Deb: You are correct. Loss of coverage would be a triggering event for a change of status.

Good luck!

Sheila K

In late 1998, I requested that my IRA trustee convert the entire balance of my IRA to a Roth IRA. The distribution from my IRA was effected 12/30/98 and reported on a 1998 Form 1099-R. The trustee established a Roth IRA account for by benefit on 12/30/98. However, the rollover to the Roth IRA was not effective until 1/14/99. I did not receive a 1998 Form 5498 (IRA Contribution Information) from the trustee with respect to the Roth IRA account.

Does this conversion allow me to use the four-year income reporting method?

Has anyone had an experience with HMOs and COBRA? We have several folks on COBRA who have HMO coverage. We have problems getting folks reinstated, terminated back several months on the HMO billing. That is because the HMO policy may only allow say, 30-days or 60-days of retroactive changes. As we all know, the COBRA election period can by law be several months when you add the period the administrator has to mail the qualifying event letter, the 60 day election period, plus 45 day payment period. Are HMOs required to follow same federal COBRA laws? In other words, can they choose not to add a participant back on to coverage even though the law says the participant has a specific length of time to elect coverage?

Looking for a quick reference on the details of the 70½ required distribution laws. Any suggestions?

[This message has been edited by CVCalhoun (edited 08-12-1999).]

Client is a C-Corp with an overfunded, single-participant DB plan. Client is considering setting up a new corporation, transferring sponsorship of the DB plan to the new corporation, and selling the corporation (with the overfunded plan)to an unrelated third party for about 70% of the overfunded amount.

Have any of you had experiences with the above-type of transaction? Is 70% a reasonable amount? Also, what if the client simply terminated the DB plan and distributed the entire amount to the employee? Although this would disqualify the plan, wouldn't it avoid the 4980 excise tax?

Any ideas would be appreciated.

Does anyone know whether the employer is required to withhold for federal income taxes where the employee has died and spouse is entitled to a lump sum death benefit from the employer's unfunded nonqualified deferred comp plan? Reg. Sec. 35.3405-1, Q & A 21 appears to require withholding under section 3402 but at least one IRS representative that I've talked to says there is no withholding obligation. The 1099-R instructions are not particularly helpful in my view but the representative cited to these as her authority that no withholding is required. Any input would be appreciated.

Looking for comments on how many plans per administrator is common. What is the measure of a plan # of participants/frequency of valuations or amount of assets. Let me know what you do.

I am trying to find a good source for information on running a plan with Davis Bacon wages. I have questions such as: when testing Davis Bacon wages in the discrimination tests, could the davis bacon wages be put in with the salary deferral or matching contributions?

I can see where the substantiation guidelines under Rev Proc 93-42 might be useful for very large employers. Are there instances when it might be beneficial for a small employer (less than 100 employees) with a defined contribution plan that allocates contributions based on compensation and/or service to use the substantiation guidelines?

I don't typically check line 21 on Form 5500-C/R and wonder if I'm missing the boat.

As alert readers of this board may already have noticed, my employee benefits legal resource site has moved to a new server. The new address is http://benefitsattorney.com. Do stop by to check out the new site, which contains everything from updated lists of section 415 and other inflation-adjusted limits to how to find out whether participants you cannot locate have died, plus articles and speech outlines on employee benefits. And don't forget the résumé originally published here on BenefitsLink, which was how I originally discovered just how effective this site is!

As alert readers of this board may already have noticed, my employee benefits legal resource site has moved to a new server. The new address is http://benefitsattorney.com. Do stop by to check out the new site, which contains everything from updated lists of section 415 and other inflation-adjusted limits to how to find out whether participants you cannot locate have died, plus articles and speech outlines on employee benefits. And don't forget the résumé originally published here on BenefitsLink, which was how I originally discovered just how effective this site is!

The 401(k) Plan in question has a one yr. of service requirement and age 21, with immediate entry upon meeting these requirements. An ee was hired and terminated with 1997 with less than 500 hours. He was rehired in 1998. What date of hire do we look at and can hours be addes together to get 1000 ?

