Must a profit sharing document state how forfeitures are to be dealt with in a plan? For example, must the document clearly state whether forfeitures are to be:

re-allocated to eligible participants

used to offset future ER contributions or

used to pay expenses of the plan

or may any of these options be used, regardless of what the document states?

thanks for any help.

A clients CPA is preventing them from adding a 401(k) provision based upon misinformation. What can I show the CPA firm to show them they are wrong?

Here is the situation:

Client with approximately 50 employees sponsors a Profit Sharing Plan that is top-heavy. Due to business conditions no contributions have been made for several years, and most likely none can be made for at least several more years. Client decided they would like to add 401(k) provision so at least employees could add to their retirement account balances. I advised them this was fine as long as key employees did not defer until such year that plan is no longer top heavy, so as not to trigger a top heavy minimum contribution.

However, CPA advised first advised them that if even a highly compensated employee who is not a key employee defers that that would also trigger a top heavy minmimum contribution. Now they are also telling the client that the only way the key employee can elect not to defer is to opt out of the plan permanently. Both these statements are dead wrong, but client respects his CPA.

How would you deal with this situation. Please HELP!

Our Company matches pre-tax and after-tax employee contributions to 401K. After employee has maxed $10,000 on pre-tax, can he go to after-tax contribution to continue to get Company's match? Thanks for your help and possibly where this info originates.

Our company had chosen The Vanguard Target Plan as it's 401(k) provider and Trustee.

What is required of the employer with regard to it's fiduciary responsibility? We've been advised that the DOL has specific requirements.

We have accounts remaining with us at this late date. Our company was never providing full administration of these plans and the SBJPA '96 forced us to exit the 457 line of business completely. Despite our best efforts, accounts remain with us still.

It was our understanding/opinon that we could not redeem these accounts without written instructions from the plan administrator/employer.

But now what happens? Has the IRS said what they can/will do to plans found to be out of compliance with the SBJPA '96 after 1/01/99?

Is it allowable to have a 500 hour, last day requirement and a provision for employment of at least one hour of the previous year? If it is allowable, are there any implications of the provision?

I am trying to find regulations regarding special rules governing pension and other benefit plans when a company is being purchased. I would appreciate if anyne could point me in the right direction. Thanks.

Are there any regulations to the number of Sick &/or Vacation days an employer is required to give it's employees? Is there a difference based on the number of employees in the company?

As Dave Baker has noted elsewhere on this site, BenefitsLink and Calhoun Law Group (the firm I belong to) have collaberated on an expanded Employee Benefits Library of legal research links. Members of this board may be interested to know that one of the pages in the Library deals specifically with church plans research links.

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Employee benefits legal resource site[Edited by CVCalhoun on 09-22-2000 at 02:23 PM]

Fiscal year is 12/31 and plan year is 6/30. They had both been 6/30 until fiscal year was changed many years ago.

Are there any compelling reasons to change the plan year?

What if an employer decides to pay bonuses to cafeteria plan participants, in amounts equal to the unspent part of their medical expense reimbursement accounts? Assuming income and FICA taxes are paid on these bonuses, and there is no written or oral promise on the part of the employer to make these bonuses in the first place or ever again, would the "use it or lose it" rule be violated?

Does the term "lookback month" refer to: The month containing the 30-year treasury bond data; or The following month in which the resulting average is published?

I am interested if anyone has any experience in setting up cafeteria plans in the construction industry where an hourly employee's work may be intermittent becuase of slow periods and layoffs. It seems that calculating salary deductions can be a sticking point for employers because insurance premiums often become due at the beginning of a month, and an employee might be laid off after the first 2 or 3 days in a month, and the employer cannot recoup the premium already paid.

Any thoughts would be greatly appreciated.

Can a rollover IRA beneficiary designation be drafted using "separate account" language leaving a percentage to a trust qualifying as a designated beneficiary (i.e., 75% to the trust) and the remainder to a charity and have the minimum distributions to the owner be calculated on the basis of the owner's and designated beneficiaries as to the 75% and on the owner's sole life expectancy as to the 25% going to the charity?

