I'm drafting my first new comparability/cross tested, etc. plan. The employer wishes to allocate a certain % to the HCE group and a lower % to the NHC group.

In the document, does "the Employer shall make Discretionary Non-Elective Contributions on behalf of each group of Active Participants as defined in Section 2 below. Section 2 defines the two groups. Is this sufficient? May the employer also elect to contribute a certain dollar amount rather the a percentage amount to each group under this formula? Thanks.

An employer gave the safe-harbor notice in August 1999 with a 10/01/99 start date for 401(k) deferrals. He elects the 3% QNEC safe habor. Can the effective date of the plan be 01/01/99 for regular p/s contrib purposes? If yes, what is the 3% minimum: 3% of 4th quarter comp or 01/01-12/31 comp? Could the HCE defer $10,000 during the fourth quarter, whatever the effective date? Thanks.

A plan sponsor is considering a medical reimbursement account program where each (non-high paid) employee would get $X credits per month and no employee contributions would be accepted. Credits would carry over year-to-year. At termination of employment, any credit balance would be applied to COBRA or retiree medical premiums (and could not be converted to anything taxable). If for any reason the credit balance could not be used by the participant and his or her family for extended medical coverage, the credit balance would be forfeited. The arrangement would be funded through an existing welfare benefits trust.

Since no employee contributions would be accepted, 125 would not apply. So, since 125 does not apply, do you see any problem with carrying over credits year-to-year? Is there a risk that (due to the carry-over) the arrangement might fail to be a group health plan under Code Section 105? How would COBRA apply to a (potentially large) credit balance in the event of a participant’s divorce?

Can someone help me find a UP-1984 Present Value Factor Table at 8 1/2 interest. I have searched the Web but can't find one. Also, what does the UP stand for? Thank you for the help!

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Can anyone recommend resources to establish a percentage of sales dollars to be used as commissions? I have a group of acct. execs in the advertising business, and am currently establishing guidelines for base salary and commissions. I would like research as back up for my decisions.

Does anyone know if one can use 457 funds to purchase yrs of service without having to pay taxes on the withdrawal of the 457 deferred comp funds? In other words, the funds would be withdrawn soley to purchase yrs. of service in a state retirement system - not for any other purpose. Would such withdrawal require the payment of taxes on such 457 withdrawal?????

Can COBRA premiums be paid from an FSA account for continuation of the same employer's medical plan? Prop. Reg. section 1.125-2, Q&A-7(B)(4) says you can't use an

FSA to pay for "other health coverage" and gives an example of premiums for another employer's medical plan. Then it says salary reductions under the cafeteria plan for "current health plan coverage" are OK. What about after-tax (COBRA) premiums for current health plan coverage? Are there any authorities on this?

[This message has been edited by Yolanda (edited 10-15-1999).]

Can you use an FSA account to pay COBRA premiums from the same employer's medical plan? Prop. Reg. section 1.125-2, Q&A-7(B)(4) says you can't use an FSA to pay for "other health coverage" and gives an example of premiums for another employer's medical plan. Then it says salary reductions under the cafeteria plan for "current health plan coverage" are OK. What about after-tax (COBRA) premiums for current health plan coverage? Can you point me to some authority?

[This message has been edited by Yolanda (edited 10-15-1999).]

[This message has been edited by Yolanda (edited 10-15-1999).]

Has there ever been any litigation that has compelled a DB plan to convert to a DC plan?

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Client has already begun minimum required distributions and dies. His surviving spouse (the designated beneficiary) will elect to treat the IRA as her own. She is also past age 70.5, and will begin minimum required distributions in the year after death. Question: Must a minimum required distribution be made in the year of death using the decedent's method?

Has there ever been any litigation to compel a DB to DC conversion?

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Has there ever been any litigation to compel a DB plan to convert to a DC plan?

Employee advises employer of legal separation with spouse and drops him/her as dependent. A few months later, the dropped spouse notifies the employer that there was no legal separation and that he/she should not have been dropped. To what extent does the plan administrator have a right to rely on the employee's representation in connection with a change in family status? In the joint and survivor annuity area, ERISA provides that if the fiduciary was prudent in relying on participant representation of no spouse, there is no liability. Here, there is no duty of spousal consent, so there would appear to be no specific duty to investigate the participant's claim. Any thoughts?

An employee terminated employment with a qualified 403(B) entity and received a taxable distribution from the 403(B) plan. About 5 years later the employee has been reemployed by the same 403(B) entity. In calculating the maximum limitations do we take into consideration those years which the employer worked for the entity, even though the previous 403(B) account had been cashed out? That is, do we include those prior years in his Years of Service? Do we include his previous benefits in the calculations event though they are no longer in the plan?

We have university looking to terminate their overfunded defined benefit plan and take back the excess assets. The school is concerned with reversion penalty, 50% if no benefit improvement or 20% if some of the excess provides additional benefits. It was my understanding that these taxes did not apply to not for profit organizations unless there had been some tax advantage in the past, such as reducing unrelated business income tax by pension contributions as a business expense. I'm looking for any information, references that would tell me it's ok to do this reversion and not worry about the reversion penalty. If there is a problem, I need to know that as well obviously.

The IRS issued a news release dated 10/14/99 indicating that the deadline to recharacterize 1998 Roth IRA contributions or conversions to Traditional IRA's until the end of the year. The IRS also is sending letters to taxpayers who appear to be ineligible to convert in 1998.

What a great relief to taxpayers who were confused by all the rules for conversions/contributions to Roth IRA's. At least this time, the IRS is looking out for the taxpayers.

A plan miscalculated the MRD for 1998 and sends the participant a "make up" distribution in 1999 along with the "regular" MRD for 1999. Particpant is seeking waiver of the excise tax for the underpayment in 1998. Should the "make up" MRD be reported on an amended 1099 for 1998 or should both the make up and regular MRD be reported on a 1999 1099.

I have a situation where the owner of a U.S. company (permanent resident status) is separated and in the process of divorcing his wife who left him by going back to Germany with their children. He is staying here and the wife and children will be in Germany where the wife is a citizen.

Could the soon to be ex-wife be taken off the health plans now and at the time of official divorce/separation then put her back on due to the qualifying event if the courts so order?

There is also the issue of a domestic insurer covering a non-U.S. citizen living in Germany, e.g. claims paid from a German doctor. To my understanding, the insurer won't cover dependents living outside of the U.S.

A self-employed client of mine made a SEP contribution for 1997 in April 1998 based on what we thought was his 1997 self-employment income. In the middle of 1999 (yes, 1999), he received a 1997 K-1 from new partnership which reported a net self-employment loss. This new information has many ramifications; the one I'm most concerned about is that it means that his 1997 SEP contribution was overstated by roughly $4,700. Is there any way to characterize that amount as a 1998 contribution? Or are we forced to comply with the excess contribution/excise tax rules?

Does anyone have experience with 457(f) ineligible plans for officers of credit unions in which assets are set aside in a supplemental retirement account on the books of and held by the credit union (i.e., no grantor trust or insurance or annuity vehicle) and invested in mutual funds? The main issue is whether such investment, which would normally not be permitted as a credit union investment, is permissable as an investment because it relates to the credit union functioning as an employer providing retirement plan benefits to employees. I am aware of a few NCUA letters on this, but am looking for practical experience, e.g., how common is it to fund the plans internally, are there likely to be audit/examiner inquiries, accounting treatment, etc.