Client doctor has account balance in PSP. Doctor is also MAJ s/h, director of P.A. and is trustee on the PSP. Doc is looking at terminating the PSP. Doc has recently hit his RBD and has taken his first RMD. Doc wants to terminate PSP and rollover his account into IRA. Also, doc wants to name his kids as ben's of the rollover IRA. His spouse is currently ben of his plan account balance. His naming different ben's (e.g., his children) after his RBD seems to be O.K., but it appears that he will be stuck with having to use his spouse's life expectancy to figure future RMD's from the IRA. See Prop Reg §1.408-8, A-6, Q & A (second sentence); Prop Reg §1.401(a)(9)-1, G-2, Q & A, (B), and Prop Reg §1.401(a)(9)-1, E-5, © and (d). Any comments or suggestions.....Thanks

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help, trying to get what is my fair share without much coop from spouse. He has 3 pension plans that I don't understand. He works for the local township where we live and has a defined benefit plan fully funded by the employer. He says it has no cash value and if he leaves employer he longer is eligible to collect from this. He says it has no cash value and is not covered by ERISA. He also has 2 personal plans he pays into, one he calls a PEDC and the other an annuity. I don't know where to start. He refuses to talk about a post marital agreement unless I sign divorce papers and I cannot do this. I didn't want the divorce and cannot condone it. He can get a divorce anyway in two years with or without my signature. If it helps I am in the state of Pa. UAN5@aol.com

I have found myself in the middle of a messy ESOP where no allocations have been done for several years. The ESOP is leveraged but the note was paid off.

Does anyone know or can send or point me to good information on the basics of allocating an ESOP? It's been way too many years since I have looked at one of these.

Thanks.

I think the first place to check is the plan document. How does it define compensation for testing?

If the service crediting method of a plan is changed from elapsed time, which includes fractional years, to hours of service, which is whole years only, how are service accruals converted? For example, if a person has 2 years and 8 months, how much service would the person be credited with under the new method?

Would you assume an hours equivalency, for example 190 hours for each month, in determining service for the partial years?

I have 2 medecal groups, A & B. Both are LLP's with MD, PA's as partners. No partner is a partner of both. Another LLP exists, C, which handles all medical billings and collections for A & B, remitting each one their respective collections. A & B each own 50% of C. Except for billing and collecting, A & B are autonomous and unrelated to each other. One more exception though....C also holds the provider contracts for both A & B in it's name so physicians from A & B can participate in all contracts. All other resources for providing medical services to the public are provided by A & B including salaries, rent, management, etc. Question, is A, B & C a controlled group? If C provided only billing and collection services, I would say definitely no. However, I am not certain since C holds the contracts for the doctors.

Thanks for any help.

Have a client who owns 100% of a C Corp and 100% of an S Corp. One employee in the C, 90 ees in the S Corp, a restaurant.

Employee X, running the restaurant, gets 25% of profits through a handshake arrangement. Doesn't want stock because of capital gains?

I've found Code Section 1563(e)(1), pertaining to options.

If my guy gives this Employee X an option to buy 25% of the S Corp, I'm thinking I wouldn't have a controlled group.

Plan year ends 12/31, conversion expected to be 2/1. Are there any considerations when doing this type of conversion (i.e. non-discrim. testing, 5500), as opposed to a 1/1 conversion? Thanks.

A non-governmental DB plan is terminating and amending the plan to offer a lump sum to current retirees and beneficiaries. If the annuitant wants the monthly benefit to continue, then the plan will purchase a commercial annuity. The lump sum will be calculated as the present value of all future payments, using the form of payment in effect and the definition of actuarial equivalent in the plan.

The question is what spousal signoff is required for those who want the lump sum?

1. If retiree was not married at date of retirement, is any spouse signoff needed? I suggest NO, even if currently married. However, if retiree elected a J&S with a non-spouse contingent beneficiary, would that beneficiary need to signoff?

2. If retiree was married at original annuity commencement date and spouse is still living

a. J&S was elected, spouse signoff is required, whether now married or now divorced? Presence of a subsequent spouse is not relevant.

b. J&S was waived in favor of a single life annuity. Any signoff required?

c. J&S was waived in favor of a 10C&C with spouse as beneficiary. Signoff required if still within 10 years? Signoff required if now beyond 10 years?

d. J&S was waived in favor of a 10C&C with nonspouse as beneficiary. Signoff required if still within 10 years? Signoff required if now beyond 10 years? Signoff by spouse AND by beneficiary?

Do the applicable regs [i think 1.401(a)-20] require the plan to offer a J&S upon the offer of the lump sum, which might effectively create a new annuity commencement date (I don't think so, but looking for cites and reasoning)? If so, this might create a new requirement for the retiree who was single at DOR but is now currently married.

By the way, if the original election was a J&S and the spouse is now deceased, then the lump sum will be the present value of the single life annuity to the retiree. Anyone disagree?

A somewhat rambling question, but would like any other advice related to the offer of lump sums to retirees. Thanks.

[This message has been edited by pax (edited 11-09-1999).]

The IRS Code provides that a plan can "buy back" the 1.0 for 415(e) by providing a 4% DC contribution. See 416(h)(2)(A)(ii)(II) below.

IRS Regs say that a plan can "buy back" the 1.0 for 415(e) by providing a 7.5 DC contribution. See IRS Reg 1.416-1 M-14.

Can the Code be used or does the IRS Reg have to be used?

