I am trying to determine the importance of prospectuses for distribution to employees in employer-sponsored ERISA retirement plans (401(k), 403(B), etc.) At first glance, it would seem logical that each employee would need a copy of a prospectus for each fund offered in an employer plan. However, since the plan sponsor is ususally the client the purchasing client and is acting as a fiduciary, it may only be necessary to obtain prospectuses for the employer and provide prospectuses on demand for the employees.

Other issues are the cost of mailing, difficult of getting adequate supply from each independent fund company and the logistical nightmare of distributing them. For instance a 1000 employee plan, with 10 investment requires 10,000 prospectuses be delivered and distributed. This is difficult and expensive, cutting into resources and profitability.

Can anyone tell me the DOL position on the use of prospectuses and the most logical course of action (e.g.supply at enrollment to all, supply electronically on a website, deliver after enrollments but before contributions begin, or other)???

Thanks

If during a plan year a participant has a change in circumstances and finds the dependent care allocation is too much and medical is too little, can money be swapped between these two categories without a trigger event?

If not, is there any congressional bill in process which would allow a mid-year change in allocations without a trigger event?

Does anyone know of any cases or how to deal with a situation involving a scrivener's error where the drafter of a restated plan document, which is restated to meet the requirements of TRA 86, fails to put in the specific effective dates (e.g., certain TRA changes had to be effective 1/1/89) and instead has everything effective as of the date of restatement (e.g. 1992)? Thanks.

In calculating the 1999 Top Heavy test for a plan with a 12/31 plan year end, I have the following calculations in which I am confident of the calculations:

12/31/98 Balances for Key EEs = 3,096,677.97

12/31/98 Balances for ALL EEs = 7,193,148.80

Withdrawals made from 1994 to 1998 Plan Year

Key = 80,303.40

Non Key = 118,353.20

Which calculation below is correct?

1)

3,096,677.97 / (7,193,148.80+80,303.40+118,353.20)

OR

2)

(3,096,677.97+80,303.40) / (7,193,148.80+80,303.40+118,353.20)

Since it passes no matter which is used, it is not critical in this example but where the ratio is close to the 60% thershold, it could make the difference.

I personnally believe that formula (2) is correct but would appreciate others input.

Thanks

John Armknecht

I am 75 and now into my 403(B) grandfathered money. VALIC is using a "50% Rule" [taking 51% (yes, 51%) of the pre-'87 money and using the annuity due formula with my single life age (as time) instead of joint with my wife as the divisor]. TIAA/CREF has never heard of this. Is there such a thing (i.e. 50% Rule)?

I am contemplating moving my 403(B) from VALIC to TIAA/CREF and would like the same benefit and if I could locate the citation, etc., I might have some foot to stand on.

HELP.

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Al

I am in the frequent position of accompanying many life insurance agents on their pension sales calls. I try to limit this because I'm afaid I won't be adequately compensated for my time.

I can see it two ways:

1. If we sell the case, I get the administration. Many times, I leave a bill for the administration or the plan document and they pay immediately.

2. Lawyers and other professionals charge for their time. We are professionals (although lawyers like to think of theselves as THE ONLY professionals on the planet.

If I am charging $500 on a case, and it takes me 2 hours each way travel time plus an hour meeting with the client, I have not made any money. And, if the agent blows the sale, we have all wasted our time.

Steve

What is the usual practice, if there is one?

What has anyone experienced in requiring a year-end bonus to be paid back if the employee leaves within 6 months? Thanks

An employee's spouse has been deported. The deported individual is expected to return in three to six months. The plan covers dependent spouses as long as they are not legally separated, (this will be defined as a domestic agreement to be separated) but the author of the plan could not foresee an illegal immigrant qualifying as a dependent. Is the deportation and non-US residency status enough to terminate coverage? What if the person in question never returns to the US, can coverage ever be terminated?

I administer a 401(a) defined contribution plan for a public college system. We are prohibited by law from using current funds to provide compensation (including benefits) to former employees including retirees).

I would like to set up some method for taking current contributions to the governmental 401(a) defined contribution plan to be used in the future to subsidize the plan retirees' health insurance premiums.

At first it seemed that a 401(h) account was the way to go, but I am not so sure now.

What about a Retiree Lives Reserve or a Voluntary Employees'Benenfits Association.

Have any of you made such an arrangement? If so, how do I find out how to do it and the pros and cons of the various mechanisms?

Dan Gould

Is there any reason a sole proprietor cannot have a SIMPLE IRA plan? She is the only employee.

Assuming she can, and she defers the max $6000, does she still get the company match or is that considered part of the deferral?

There seems to be a large difference of opinion among CPA's I have spoken to. Any help would be greatly appreciated.

What is the consensus on how to report hardship distributions on Form 1099-R after 12/31/99? Since hardship distributions coming from certain sources (i.e., elective deferrals and earnings) will not be eligible for rollovers, but hardship distributions coming from other sources (i.e., employer matching or profit sharing contributions, and) will still be eligible for rollovers, should two 1099-R's be used (one to report rollovers and one to report other hardship distributions) or should only one be used? If only one is used, how is the hardship distribution reported?

Is employer stock an allowable investment in a Simple 401(k) plan? If so, could the match be made only in employer stock?

Can anyone tell me about any negatives to combining conversion and contribatory Roth IRAs? I would like to use my Roths to help pay for the purchase of a new house. If I combine my roth will I have to wait 5 years from the combining to use the origional monies? And if I do combine and contribute money to my Roth in 2000 do I have to wait 5 years after that or do I have to start a new Roth?

I came across PLR 9633006 which states that if a private foundation is a designated beneficiary, the private foundation would owe an excise tax on the difference between the contributions made to the Plan and the actual distribution to the foundation.

This makes no sense to me. Has anyone else had experience with this issue?

Is there any reason to consider terminating the money purchase plan rather than merging the 2 plans? If so, could the plan require direct transfer or direct rollover into the 401(k) plan as the only option? Would there be any problem with giving participants the option of a rollover into the 401(k) plan?

If merging the plans is the better option, what are the issues involved? The only ones I could think of were issuing the 204(h), d sticking the 401(k) plan with J&S requirements, and filing a final 5500 for the money purchase. Are there other issues?

Thanks!

What is the consensus on how to report hardship distributions on Form 1099-R after 12/31/99? Since hardship distributions coming from certain sources (i.e., elective deferrals and earnings) will not be eligible for rollovers, but hardship distributions coming from other sources (i.e., employer matching or profit sharing contributions, and) will still be eligible for rollovers, should two 1099-R's be used (one to report rollovers and one to report other hardship distributions) or should only one be used? If only one is used, how is the hardship distribution reported?

CAN I CONVERT MY ROTH IRA INTO A SELF DIRECTED IRA TO INVEST IN A RENTAL APARTMENT BUILDING?

WHERE CAN I FIND AN APPROVED CUSTODIAN?

Are the instructions and the 5304 form required to be given to the EXISTING paricipants as part of the annual notification or is it only the actual Model Notification Form?

Is the a maximum employee number for an employer adopting a SEP? I cannot find any limits, but 25 keeps running through my head. Maybe I'm just thinking of the old SARSEP rule.

cash balance plan allows for lump sums. Is it true that the lump sum must be greater of acct balance and the value of the account balance projected to 65 using interest credit rate and then discounted to current age using lump sum interest rate. i.e. if interest credit rate is higher than the lump sum interest rate the lump sum would be greater thatn the acct balance?

Also if the interest credit rate and the lump sum interest rate are variable, do you apply the rates in effect at termination and use those in the projecting and discounting?

Look forward to any thoughts on this important subject.