An employer wishes to allow a 401(k) plan participant access to their money. The participant has reached the Normal Retirement Age of 55 under the plan, but is not yet 59 1/2. The adoption agreement and prototype do not seem to allow for choosing to grant in-service distributions from any source prior to 59 1/2.

Our thoughts have been:

1) Be sure the participant is terminated and then wait to rehire the participant until after the check is cut. Is it necessary to wait until the check is cut before the rehire?

2) Amend the plan to allow for in-service distributions prior to 59 1/2.

Are we correct that this could only be done for non-elective contribution sources?

Would the amendment make the plan an individually-designed plan?

Any suggestions as to the best course of action for the employer? Thanks.

Does anyone out there have a list or can you lead me in the direction of where I might find a listing of eligible prescriptions that would apply towards the flexible 125K spending accounts? I understand that not all prescriptions are eligible even though they are prescribed by a physician. Thanks for your help in advance.

When a company has a lay off, how do others of you out there handle the claims for medical reimb? Do you allow claims for expenses while they are laid off to be reimbursed? Same with leave of absence?

HOW DO YOU CORRECT EXCESS CONTRIBUTIONS TO A SIMPLE IRA?

What are the rules that apply to a cafeteria plan where the employer contributes a set amount of money which the employees can use toward employer sponsored benefits? Does it operate differently than a regular 125 plan? Are there special administrative issues? How does it affect the employer, tax wise? I don't know anything about this issue, so all help will be appreciated! Thanks!

------------------

Liz

Can a new enrollee in an insured health plan claim coverage at VA facilities as creditable coverage? Enrollee is not retired military and has used facilities because he had no other coverage. VA was absolutely no help in this matter.

A type of DB plan has distribution options in the form of lump sum, annuity, and deferred annuity. Must plan offer same distribution options to spouse under survivor annuity rules?

An Employer has a profit sharing plan. Fiscal year and plan year end 9/30.

Employer started paying investment management fees out of plan assets about 2 years ago.

For the 98/99 Plan year, the employer by mistake paid the fees from the company.

Now the employer wants to know if they can be reimbursed for the fees at this time.

The 9/30/99 statements are done.

If we redo the statements and reflect the fee in the g/l, are we okay?

Can we include the fee in the 99/2000 g/l?

Does it matter which year it's incurred and expensed in?

Or is this an issue because the terminated employees will not share the fee if they are paid out?

Is it a facts & circumstances issue?

Thanks

Dlm

An individual has been running a business as a sole prop for several years (John Smith, A Sole Proprietorship), and in November 1999, converts it to an LLC (XYZ, LLC), using a tax free asset conversion.

He wants to establish a pension plan effective 1/1/99. (The tax years of the business and LLC are both 12/31).

The plan is being established with both entities (John Smith, A Sole Proprietorship and XYZ, LLC) being defined as "employers"

For 1999, the sole prop will take most of the deduction since most of the earnings was run through the sole prop.

However, by the time the majority of the contribution is made (in early 2000), the sole prop will cease to exist and its assets will have been transferred to the LLC.

Can the LLC make the contribution in early 2000, and have the sole prop take the deduction for it?

Am I worrying too much for nothing? Is there a real issue? What other ideas or issues are there?

Thanks.

Research and studies have concluded that the number one concern of employees is their financial well being and their present financial situation. These studies have shown that between 15 and 50 percent ( depending upon the company ) of employees are experiencing stress from poor financial behaviors to the extent that it negatively impacts their productivity and therefore the corporate bottom line. My firm is putting forward a program to the corp community that addresses this issue. What is presently being done by the corporate community to address this issue and how many companies are now active in this process.

------------------

David Abelson

When drafting an ESOP why would I need to include a definition for Highly Compensated Employee? I can think of no reason.

Thanks.

Is an eligible 457 plan required to file a 5500 annual report? Is an ineligible 457 Plan required to file a 5500 nnual report? I ask because now that a 457 plan is required to have a trust fund it qualifies as funded deferred compensation under Code SEction 6058 and might have to file a 5500 annual report.