Does "Short Term" health insurance coverage qualify as "credible coverage" under the HIPAA portability definition? I have a client who has a 90 day waiting period in his new job. Rather than electing Cobra coverage, he wishes to secure 90 days of "Short Term" coverage to save money. Does this threaten his portability of credible coverage?

Has anyone upgraded from the DOS version of your administration software to the Windows or internet versions? If so, did you feeel that the cost was worth the difference in the program? in the service provided? Do you mind telling me which software and how many employees you have actually administering the plans?

I have been looking at 2, and the hardware improvements that we would have to make are incredible, forget the software expenditures. But if client service is significantly improved, or anything else, I would appreciate any input. Thanks.

Husband owner, wife primary benficiary, 4 Children contingent beneficiaries. On a recommendation from his lawyer, the owner wants to set up 5 seperate IRA's, with each child named a beneficiary in a respective IRA. Does anyone know of the tax advantages on this? I do not see any. If the owner and then the wife die, the IRA would be split up for the 4 children anyway. Am I missing something?

A client feels they may be discriminating against their Hourly, non-exempt workers since they and their Salaried workers "run" their payroll deductions through a Sec. 125 Premium-Only Plan but their Salaried workers enjoy a shorter Waiting Period (30 days)versus their Hourly workers (90 days).

I'm confident they are not discriminating but would like some direction to prove my point. Any help is appreciated!

Employer is looking to write a Plan which excludes all Key Employees and Employees in certain job clasifications. I've been told that the IRS office in Ohio has been rejecting this approach claiming that you are imposing a defacto eligiblity requirement under 401(a). Does anyone have any thoughts on this or persoanl experience.

As mwyatt pointed out in the thread started 4-09-99, the appropriate regulation is DOL Regulation 2530.203-2©. However, I disagree with mwyatt's analysis.

Here is the DOL regulation in question:

© Amendments to change the vesting computation period.

(1) A plan may be amended to change the vesting computation period to a different 12-consecutive-month period provided that as a result of such change no employee's vested percentage of the accrued benefit derived from employer contributions is less on any date after such change than such vested percentage would be in the absence of such change. A plan amendment changing the vesting computation period shall be deemed to comply with the requirements of this subparagraph if the first vesting computation period established under such amendment begins before the last day of the preceding vesting computation period and an employee who is credited with 1,000 hours of service in both the vesting computation period under the plan before the amendment and the first vesting computation period under the plan as amended is credited with 2 years of service for those vesting computation periods. For example, a plan which has been using a calendar year vesting computation period is amended to provide for a July 1-June 30 vesting computation period starting in 1977. Employees who complete more than 1,000 hours of service in both of the 12-month periods extending from January 1, 1977 to December 31, 1977 and from July 1, 1977 to June 30, 1978 are advanced two years on the plan's vesting schedule. The plan is deemed to meet the requirements of this subparagraph.

The question concerned a short plan year of 10/1/98 - 12/31/98 with the prior plan year being 10/1/97 - 9/30/98. In Journal of Pension Benefits Volume 4 Issue 3 from Spring 1997, J. Michael Pruett writes "The determination of vesting with respect to a short plan year is based on the 12-month period ending on the last day of the short plan year." I agree with J. Michael Pruett. My reasoning is that the "preceding vesting computation period" prior to the amendment changing the plan year has to be the 12 month period (10/1/97 - 9/30/98 in the example being questioned) ending prior to the short plan year. The "first vesting computation period established under such amendment" then "begins before the last day of the preceding vesting computation period." So the "first vesting computation period established under such amendment" should be 1/1/98 - 12/31/98. I could possibly see an argument that either method is acceptable (that is, either A) vesting computation periods of 10/1/97-9/30/98,1/1/98-12/31/98, and 1/1/99-12/31/99, or b) vesting computation periods of 10/1/97-9/30/98,10/1/98-9/30/99, and 1/1/99-12/31/99). Since the regulation above does not even mention changing the plan year, only changing the "vesting computation period to a different 12-consecutive month period", it would seem to be possible under the above regulation to keep using 10/1-9/30 for as many years after the change in plan year as you would like and to change to any different period provided credit is given for overlapping periods. Is anyone aware of additional guidance that would tie the above regulation to a change in plan year?