Does anyone have experience using the 4% in the Code to do the buy-back? Does anyone have experience using 7.5% to do the buy-back? Can anyone tell me if there are specific situations that call for one or the other?

I realize 415(e) is going away soon, but I'd still appreciate any information on this. I have been curious for a long time.

Section 416(h)(2)(A)(ii)(II) is as follows:

(h) Adjustments in Section 415 Limits for Top-Heavy Plans.*

(1) In general.

In the case of any top-heavy plan, paragraphs (2)(B) and (3)(B) of section 415(e) shall be applied by substituting ``1.0'' for ``1.25''.

(2) Exception where benefits for key employees do not exceed 90 percent of total benefits and additional contributions are made for non-key employees.

Paragraph (1) shall not apply with respect to any top-heavy plan if the requirements of subparagraphs (A) and (B) of this paragraph are met with respect to such plan.

(A) Minimum benefit requirements.

(i) In general.

The requirements of this subparagraph are met with respect to any top-heavy plan if such plan (and any plan required to be included in an aggregation group with such plan) meets the requirements of subsection © as modified by clause (ii).

(ii) Modifications.

For purposes of clause (i) --

...

(II) paragraph (2)(A) shall be applied by substituting ``4 percent'' for ``3 percent''.

IRS Reg 1.416-1 M-14 Q. says:

M-14 Q. What minimum contribution or benefit must be received by a non-key employee when he is covered under both a defined benefit plan and defined contribution plan (both of which are top-heavy) of an employer and the employer desires to use a factor of 1.25 in computing the denominators of the defined benefit and defined contribution fractions under section 415(e)?

A. In this particular situation, the employer may use one of the four rules set forth in Question and Answer M-12, subject to the following modifications. The defined benefit minimum must be increased by one percentage point (up to a maximum of ten percentage points) for each year of service described in Question and Answer M-2 of the participant's average compensation for the years described in Question and Answer M-2. The defined contribution minimum is increased to 7-1/2 percent of compensation.

Is there any public agency that enrolls its public employee via the internet? If so, I would like to discuss privacy issues with you.

I have been asked to assist a start-up company establish its full benefits program.

My experience has been with large corporations and this is fairly new to me. Can someone suggest a good starting place -- are there independent agents who handle this sort of program. Appreciate any help you may provide. Thank you.

Non-duplication rule of recent Regs provides that earnings on account balance plan amounts (that have been previously subject to FICA) will not be subject to FICA provided those earnings “reflect a rate of return that does not exceed either the rate of return on a predetermined actual investment ... or, if the income does not reflect the rate of return on a predetermined actual investment, a reasonable rate of interest.” (d)(2)(i)(A) If the NQDC plan account is funded by a managed portfolio of securities w/ actual returns allocated to the account, does this ‘predetermined rate’ rule apply?? That is, is the account portfolio itself an ‘actual investment’ under (d)(2)(i)(B) even though investments in the portfolio will change during the year? Thanks

If I have the date correct, the definition of 415 compensation changed after 12/31/97. For DB plans that are determining the high 3-year average after 12/31/97, does the new definition apply to 1997 and earlier years? Or is the 3-year average based on the old definition for 1997 and earlier years and the new definition for years after 12/31/97?

A plan provides that, for vesting purposes, plan years prior to age 18 will be excluded. The plan year is the calendar year. An employee has a birthdate of November 1, 1979 (so 18th birthday is November 1, 1997) and a hire date of January 1, 1996. The employee has worked 1000 hours in each calendar year which satisfies the plan’s hours requirement for vesting. Which of the years 1996, 1997 and 1998 are counted for vesting? Would the answer change if the 18th birthday was February 1, 1997? Would the answer change if the 18th birthday was July 1, 1997 and the employee worked 1000 hours both before and after July 1 in 1977?

Clearly 1996 is not counted. Clearly 1998 is counted. Is 1997 counted?

There is disagreement on our staff on this.

IRS Reg. 1.411(a)-5(b)(1) says:

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.

While the reg has clearly not been updated from age 22 to age 18, can it still be relied on to say that, in the example above, 1997 must be counted if the 18th birthday occurs any time during 1997? Or is it possible to disregard 1997 in some circumstances (more up-to-date guidance?)?

For any of you UHC customers, did they let you know how their decision would affect pricing, and/or whether they are making changes with respect to their administration only services?

Has anyone coordinated a health fair for your employees??? What types of services do you make available? Flu shots? Cholesterol testing? Would it seem reasonable to have a blood drive in conjunction with this type of event???

HELP!!

Sheila K 8^)

I'm preparing an SPD on health insurance. wonder if I need to include HIPPA language. If so, any suggestions on text?

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Susan

My employer is a small for-profit LLC. I have been hired as CEO and have been asked to design a production bonus plan for myself that will complement my annual compensation. I want to tie the bonus to quality somehow and need ideas of formulas that measure outcomes and quality as well as volume. Specific formula equations are needed.

I read 4318 to apply to governmental plans. Following is 4318(a)(1)(A).

§ 4318. Employee pension benefit plans

(a) (1) (A) Except as provided in subparagraph (B), in the case of a right provided pursuant to an employee pension benefit plan (including those described in sections 3(2) and 3(33) of the Employee Retirement Income Security Act of 1974) or a right provided under any Federal or State law governing pension benefits for governmental employees, the right to pension benefits of a person reemployed under this chapter shall be determined under this section.