I read that some EAPs are subject to COBRA. We are starting an EAP for some of our employees in which they can receive free counseling. If inpatient counseling is needed, it will most likely be coordinated with our health plan benefits. Are we required to provide COBRA for free, outpatient counseling sessions?

I attended a seminar back in April and want to confirm what I thought the instructor said about partial COBRA payments. I am familiar with the short payment rule (ours is $20 - if payment is short by that amount we accept and send deficient premium letter - participant has 30 days to make up premium). At the seminar, the instructor did say that if the employee doesn't make rest of payment, we can term, but we can't refund payment - we must accept and prorate coverage - for example, the employee never pays the remainder of the premium and we cancel the participant's coverage, are we required to carry the participant's coverage through the date he/she paid? Or do we refund? We have refunded in the past, but the instructor implied that by law, we must accept whatever payment was made and prorate coverage. Any thoughts out there?

We have a plan sponsored by a Credit Union (CU). The CU has a new subsidiary which is a credit union service organizaiton (CUSO). 50% of the CUSO is owned by the CU. The CUSO will do work for the CU as well as for other entities. It doesn't appear that we have a controlled group. Do we have an affiliated service group? Both are not-for profits, and I think that may make some difference. Do you need more information? Please advise.

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I have encountered a practitioner who is interpreting the special rule under Reg.54.4975-7(B)(8)(ii) as being available only in situations where interest and principal are paid only once a year. The practictioner is pointing to the requirement that "...the loan must provide for annual payments of principal and interest at a cumulative rate that is not less rapid at any time than level annual payments of such amounts for 10 years.

Any ESOP loan I have been involved with had monthly payments, but I do not know that any of them uses this special rule for releasing of shares. Any authority for using principal only even if there are quarterly interest payments and annual principal payments?

When a company decides to leave Administaff and set up their own benefits there are a couple of issues regarding 401k I am unsure of:

1. Are distributions from Administaff eligible for cash dostribution or rollover to an IRA or should they be rolled into the new 401k based on "same desk" rule?

2. There have been some adverse rulings from IRS regarding the qualification of the Administaff plan. Some attorney's I work with advise against accepting Administaff rollovers as they may "taint" the new 401k plan. Any thoughts or opinions on this issue?

A 401(k) Plan has serveral participants with small balances (less than $25.00 for prior PS forfeitures)who are not contributing to the 401(k) portion of the Plan. Is there any way to either cash these people out of forfeit their account balances without a severence of service? The Employers does not want to continue to pay a participante charge for non-contributing employyees. Could the plan establish an administrative proceedure that would require participant fees to to taken from the account balances of non-contributing participants? This would clear these small accounts. Because there are several participants who are contributing small amounts to the plan ( $5 & $10 a pay check )the employer does not want to charge fees to all participants.

My firm handles marketing and administration of 401(k) plans, currently offering a selection of nine funds to our participants. The funds are not publicly traded (I believe the term is "Class C.") We are considering the addition of some publicly traded mutual funds. Can anyone offer some guidance on the different areas we should concern ourselves with during the planning phase? Of course, I understand that we will now have to comply with requirements regarding prospectus availability, but what about required certifications for any of our staff? Also, if we replace an existing bond fund with a new bond fund, what kind of notification and disclosure requirements are we looking at? Are there compliance issues that I should consider when eliminating a fund option and moving all assets from the eliminated fund into a newly selected, similiar, but not identical, fund. Any references suggested would be extremely appreciated.

participant received his distribution from a 457 plan and rolled the balance into an IRA. We now discovered this problem, what are our options? what do we do with the money?

TAKING OVER DR'S OFFICE WHO HAS CALENDAR YEAR MP AND PS PLANS. VIA RESOLUTION, MP PLAN FROZEN 12/31/98, MERGED INTO PS 1/1/99. FINAL REQ'D MP CONTRIB FOR 98 WAS MADE IN 99. PS PLAN AMENDED FROM PROTOTYPE TO INDIV DESIGNED NEW COMP EFFECTIVE 1/1/99 (DOCUMENT INCLUDED LANGUAGE INDICATING MERGER). PRIOR ADMINISTRATOR FINISHED 98 ADMIN TODAY. WE WANNA MOVE ON THE MERGER.

