When a participant "buys back" his forfeiture, do I establish an after-tax or pre-tax account for him? Assuming the answer depends upon the source of the money coming back to the plan, i.e. IRA rollover or personal funds, do I have any responsibility to verify the source? What if the source is both?

Company X currently sponsors a SIMPLE IRA for its eligible employees. Company X has a fiscal tax year which begins on October 1 and ends on September 30. I know that Company X cannot maintain a qualified plan at the same time it maintains a SIMPLE IRA without violating the SIMPLE IRA's exclusive plan requirement. However, can Company X implement a qualified plan on October 1, 2000 (the first day of its 2000-2001 fiscal year) even though it maintained a SIMPLE IRA (to which contributions were made) during the 2000 calendar year? Put differently, if Company X terminates its SIMPLE IRA before October 1, 2000, may it then implement a qualified plan effective October 1, 2000, without violating the SIMPLE IRA's exclusive plan requirement even though it did sponsor a SIMPLE IRA between January 1, 2000, and September 30, 2000?

The Code states that the relevant measurement period for purposes of applying the exclusive plan requirement is the calendar year (see Code § 408(p)(6)©), but does anyone know whether the IRS permits the rule to be applied based on the plan sponsor's fiscal year in lieu of the calendar year?

Our Risk Management department is looking at providing certain risk policies through a captive insurance arrangement as has asked if our company health & welfare benefit plans can be used to meet the 30% unrelated business requirements. From what I've seen, setting up a VEBA for benefit plans is a much more efficient way of funding benefit plans. Does anyone have any experience in attempting to fund employee benefit plans through a captive?

I have a 403(B) plan document that has individual Trustees named.

The account is a pooled investment account with a bank custodian.

I have a concern that 403(B) plan has named Trustees

Any thoughts on this?

The 403(B) in question is a church plan, although I don't think that changes the issues

Much thanks

Pat Insall

In the past we offered participation in our 401(k) plan to temporary agency employees that worked for us over 1,000 hours. The situation has come up again but the temporary agency doesn't know how to handle it at their end. Any help would be appreciated.

Participant in 401(k) turned 70.5 in early 90's. Took Min Distributions until 1997 when they elected to cease receiving. Participant terminated in 2000. How do we calculate the minimum distribution? Does original election apply or do you create new election? If they choose to rollover, do you take Min Distribution prior to rollover? If so, then which election?

Recently we have heard tales of Medicaid or Medicare going after non-profit entities, particularly hospitals, who terminate over-funded defined benefit plans. Supposedly they have gone after any excess assets that facilities proposed to revert. In one case, we heard that they got a court injunction to prevent the reversion. Our understanding is their reasoning is that when rates are set they include consideration for benefit costs and therefore the reversion is not allowed. First, has anyone actually encountered this situation and what info can you share? Secondly, do you believe that using the reverted assets could be used as an argument that the assets are still being used for benefits purposes? Any information would be greatly appreciated. THANK YOU!!

Our client has an employer who recently passed away. He was a teacher so he only works 9 months of the year, but receives compensation throughout the entire year for the 9 months he works. Can the employer withhold his 401(k) deferrals from the compensation that is owed to him that is now being paid to his estate? Can you please provide me with a citation to support any answers?

Does anyone have release language for an ERISA matter. The general release language used by my firm just mentions claims under ERISA. Does anyone have anything more specific. My e-mail address is mcelroy@wildmanharrold.com. Thanks in advance. Ed

I belonged to a company with 2 separate divisions. Both divisions shared 1 401k profitsharing plan. The plan is one where you are 20% vested after 3 years, 40% vested after 4 years and up to 100% vested after 7 years. I am currently 20% vested.

My division recently split and formed a separate corporation with no relationship to the former company and a new similar plan was developed which continued my 20% vesting.

My Question: Since I was forced to leave my first 401 k profit sharing plan and all money was taken out of the account and transfered to the new plan, in effect, in my case, the original plan was terminated by having my account closed. Any termination of the plan, as outlined in the rules and

regulation, means I should be 100% vested instead of 20% Am I missing something here?

