My organization administers approximately 500 401(k) plans with participant directed investments. We are planning to change the investment options on 4-1-2000. New options will be added and some will be eliminated. Can anyone offer suggestions on the timeline for notification and the types of notices that should be provided to our participants?

I know that this must be a fairly common practice, but I have been unable to locate any authoritative written guidance. Any references would be very much appreciated.

Is anyone using a Cash Value Pension Plan or Benefit? This is a type of DB plan in which the formula expressed the benefit as a Cash Value rather than an annuity. It is not the same as a Cash Balance plan although there are some similarities.

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A company wishes to pay a portion of the employee medical premium for some groups of employees but not others. The company desires to pay a portion of the premium for the hourly and salaried employees but not for the commissioned sales employees, many of whom earn six figures. Can they do this?

DOL Adv. Op. Ltr. 94-32A generally describes receiving a distribution from a retirement plan as an ERISA protected right, then goes on to say that you cannot charge a participant directly fees for an ERISA right (can charge to remaining assets of plan). However, some mutual fund and annuity companies charge fees directly to participants taking termination distributions. What is the basis for this? Does having a segregated, self-directed account make a difference?

In addition to the rights and features disparity question . . Corp. A is an accts. rec./billing office for the physicians in Corp B. Between 1/93 and 12/98, the 30 physicians in Corp B had equal ownership in Corp A (each physician had 300 shares). The legal counsel for both corporations deemed them to be Afilliated Service Groups during this period. Therefore, during the period above, Corp A and B shared the pension/profit sharing plan and medical reimbursement plan.

During the period of 1/99 to the present, their legal counsel recommended that the physicians divest their ownership from Corp A in order for B to set up their own pension plan, medical reimbursement plan, and relieve them of making any more contributions to the employees of A. Each physician then relinquished their 300 shares to the president of corp A. A legal opinion was issued. Any input?

Background: Corp A and Corp B are located in the same office. 99% of Corp A's business is performed for B. Corp A answers the phones for the physicians in B. The president of A performs payroll and accounting duties for the physicians of B. The secretary for the physicians is an employee of A. Corp A charges a % of Accts. Rec. created by Corp B.

[This message has been edited by Michael J. Sievert, CFP (edited 09-23-1999).]

Since 1993, corporations A and B shared A's pension and profit sharing plan. A is medical billing/Acts. Rec. business with 30 employees and B is a physician group with 30 physicians. All of B's plan participants are trustees on the plan document. I am concerned that in A, the pension/profit sharing contribution is made to a pooled account and allocated by the president of A. In other words, the employees of A have no say in their investment options or allocation. On the other hand, B's employees can self-direct on an individual basis, choose among any investment firm and any investment vehicle to allocate their contributions. Some of B's employees have stock brokerage accounts with various firms and some choose management accounts with other firms. A and B's legal counsel has issued a legal opinion on this matter. Any input?

More background: Both A and B are located in the same physical office. In addition to the billing function, employees of A routinely perform administrative, accounting and payroll functions for the employees of B. 99% of A's business is performing services for B. From 1/93 to 12/98 each physician in B owned 300 shares of A. In January of this year, each physician relinquished their shares to A in an attempt to keep them out of the Affiliated Service Group rules.

[This message has been edited by Michael J. Sievert, CFP (edited 09-20-1999).]

[This message has been edited by Michael J. Sievert, CFP (edited 09-21-1999).]

Does anyone have a bonus program set up exclusively for their maintenance employees? We are considering this option since our maintenance employees are responsible for purchasing most of our parts and scheduling services that we cannot perform in-house. They are making great efforts to reduce costs and we are looking for a way to reward them. Please help!

A California city client's city attorney has asked the following:

Will the City's financial capability be impaired in any way in the event that "leased employees" who lack sovereign immunity are utilized in job functions ranging from jail guards to parks and recreation employees?

His concern lies in the possibility of a California deep pockets suit in which the City is found liable over the amount of insurance carried by leasing contractor. How would revenue and/or bond counsel view this?

