It is valuation time again for my office (09/30) annual plans. Only the second year on Quantech some we have some pretty basic questions.... I have a date of hire of 03/03/98 - date of entry is first day following one year of service which should be 04/01/99, but the system is calculating 03/01/99. I made sure that the "credit full month for any service" is NOT checked. The system calculated correctly on all but one person on two plans? Any suggestions?

A defined contribution plan defines Valuation Date as "the last day of the Plan Year or such other date as agreed to by the Employer and the Trustee on which Participant accounts are revalued ...". The Employer has always paid distributions based on the last day of the preceding plan year. A participant with a very large balance (much larger than most other participants) is threatening to sue the Employer if the Employer does not revalue his account shortly before making his distribution. What are other TPA's advising their clients in this situation? Is anyone aware of actual court cases similar to this? (Note: I posted this same question on the Retirement Plans in General message board - I wasn't sure which place was more appropriate).

A defined contribution plan defines Valuation Date as "the last day of the Plan Year or such other date as agreed to by the Employer and the Trustee on which Participant accounts are revalued ...". The Employer has always paid distributions using the value as of the last day of the preceding plan year. A participant with a substantially larger balance than most terminated in 1998 and is threatening to sue the Employer if the Employer does not revalue the account shortly before making the distribution. What have other TPA's advised their clients in this situation? Is anyone aware of actual court cases similar to this situation?

Does anyone know how to contact Mr. Benefish? We're looking for someone to run our Benefits Department and he seems to be extremely competent. Please advise. Maybe Mr. Benefish could identify himself?

I have a client that has a 9/30 Corporate fiscal year end and a 12/31 Plan year end. I will be preparing a preliminary ADP test shortly and it is likely the test will fail. If the test fails, the client's accountant is going to recommend they make a QNEC by the due date of the 9/30/99 Corporate year end in order to reduce their taxable income.

My question is whether a contribution made for the 12/31/99 Plan year end is deductible on the client's 9/30/99 Corporate return.

Has anyone figured out what the dollar limits are for tax-exempt parking and mass transit for the year 2000?

We have two issues we need some help with.

1. Dependent was cancelled from our pre-tax medical plan because he was not enrolled in school. Now the dep is back in school and parent wants to enroll him. We can't find reason under Section 125 (e.g. he is not a "newly" eligible dep.") to allow him to enroll now. We are thinking that the dep can be enrolled during open enrollment.

2. We have a dependent who turned 18 and moved out on his own. His parent's want to drop his coverage. Our plan states that you may cover "an unmarried child under the age of 19." We are wondering if the parent can drop the dep simply because the dep no longer lives with them. Or, do they have to wait until open enrollment.

A small client requested 2 distribution checks from their investor.

1 for 80% of the acct. balance to participant

1 for 20% as IRS w/holding

The IRS w/holding check is made payable to IRS not to a Fedral Reserve bank.

ANy ideas on how the client can deposit this check payable to IRS along w/tax deposit coupon (8109B)? Will a bank take the check if it's made payable to IRS? Is there an IRS address that will accept the w/holding check and coupon?

thanks for any help

I have a client with a floor offset plan who wants to terminate the DB portion of the plan and let the MP portion continue.

His issue is that only 2 participants now have a benefit under the DB portion of the plan, the rest are fully offset.

These 2 participants are low paid new hires (this is a takeover, I have no idea why the plan was designed this way, but that's how it is, total DB plan assets are less than $12,000).

The client really doesn't want to make distributions to these 2 participants since it will cause him PR problems with all his other employees (all of whom are long service).

Question: If accruals are ceased under the DB portion of the plan but the plan is not terminated, are the DB benefits offset by the MP balance as of the date of the cease, or by the MP balance at the date of distribution?

If the benefits can be offset by the then current balances of the MP plan, it is likely that the benefits of all particpants will be fully offset by their MP balances within 2 or 3 years. The client would terminate the DB plan at that time (assets will be about $10,000 or so since he will pay administrative expenses from the plan assets for the next 2 -3 years), transfer 25% of the potential reversion to the MP plan and then pay the 20% reversion tax and ordinary income tax on the remainder.

What do you think? I haven't found anything to say one way or the other what a cease of accruals means in a floor offset plan.

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I would like to understand what a 414(h) plan is. I see it shown on an employee's W-2 form. In box 14d, the label is N.Y.C.E.R.S. 414(h). The amount show in the box has been deferred, like the amount in box 13e, for a 403(B) plan. The employer is New York City Health & Hospitals Corporation

can you attach a last day rule to the 3% profit sharing contribution for a safe harbor 401k?