[This message has been edited by Dave Baker (edited 11-15-1999).]

Our ESOP has recently been approved for termination by the IRS. We are processing distribution forms for final distributions to eligible participants which will take us into early 2000. What is the suggested practice when you terminate a plan and cannot locate those last remaining participants? I would think we would like to clear out all assets of the terminated ESOP and place those remaining assets of missing participants in some other type of trust, IRA, etc. Any ideas? Thanks.

Can anyone provide me with a source that contains a good discussion of a WRAP plan (ie, a plan designed to allow the filing of a single 5500 for multiple welfare plans)? Does anyone have a sample document? What allows the use of a WRAP plan and filing of a single 5500 for multiple plans (ie, what statute, reg, etc.). Any help would be appreciated. Thanks in advance.

Owner of IRA ("X") wants to invest IRA assets in an LLC in which he owns 45%. The other owners of the LLC are unrelated to X. In addition to owning 45%, X will either be the manager or chairman of management committee of the LLC (ie, he will have operational control). Will this constitute a prohibited transaction? It does not appear to me that this would be prohibited since his ownership percentage is not at least 50%.

Next step (assuming first purchase is not a prohibited transaction) - assume X, through the initial purchase, purchases 10% through his IRA. Then, a year later, X wants to purchase more. Is he then conidered to own 55% (45% owned directly and 10% owned through IRA) due to his IRA holding in the LLC such that the second transaction would be prohibited?

Does anyone know what mortality tables are used to generate the life expectancies in Table V and Table VI for Section 72 of the Internal Revenue Code?

If a participant “retires” and is rehired each year for several years in a plan that grants an allocation to participants who retire, should that person get an allocation each year, even if the person does not meet the requirements for an active participant (hours and/or last day)?

IRS Regulation 1.411(a)-5 (shown below) says that for a plan that uses computation periods, service within a computation period during which an employee attains age 22 must be taken into account for vesting. Should this regulation be used for guidance as if it had been updated to replace "age 22" with "age 18"? Or should the regulation be ignored since it has not been updated?

1.411(a)-5 Service included in determination of nonforfeitable percentage.

(a) In general.

Under section 411(a)(4), for purposes of determining the nonforfeitable percentage of an employee's right to his employer-derived accrued benefit under section 411(a)(2) and § 1.411(a)-3, all of an employee's years of service with an employer or employers maintaining the plan shall be taken into account except that years of service described in paragraph (B) of this section may be disregarded.

(B) Certain service.

For purposes of paragraph (a) of this section, the following years of service may be disregarded:

(1) Service before age 22.

(i) In the case of a plan which satisfies the requirements of section 411(a)(2) (A) or (B) (relating to 10-year vesting and 5-15-year vesting, respectively), a year of service completed by an employee before he attains age 22.

(ii) In the case of a plan which does not satisfy the requirements of section 411(a)(2) (A) or (B), a year of service completed by an employee before he attains age 22 if the employee is not a participant (for purposes of section 410) in the plan at any time during such year.

(iii) For purposes of this subparagraph in the case of a plan utilizing computation periods, service during a computation period described in section 411(a)(5)(A) within which the employee attains age 22 may not be disregarded. In the case of a plan utilizing the elapsed time method described in § 1.410(a)-7, service on or after the date on which the employee attains age 22 may not be disregarded.

Does anyone have or know where I might find any information on the comparison of tax savings between a dependent care plan vs. useing the child care tax credit? Any help in this area is appreciated. Thanks.

Husband and wife own a business which operates within a C Corp. They sell all tangible and intangible assets related to the business and have a large gain in the C Corp. There are no employees remaining other than husband and wife to manage affairs of the C Corp that essentially has liquid investments. Advisor indicates that contributions to a VEBA estabished after the sale for the benefit of husband and wife are deductible and can reduce the tax impact of the gain on sale of the business. Seems like a problem because of lack of business purpose, ordinary and necessary business deductions, etc. Any thoughts or ideas?