Is anyboby know if the ROTH IRA would be in anyway available to american expat with no residence in USA. If yes how to proceed

I have a client that presently have a Profit Sharing Plan. They would like to set-up a SIMPLE IRA plan. "MUST" they terminate the Profit Sharing plan before setting up the SIMPLE IRA or can they just not make any additional contributions to the P/S but keep it open? (They would be required to pay surrender charges on the P/S if they must terminate it.)

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When is the Plan Administrator supposed to distribute the Individual Benefit Statement to employees. I know that it is once a year, but I thought it was to be sent no later than 8 months after the end of the fisical year ending December 31st.

With the new HIPAA regs, can self-funded plans still exclude dental care for congenital anomalies except in children who were covered under the plan from either birth or the date of placement for adoption? Or is the exclusion period limited to only six months? Your advise is greatly appreciated.

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Judy

Has anyone found a vendor that has a program for calculating and testing allocation formulas?

We are not really interested in a full blown administrative package. More of just a calculator for determining allocations and testing the allocations for 401(a)(4) compliance.

What are the potential penalites for late filing of a 5500? The plan has more the 100 employees.

the new 5.0 disks should be arriving at your office soon. we got ours today, though since we loaded the original version it is not going to help us.

somewhere soon you are going to need to load the latest version. I would guess you want to be done before the new year, just to get use to things before the ADP processing begins. Being realistic, I would hope you can target doing this within the next month.

All that being said, watch out for the following:

vesting tables. if you can set your plan to a predefined table, do so! e.g. if you have code a 2/20 schedule and plan specs says 'predefined table 'none' ' then change it to 2/20. you do not have to rerun eligibility at the warning prompt.

probably the easiest thing to do is create a crystal report and selct out those plans where predefined table is set to 'none'

obviously you will have some tables that can't be named, but believe me, you won't regret setting these.

there was nothing in the update documentation, nor in the fix list, but it is recommended by support to not use the new user defined fields.

distribution logic has not been fixed yet. this is noted amongst the fix list. in other words, don't code someone term & fully paid out, and then run a distribution. the person will be treated as 0 vested.

you MUST make sure your custom reports are updated before converting to 5.0, and then again afterwards if you used vesting percentages in any reports. the general process of updating them is not bad (the documentation is improved), however be aware that Crystal has changed quite a bit.

suppressed items are no longer grayed out, and you should not have your report open in Quantech and then try to make changes/save the report in Crystal. the report will be saved as a Temp file. not sure why Crystal made those changes, but I have found them to be a real pain. Just moving things around seems a little more difficult.

good luck!

I don't know if this question has been asked before, but when the employer maintains separate medical and dental plans does the issue of Medicare Eligibility come into play with regard to the separate dental plan? In other words can we assume that regardless of a person's Medicare Status(i.e.,covered or eligible for coverage)if the person is age 65 can we refuse to offer COBRA Dental and/or automatically cancel COBRA dental at age 65?

By the way, what is the real answer to not offering any COBRA to an employee who terminates employment at age 65 or older? Do you even have to offer COBRA?

I have a question on how cross testing is affected by the safe harbor provision. What is the value of cross testing in the following example:

NHCE payroll 3,000,000

HCE payroll 3,000,000

Benefit formula: 401k $.50 up to 6%

MPPP 3% safe harbor

3% additional

Permitted disparity

IF the example is not helpful, some +'s and -'s please. Thanks in advance.

If a cafeteria plan has a short first plan year, are the contribution limits prorated? For example, if the first plan year is 11/1 to 12/31, are deferrals for DCA limited to $800 rather than $4,800?

There are penalties for filing Form 5500s late. Anybody have experience with late filing where you were assessed penalties? If so, what were they?

Any good authority for determining whether a partial termination has occurred for a 401(k) plan? Successive asset sales in a year has left a plan sponsor with 25 of its original 122 participants.

[This message has been edited by wwest (edited 09-17-1999).]