to the surrender fee.

Does anyone know of any authority from the IRS or DOL which says that this type of action is acceptible?

I'm preparing a grid detailing the withholding and tax treatment of retirement plans. Regarding 457 plans, does anyone know the specific IRC Sections which exclude from FIT the employee and (separately)the employer contributions (the salary reduction and the er contribution)?

Also, while government employees are exempt from FUTA, would these contributions otherwise be subject to FUTA?

And finally, I understand that distributions are not subject to 3405. How are they treated and reported?

What law required that health plans provide coverage for children placed for adoption, before adoption is finalized? When did it become effective?

Is it possible to open a roth ira, make contributions annually, and then use those contributions to purchase a home for a child while leaving the gains (hopefully) in place? Would this be considered a first time home purchase since it would be (for my child) or does the irs look to my house buying record to make that decision? Also, can a roth ira be transfered to another persons name?

I am working to get the ERISA Advisory Council to consider the topic this year of simplifying the law governing plan mergers in acquisitions.

I would like to hear from the users on 2 matters:

1. Where does the current guidance or absence of guidance provide you or your benefit plan clients with extreme problems in accomplishing the reasonable task of sponsoring cost-effective retirement or other benefit plans in the case of a business combination or separation?

2. Do you know of any plan sponsors who would be good witnesses to this issue?

Thanks in advance.

[This message has been edited by BeckyMiller (edited 03-14-2000).]

Client terminated employment with hospital early in 1974 after 17 years of service. Client rehired mid- 1976 and then terminated mid 1979. HR department says client is not entitled to anything because client was: 1) not 55 years old and 2) did not have 10 years of service at date of termination in 1979.

I've requested copies of SPD's and plan doc's for the requisite years. DB plan was amended effective Jan 1, 1976 (I assume to comply with ERISA/IRC requirements). The plan doc as of Jan 1, 1976 says that credited service prior to Jan 1, 1976 shall be computed under the terms of the plan in effect prior to jan 1, 1976. That plan doc is silent on breaks in service other than to say that an authorized leave of absence is not to be considered termination of employment under the plan.

SPD for plan doc effective Jan 1, 1976 says that employees who terminate with 10 years of service or more will be entitled to 100% of their accrued benefit. That short paragraph comes right after the paragraph which says that if you terminate employment before you are eligible under the plan and before you are vested, you get nothing. Of course, SPD's final paragraph states that it is not a contract and provisions in the plan trump anything in the SPD.

If prior service could be counted, then client definitely has 10 years of service. Client however was 44 years old at date of termination in 1979. So, it may be that client's not entitled to anything. It just doesn't sound right that an employee can work for almost twenty years for one employer and then not be entitled to anything in the DB plan because the e/ee wasn't 55 at the date employee terminated employment. I work mostly with DC plans so maybe that's why it doesn't seem to fit.

After looking at this issue I ran across Reg. §1.411(a)-5(b)(5) which says that pre-1971 service cannot be disregarded for vesting purposes if the participant has at least three years of service post 1971. Pursuant to language in the Reg. this trumps the §411(a)(4)(F) provision regarding pre-ERISA break in service rules. Thus, in the client's situation, it appears client has 10 years of service which would entitle client to 100% vesting.

Anyone dealt with this issue or dealt with Reg. §1.411(a)-5(b)(5) before???

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