IRA “Time Bomb”. Let’s suppose that your unmarried client has an IRA at Fidelity, and, following your sound advice to split that IRA into several accounts so that the life expectancy of each beneficiary can be used for Joint Life Expectancy, for Required Minimum Distribution purposes, she splits the account into several accounts - each with a different child or grandchild as beneficiary. Fidelity remains the custodian for all accounts.

Now, suppose that she later decides, for whatever reason, to change the beneficiary of one of those accounts or adds a new IRA account, and, for that newer account, she wants to name her church as beneficiary. She uses the Fidelity form to do that.

But the boilerplate just above the signature block on that form says that this beneficiary information shall be effective for ALL IRAs of which Fidelity is custodian,including Roth, rollover, SEP-IRAs, and Traditional IRAs, and SHALL REPLACE ALL PREVIOUS BENEFICIARY DESIGNATIONS ON ALL FIDELITY IRAS.

She’s just made the church the beneficiary of ALL her Fidelity IRAs!

Would a "heads up" to our clients who have Fidelity IRAs be in order?

John L. Olsen, CLU, ChFC

Olsen Financial Group

St. Louis, MO

We have an employee who was eligible to begin deferrals on 1/1/99. She was not given election forms until 11/23/99. What is the corporation's responsibility to make up her "lost" deferrals and match. What about earnings?

I am looking for a copy of a self-funded medical plan document.

If an employee switches employers mid-year, and that employee is covered under 457(B) plans of both employers (who are unrelated), can he/she have two $8,000 deferral limits? It appears that the 457 (B) limits are on a plan-by-plan basis, which would mean that a person could have multiple deferral limits during a year.

Based on the above, if the contribution under the first 457(B) plan was offset by a deferral under a 403(B) plan, will that offset also apply to the limit under the second 457(B) plan? It appears so, because the offset rules are based on what the individual has been able to exclude from income.

Am I missing anything?

Two calendar year 401(k) Plans merge effective January 1, 2000. Each Plan will have a different profit sharing contribution amount for the 1999 year. Does the profit sharing contribuiton for the 1999 year have to be in by the effective date of the plan merger, or does the employer still have until March 15th to make the contribution under each Plan's 1999 allocation formula?

What is the maximum deferral limit for 2000?

I have a client who owns multiple gym/fitness centers. He is trying to put together a sales presentation for businesses to show how a wellness program can benefit them. His questions...

1) Can dues, etc. be paid from a cafeteria plan or would the company need to set up a separate wellness plan to offer these kinds of benefits?

2) Are there any professionally done brochures, pamphlets, etc. he could incoporate into his sales presenation to avoid having to create something on his own?

Any suggestions or links would be greatly appreciated!

First part of my question involves the definition of HCE. I'm of the understanding that unless there are employees of a nonprofit entity that meet the compensation amount of the HCE definition ($85000), then there are no HCEs. Is this correct?

If this is correct, the plan then only benefits NHCEs and would automatically pass 401(a)(4) and 410(B)? The point is this. The plan sponsor wants to provide a benefit for the executive director that is greater than the other employees. Is this permissable? My first thought is that since there are no HCEs benefitting, there would not be a problem with providing a different level of benefits for the various HCEs. Any thoughts on this issue would be appreciated.

I should point out that the discrepancy between salary levels of the executive director and other EEs is considerable.

Does anyone have a safe habor Notice they would be willing to share.

Thank you

Does anyone interpret that ERISA 104(B) provides that a deferred vested, retired or luimp sum recipient can request for a copy of their benefit calculation?

For the same group of participants stated above, how long does a company need to keep employee records that are necessary to compute the participant's benefit? This I believe is addressed in ERISA 209(a)(1), but I am not clear fot this group of participants.

A individual formerly participated in a 401(k) plan and then terminated employment. The individual never incurred a break in service. The plan currently provides that an individual will be able to make deferrals as of the entry date following their date of hire. During 1999, entry dates were the first days of each calendar quarter. In 2000, the plan will have been amended to provide for a single entry date ... January 1. The individual in question was reemployed on November 10, 1999. Can he make deferrals immediately or does he wait until 1/1/99? Additionally, if an individual becomes reemployed on 1/5/2000, does the individual need to wait until 1/1/2001 to begin making deferrals? The plan is silent as to reemployed individuals. Any thoughts? Thanks. Ed

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Plan has four HCE's making 1999 contributions in excess of $160,000 limit. Can this be corrected by doing refunds in the current year?

