If contributions to a money purchase plan are not due until the end of the plan year and then only for employees employed at year end, can you reduce the contribution formula mid-year as long as you give a 204(h) notice.

I thought I read somewhere that IRS says that you cannot change the formula for anyone with over 1,000 hours at the time of the amendment. However, I cannot locate where I read this.

Resolution issued effective 1/1/99 to merge all welfare plans into one master plan effective 12/31/98. There are two trusts involved which will not be changed in any way. The financials will just be reported under the new master plan. I have a couple of questions:

1) The dental plan has a different plan year than the other plans involved. It is my understanding that a 5500 will have to be filed for the regular plan year (3/1/98 - 2/28/99) and then another for a short plan year ending 12/31/98 where the plan will be terminated.

2) All assets from the 2 plans with the trusts will be shown as 0 assets on 12/31/98 and the new master plan will show 0 assets at the beginning of the year and all of the other plan assets will be added together and shown under the new plan as of the end of the year. The two trusts have been audited that are involved. Does the new master plan now have to be audited? Are the schedule As for the plans filed with the new master plan.

I would just like to hear your opinions. We have a lot of confusion with the auditors about how this should be handled. I cannot understand why. This is bound to have happened many times since ERISA was enacted.

Can I start up a safe harbor 401(k) Plan 11/15/99 with an April 1 Plan Year; have a first "short year" of 11/15/99-3/31/2000; and make the safe harbor NEC into an already established ESOP that has an April 1 Plan Year. The 401(k) would not be violating the plan year requirement since the first year is more than three months, but would implementing the NEC provision into the ESOP mid-year violate any other "timing" provision?

Client is 49, was terminated 13 years ago from a company who had a 401k/match program. Client was 100% vested at the time of termination. Administrator is holding onto the money until the terminated employee reached the age of retirement (65). I thought a terminated employee had the right to take their vested dollars at any time. Can they hold onto this clients money until the client reaches the age of 65?

Hello. I have a problem that is similar to an inclusion of an ineligble employee. We have two plans, each of which providees benefits for a different group of employees. Both plans are defined contribution pension plans for a public school. Two employees were mistakenly included in Plan A when they should have been included in Plan B. We are going to transfer the employees benefits from Plan A to Plan B, but must refund some excess benefits. Does anyone know what the tax effect of the transfer will be? Will the employee have income and if so, in what year (the mistake covers three plan years)? What penalty, if any, do we (the employer) have to pay?

I don't work much with SARSEPs, so.....

Company has a grandfathered SARSEP covering all employees. They decide that either a new comparability profit sharing plan or a DB plan (covering the same employees) would better meet their needs. The plan year would be the calendar year.

#1. Are they prevented from having an additional plan for 1999 since they currently have a SARSEP? (I know they would be prevented if they have a "simple" 401k.)

#2a. Assuming they can have a profit sharing plan for 1999, is the maximum aggregage contribution of 15% of payroll for 1999 determined based on the sum of the SARSEP deferrals and contributions, plus the profit sharing contribution?

#2b. Assuming they can have a DB plan for 1999, is the 25% of pay maximum contribution determined based on the sum of the SARSEP deferrals and contributions plus the DB contribution?

Thanks.

My small client wishes to terminate its 401 plan. The plan is a standardized prototype, with an adoption agreement last dated December 1994. The company that sold the prototype to my client has gone out of business. Can anyone recommend an organization that can provide a standardized prototype, including all applicable amendments, that can be submitted to IRS with Form 5310?

I am dealing with a SEP established using a model 5305-SEP form. The employer has been making an annual 7.5% contribution. Two years ago, the employer began permitting elective deferrals not realizing this was prohibited. Now, the participants have individual custodial accounts holding valid employer contributions and invalid deferrals. I understand that the VCR program is only for qualified plans and thus not available to a SEP. The employer could qualify under a 457 program and prior employer/employee deferrals would have been valid with the exception of one employee. I would appreciate any ideas on dealing with the problem.

Plan sponor wants to vest all current participants 100% and then subject new employees to the vesting rules. Does anyone see a problem with this? What would be the best way to go about this?

What are the coverage requirements for an employer-contribution only, nonelecting, 403(B) church defined contribution plan? Is it possible to exclude groups of employees (pre-school employees paid from the church's payroll, bookstore employees paid from the church's payroll, part-time employees, etc.) from getting a contribution while all other employees get a uniform percent (like 5%) of compensation?

When do you determine the participants age when making an MRD calculation? Is it the beginning of the year the MRD is being paid for, or is it the end of the year the MRD is being paid for, or is it something else?

1) Do the final and proposed COBRA regulations issued in February 1999 make similar changes to continuation coverage for plans sponsored by government employers?

2) Are the notice requirements for continuation coverage for government employers "exactly" the same as COBRA? That is, if a government employer uses the model notice provided by COBRA, will that meet the minimum requirements of the Public Health Service Act? Does the "model" notice provide more than the minimum necessary for government employers?

If a client decides to make a QNEC rather than distributing excess deferrals to correct a failed ADP test, may HCE's receive a portion of the QNEC? If yes, then does the HCE portion of the QNEC need to be included on the ADP test?

If the HCE's may receive a portion of the QNEC and it needs to be included on the ADP test, how do you calculate the QNEC? It seems like it would be mathematically impossible to calculate, but I may be missing something.

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.