Company A offers group health coverage to its employees. Company A's wholly owned subsidiary Company B has employees who are covered under a separate group health plan. Company X is purchasing substantially all of the assets of Company B and any of the transferring Company B employees will be covered under Company X's health plan, which has comparable features to Company B's group health plans. Company B's health plans will be terminating. What about the employees for Company B who are not going to transfer to Company X? Those employees will be have a qualifying event since they will be terminated, but Company B's health plan is terminating for everyone (no bankruptcy involved). Any duty to offer COBRA coverage? What about Company B employees who are already receiving COBRA benefits? Do they finish their statutory coverage periods? Does Company A have any liability for COBRA for this minor set of terminating Company B employees NOT transferring to Company X?

Has anyone had any experience in counting years of service for a reemployed individual in determining the exclusion allowance. I see nothing in the Code or Regs. that indicates prior years of service are not counted. Publication 571 indicates that years of service need not be continuous. Obviously, if the years of service count then amounts previously excluded are also considered.

The employer has a number of employees who are in a collective bargaining unit. The employer wishes to utilize the statutory exclusion for all those individuals EXCEPT one, who happens to be highly compensated, of course. Does anyone know if there would be any complications which might arise from doing this?

I caught part of a news story that described a change in the way the IRS calculates IRA distributions for multiple beneficiaries. The "old" formula used the age of the oldest person in the case of two or more beneficiaries. This new ruling allows the youngest age to be used instead. Any clarification on this?

What tie-in is required between contributions to a leveraged ESOP and loan repayments on the ESOP loan? Here's a situation:

A company maintains a leveraged ESOP. The plan's loan agreement allows for a late repayment, up to 60 days after the due date. If paid late, company is responsible for paying 1% penalty. If the company pays, for example, the loan payment due 12/31/1999 on, say, 2/15/2000, can the company call that contribution a 2000 contribution (since they will deduct it in 2000) and not release shares to participants until 2000, instead of as of 12/31/1999? Would the answer be determined solely by what the plan document specifies as the allocation date?

I was terminated 1/5/94. I was disabled on

12/17/93 and my physician submitted slips

confirming disability under WC and Short term disability. I went on vacation while on

disability due to a dispute over WC benefits.

Unpon return was terminated. HOw do I seek

STD and LTD (short and Long term disability)

when I submitted the paperwork over and over

again and it was never processed. ANd later the employer closed. The Plan adminsitrator keeps delaying and eventually

declined the claim 1995 for no cause. What

recourse do I have? If an atty. will I have

to pay fees or can I demand fees from the

Employer (who is now merged with another co

under another name?}

i ed

Church group client has overfunded DB plan they want to convert to cash balance. Plan is overfunded. To sweeten conversion, they want to set up a 401(k) plan but make matching contributions to a 414(k) account in the (converted) cash balance plan, using the excess assets. PLR 9723033 addresses the issue for an apparently for-profit plan sponsor, but some of the analysis wouldn't apply to a church group.

Any ideas? Their backup plan is to take a reversion and contribute 100% to the 401(k) plan as pre-funded match, since they don't think they're subject to 404 limits or 4980 excise tax.

A company has salaried employees and also has two collective bargaining units (CBU1 and CBU2). The company maintains a 401(k) plan which, prior to 1998, covered the salaried employees and CBU1 only. Neither CBU1 nor CBU2 had any highly compensated employees (HCEs) prior to 1998 so ADP testing was not performed for the union employees. In 1997, 5 employees in CBU2 earned in excess of $80,000. As of June 1, 1998, CBU2 also became eligible to participate in the 401(k) plan as part of their new collective bargaining agreement. Therefore, in 1998, the union employees eligible for the 401(k) plan are now required to be tested since there are HCEs who are union employees.

Questions: Since the collectively bargained employees must be tested separately, what is the prior year NHCE ADP for the union employees since testing was never required prior to 1998 (and it's not a new 401(k) plan)? Or, is there even a prior year non-HCE ADP? Would the company be required to create the non-HCE ADP for the union employees who were eligible for the plan in 1997, or would they have to use current year data for this group in 1998?