I am the office manager for a small IT start-up. The owners are from another country and when they started this company they assumed 2 weeks vacation was standard in the U.S. I told them that it really depends on the company. They would like to get a sense of the industry standard for a company of our size in the IT industry. We really need a full time off policy - vacation, sick, holiday, floating holiday, etc. The numbers are important.

A participant is covered under a MP and 401(k) plan. The sum of her MP + Deferrals + Match is greater than $30,000. The 401(k) plan document provides that deferrals may be returned to satisfy 415. What happens to the match associated with the return? Is it forfeited? reallocated? They are failing the ACP test and will make a QMAC.

Another alternative would be to prorate the correction between deferral and match. The excess match would then be used to reduce her matching contribution for the next year.

Any help is appreciated.

One of the plans that I work with is planning on entering into a securities lending arrangement with its trustee. Has anyone had a good or bad experience with this type of arrangement?

My company charges an administration fee and custody fee on the IRA's we service. A client has inquired to have the fees billed to them rather than charged against their IRA Account. What is the tax advantage to this? Are the fees paid directly by the IRA holder tax deductible?

Thank You, AJM

Carol, or anyone else who has filed a determination letter for a governmental plan, do you have the plan send out notice to participants re the letter filing? The regulations concerning the provision of notice (1.7476-1(B)(7) and ©(5)) are not written clearly. My reading of ©(5) is that it was written specifically to draw governmental plans into the requirement to provide notice. However, ©(5) provides that notice must be given for a determination seeking qualification for a year to which section 410©(2) applies. 410©(2) was amended in 1997 to carve out governmental plans from meeting certain "pre-ERISA" requirements. Does this mean that post-1997, notice need not be given for governmental plans? Thanks!! -Shaun

Has anyone addressed whether a pre-1989 distribution election may be changed to meet the current minimum distribution requirements. I understand that the Tax Reform Act of 1986 provides that the minimum distribution requirements will not apply to distributions that were in effect prior to January 1, 1989, but I wasn't sure if this meant that the distribution election was irrevocable, and the distribution amount could not be raised to meet the current MRD requirements.

Consider the following:

An employee elects, prior to the beginning of the plan year, to contribute one thousand two hundred dollars ($1,200) to a Health FSA at the rate of one hundred dollars ($100) per month. The employee incurs reimbursable expenses of two hundred dollars ($200) in February which are reimbursed to the employee in March.

Additionally, the employee incurs reimbursable expenses of seven hundred dollars on June 2. However, the employee's employment is terminated on June 30, at which time the employee has only contributed six hundred dollars ($600) to the Health FSA. Further, the employee's June 2 expenses have not been reimbursed as of the date of the employee's termination of employment.

Is the employee entitled to be reimbursed for the entire amount of his June 2 expenses ($700), even though he only contributed six hundred dollars ($600) to the Health FSA prior to his date of termination, and he was already reimbursed two hundred dollars ($200)?

Consider the following:

An employee elects, prior to the beginning of the plan year, to contribute one thousand two hundred dollars ($1,200) to a Health FSA at the rate of one hundred dollars ($100) per month. The employee incurs reimbursable expenses of two hundred dollars ($200) in February which are reimbursed to the employee in March. Additionally, the employee incurs reimbursable expenses of seven hundred dollars on June 2. However, the employee's employment is terminated on June 30, at which time the employee has only contributed six hundred dollars ($600) to the Health FSA. Further, the employee's June 2 expenses have not been reimbursed as of the date of the employee's termination of employment.

Is the employee entitled to be reimbursed for the entire amount of his June 2 expenses ($700), even though he only contributed six hundred dollars ($600) to the Health FSA prior to his date of termination, and he was already reimbursed two hundred dollars ($200)?

A big client was acquired by an out of state company and will be closing its doors as of June 30, 2000. Most employers either have been, or will be let go. June will be the last payroll. The 401(k) has 22 loans outstanding as of this date with approx. $277k outstanding. The loan feature was just added May 1, 1999.

