In light of the tax deferral already present

in a 401k and the charges for mortality and other fees (in a variable annuity) is it appropriate to include variable annuities as an investment choice in a 401k plan?

It is not a qualifying event under COBRA but you do need to send a certification of creditable coverage under HIPAA.

The $10,000 402(g) limit is a dollar limit that is unrelated to salary (or at least not directly related), and is applied to the calendar year. It is really a participant's responsibility to be sure the participant does not go over this limit. As a favor to employees, it is certainly a good idea for an administrator to check with the participant about deferrals made with another company.

A 401(k) plan active participant who turned 70 1/2 in 1998 was given the option to start minimum distributions or defer to termination of employment. The participant chose to start. The required minimum distribution for 4-1-99 was calculated incorrectly. The question is: when an active participant chooses to start, is the distribution truly a required minimum distribution (RMD) with all associated characters (can't be rolled over, 50% excise tax applies if amount is not made or if amount is too small, etc.)? Or can the distribution be treated more like an in-service withdrawal (can be rolled over, no excise tax applicable, etc.)?

Thanks, Dawn. You were right ... compensation is limited to $2,000 for purposes of non-elective contribution.

We have a intragovernmental agency which is now a tax-exempt nonprofit organization.

The same individual will remain in charge.

The board for the agency (now the board for the tax-exempt) had made a $6,000 employer contribution to a §403(B) for this individual. Given the discrimination rules that now come into play with a tax-exempt, we need an alternative plan for providing $6,000 to this person on a tax-deferred basis. One thought is an unfunded deferred compensation plan (or through a rabbi trust).

Would such a plan be considered an ineligible

457 plan? If so, are there unresolved issues related to such plans? Any help is appreciated.

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Husband and wife each have an IRA. Both are over age 70 1/2. Husband is using straight life calculation, while wife is using JSA table with recalculation. Husband dies in 1997. The 1998 distributions, based on 1997 balances, are calculated from each IRA as in the past. In 1998, however, the wife combines the husband's IRA with her own, so that at 12/31/98 there is only one IRA. Two children are now the beneficiaries. For 1999, what life expectancy would I use? I am leaning towards straight life, using the life expectancy of the spouse. Am I on the right track? Thanks!

While I know a plan can use any "reasonable method" for calculating the earnings on excess contributions, has anyone actually used a "uniform" type of calculation. For example, the average earnings amount for the plan, Retirement Money Market Rate, etc?

We're considering ordering 2 of the resources authored by Q&A columnists:

1. The 401(k) Plans Manual by Stuart C. Harris and Kut E. Linsemayer.

2. Retirement Plan Distribution Book by Martin Silfen, Esq.

Has anyone used either of these? If so, would you be willing to share any comments about them?

Thanks.

Assume Employer A has a qualified plan with a calendar year plan year. In 1999, Employer A terminates the plan. In 2000, Employer A establishes a SIMPLE IRA. In the first quarter of 2000, Employer A makes the last contribution to the terminating qualified plan. Question: Does the last contribution to the qualified plan in the year the SIMPLE IRA is established cause the exclusive plan rule to be violated? Notice 98-4 states that an employer is considered to be maintaining another qualified plan if any employee receives an allocation of contributions for any plan year beginning or ending in the calendar year. Here, the right to the contribution was earned in the preceding year, but the contribution was made in the following year. Any thoughts would be sincerely appreciated.

We have a 3-ring binder for which updates are sent periodically that is entitled "ERIAS OUTLINES PPD Pension Library." Is this resource the same as or related to Sal Tripodi's "The ERISA Outline Book?" Has anyone seen both? Would you be willing to explain any differences between them?

A plan failed the ADP test and the plan document calls for forfeiting the match associated with the deferrals that will be returned to the one HCE causing the failure. The plan also failed the ACP test and will do a corrective distribution to pass the ACP test. Since the amount returned to pass the ACP test exceeds the amount of associated match, can the associated match provision be ignored in this case?

Would it be possible to use a qdro on a nqdc plan account?

Since S Corp dividends attributable to only unallocated ESOP shares can be used to pay off an ESOP loan, how does an ESOP sponsor avoid a situation where, due to level loan payments occurring over the years of the loan, the number of allocated shares in the ESOP get higher and higher as the debt is paid, leaving fewer and fewer unallocated shares? This reduction in unallocated shares also necessarily reduces the amount of any S Corp dividend distribution that can be used to repay the ESOP loan in the later years of the loan. This is especially problematic where the S Corp's 25%-of-payroll contribution may not be high enough, when combined with dividends allocated only to the shrinking number of unallocated shares, to support the debt service at the tail end of the loan. For an S Corp, owned 100% by an ESOP, with a stable and steady income stream, would it be possible to make minimal contributions (less than the 25%-of-payroll) to the ESOP for a number of years early on in the loan until such time as the company's steady and healthy income stream has allowed the S Corp to accumulate enough earnings (tax free) within the corporation to make one huge dividend distribution to the ESOP which would allow the entire loan to be paid off? Is this a risk with the possibility of some sort of UBTI tax looming out there?

Have a 10/1/99 effective date on a safe harbor 401(k). Min age 21, 12 months service. Employer tells me most of the employees are part time, work less than 16 hours per week, and were hired 5/98.

Problem is, I usually have effective dates of 1/1 on my plans, not 10/1.

Would the first 1000 hours for eligibilty run from 5/98 to 12/98 and if the hours were not met, they would not come into the plan on 10/1/99?

Or is the year measured from 5/98 to 5/99 and if they didnot have 1000 hours in that period, they would not come into the plan 10/1/99??

May an Employer that started business 8/1/99 make the effective date of a Plan 1/1/99?

Employee states that his daughter will start

counseling in '2000 for Depression. I've referred to the Publication 502 and I don't see anything that specifically states "Counseling". I've have read the Psychologist and Therapy sections. Is counseling considered an eligible expense? Thanks! Yvette

There are no rules on who can be a beneficiary other than what are in the plan document. There are certain rules when figuring out minimum required distributions for non-spouse or non-human beneficiaries. There shouldn't be a problem with this designation.

I have self-employment income and have set up a SIMPLE IRAin which I plan to direct both my "employee" contribution of up to $6000, and my 3% "employer" contribution. I understand that as an "employee" the amount that is available for my contribution would be after my 7.65% "employee" FICA amount is deducted.

My question is whether I need to also to deduct my "employer's" 7.65% FICA amount before I determine what amount is available to contribute.

If you sell stock in a company under a Roth IRA and that money goes into a money market account within the Roth IRA, how is the sale treated if it results in a loss?