1. IS THE PROCEDURE OK?

2. IF INDIV. ACCOUNTS, CAN THEY JUST BE RETITLED UNDER PS PLAN AND FINAL 5500 FILED FOR 99?

3. IF POOLED ACCOUNTS, IS A FINAL ALLOCATION REQUIRED LIKE IN A PLAN TERMINATION, THEN MONEY TRANSFERRED INTO PS PLAN UNDER INDIV. ACCOUNTS?

4. ANYTHING ELSE I NEED TO CONSIDER?

THANKS IN ADVANCE FOR YOUR RESPONSE!

Is "Includible compensation" for purposes of the 403(B)(2) exclusion allowance limited to the 401(a)(17) compensation cap (currently $160,000)? Example 20 of the updated IRS Examination Guidelines for 403(b)plans indicates that "Compensation" for 415 limit purposes is limited to $160,000, but is seemingly silent with regard to 403(B)(2).

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Mike W.

An employee worked for her employer from 10/1/96 to 9/30/97 and was laid off due to a cut in funding. She was never a "participant" due to the fact that entry dates are 7/1 and 1/1. She has just been rehired. Am I correct in telling the employer that she must wait a full year again before becoming eligible because she had a break in service -- even though she did not quit and wasn't fired?

In Section 13.5.1.2.1 of the updated Examination Guidelines for 403(B) Plans, it is stated that, in theory, an employee who has completed 15 years of service with a qualified organization other than the one at which he/she is currently employed could use the full amount of the 15-year "catch up" election under 402(g)(8) with respect to the current organization. This seems to contradict 402(g)(8) and at least one well-known 403(B) publication, which indicate that the 15-year "catch up" election can only be utilized at the employer for which the 15 years of service had been performed. Which interpretation is correct?

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Mike W.

Am I correct in understanding that an employer can change the dollar amount that they match at any time if they have a "discretionary match"? More specifically, this employer's plan doc says that the employer will make a discretionary match not to exceed $520 per year (which equals $10.00 per week). They would like to increase it to $15.00 per week which would be $780 maximum for a full year. Can this be changed any time?

Can Safe Harbor contributions be made in a combination of cash and employer securities, or must such contributions be made solely in cash?

If the IRS Notice 98-52 are adopted by a plan, must the "safe harbor" contributions be funded as frequently as elective deferrals, or can such contributions be funded on a less periodic basis?

Found my answer by searching old Q&As

[This message has been edited by Roger (edited 08-03-99).]

I am the marketing director of a large local Phoenix, AZ CPA firm. We do plan audits along with design, administration, etc. I understand that basic plan information is public information. I would like to obtain a list of all the plans in Maricopa county (Phoenix) which require such audits. Anyone know where I could obtain such information? Thanks.

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Steve Parker

My husband left his employer at the end of March. We received the health/dental cancellation notice July 15 and still have not received any COBRA notification. My understanding was that notice must be within 14 days of the cancellation or the event which caused the cancellation. Since we did not receive notification, are there any consequences to the employer?? I think that a three month delay in notification is more than an oversight...

Would really just like some links or something to point me in the right direction.

Thanks in advance...Sheila K

Can a 401(k) plan charge the participant for a distribution?

Small employer is terminating 2 year old 401(k) plan with only one active participant with any account balance. The 401(k) plan apparently (I haven't seen any background docs yet)includes money "fozen" from a previous money purchase plan MPP that the employer sponsored for about 12 years and terminated before adopting the 401(k)(again all benefits were for this one participant).

The paticipant plans to roll over his 401(k) contributions to a new traditional IRA.

Question: assuming his plan distribution includes after-tax contributions that he made to the former MPP, am I correct that he can't rollover those proceeds to an IRA, but could rollover the earnings on those contributions?

Anyone willing to share any thoughts on how the former MPP controbutins are treated or options?

Thanks