Other than the possibility of the acquirer's plan permitting the receipt of rollover loans, any suggestions?

Do any of you have letters to participants with loans explaining options at plan termination?

Any words of wisdom?

Employee divorced spouse last fall, failed to notify Plan administrator to delete spouse within 30 days. Now has remarried and wants to add new spouse, can we allow him to delete old spouse or must he wait until open enrollment? Also, he wants to purchase COBRA coverage on x-spouse, do we charge him retro to divorce date, even though he has been paying for her coverage through his regular premium payment? Technically, the x-spouse is no longer eligible as of divorce date, even though the employee failed to properly and timely notify the Plan administator.

California courts routinely seek to join plans when QDROs are presented. There is a string of cases where the DOL has argued that ERISA preempts this type of joinder. The courts usually find there is no preemption (with some exceptions). Can anyone point me to a DOL document that sets forth its opinion on this matter? Thanks.

Is there ANY way at all that a group of governmental entities could qualify as a MEWA for the express purposes of providing health benefits to its employees and dependents?

Thanks!!

Plan documents should be written so that your benefit is "capped" at 415 levels and a participant can never "accrue" a benefit in excess of 415. Therefore, abiding by 415 should never raise a 411(d)(6) issue.

Pardon my ignorance. Is this a new proposed law or something that has been around a while? Is it federal or state?

Our company adopted a 401(k) plan on 1/1/2000 with a safe harbor matching contribution formula on elective deferrals. (the standard safe harbor match - 100% of the first 3% and 50% on the 4th% and 5th%) Participants are eligible on the January 1st or July 1st after having completed a year of service in which they had 1000 hours of work service. We passed out the safe harbor notice yesterday to the July 1st eligible participants and I'm getting ready for the meeting. Question: If someone who becomes eligible July 1 makes $40,000.00 annually and elects to make a 6% contibution, how much is their maching contribution? Is it $800.00 based on $20,000 X 4% max% for their period of eligibility? Or, is their a true up involved since their deferrals will equal $1,200 which is 3% of their comp from 1/1/2000 thru 12/31/2000?

In the '85 edition of Pension Math for Actuaries by Anderson the 3rd chapter addresses the contributory plan & introduces the need to add PVFRefunds to PVB & in chapter 4 under the discussion of the valuation of vested benefits upon termination of employment with contributory Unit Credit it's mentioned that the accrued benefit should be the greater of the full accrued or ( refund + reduced accrued ); under a contributory plan using Aggregate (not IA), if the full accrued is used at

termination and the full projected at retirement, then I'm assuming the PVFR

term would be omitted ? All participants are 100% vested also.

[This message has been edited by Don N (edited 05-31-2000).]

A spouse who is the beneficiary of her spouse's IRA elects to treat the IRA as her own upon the spouse's death. If the spouse names the children of the decedent's prior marriage as irrevocable beneficiaries of the IRA, is this a taxable transfer? If it were a qualified plan, I believe the anti-alienation provisions would prevent a completed gift but I am not sure what the rule is in the IRA context.

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In regards to dental coverage, when an employee has primary coverage at work and dependent coverage at the spouse's plan, and the secondary insurer is applying non-duplication of benefits, we are being told that the secondary coverage can be completely offset by the primary is their benefits are the same or higher than the secondary. For example, the primary covers basics at 85% and leaves 15% unpaid. The secondary is not picking up the 15% and is stating that their 80% benefit is competely offset. This is the first time I have encountered this. Is this a new way of adminstrating COB? Should employees have been told about this before they enrolled when the employer switched to this policy?

Where can an employer purchase an updated procedures manual that would stand up to a DOL audit?

When using prior year ADP and ACP, is there any leeway with the multiple use test in the event of an amendment to the Plan increasing the matching contribution? It appears that my HCES will exceed the multiple use rules due to the doubling of the matching contribution in this plan year.