An oldie but a goodie. My client hired a new benefits administrator and she's looking to make her mark.

Her concern is there may be discrimination within their Sec. 125 premium-only plan because their Salaried employees enjoy a shorter eligibility period (30 days) than their Hourly workers (90 days). While I've dealt with this issue over and over again, I'm now on my own and until I get my "Spencers'" or "Thompson Publishing" ERISA guide books, I don't have readily-available resources. Can anyone help me out?

Thanks to anyone in advance!!

Would an amendment to eliminate provisions in a 401(k) PSP allowing voluntary employee (after-tax) contributions be a violation of the anti-cutback rules under 411(d)(6) and regs? Attorney says he thinks its okay to eliminate voluntary contributions, but can't point to definitive section in regs . . .

Any help?

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LKP

The Taxpayer Refund and Relief Act of 1999 (TRRA '99)(recently vetoed, but pension provisions expected to be passed in future legislation) contained a repeal of the 403(B)(2) "exclusion allowance". I was informed at a recent conference on employee benefit plans of tax-exempt employers that the legislation would similarly repeal the "A", "B" and "C" elections under 415©(4) but would leave intact the 15-year catch-up election under 402(g)(8). Is this correct? And, if so, could the 402(g)(8) 15-year catch-up be used in conjunction with the catch-up for employees who are age 50 or older that was also contained in TRRA '99? If so, employees who are 50 or older and who have at least 15 years of service at a "qualified organization" will be able to defer large amounts (402(g) limit potentially increased to $25,500 in the year 2005, for example, if the pension legislation survives in some form and my math is correct!) into a 403(B) arrangement.

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Mike W.

I know that transfers are statutorily permitted from one 403(B) arrangement to another, via Revenue Ruling 90-24, and that plan documents and annuity contracts/custodial agreements can restrict such transfers. However, I am confused as to whether such transfers can be made from a 403(B) ERISA plan to a 403(B) program that is not subject to ERISA. If such transfers are permissible on their face, couldn't an employee circumvent the spousal consent rules that may apply to his/her ERISA plan by simply transferring the assets under 90-24 to a Non-ERISA arrangement (spousal consent would not be required for this transaction, since 90-24 indicates that such a transfer is not a distribution), and subsequently receive a distribution (when permissible) from the Non-ERISA account where no spousal consent is required?

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Mike W.

What are the estate plannign benefits of starting an esop for a company? Also, are there any income tax beenfits to starting an esop and giving up approxiamtely 20% of corporate securities to key employees by an owner who owns 100% of the corp? Will it lower taxabel income?

Can partners participate in a dependent care assistance program? If so, how would this work? Can the partner elect to have a certain dollar amount set aside in a reimbursement account with the partnership reimbursing him/her when expenses are incurred, similar to common law employees? Are there any tax disadvantages to the partner?

A 401(k)plan currently under audit has been asked to correct an error in which a matching contribution was made to a HCE based on total comp., not comp. limited by 401(a)(17). The IRS has not identified two similar occurences that took place in the year under audit. Due to the size of the plan (over 200 participants) and the small amount involved (total overage is less than $3K), the two combined errors probably constitute an insignificant error which could be corrected under APRSC, despite the audit. Presuming the employer corrects under APRSC, shouldn't the employer disclose the two additional, corrected errors to the IRS?

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I have a 401(k) plan with a participant who is 100% vested, terminated during 1999 and is 60 years of age. The distribution paperwork submitted to the asset custodian did not indicate to the custodian to withhold the required 20% as it should have. How can I "fix" this error? When the participant files his 1999 1040 should he go ahead and pay the tax at that time or perhaps he should cut a check to the plan sponsor for the 20% so that they can make the necessary deposit and prepare Form 945? Also, does the above scenario lead to negative consequences (ie: penalties) for the plan sponsor?

