Profit sharing plan year ends 8/31/99. Participant turns 70 1/2 on 4/24/00. Plan was terminated and direct rollover to IRA of funds in terminated plan was completed as of 12/31/99. For calculating the RMD for 2000, do we use 8/31/99 plan year ending balance or 12/31/99 IRA balance? Any guidance out there?

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LKP

Assume a blackout period of 10 weeks for a 401(k) plan conversion to a new trustee/recordkeeper (and assume that the length of the blackout period is not questionable, ie, that is was reasonable). The "mapping" approach is used for the conversion. Accounts are participant directed (except during the blackout period). Employee deferrals are withheld from employee's paychecks during the blackout period. What should/can happen to those employee deferrals during the blackout period? Can the employer continue to hold those deferrals in a separate interest bearing account (for its own account) until such time as the blackout period expires? Beyond the time prescribed by DOL Reg. 2510.3-102 (ie, at latest, 15 days into the month following the month withheld), it seems this would constitite a prohibited transaction.

I am looking at this issue for a client. The new trustee refused to take the employee deferrals from the employer during the blackout period. Thus, the employer placed the deferrals in an interest-bearing account (for its own account) until the blackout period had expired. Is this common/acceptable? It seems a clear violation of the DOL Reg. Though I recognize that the deferrals cannot be invested pursuant to participant's directions until the end of the blackout period, it seems that the deferrals should be held by the trustee in a money market or something of that nature.

Any thoughts would be appreciated.

IRS Notice 2000-3 [Q-A 11] permits an existing profit sharing or pre ERISA money purchase pension plan to be amended to add safe harbor 401k provisions. Any thoughts on whether an existing money purchase pension plan can be restated as a safe harbor 401k under that question or under the law in general? I understand that the 204h notice must be given and any required funding be made.

I am confronted with a profit sharing plan with a frozen PAYSOP portion. What provisions of the Code apply to the PAYSOP? Are the provisions applicable to PAYSOP's identical to the provisions applicable to TRASOP's?

My company has been approached by a vendor to implement a program offering products and services to our employees.

One aspect of the program that I'm concerned about is this: the vendor provides each employee with a credit towards the purchase of these products and services. The total credit amount is undecided - it could be somewhere between $25 and $100 and the credit amounts per product vary. Typically, the program is set up so it appears as though the employer is "providing" the credits. This is done for goodwill purposes, building participation based on the employer/employee relationship. My task is to research the credit piece of this with the goal of determining if there is any risk of our company incurring liability of any kind. Does anyone have any experience with anything like this that you can share with me or would anyone be willing to comment? I intend to obtain a legal interpretation but I would prefer hearing from the HR community as well.

Thanks.

I've changed jobs, rolled my 401k to a Traditional IRA, then rolled that to an existing Roth Conversion IRA, all in 1999. The 401k had my contributions, the company matched contributions, and capital gains on both. Do I pay taxes on the total amount, and how is it taxed- as earned income or capital gains or a combination?

Alert! Do not trust your custodian to get the job done correctly or to make the proper notations for year or even valuation. This site has seen many problems and complaints related to custodian errors, delays and failure to complete.

Each IRA owner needs to be proactive about rollovers and contributions. In the case of rollovers, give your custodian a clear letter of instruction. Get a receipt. Check your statement.

Also... avoid the rush at year end and around tax season. Temp help is often brought in to handle the extra burdens and this may increase the number of errors.

I am displeased with my current Roth custodian and plan to move my account. I've heard that it is possible to use a Roth account for day trading. Is this true? If so, what are the necessary procedures for doing so?

Controlled group made of Holding Company and two wholly owned subsidiaries. The Holding Company has adopted the SIMPLE IRA and is making the 3% match for employees. Generally, with a qualified plan all three entities would adopt the same plan as participating employers and each individual subsidiary would make the contribution for their own employees. Holding Company doesn't even have any employees. Is this a problem the way they have set it up? It seems like each of the subsidiaries should have also adopted the SIMPLE IRA and that they should be paying their match on behalf of their employees. I seem to remember though that for tax deductibility purposes, a member of a controlled group may make contributions on behalf of other members. Any thoughts?

[This message has been edited by Dawn Hafner (edited 01-17-2000).]

Are there any members that use BlazeSSI for their recordkeeping system? If so, anyone interested in starting an unofficial users message board? Thanks.

