Recent retiree from a large publicly traded company has stock and cash in his retirement plan. Cash is $200,000. 10,000 shares of stock has a basis in the plan of $15 per share and a FMV of $40. He can take the stock, pay tax on the plan basis and defer tax on the $25 per share appreciation.

Question 1: Is the $25 capital gain or ordinary income on the subsequent sale of the stock? (I have always thought it was ordinary income, and eventually IRD, but someone has suggested otherwise)

Question 2: If a lump sum distribution of the cash and stock is received, is the 10-year averaging tax based on the total FMV of the cash and stock or the cash plus plan basis?

Thank you

What IRS Regs, or Rulings exist that are proof of the future viability of cross-tested plans? What do they say? Dates written.

I am researching benefits management as a career option for myself and would like any first-hand information about the field. Some of my questions include:

1. What do you find most satisfying or frustrating about your job/field?

2.What skills do you use the most?

3. What kind of person does best at this type of work?

4. What kind of challenges does your work provide?

5. What is a typical day like?

6. What do you find stressful about your work?

7. What is your work environment like?

8. How much time do you spend working with people?

9.Is it a secure field in terms of earning potential and future demand?

10. How much variety do you have on the job?

I would be very grateful for any feedback from anyone who is currently in the field. I'm at Pavson@rcn.com. Thanks.

Trial attorney with 2 heart attacks; his doctors recommend he no longer do trial work as the stress would aggravate his heart disease, causing another heart attack/death. Is anyone aware of any reported decisions under ERISA where employee can physically perform the duties, but only at a risk of death?

A 457 plan sponsor asked me if the fact their plan was funded by annuities (issued by an insurance company) didn't already meet the new requirements of the SBJPA? Perhaps we left this line of business hastily? We did withdraw from this line of business due to our understanding of the new requirements of the SBJPA.

Would a simple plan amendment on the part of the plan sponsor (we provide only the plan funding vehicle) to their plan - combined with the fact that they are already using annuities - have made the plan compliant with the SBJPA?

Could the withholding/reporting requirements remain the responsibility of the plan sponsor/administrator - or would the SBJPA require these duties be transferred to the insurance company that issued the annuity?

We need some advice on your process for calculating the FSA healthcare premium for COBRA. I have read that an employee's COBRA premium for FSA is based on, plan year election, minus reimbursements to date, divided by the number of months left after the qualifying event date. Problem is, we have a payroll system bringing over the term with FSA info, a TPA who administers FSA who has the reimbursement amount, and a COBRA system, Travis that has the COBRA info. We don't see these three systems mingling to give us all the info we need. One idea I had was to have the COBRA beneficiary indicate that they want the HC FSA on their COBRA form and then we contact them with the premium so that we don't have to manually calculate the premium for everyone - just those who want to elect?? Any comments, suggestions?

Can the Company exclude health/dental coverage from its self-insured plan for spouses of employees who have access to health coverage through their employer?

I have seen a lot of press lately on projections for the 2000 rate brackets, standard deduction, and tax credit amounts in the individual tax area. Although I know that these numbers cannot be finalized until later in the year, has anyone heard about the projections for retirement plans?

I understand that the following limits are indexed: annual compensation limit, annual limit on elective deferrals, highly compensated employee threshold, the defined contribution plan contribution limit, and the defined benefit plan contribution limit.

Does anyone know what the most current projections are?

I have seen a lot of press lately on projections for the 2000 rate brackets, standard deduction, and tax credit amounts in the individual tax area. Although I know that these numbers cannot be finalized until later in the year, has anyone heard about the projections for retirement plans? I understand that the following limits are indexed: annual compensation limit, annual limit on elective deferrals, highly compensated employee threshold, the defined contribution plan contribution limit, and the defined benefit plan contribution limit. Does anyone know what the most current projections are?

OK, the limitations have been released and they do match the values calculated below!

based on the CPI-U values, you take the average of the July, Aug, Sept values and divide by 145.7667 (the average values for the last quarter of 1993.)

Sept value will not be released until mid Oct.

however, using June, July, Aug

166.2, 166.7, and 167.1 = 500/3 = 166.67

166.67/145.7667 = 1.14338

1.143380 * 150,000 = 171506.94 so 170,000 for $ limit

1.14338 * 9240 = 10,564.83 so 10,500 for deferral

1.14338 * 30,000 = 34,301.39 so still use 30,000. (but maybe 2001 we will hit 35,000!)

1.14338 * 120,000 = 137,205 so use 135,000 for DB limit

the HCE limit is 85,000

and the taxable wage base is 76,200

cpi-u can be found on the web

ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt

[This message has been edited by Tom Poje (edited 10-20-1999).]

[This message has been edited by Tom Poje (edited 10-20-1999).]

Former Participant takes cash distribution of entire vested account balance. 20% mandatory withholding is mistakenly not withheld. Looking for suggestions on how to correct. Will try to get former participant to return 20% to trustee so that it can be remitted to IRS. If not, Employer may have to "make participant whole". If this is the case, how does Employer do this? On what amount is 20% determined? The total amount that the participant received (mistakenly) or the original amount that he should have received? What are penalties for late payment of mandatory withholding? Where is this addressed in Code/Regs?

Is it ever permissible to roll funds from an inactive SEP to a qualified Profit Sharing Plan?

I have a plan that is in the process of terminating. The owner has a cash value life insurance policy for himself in the plan. How do I distribute that to him? He will be taking a direct rollover into his IRA, so can the insurance be rolled over also?

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.