A traditional IRA is converted in full to a Roth IRA at the same custodian in 12/98. The account includes mutual fund shares that are ex-distribution at the date when the custodian records the transfer of assets into the Roth IRA. The distribution is received in January 1999, but would be includible in 1998 income for a taxable account. The custodian omits the value of the distribution receivable from the 1099-R for 1998 and reports the amount of the distribution as a separate conversion in 1999. The account holder may be ineligible to convert in 1999. Is the custodian in error, and should it have reported the full value of the account as converted, including distributions receivable? Thanks in advance for any responses.

I am new to the world of investing, other than my 401K. I am interested in opening a Roth IRA, but am not sure where to start. Any ideas?

I have been offered a sales job with a medical company, and they pay (reimburse) .12 per business mile. Is this fair? What is the industry average? Thanks!

Is the medical premium taxable to the employee if the (so-called) domestic partner does not qualify as an eligible dependent under IRS code 152?

I am working with a client who has a Standardized Profit Sharing Plan. He has approx. 25 employees but 18 of them work only during the summer months. 16 of the 18 consistantly work over 1000 hours but are not employed on the last day of the year. We are looking to convert the plan to a Nonstandardized Profit Sharing / 401(k) Plan with a last day of the year eligibility requirement. The Plan is Top Heavy. If we make a profit sharing contribution, will we be required to make a top heavy contribution to the 16 summer help employees (who work over 1000 hours) who are not employed on the last day of the year? If we make a matching contribution to the 401(k) plan, must we match the summer help employees? If it is important, most of the summer help are hired back each year. Thank you!

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[This message has been edited by SPollock (edited 08-14-1999).]

I have a client with 30% spanish speaking workers. According to the SPD regulations, that means the employer needs to create a Spanish SPD. Does anyone know of a service that specializes in these. Due to the technical nature of an SPD, I would be a little concerned about using someone who does not have any employee benefits knowledge. Obviously, I won't be able to review the document.

Kurt

A substantial amount of confusion, post-Harris Trust proposed regs, seems to exist in California, relative to what (if any) level of fiduciary liability an insurance company assumes when a separate account is used by a 401(a)qualified plan. If it is possible, could we get some clarification as to whether a governmental plan has any possible recompense in the event a separate account is not invested according to State or federal law? Please address on both a stand alone contract and a trusteed plan basis.

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Where does one find the "implicit price deflator of the GDP as calculated by the Dept. of Commerce and published by the Survey of Current Business," which is needed to calculate COBRA premiums for self-funded plans under the past costs method??

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We are an employee benefits consulting firm working with employers with 500 to 3,000 employees located in the NW and in California.

Most of our clients have employees located throughout the US

We have both self-funded and fully insured business. We are experiencing double digit increases in the funding/insured rates. An average would be in the low 20's.

We would like to know what other broker/consultants and employers are experiencing in their locations?

Thank you

What are the ramifications on an employer and its employees if the employer is unable to make its matching (or nonelective) contribution to a SIMPLE IRA due to financial difficulties? This assumes that employees had made salary deferrals during the year, and that an employer contribution is required to be made.

Is there an IRS penalty on the employer if it doesn’t make the contribution? Will the DOL get involved, and what are its remedies? Or is it solely a state law matter?

Further, are there any tax consequences on the employees? (It seems unlikely as long as nothing is distributed.) Thank you.

Does FMLA require an employer to pay holiday pay to an employee while on FMLA if he/she would otherwise qualify for holiday pay?

A Plan has less than $100,000 in assets. It is an S-corportation.

There are two owners (brothers) and several very PT employees.

The only participants in the Profit sharing Plan are the owners.

Can a 5500-EZ be filed?

Or because there are 2 owners (and not owner +spouse) must a C/R be filed?

Employer is experiencing unexpected financial difficulties and can no longer make any matching contributions to the SIMPLE IRA. How does an employer terminate a SIMPLE IRA without triggering the 25% penalty? Can the employer pass a board resolution freezing the plan, wait until each participant was in the plan for two years, then distribute the assets? Can termination/freezing asssets be done mid-year?

If an employee has a lifestyle change due to a new marriage and elects to add the spouse within the 31-day grace period, is the effective date of coverage the date of marriage or the date that the employee makes the election? Is there specific rules in the regulations on this subject or is it by plan design?

Deb: You are correct. Loss of coverage would be a triggering event for a change of status.

Good luck!

Sheila K

In late 1998, I requested that my IRA trustee convert the entire balance of my IRA to a Roth IRA. The distribution from my IRA was effected 12/30/98 and reported on a 1998 Form 1099-R. The trustee established a Roth IRA account for by benefit on 12/30/98. However, the rollover to the Roth IRA was not effective until 1/14/99. I did not receive a 1998 Form 5498 (IRA Contribution Information) from the trustee with respect to the Roth IRA account.

Does this conversion allow me to use the four-year income reporting method?

Has anyone had an experience with HMOs and COBRA? We have several folks on COBRA who have HMO coverage. We have problems getting folks reinstated, terminated back several months on the HMO billing. That is because the HMO policy may only allow say, 30-days or 60-days of retroactive changes. As we all know, the COBRA election period can by law be several months when you add the period the administrator has to mail the qualifying event letter, the 60 day election period, plus 45 day payment period. Are HMOs required to follow same federal COBRA laws? In other words, can they choose not to add a participant back on to coverage even though the law says the participant has a specific length of time to elect coverage?

Looking for a quick reference on the details of the 70½ required distribution laws. Any suggestions?

[This message has been edited by CVCalhoun (edited 08-12-1999).]

Client is a C-Corp with an overfunded, single-participant DB plan. Client is considering setting up a new corporation, transferring sponsorship of the DB plan to the new corporation, and selling the corporation (with the overfunded plan)to an unrelated third party for about 70% of the overfunded amount.

Have any of you had experiences with the above-type of transaction? Is 70% a reasonable amount? Also, what if the client simply terminated the DB plan and distributed the entire amount to the employee? Although this would disqualify the plan, wouldn't it avoid the 4980 excise tax?

Any ideas would be appreciated.

Does anyone know whether the employer is required to withhold for federal income taxes where the employee has died and spouse is entitled to a lump sum death benefit from the employer's unfunded nonqualified deferred comp plan? Reg. Sec. 35.3405-1, Q & A 21 appears to require withholding under section 3402 but at least one IRS representative that I've talked to says there is no withholding obligation. The 1099-R instructions are not particularly helpful in my view but the representative cited to these as her authority that no withholding is required. Any input would be appreciated.