Hello,

My name is Faith Ivery, and I am with Educational Advisory Services, Inc. We work with companies that provide Tuition Assistance to help them receive the best ROI for that invesment (www.e-a-s.com).

I will be hosting this discussion area. We can talk about practical issues, such as Section 127, tax regulations, process applications...and some broad-based issues regarding Employee Development, lifelong learning, distance learning application, learning styles, all sorts of issues that encompass TAP and higher education use with industry.

I look forward to these discussions. To start off...

Q. How significant is TAP to your company? How many employees use it? How much do you spend on this benefit? Does your company use TAP in its strategic planning endeavors?

Please add you comments and thoughts. Thanks....

[relayed to message board by Dave Baker for Faith Ivery]

Are adult children of 5% owners automatically HCEs? Are minor children of 5% owners automatically HCEs? What are the cross testing ramifications of this?

It seems per IRC 318 that adult and minor children of 5% owners are HCEs. This would cause difficults in a typical cross testing situation because of their youth. (Typical situation being defined as a company with one or two older owners and a bunch of young and middle aged rank & file employees. Now add a couple children of the owners on the payroll.) They would have to get a small contribution %, not the large contribution % like other HCes.

If the children are in fact HCEs, what solutions are out there in these typical situations?

Can a participant elect out of a 457 plan (like a 401(k))? My husband is a Teacher employed by the state (MA) participating in a state retirement plan and is working part time after school and has been told that he must particate in the 457 plan sponsored by the part time job.

Thank you!

Self-employed person (no employees) sponsors standardized money purchase plan. If she freezes the plan before the end of the year, do you think she can get out of making the contribution on the basis that her self-employment income does not accrue to her until the last day of her tax year? There is similar logic in the 401(k) regs but I haven't seen this particular spin.

Has anyone ever heard about/worked with HealthCare Compensation Strategies, a subsidiary of Management Consulting Group? Any opinion as to the value of their services?

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Where can I find the specifically written rule or regulation that states that an employee will forfeit all unused FSA money at the end of the plan year (the "use-it-or-lose-it" rule")?

When determining the HCEs using the top paid group election, how do you handle employees with the same compensation, $160,000? For example, a plan with 42 employees would have 9 employees in the top paid group. If there are more than 9 employees with compensation of $160000, how do you determine which of the employees earning $160000 are the HCEs? Would you have to include all of the employees with comp of $160000 or only 9 of them? I'm not concerned at this point with the 5% ownership rule. That has been considered separately.

Welcome to the Savings and Planning Education message board. As its name implies, this message board will be devoted to discussions regarding educating the public about planning and saving to ensure one's long term economic security. The primary focus is planning and saving for retirement, but the board will not be restricted solely to this issue. Please feel free to post any research regarding planning and saving education (such as surveys or case studies of what works, what does not work, and why), relevant articles, conference meeting notices, and questions to which you are seeking answers.

The American Savings Education Council is a coalition of private- and public-sector organizations that undertakes initiatives to raise public awareness about what is needed to ensure long-term personal financial independence. ASEC's web site is www.asec.org. There you will find many planning and saving tools, and relevant research findings. ASEC's goal is to make saving; investing; and planning for different life stages, including retirement, a vital concern of Americans. The annual Retirement Confidence Survey highlights areas of need when it comes to educating the public about planning and saving for retirement; the survey also contains information regarding the impact of workplace education on the retirement savings decisions of workers. Results of the RCS can be found at www.ebri.org/rcs.

Can someone tell me the proper method of accomplishing a transfer of 401(k) accounts in the instance where Small Company purchasesa Branch Operation from Big Company and retains the four employees of the Branch Operation who had been participants in Big Company 401(k) Plan? Can Big Company merely effect a Rollover of the accounts? Is an IRS Form 5310-A filing required? If IRS 5310-A is required which plan sponsor must do the filing? Any information on above sincerely appreciated.

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I work for a large financial services organization that is exploring the possibility of entering the 529 plan market. I am trying to identify TPAs that are currently recording for such plans.

A P/S plan purchases life insurance contracts for individual participants. Each contract has a cash surrender value. I am trying to determine how to report these on 5500 and financial statements. Based on SOP 94-4, it seems fairly clear to me that contracts for current life insurance coverage are allocated contracts and are not plan assets. On the other hand, the SOP also states that some of these (allocated) contracts may also include unallocated side or auxiliary funds, which ordinarily would be considered plan assets. Could the CSV be considered unallocated side or auxiliary funds? Should it be reported or omitted?

I have a prospect that would like to set up a SIMPLE IRA Plan with deferrals beginning in year 2000. If we give the employees notification on December 1, 1999, can we begin the deferrals after the 60 day period, ie February 1, 2000?

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If a Plan has no HCE's can the matching formula be different by pay group, division, job title etc....? Thanks

We are taking over a plan that has a 401(k) plan and a New Comparability Profit Sharing Plan with 4 HCEs and 45 NHCEs. The plan is designed to allow for a contribution of $30,000 to each HCE, none of the HCEs make a 401(k) contribution, and normally this is not a problem to pass testing. This year for some reason, one of the HCEs made contributions of nearly $10,000 to the 401(k) plan. THE PROBLEM: The plan will not pass testing if we make a $30,000 P/S contribution to 3 of the 4 HCEs and a $20,000 contribution to the one HCE who made the 401(k) contribution. MY QUESTION: Is there some way we can "return" the 401(k) contribution made during this year to the HCE who made the mistaken deferrals? Can we hold it in a suspense account or treat it as an employer contribution? I hope someone can respond to this soon because I am meeting the client tomorrow. THANK YOU!!

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The Plan bases discretionary contribution on gross compensation excluding bonuses and overtime. The differential between the included compensation for the HCEs and nonHCEs is only 3%. Any advise on whether this differential would be considered di minimus for testing purposes will be appreciated. Thanks.

Participant in 401(k) plan is married and names spouse as death beneficiary. They divorce. Divorce decree does not mention retirement plans or employee benefit plans of any kind. Participant neglects to change beneficiary designation. Participant dies. Is there any argument that plan can pay death benefit to participant's brother instead of to ex-spouse?

Our VP just got back from ASPA and said that the general consesus was that cross-tested plans may be on the way out (given the increased scrutiny of aggressive plans in general owing to the cash-balance episodes of this summer). Anyone care to comment on this opinion (not mine, my boss's - however, a Democratic house in 2001 should surely bury these plans - my view).

I've seen several references to published IRS audit guidelines for flex plans, but have not been able to locate a copy. Want to do a self-audit for compliance.

Does anyone have an internet source? or other source?

Assume an employer maintaining a DC plan (which is not being terminated) has exercised its fiduciary duty to locate a number of participants in the plan whose account balances are payable, but has been unable to locate them (ie, assume diligent effort has been made - locator firm hired, IRS locator service utilized, etc.). In a DC context, what can the employer safely do other than to continue to maintain these account balances? Can the money be transferred to an interest bearing account for the account of the missing participants? Can the money be trasnferred to an interest bearing account for the account of the employer (probably not)? Can the plan be amended to provide that, in the event a participant cannot be located after diligent effort has been made, his/her account will be treated as a forfeiture under the plan (either reducing future employer contributions or reallocating to other participants)? I am aware of the missing participant program for DB plans, but would like to know what others are doing with this situation in a DC context (and when there is no plan termination).

Does anyone know of any company, law firm, etc. that provides the service of licensing TPAs in all 50 states?