I think I already know the answer to this question, but anyway, can employer contribution money that has been put in to a profit sharing plan be transferred to a money purchase plan in order to meet the funding formula?

They are trying to get away from having to put more money into the money purchase plan by taking some money that was put into the profit sharing plan and moving it to the money purchase plan.

[This message has been edited by Theresa (edited 11-24-1999).]

When considering which fees may be passed onto qualified plans (settlor vs. nonsettlor distinction by DOL), how do feasibility study fees fit in?

Does it make a difference if it is an ESOP already in existence, reviewing the feasibility of becoming 100% employee owned vs. 15% employee owned? It doesn't seem to be an administrative or compliance type of fee, but it is a fee to determine the prudence of an investment and in taking on debt. Any cites are appreciated.

Under the Code, it appears that a TAMRA revocation (found at 415(B)(10)©(ii)) made on December 31, 1999 will subject a governmental plan sponsor to liability for any benefits paid to retirees in excess of the Code Section 415(B) annual benefit limitation for years after December 31, 1994. Why would the IRS permit a revocation but then subject the entity making the revocation to possible plan disqualification (for not meeting the 415 requirements)? Is the answer to my question that the governmental plan sponsor should have adopted a 415(m) "excess benefit" plan in 1995 to prevent the 415 limits from applying in later years? How can such an assumption be made (that the sponsor will immediately adopt a 415(m) plan) when an entity has up to 3 years to consider a revocation? I'd appreciate any thoughts. Thanks!

Our plan document states that forfeitures should be used to reduce employer contributions and that employer contributions need to be paid in to the plan by the tax filing deadline plus extentions.

When we process forfeitures, do we need to use them to reduce employer contributions in the year in which the forfeiture happened or (if the employer chooses) can they be used in subsequent years? Our document does not explicitly state either way. Is there code or common practice that would assist in resolving this question?

For example:

- 1999 forfeitures of $1,000 on 12/31/99

- plan match is pay by pay & has already

been paid in to the plan

- no top heavy contribution required

- employer elected not to make P/S contrib.

What to do with the $1,000?

In his recent press release, Mr. Gore's rhetoric sounds distinctly, and alarmingly, familiar. I pose the following comments for your consideration:

1) It has always been true that plan sponsors have "reduced" future benefits, for a variety of reasons. The most common, in my experience, has been a projected inability to continue to meet minimum funding levels, and usually resulted in a partial or complete termination of the DB plan.

2) Unless I missed a recently signed law, no plan guarantees future benefits. Benefits do not become payable until certain conditions are met, and the provisions of the plan in effect at the time of the termination of employment, with grandfathering, are the legal definition of the benefit.

3) It comes as no surprise to those of us in the industry that future benefits for older employees cost more to provide. I am personally chagrined to see a candidate for President use scare tactics in this fashion.

[Edited by Dave Baker on 07-16-2000 at 11:56 PM]

Does anyone see a problem in setting the normal form as a straight life annuity, but if a participant selects an optional 100% JSA, have the JSA subsidized so that it is the same monthly amount as the straight life annuity would have been?

[This message has been edited by mo (edited 11-22-1999).]

There is an employee of my company who has a speech impediment. He may go into a sort of marketing role (working at tradeshows)in the future (he is an engineer). The president has told him that we will pay for him to have speech therapy. My concern is that this may be preferencial treatment and we may face problems in the future if someone wants us to pay for similar treatment. The only other what-if scenarios I can think of would be physical therapy or paying for hearing aids. The question is- should we offer to pay for this person's speech therapy? Thank you for any help on this.

We have two employees who will get no pay for December. One is terminating and the other is going on unpaid leave of absence for the rest of the year. In a calendar year cafeteria plan, can we take three paychecks worth of their elected deferral amounts out of their last checks this month so that their annual elections amounts will be met for the plan year?