All responses are greatly appreciate. Thanks

My wife has a Roth. We are married and file jointly. We can contribute $4000 to a Roth. My question is this. Can these contributions all be sent to to the same Roth?

In other words, does one Roth account handle all $4000 or do we have to set up two different accounts?

A 5% owner took a lump sum distribution from a Defined Benefit plan that was about $200,000 more than the plan formula allows. I don't know if he is going to return it to the plan or not.

The ERISA Outline Book states "A little known provision in the tax code, IRC 72(m)(5), imposes a 10% penalty on a distribution made to a 5% owner which exceeds the benefits provided for such individual under the plan formula."

Does IRC 72(m)(5) apply in this situation, and if so does it apply if he returns the overdistribution? If it applies, is the 10% penalty on the entire distribution or just on the portion that exceeds the correct distribution amount?

I recollect reading soemwhere where a loan can be rolled over from a prior employer's plan to new employer's plan.

If in agreement, what is needed to do this?

Much thanks

Pat Insall

Can my employer, the sole contributor to my esop, contribute so much that it interferes with the 15% max I can put towards my 401k ?

My employer is the sole contribitor to my esop, so will this effect how much I can contribite to my 401k ? I believe the max contribution I can make to my 401k is 15%, but my esop last year was over 15% of my salary.

In Rev. Rul. 2000-27 the IRS has essentially exempted, from the same desk rule under 401(k)(10), transactions involving the transfer of less than 85 percent of the assets of a trade or business - it has said that it will respect applications of the same desk rule to transfers of less than 85% of assets occurring prior to Sept. 1, 2000, it also stated that it will allow application of Rev. Rul. 2000-27 to past transactions that fall within its paramaters. Question - if the asset selling organization asserts the same desk rule in a transaction that is now eligible for non-same desk rule treatment under 2000-27, contary to the wishes of former employees, is it a violation of the former employees' ERISA Sec. 510 rights to continue to prohibit distribution or even rollover of their plan accounts to a new employers' plan??

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I have a church which currently has a 403(B) plan with a discretionary employer profit sharing contribution giving difffering %'s to 3 classes of ees.

There are currently no HCE's

Since a church plan not subject to ERISA

Is there any reason that they couldn't restate to a 401(k) plan? Any real advantages here since testing is a mute point?

I guess one hassle would be that they would have to continue to file a Form 5500 for the 403(B) plan since can't terminate?

Thoughts are appreciated

Thansk

Pat Insall, CPC

I would like to know what other administrators do in this situation. A profit sharing/401(k) plan does not provide for annuities as a form of benefit. Per the Code, therefore, spousal consent is not required for distribution. What should be done to be certain that a participant in the middle of a divorce is not trying to take his/her distribution to avoid losing part of it in in the divorce, via QDRO, etc? What types of questions are asked on every distribution? Do most administrators require spousal consent for all distributions? If so, under what authority?

It has just been suggested to me that I look into investing in a Roth IRA. I know nothing about this sort of thing; I have been relying solely on PERA and savings account for retirement (which is still 30+ years away). Here are few questions: minimum amount to open?; minimum yearly amount?; monthly payroll deductions?; interest rate?

Forgive my novice questions. Thought this would be a good place to start

I've been reading the IRS comments on the new cafeteria plan regs on mid-year changes. I'm pretty clear on most of the changes but am concerned with how the dependent care FSA deductions may be handled - or expect to be handled - by employees. According to what I have read, if an employee changes coverage (dependent care providers) mid-year then they can change DC FSA deductions. I understand that but wonder about ee's who either do not use dep care providers over the summer, or who begin to use dep care providers over the summer. I have several ee's every year during open enrollment who ask if they can stop deductions over the summer (or start them over the summer) during the school vacation period. My standard answer has always been no. But if an ee now stops or starts using DC providers during the summer months, this seems like it would fall in with the change in coverage. After reading and re-reading it several times I believe that an ee who just increases or decreases utilization of providers over the summer could not change their election. But the ee's who stop or start coverage may have a case to increase or decrease their deductions.

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Debbie Button