I am a TPA of very small plans and have done manual data entry to date. However, I want to switch to electronic data entry for employee data on one 401(k) client - specifically hours worked, salary earned, deferral amount, etc. Does anyone have experience in this transition who is willing to give advice/horror stories, etc? Thanks for all input.

An employer client of mine has asked me to bless a proposed recordkeeping services agreement with BISYS, in connection with the client's decision to use the American Funds Group for participant-directed investments.

Is it industry practice for BISYS-type service-providers to have language like this in the agreement for services --

"The Plan Administrator's remedy and BISYS' sole liability for any claims, notwithstanding the form of such claims (e.g., contract, negligence or otherwise), arising out of errors or omissions in the services provided by BISYS shall be for BISYS to use reasonable efforts to correct any resulting error in its own records or in any reports BISYS has prepared for the Plan Administrator."

That language is in a section describing the employer's duty to serve as Plan Administrator. (Don't have any problem with that.)

Later, in a section entitled "Limitation of Liability," the contract states "BISYS' sole liability and the Employer's sole remedy for those errors resulting solely from BISYS' negligence in the performance of its services hereunder, shall be at BISYS' own expense to use its reasonable efforts to correct such error."

I can appreciate that a service-provider would be able to provide services at lower cost if its exposure for damages arising from negligent performance is expressly limited. There's no free lunch. But I'm wondering if other service-providers provide services for similar fees without this kind of limitation on liability for negligence. And, if this is an industry standard, whether an employer/plan administrator needs to have some other firm checking the recordkeeper's work (e.g., ADP tests) in order to be able to fulfill its fiduciary obligation to operate the plan according to the plan's terms.

I have been asked to check if the affiliated group rules apply to this scenario. Any assistance would be greatly appreciated.

Corp A is owned 100% by Dad.

Corp B is owned 49% by Son and 51% by Daughter-in-Law. Currently, only Corp A has a profit sharing plan, and the question is if the employees of Corp B must be allowed in to Corp A's PS plan.

Could a 401(a) plan have an employer contribution rate of 5% and a mandatory employee contribution higher than 5% as long as the total limit does not go over the 415 limits?

When is the earliest I can deposit my Roth IRA contribution for Yr 2000?

I can't remember when a QNEC has to be made, for instance if a plan year ends 6/30/99, when must the QNEC be made?

Is there any reason an employer could not terminate its existing money purchase plan and allow participants to roll the money into its existing 401(k) profit sharing plan?

Does anyone have an idea of what generally is the impact when the cost of Health insurance to employees is increased significanlty. How does it affect 401(k) participation?. Are there any IRS/DOL notices or advices? out there?

Thanks

A question has come up during audit season, and that is how to report contributions receivable. I am always of the belief that contributions should be shown on the audit (and 5500) on an accrual basis, but a partner has questioned as to whether or not it could be reported on a cash basis, to tie to actual contributions received by the trust in a Money Purchase plan situation where contributions are funded monthly. That is, the December contribution, received in January of the next year, is shown on next year's 5500, while last years December contribution is shown this year.

Any comments would be appreciated. Thanks!

I have a compnay that wants to make their company stock option an investment choice in the 401K. Besides the admin hassle, would their be any problem if the option pricing was the same for everybody. (no discrimination)

Can I convert froma 401K to a Roth without penalties, and if so how??

I can find no upper limit on the number of employees for adopting employers of Simplified Employee Pensions. 25 is stuck in my head, but that may be for only the old SARSEP's. Can any employer adopt a SEP?

Is there section 415 limit coordination between two nonprofit entities that each offer 401(a) DC plans? Some employees work for both nonprofit entities.

In other words, do we have two of the full $30,000 section 415 limits?

The entities consist of a section 115 school and a separate section 501©(3) hospital.

Thanks,

Johnny

I understand that governmental plans can not maintain 401(k) plans unless the plan is a grandfathered 401(k) plan. Does this mean that matches (in any types of governmental plan) are limited to grandfathered 401(k) plans only? It seems like 401(k) and (m) are inseparable.

Can a governmental plan that is not a 401(k) plan (e.g., 457) provide for matches?

Thanks.

I am the Benefits and Compensation Manager for an international law firm with about 500 attorneys. Currently, we allow our Associates (non-partner attorneys) to participate in our 401(k) plan with deferrals only. The are not eligible for a matching contribution nor are they eligible for the firm basic contribution. This has generally been standard practice in the past with other law firms, but I'm wondering if this is now changing.

We are hearing from our Associates that other firms that they have spoken with are indeed giving Associates a match and some even a firm basic contribution. I would love to hear from any other B&C Managers at law firms to find out just what the trend is these days. I really appreciate any feedback! Thanks.... Susan

Are the rules for making a trust a designated beneficiary for a Roth IRA the same as the rules for a traditional IRA under Prop Regs 1.401(a)(9)? Can a revocable living trust serve as a beneficiary?

Plan sponsor wants to make several non-required amendments for 1999 (e.g., change eligibility age, maximum contribution pct). None of the amendments involves a potentially disqualifying plan provision.

Question: Is it allowable to simply operate in 1999 as if the amendments were in place and then include these provisions when processing the required amendments in 2000?

I ask the question because it appears that this procedure is allowable in the case of potentially disqualifying plan provisions. In other words, is there a distinction to be made between amendments that relate to disqualifying provisions and amendments that do not, when it comes to using the extended deadline for required amendments?

Client is an S Corp with a 401(k) PS Plan.

They are considering converting to a C Corp.

After conversion, would the sharelholders be permitted to take participant loans against

accounts attributable to contributions

while an S Corp? Or only against

money contributed while a C Corp?

Funding or Tax deduction?

For Funding (minimum funding standards) contributions must be deposited within 8 1/2 months after the close of the Plan Year. (IRC Section 412)

Deductions get a bit more complex, and it depends both the fiscal year end and the plan year end. Also, past deduction (accounting) practices can come in to play. Do you have a specific example?

Sal Tripodi's TRI Services web site (http://www.cyberisa.com) explains that the new $85,000 number (up from $80,000) would apply in 2000 to a calendar year using a prior-plan-year lookback definition such that, for a plan year which begins January 1, 2000, the $85,000 compensation limit will be applied to compensation for the period January 1, 1999, through December 31, 1999.

Has anybody heard anything different?