We prepare a partially filled-in "fill in the blanks" format.

The ask for information on all employees as of end-of-year; we then determine eligibility.

For assets, in lieu of the client filing out a form, we also accept copies of monthly, quarterly or annual investment statements, and we then reconcile the assets.

The brick wall, as well as partially (or incorrectly) filled out forms is still a problem with some of our clients.

How often are fee surcharges used for poorly prepared data from clients?

I am under the belief that when doing 410(B) and 401(a)(4) testing only the employer discretionary contributions are tested. I don't include 401(k) or match in testing contributions. I have been told before by Corbel that I am wrong but when given reg's to support their position, I don't agree. Isn' that what the ADP and ACP tests are for?

I would like to see what the average TPA administrative fee is broken down by claims processing and COBRA/HIPAA administration. I have a company with approximately 800 employees in several states with PPO networks. The TPA primarily processes claims and provides management reports. I keep seeing admin fees all across the board. What is a reasonable fee range?

I work for a company with a qualfied plan. If I take a new job, can I rollover my distribution into a new Traditional IRA, and convert that IRA into an already exisitng conversion Roth IRA, or can I create a seaparte new Conversion IRA, assuming I can pay the taxes and am within the income limits?

A prospect is dissatisfied with the institution that sold them their SIMPLE-DFI (Form 5305). They now want to allow employees to direct their deferrals to any institution. Since this is prohibited as long as they are on the 5305, can the employer amend to Form 5304? If so, can this be done mid-year?

Also, if employer decides to just invest with us, can the employer amend to 5305 with us? If so, can this be done mid-year?

Thanks for any info you can offer, Gary!

I notified my IRA trustee towards the end of December 1999 to convert my IRA to a Roth before year's end. They indicated the conversion would occur before the close of the year. I have just received notict that they made a mistake and did not do the conversion. Can they correct the coversion, and make it still valid for 1999? If not, I am certain this will result in a significant loss to me due to large differences in tax rates between 1999 and 2000. Is there legal recourse against the trustee for failing to complete the transaction? They have offered to issue a letter stating there error, but are not clear what tax documents for 1999 will reflect.

Employer has cafeteria plan with employer contribution and health insurance option and health FSA.

Employer would like to include part-time employees but wants to make a lower dollar contribution (seems reasonable since they won't be working as much they shouldn't get as large of a contribution). Employer could exclude part-time employees completely from plan so if they are allowed to participate can they be given a lower employer contribution? It doesn't seem fair to punish the employer for giving lower benefit contribution when other employers give nothing. Before you answer consider the following points:

1. Section 125 has special nondiscrimination rules for health benefits that requires employer contribution to be equivalent dollar for dollar up to a level equal or greater than 100% of health benefits received by majority of similarly situated HCEs or 75% of health benefits of HCE with largest health benefit. This rule appears to prevent lower contributions for part-time employees at least to the extent that the lower contribution does not meet the 100%/75% rule. When determining the HCE health benefit level do administrators include benefits under a health FSA? A health FSA is after all required to be a health plan under the regulations. If administrators do not include the health FSA benefits can you cite some authority or reasoning why not.

2. Can employer set up a separate cafeteria plan with a lower level of contributions for part-time employees? These employees are excludable so they would not cause the full-time plan to flunk the elegibility test.

any thoughts on the

Do QDRO's get reported on 1099-r's?

Okay, what if the beneficiary rolled it to an IRA, would it be a code H? And would the 1099-R be made out to the beneficiary or the participant?

[This message has been edited by Theresa (edited 01-18-2000).]

I have a small employer with just a few employees. He wants to provide the maximum benefit to himself utilizing a Profit Sharing 401K and a Money Purchase Pension. (Does not want a Cross-tested Plan).

Which plan should he integrate with Social Security?

I administer a vanilla nonstandardized prototype 401(k) plan which allows for loans. One of the plan participants would like to take a loan. However, this participant has read a book by Charles Givens entitled "Wealth Without Risk". In this book, there is a passage where Mr. Givens indicates that if a participant borrows money from a retirement plan to make a down payment on a home, the participant never has to pay the borrowed money back (paraphrased). He states that this is a "little-known, major opportunity Congress threw into the qualified retirement plan rules". No citation was given. I have not come across this in the reading of the regulations I have done. Can anyone comment on this? Is there a regulation I can be referred to?