Assume two 401(k) plans are being maintained by Company A and Company B which are in the same controlled group and that Company A's PY is 1-1 to 12-31 and Company B's PY is from 10-1 to 9-30. How is controlled group testing done for 410(B) purposes? Would a 410(B) test be run for Company B at 9-30-99 based on data on Company B at 9-30-99 and data on Company A at 9-30-99 and then a 401(B) test would be run for Company A at 12-31-99 based on data on Company A at 12-31-99 and Company B at 12-31-99?

Also, can anyone recommend a comprehensive book/resource that covers 401(k) testing issues in great detail (with examples, etc.)?

I would like something that goes beyond a citation of the regulations.

[This message has been edited by beth beaube (edited 12-07-1999).]

Is anyone using PCAnywhere with QT 4.3? 5.0?

We're still at 4.3 trying to work out a few hiccups. The biggest problem is with remote user locking up and host not resetting session.

We'd like to make this work to avoid going with terminal server and additional licensing $$$. We'll probably be going to 5.0 early next year.

Any input would be appreciated.

Meghan

What is the going rate to handle all aspects of amending and restating qualified plans for GUST???

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Any comments on adapting a self-funded medical expense reimbursement plan (Code 105(h)) to permit reimbursement of retiree medigap insurance premiums, only (not medical expenses themselves)? If you are aware of any other documentation options please comment.

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A client with a money purchase plan dislikes the wording on the "Notice of pre-retirement survi. annty" form. She specifically thinks the wording of "the Plan will use 50% of your Account Balance to purchase a pre-retirement annuity for your spouse" is misleading and particpants want to know what happens to the other 50% of the account balance and can that be wriiten into this notice. Any thoughts?

My employer will take vac.time i use if i leave before the end of the year.Ithink this is against the law.He said that what the ten people that are in the union agreed to.theres about 80 people working there.Is this not stealing.I am leaveing the first of the year. But i have worked there many years.Made many friends there.Iwas wondering is there anything i could tell them.Its like he steals one week of pay from you.Hardy nobody stays at one job for life.

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RyanBowlin

Greetings,

I have a client who wants to retire at age 55. He has pension benefits kicking in at age 60, and social security will kick in at age 66. Between age 55 and 60 he will need to dip substantially into his IRA capital. Can he take penalty-free distributions that are much greater than the three IRS approved methods (minimum distribution, amortization, or annuity)? In other words, as long as the payments are substantially equal, and last for 5 years and until he is 59 1/2, can the payments be much larger than specified by the three IRS approved methods?

If a privately owned company decides to sell to an ESOP who runs the company if the owner sells:

1. 30% ?

2. 49% ?

3. Over 50% ?

4. Who appoints new president if original owner sells out? or how is this determined? Can employees vote in a new president or board if they own over 50% ?

Has anyone had experience in merging 2 or more VEBAs maintained within the same controlled group of corporations? Are there any tricky issues of which one needs to be aware?

I was recently told by a plan administrator that it is not possible to terminate a 403(B) plan! In this case, a church-sponsored plan has stopped using their 403(B) and adopted a 401(k) plan. The participants were only allowed to roll accounts to annuity contracts and not to rollover IRAs. The reason given was that it was not possible to terminate the 403(B) plan and none of the other qualifying events had taken place (separation from service, etc.) I don't work with 403(B) plans, but this seems pretty strange.....you can start a plan but never terminate it? Any comments and cites appreciated.

I'm confused as to whether 402(g) excess deferrals that have not been refunded by April 15 have to stay in the plan as provided by Reg. 1.402(g)-1(e)(8)(iii), or should or must be returned under APRSC as provided in Rev. Proc. 98-22, Appendix A, .04. Did Rev. Proc. 98-22 supercede Reg. 1.402(g)-1(e)(8)(iii) - which says that the excess deferral must stay in the plan until a distributable event named in 401(k)(2)(B) has occured? If the deferral has to stay in the plan, do earnings still have to be returned?

