I have a client who wants an opinion letter for its prototype Educational IRA document; however, I can not find where any LRMs have been issued nor where the IRS has said they will start accepting requests for opinion letters. Any news?

A company has several nonunion and union plans. Members of one of the union 401(k) plans want to increase deferral limits to 20%. There is also a 5% company profit sharing contribution. When a company sponsors multiple retirement plans, including union plans, how is the 404 limit calculated? Is it total corporate payroll, or is each union plan payroll calculated separately?

Should a Schedule P be issued by the custodian of a 403(B)(7) custodial account that is a Title I plan? My research points to Sch. P for 401(a) plans only. Do you have a reference that support filing or not filing Schedule P?

Does anyone know of any software that can perform the MEA calculation and then proceed with the administration of 403(B) plans. I work for a TPA firm and we use Quantech (QT) for the administration of our defined contribution plans. When I spoke to QT's technical support about this capabiltiy they responded that it is not available on the system at this time. Any suggestions or advice would be appreciated. Thanks.

I am being told by 401(k) prototype sponsor that it is appropriate to allow deferrals in a 401(k) plan prior to the date that the document is executed so long as: (1) the deferrals are placed in a trust within the 15-day period (which funds would be transferred to the trust subsequently established for the plan); (2) the effective date of the document is retroactive to the date the deferrals were first withheld; (3) the document reflects the appropriate deferral percentages (ie, the document reflects what the participants' election forms allowed them to defer). This is contrary to what I have always thought; that is, I have always thought that deferrals could not be allowed until there was an executed document in place. Further, even if deferrals could be allowed before a document is in place, I do not think it is appropriate to place the deferrals in another trust to later be transferred to the trust established for the plan. Any thoughts?

We have an employee whose dependent died early in the year. We of course stopped his Dependent Care deduction, but the remaining concerned is that more has been deducted than they will have receipts for. Can the full amount, contributed to the plan prior to cancellation of the deduction, be refunded even without receipts totalling the contributed amount?

I have a participant that worked 6 mos as a non-union employee and then joined the union and continued working for the same employer. He is now is no longer eligible to participate in their profit sharing plan. The plan provisions are that all employees completing 501 hours share in the year end profit sharing contribution (including terms). He has not term'd and is no longer an eligible ee but did complete the 501 requirement. Does he share?

My company continues to maintain a SARSEP benefit plan and are very generous with their contributions. However, the financial institution that originally set up the plan has limited choices in investments. I am preparing a proposal to change from the financial institution to a financial planner. The IRS has said that the company can continue to operate the SARSEP if they "appoint a new trustee [and] continue to use the old plan". My question is how does my company appoint a new trustee. In addition, can the plan be administered in house? Both questions assume that answers do not violate the IRS regulations regarding the continued operation of the SARSEP plan. Thank you in advance.

[This message has been edited by Scott L Brown (edited 07-06-99).]

Trustee paid 35,000 for ernst money contract on land as a plan investment. At closing there is a simultaneoues transaction to sell a portion of the land the proceed are used purchase the property. At no time is the property leveraged by either by intent or actually. Is this a prohibtive transaction? Any thoughts?

I have a plan where employees have transferred from a 'Union' Status to a Salaried, Non Union Status. Are contributions and compensation simply prorated for ADP/ACP testing purposes?

I have a client that wants to set up a non-§125 FSA, i.e., no discretionary contributions are made by the employee; the employer will merely reimburse funds up to a limit. The employer, however, wants to make $750 dollars available every 6 months rather than have $1500 available at all times during the year. While this would run afoul of the $125 regs., I know of no reason why we can't have these terms in place for a non-§125 FSA. Does anyone see a problem with this?

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Charlie Stevens

Michael Best & Friedrich LLP

I read a previous questions requesting info on newsletters for end users. The recommendation was to look up Darkhorse Communications. I can not find a site for this name. Can someone help me with the site name and/or names of other sites where I can purchase quality newsletters to send out to my referral sources. Thank you!

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Does anyone see any drawbacks to client's naming a private foundation set up by him as the beneficiary of his 401(k) account??

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Does anyone see any drawbacks to client's naming a private foundation set up by him as the beneficiary of his IRA???

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The ERISA regulations state that an hour of service, for participation, vesting, and benefit accrual purposes, must include an hour of service for which an employee received a backpay award. For participation and vesting purposes, no more than 501 hours of service need be credited for one continuous period for which the employee was not actively at work, in order to prevent a break-in-service.

At the same time, the same 501 hour rule appears to apply for benefit accruals, although the break in service rules are not relevant. Any thoughts as to whether same 501 minimum applies to benefit accruals?

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There is an excellent thread on this subject "treatment of former employees" in the 401(k) Board. It was started by Charlie Stevens on April 19, 1999.

(Use the search feature to get to it.)

Should a CODA plan be designed(or amended) to comply with the Safe Harbor requirements? Or can it operate in diferent "mode" each year as long as proper notice is given to participants?

Also:

-What is the deadline for the notice

-Can anybody provide a sample notice?

fax: (818)992-6134

Thanx.

Existing PSP (or amended one) has plan year 01/01 to 12/31. 401(k)/401(m) provisions effective 08/01/99. For plan year 1999 can one consider for ADP/ACP testing only compensation from 08/01 to 12/31. Since the plan uses previous year NHCE deferrals it will help for next year HCE deferral since present yr NHCE deferral% will be greater. If yes, should plan docs provide for such? Can/must it be specified in the Adoption Agreement as a one time compensation definition for 401k/m provisions?

Thanx.

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I am about to make an investment in a Sub S. Corp. The investment will consist of stock and a loan to the Corp.

Can my Roth IRA own the stock in this new Sub S. Corp? I will not be the majority stockholder. If this startup succeeds, I could be employed by the Sub S. Corp. in 2-3 years.

Thanks for your help.

Can a tax shelter annunity section 403(B) be part of a section 125 cafeteria plan??