A C-corporation with an existing ESOP plan became an S-corp for the 1998 calendar plan year. The S-corp has Schedule k-1 income. Does the income need to be allocated to the ESOP plan as a shareholder? If the income is allocated in the ESOP, on what basis is it allocated? Is it allocated on ending shares? Is it deposited in the cash account? In this case, the company is not wholly owned by the ESOP.

Does anyone have language for bottom up qnecs that they have submitted to IRS and gotten approval for.

I see plenty of language in plans that say a qnec(or qmac) will be made to a plan in an amount sufficient to pass the test. I'm concerned that this language is very loose language for doing a qnec that only goes to, for example, 1 person in the nhce group.

Any thoughts out there???- THANKS

Our company is looking at our mileage reimbursement for our employees. Currently we are paying 28 cents per mile. We are trying to see what the rest of the market place is doing in the Northern Virginia/Washington area on mileage reimbursement.

Does the State of Wisconsin allow individual health policies, which are written in the state and cover residents of the state, to be non-renewed because of a change in the insured's health status?

As Dave Baker has noted, BenefitsLink and I have collaberated on an expanded Employee Benefits Library of legal research links. Members of this board may be interested to know that one of the pages in the Library deals specifically with governmental plans research links and another deals with church plans research links.

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Employee benefits legal resource site

[This message has been edited by CVCalhoun (edited 09-27-1999).]

As Dave Baker has noted, BenefitsLink and I have collaberated on an expanded Employee Benefits Library of legal research links. Members of this board may be interested to know that one of the pages in the Library deals specifically with governmental plans research links.

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Employee benefits legal resource site

[This message has been edited by CVCalhoun (edited 09-27-1999).]

How much can or should a school district get involved with vendor selection and still keep a plan "non-ERISA"? In assisting a financial planning client, I discovered that the school system she works for has a list of vendors that seems to be a haphazard list of the first 25 insurance companies that any employee came forward and asked for. Very few on the list seem to be quality choices and many major players are missing. I would like to approach the school system to help them rationalize this process of selecting vendors. So my question is, How much can the sponsor get involved? Can there be a procedure that limits the number of vendors? Can or should any "due dilligence" be done? I would appreciate any comments or information on the subject? Thanks

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Geoff

We were just hired by an employer to provide consulting sevices (document, testing, etc) to a 401k plan. They are investing their assets with MFS, where each participant will have an individual account. MFS will be responsible for receiving, processing and maintaining records of employee contributions and accounts. Pretty standard stuff.

MFS wants to have a service agreement signed between us and them (even though we don't work for them or get paid by them). Perhaps, it might be a condition of us being allowed to view electronically the employee/employer accounts.

The service agreement requires information that we consider proprietary and confidential. It does delineate (somewhat) which organization is responsible for what functions -- which we would clarify with the client anyway -- that's OK. However, the service agreement in addition asks for things that a prospect/client might ask (fee structure, number of clients, references, ownership structure, etc.), and confidential information, and they are not the prospect/client.

What's going on? What is the experience of you folks out there? We work with other investment firms and haven't seen this before. Have you? What do you do?

How are esops used in estate planning ot reduce estate tax liability?

If I have a client who owns all of the stock of a corporation and he pays income tax of about $400,000 every year, how can starting an esop reduce his taxable income? He is only willing to give up about 20% of the company to key employees.

[This message has been edited by Angie Horn (edited 09-27-1999).]

Is it acceptable to use a rate lower than the IRS acceptable rate of 120% of the Annual Long-Term Applicable Federal Rate when calculating a pre-59 1/2 Qualified Plan Distribution? Also, I was told by Universal Pension that the rate for September is 7.16% but Brentmark lists 7.53% for the rate for September. Who is right and what rate do we take 120% of? I appreciate any help!!

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[This message has been edited by SPollock (edited 09-25-1999).]

I have a question about COBRA eligibility.

I have voluntarily terminated employment with my previous employer and is offered COBRA; however, I have yet to make an election to accept or decline COBRA and is still within the 60 days limit.

I then accepted employement with my current employer and is covered under a group plan. If I terminate employement with my current employer, can I still elect to accept COBRA from my previous employer?