As I read VIII. B. of Notice 98-52, an employer profit sharing contribution of 3% of pay, which satisfies the vesting and other rules for a safe harbor nonelective contribution, can also be used to satisfy 401(a)(4). So if the plan is NOT integrated, the safe harbor does "double duty"- the employer can avoid the ADP test by committing itself to make a portion of the otherwise discretionary profit sharing contribution. However, if the plan is integrated (3% of pay up to the taxable wage base, then 3% of pay over the taxable wage base), the 3% nonelective safe harbor CANNOT be used as the base (or first) allocation of the profit sharing contribution. In effect, the safe harbor nonelective contribution is in addition to the amount allocated per the integrated formula. Is this correct?

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Two of my clients received notice last year that they must use EFTPS for all tax payments. To do this they would have to deposit the 20% withholding in to the employer checking account. Is this a prohibited transaction?

I suggested an in leu of 125 plan to a company and they are looking at simply denying coveraage to anyone covered under the insurance of a spouse? Does anyone know of any problems with this idea?

A plan will be contributing amounts for employees who were not able to begin participation in a 401k plan w/ match as of their entry dates into the plan. This operational failure occurred in years in which the plan was valued first as a quarterly valued plan, and then also after plan switched to daily valuation. I would think that lost earnings on the contributions should be calculated/compounded on a quartely basis when the plan was valued quarterly, but what about after the plan switched to daily valuation? Can plan still calculate a quarterly rate? Monthly? Is there any requirement to do calculation on daily basis? Any guidance would be appreciated.

A plan sponsor did not make their total Top Heavy contribution for a PYE in ‘98. As TPA, our firm completed Form 5330 for them and instructed them to deposit the additional amount and file the Form 5330 with the IRS. The plan sponsor signed the form in 1999 and sent it to the IRS along with the penalty. The IRS is now asking for the date the deposit was made (Part IX- Form 5330). In conversation with the plan sponsor, it appears the plan sponsor never deposited the amount to make up the Top Heavy contribution. What should we as TPA do now? What should the plan sponsor do?

Facts: 401(k) plan with lump sums and installments - payable "as soon as administratively feasible" upon termination of employment. Plan is amended to state that

payments will be made no sooner than 145 days after termination of employment. It seems to me that this could be a violation of Reg. section 1.411(d)-4. Although the regulations allow a change in timing of distribution by up to "two months" for distributions after termination of employment (6 months for distributions during employment)(see Reg. Q&A-2(B)(2)(ix)), the 145 days could exceed the de minimus rule. Of course, "as soon as administratively feasible" is subjective and differs among plans based on number of participants, valuation methods, etc.. Any thoughts? I am being too picky and conservative? Would anyone else be concerned about making this change? (By the way, they have already done the amendment).

We have a terminated DB plan that has had some money returned to the corporation, how do you handle issuing a 1099-R for the corporation?

We were just notified we failed our dep care disc test. Does anyone out there have experience with this? How did you handle? I've gotten some general guidelines about - that we have to go back and deduct monies from highly comps - that is, they will have to pay taxes on monies. Any resources on web to help? Thanks.

I've been asked to research this potential employee benefit? Where do I start?

Any, and I mean, any information would be greatly appreciated!

I have a client with a Top Heavy DB & DC Plan. The DB Plan is frozen and the TH min is to be provided in the DC Plan. In 1999 the client did not make a PS contribution and therefor I assume that short of telling the client he must make a PS contrib. the TH min could be provided in the DB Plan.

The problem is, I have several participants who were employed on the last day, but did not work 1000 hours. The DC Top Heavy rules say that they are entitled since they were employed on the last day, but the DB rules would exclude them because they did not complete 1000 hours.

Does either Plan owe them a TH min? Could I argue that since there was no PS contrib. the TH min reverts to the DB Plan and since they did not work 1000 hours then neither plan owes them anything?

Employer has MPPP that has been frozen for several years. During that time forfeitures accumulated from termination payouts because forf. were supposed to be used to reduce. Employer also has 401(k) plan. What are options with regards to the forfeited amounts from the MPP?. Can MPPP be merged into 401(k)? If MPPP is terminated and forfeitures are reallocated, what employee base should be used? Are 401(k) participants who would have normally entered MPPP eligible for forfeiture reallocation? We are trying to avoid a reversion if at all possible.

Company X has an ESOP which owns approximately 70% of X. X wants to grant stock options to some of its key employees which will cause some dilution. Do most companies take a conservative approach and obtain a fairness opinion or do most take the position that the decision to grant options is a business decision that does not relate to administration of the ESOP or use of the ESOP's assets? I would just like an idea of what the more common approach is. Also, if anyone knows of any specific cases, rulings, articles, etc. that specifically address the grant of options in a company maintaining an ESOP, please let me know. (I am already familiar with the Martin v. Feilin case). Thanks in advance for any comments.

An LLC consisting of all key employees would like to set up a SIMPLE plan. However, some of the LLC owners are common law employees of other unrelated businesses where they participate in qualified plans. Since they are only common law employees is it ok, for them to participate in both the SIMPLE and a qualified plan???

Thanks.

Participant is getting ready to take distributions from pension plans (DC and DB). Participant's first marriage ended in a Mexican divorce. He cannot verify that the divorce was valid, nor can he locate his first spouse, who initiated the divorce. He has remarried. What fiduciary duties does the Plan Adminstrator have in accepting the validity of the first divorce? How should this be reflected in the plan documents?

We've got a profit sharing plan where the employer has not made a contribution in several years (the plan is then deemed to be terminated). The client does not actually close out the plan. Are there any ramifications?

I'm confused about the rules governing required distributions under a 457 plan when a person retires. What choices does one have?

Are sanctions imposed against an individual and the plan for not electing a distribution according to the regs?

Yeah, that was part of last year's tax bill which was vetoed by President Clinton. He vetoed the bill due to disagreements in Social Security spending, not the other general provisions of the bill.

It's expected that the IRA provisions, along with others that were in the original bill, will resurface in a new tax bill. But, when it will happen is anyone's guess. It's possible that it could be this year, but 2000 is an election year.

Keep your fingers crossed!

Can anyone point me to a copy of Rev. Proc. 2000-6 on the Web. It isn't on the CCH site yet.

Thanks

As we look at the various activities of a health care coalition, I think it is important to note that health education can be one of the most beneficial activities for a coalition to become involved in. A coalition, through health education programs combined with adequate baseline data, can impact the appropriate use of health care resources in a given community. A good example of this type of initiative, that is

still unfolding, is the Heartland Healthcare Coalitions efforts to impact the inappropriate use of Emergency Room facilities at area hospitals for specific

level 1 & 2 upper respiratory infections and their upcoming initiative to deal with the inappropriate use of antibiotics for viral infections. These efforts by HHC, which are designed to impact their member population and the community at-large, are being coordinated with area hospitals, physicians, health departments, and health plans to insure a hopefully high level of success in changing consumer behavior.

Jerry Custer

I'm currently looking for some information on the minimum requirements and information that should be listed on 401(k) statements. I'm very happy with my detailed quarterly statements but have heard from other plan participants that only get their statement once a year. Some statements only show balances, no N.A.V.'s or dates and amounts of contributions which would make it very difficult for plan participants to keep tabs on their accounts. I thought I once read a plan participant may even have to ask for an annual statement in order to get one. So I'm not sure if 401(k) statements are even mandatory if the plan participant does not ask. I'm sure most 401(k) plan participants do not run into this problem but I'm sure the ones that do will appreciate your comments and suggestions. Thanks in advance.

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