One section of the document provides: An Employee must have completed 6 months of Service with the Employer prior to an Entry Date. Another section provides: An Employee will enter the Plan on the first Entry Date on or after the date the Employee satisfies the eligibility requirements set forth above. These provisions only conflict for an employee who satisfies the eligibility requirements on an Entry Date (the first provision would make the employee wait until the following Entry Date while the second provision would not). Can this be fixed by amending the plan so that the sections no longer conflict? Does it matter which section is amended? Should an IRS correction program be used, and if so, which one? Thank you.

I have 3 companies, all owned 50-50 by the same two people. They want identical plan provisions for all 3 corporations. Can I put all 3 on one prototype document, with each corporation signing a signature page and a board resolution? If I can, then what Tax-ID number do I use when filing the 5500C/R form? Or, do I need 3 documents and 3 5500 filings (realizing that I have a controlled group and the plans need to be aggregated for testing purposes). Thank you.

Plan year 7/15/99-6/14/00. All employees meet hours requirement in first 12 months of employment. All employees are over 21. Employee A hired 7/14/98. Employee B hired 7/15/98. Employee C hired 7/16/98. Employee D hired 7/17/98. What are the latest entry dates possible under 410(a)(4) (assume plan document is written to provide for latest possible entry dates)?

In a cross tested plan with a 401(k) feature, the salary deferrals must be included when determining whether or not the plan satisfies the average benefits test. Questions: (1)A company has a SARSEP and during 1999 wants to start a Safe Harbor 401(k)(3% QNEC, no match). Is the SARSEP considered an existing p/s plan? (2)Assumung the answer to (1) is no, must the deferrals to the SARSEP prior to the effective date of the 401(k) plan be included in the average benefit test?

How do you correct an excess annual addition when the participant has received a full distribution of their account? The excess occurred in the last plan year so I believe the correction method should be the placement of the excess in a suspense account described in Reg. 1.415©-6, but in this situation are we required to have the former participant give back the excess annual addition (without offsetting for withheld tax)? Any guidance would be much appreciated!

Are you aware of any recent complaints about student medical and life coverage from the Department of Education (Office of Civil Rights)?

We are trying to develop a strategy statement that identifies our company's goals in developing, enhancing, and changing our benefits (both welfare and retirement). An example would be to "provide employees with a package of benefits that offers sufficient choice and is considered competetive for the marketplace, while also being reasonable in cost." I'd like to hear from anyone who has such a statement in place as to how yours is worded. Thanks!

How long must an employer of a self funded benefit plan keep the records of the claims activity and the addresses of the participants?

Can a pension or profit sharing plan invest in futures contracts? (In futures contracts, a deposit is made that is akin to a margin account, and is adjusted similar to buying stocks on margin. Hence, I suspect these investments cannot be made.)

Can a pension or profit sharing plan invest (long, not short) in options? (With options, the entire purchase price is paid for up from. Also, the maximum loss is the total price paid for the options. Hence, I suspect these investments can be made.)

For this purpose, let's steer clear of all diversification/appropriateness issues.

Thanks.

Does anyone out there know of a "list" of businesses/corporations that provide a reimbursement for employees who adopt children?

I work for a child placement agency and we are interested in finding out about this topic. We are beginning to keep anecdotal information, but do not want to "reinvent the wheel" if such a list is already being done.

Thank you!

If an employer provides a tax-free reimbursement to employees of $1,500 a year for unreimburesed medical expenses but does not do so in a Sect. 125 or 105 plan, is this illegal? For example, the employee submits claims to the employer (up to $1,500/year) and the employer cuts the employee a check for the claim amount. Seems to me this should be run as a formal cafetria plan with a document, 5500, etc...

Is there any way to roll over assets currently in a Canadian Retirement Savings Plan in to an IRA?

Corporation X maintains separate Profit Sharing and 401(k) Plans. They sell 85%+ assets to an unrelated corporation, Y. Y maintains a 401(k) Plan as well. Most employees of X will go to work for Y doing the same job. They will be immediately eligible to participate in Y's plan.

X wishes to terminate the 401(k) Plan, but wants to keep the PSP open for the remaining employees.

I know that the employees remaining at X must have their 401(k) balances transferred to the PSP as it is a successor plan.

I am pretty confident that we do not have a same desk rule issue or a successor plan issue (Y's plan) for those being transferred (but correct me if I'm wrong).

However, is X's PSP a successor plan for the employees being transferred to Y? If so, why?

Thanks.

I have worked for a small pension consulting firm for about three years now (I have been in the industry longer though) and the owner of the firm is planning to retire in 2-3 years. He has indicated that he would like me to buy the company from him at that time. How much is a company of this size worth (annual revenue = $350 - 400k) and what options are available for a deal like this? He feels that if he stayed around after the sale, he could sell the company for more as well as continue to receive some salary during the transition period. I have an excellent relationship with all of my clients, and feel that the only "transition" would have to do with the clients he still works with. Finally, his timing is such (on purpose) that the sale would take place after our plans are restated to comply with the GUST amendments. I feel that the value of the company would be lower at this time, right after that income "spike". Any thoughts on this matter would be appreciated.

A 50% partner participates in a profit sharing plan and a money purchase plan sponsored by the partnership. In mid-year the partnership dissolves and the former partner forms a C Corp (he owns 100% of stock). The new corporation sets up a profit sharing plan and a money purchase plan. The former partner participates in both.

Question: Does this person's involvement in the partnership's plans have any impact on the first year's annual additions limit for the plans sponsored by the new entity?

Is anyone putting in-service distributions in

a money purchase pension plan once the participant has reached age 59 1/2 and has reached the plan's NRA? See Ltr. Rul. 8137048.

I understand that if a hardship or in-service distribution is made in a plan that contains joint and survivor/single life annuities as the normal form of benefit under the Plan, that the participant must elect the distribution in writing and the spouse's written consent to the distribution must be obtained. In getting these consents, is a plan required to also give the J&S/Single life annuity notices?

I'm drafting my first new comparability/cross tested, etc. plan. The employer wishes to allocate a certain % to the HCE group and a lower % to the NHC group.

In the document, does "the Employer shall make Discretionary Non-Elective Contributions on behalf of each group of Active Participants as defined in Section 2 below. Section 2 defines the two groups. Is this sufficient? May the employer also elect to contribute a certain dollar amount rather the a percentage amount to each group under this formula? Thanks.

An employer gave the safe-harbor notice in August 1999 with a 10/01/99 start date for 401(k) deferrals. He elects the 3% QNEC safe habor. Can the effective date of the plan be 01/01/99 for regular p/s contrib purposes? If yes, what is the 3% minimum: 3% of 4th quarter comp or 01/01-12/31 comp? Could the HCE defer $10,000 during the fourth quarter, whatever the effective date? Thanks.

A plan sponsor is considering a medical reimbursement account program where each (non-high paid) employee would get $X credits per month and no employee contributions would be accepted. Credits would carry over year-to-year. At termination of employment, any credit balance would be applied to COBRA or retiree medical premiums (and could not be converted to anything taxable). If for any reason the credit balance could not be used by the participant and his or her family for extended medical coverage, the credit balance would be forfeited. The arrangement would be funded through an existing welfare benefits trust.

Since no employee contributions would be accepted, 125 would not apply. So, since 125 does not apply, do you see any problem with carrying over credits year-to-year? Is there a risk that (due to the carry-over) the arrangement might fail to be a group health plan under Code Section 105? How would COBRA apply to a (potentially large) credit balance in the event of a participant’s divorce?