The language of each section reads:

1.402(g)-1(e)(8)(iii) (not yet amended for GATT)

(iii) Distributions of excess deferrals after correction period. If excess deferrals (and income) for a taxable year are not distributed within the period described in paragraphs (e)(2) and (e)(3) of this section, they may only be distributed when permitted under section 401(k)(2)(B). These amounts are includible in gross income when distributed, and are treated for purposes of the distribution rules otherwise applicable to the plan as elective deferrals (and income) that were excludable from the individual's gross income under section 402(g). Thus, any amount includible in gross income for any taxable year under this section that is not distributed by April 15 of the following taxable year is not treated as an investment in the contract for purposes of section 72 and is includible in the employee's gross income when distributed from the plan. Excess deferrals that are distributed under this paragraph (e)(8)(iii) are treated as employer contributions for purposes of section 415 when they are contributed to the plan.

Rev. Proc. 98-22

APPENDIX A - OPERATIONAL FAILURES AND CORRECTIONS UNDER SVP

.04 Failure to distribute elective deferrals in excess of the section 402(q) limit (in contravention of section 401(a)(30)).

The permitted correction method is to distribute the excess deferral to the employee and to report the amount as taxable in the year of deferral and the year distributed. In accordance with section 1.402(g)-1(e)(1)(ii), a distribution to a highly compensated employee is included in the ADP test; a distribution to a nonhighly compensated employee is not included in the ADP test.

Is there a GUST Model Plan Amendment, and if so, where can I get it?

If a participant exceeded the $10,000 402(g) limit for 1998 and the excess was not returned by April 15, is there another deadline for returning the excess or can the excess remain in the plan? (I realize double taxation will apply, the excess will be taxed in the year of deferral and in the year of distribution.)

I have an employee who is divorced, his children live with his former spouse, who claims them on her tax return. However, the employee pays more than 50% of their support.

Can his children be considered "Eligible Dependents" for the purpose of a Health Care FSA enrollment?

I know that the IRS allows a person to be considered a dependent for the purpose of medical expense deduction even if you cannot claim them on your return. Provided, of course, that you provided more than half of the individual's total support of the calendar year. Does this apply in FSA's as well?

At this point I am inclined to allow the enrollment, but I wanted some further clarification, as I am a "payroll" person and benefits are not really my area of specialty.

Thanks,

Carole

We are currently offering LTC Insurance as an employee benefit. We are converting to PeopleSoft in April of 2000. At this time there not a LTC module in PeopleSoft. Is there anyone processing LTC through Ben. Admin in PeopleSoft? If so can someone please help me with a solution. I would prefer to run it through Ben. Admin instead of a general payroll deduction.

Client will reach 59.5 after taking funds from account but before the 60 day period for the rollover is up. Is any amount not rolled over to new IRA subject to 10% penalty or just income tax?

A 401(k) plan participant that is 100% vested reduces hours of service to 200 hours per year. The plan does not have any hours requirement for the match. If I am correct that termination of employment is not part of the definition of a break-in-service, then the participant does have a break-in-service. Can the participant continue to defer and receive the match indefinitely, despite having a break-in-service each year? Does the reduction to 200 hours affect the plan participant in any way?

With respect to a MEWA, what are considered plan assets? Are the individual employer participation agreements considered plan assets?

I am in need of a legal opinion as to whether or not spousal consent is required in California when an employee designates someone other than their spouse as primary beneficiary for their life insurance benefit. Since California is a community property state it seems as though it is implied but I can't find anything specific. I know it is required on retirement plans. I have gotten varying opinions on this issue and any help or references would be appreciated.

401(k) plan has ees who transfer to another company that has no plan. It's determined that the same desk rule applies and no distributions are permitted. If ees are not fully vested upon transfer, but they are not terminated from plan, will they continue to accrue vesting service? Does it depend on how plan it written?