Any thoughts on whether COBRA or Public Health Service Act (for governmental entities) completely preempts state insurance

laws regarding continuation coverage?

Basically, Illinois has continuation laws that apply to fully insured plans only. These laws are both more restrictive and more liberal than COBRA. For example, employees only get nine months of coverage under state law after employment terminates. At the same time, no administrative fees may be charged, and any spouse 55 and over can get coverage until Medicare kicks in (after employee's death, retirement, etc.). A recent Supreme Court case (Unum Life) seems to indicate that state laws that expand, and do not otherwise conflict with, ERISA would not be preempted.

The end result is that employers may have to apply the most liberal provisions of both (an administrative nightmare). Perhaps one notice could integrate both COBRA and Illinois laws. Any thoughts from the experts?

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We would like to send letters out to our participants that qualify for 70 1/2 MRD's. Does anyone have a sample they could share? Thanks.

My organization administers approximately 500 401(k) plans with participant directed investments. We are planning to change the investment options on 4-1-2000. New options will be added and some will be eliminated. Can anyone offer suggestions on the timeline for notification and the types of notices that should be provided to our participants?

I know that this must be a fairly common practice, but I have been unable to locate any authoritative written guidance. Any references would be very much appreciated.

My organization administers approximately 500 401(k) plans with participant directed investments. We are planning to change the investment options on 4-1-2000. New options will be added and some will be eliminated. Can anyone offer suggestions on the timeline for notification and the types of notices that should be provided to our participants?

I know that this must be a fairly common practice, but I have been unable to locate any authoritative written guidance. Any references would be very much appreciated.

Is anyone using a Cash Value Pension Plan or Benefit? This is a type of DB plan in which the formula expressed the benefit as a Cash Value rather than an annuity. It is not the same as a Cash Balance plan although there are some similarities.

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A company wishes to pay a portion of the employee medical premium for some groups of employees but not others. The company desires to pay a portion of the premium for the hourly and salaried employees but not for the commissioned sales employees, many of whom earn six figures. Can they do this?

DOL Adv. Op. Ltr. 94-32A generally describes receiving a distribution from a retirement plan as an ERISA protected right, then goes on to say that you cannot charge a participant directly fees for an ERISA right (can charge to remaining assets of plan). However, some mutual fund and annuity companies charge fees directly to participants taking termination distributions. What is the basis for this? Does having a segregated, self-directed account make a difference?

In addition to the rights and features disparity question . . Corp. A is an accts. rec./billing office for the physicians in Corp B. Between 1/93 and 12/98, the 30 physicians in Corp B had equal ownership in Corp A (each physician had 300 shares). The legal counsel for both corporations deemed them to be Afilliated Service Groups during this period. Therefore, during the period above, Corp A and B shared the pension/profit sharing plan and medical reimbursement plan.

During the period of 1/99 to the present, their legal counsel recommended that the physicians divest their ownership from Corp A in order for B to set up their own pension plan, medical reimbursement plan, and relieve them of making any more contributions to the employees of A. Each physician then relinquished their 300 shares to the president of corp A. A legal opinion was issued. Any input?

Background: Corp A and Corp B are located in the same office. 99% of Corp A's business is performed for B. Corp A answers the phones for the physicians in B. The president of A performs payroll and accounting duties for the physicians of B. The secretary for the physicians is an employee of A. Corp A charges a % of Accts. Rec. created by Corp B.

[This message has been edited by Michael J. Sievert, CFP (edited 09-23-1999).]

Since 1993, corporations A and B shared A's pension and profit sharing plan. A is medical billing/Acts. Rec. business with 30 employees and B is a physician group with 30 physicians. All of B's plan participants are trustees on the plan document. I am concerned that in A, the pension/profit sharing contribution is made to a pooled account and allocated by the president of A. In other words, the employees of A have no say in their investment options or allocation. On the other hand, B's employees can self-direct on an individual basis, choose among any investment firm and any investment vehicle to allocate their contributions. Some of B's employees have stock brokerage accounts with various firms and some choose management accounts with other firms. A and B's legal counsel has issued a legal opinion on this matter. Any input?

More background: Both A and B are located in the same physical office. In addition to the billing function, employees of A routinely perform administrative, accounting and payroll functions for the employees of B. 99% of A's business is performing services for B. From 1/93 to 12/98 each physician in B owned 300 shares of A. In January of this year, each physician relinquished their shares to A in an attempt to keep them out of the Affiliated Service Group rules.

[This message has been edited by Michael J. Sievert, CFP (edited 09-20-1999).]

[This message has been edited by Michael J. Sievert, CFP (edited 09-21-1999).]