I was told that they could effective 1/1/99. However, I haven't seen any information on this subject.

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Has anyone ever created a performance action plan for an employee? What kind of statements need to be on there and what is the usual timeline?

Plan A has a 12/31 plan year end. Plan B has a 9/30 plan year end.

Plan A is merging into Plan B, effective 10/1/99.

What are your thoughts with respect to the ADP/ACP testing for both Plans A and B - i.e., for what periods should the comp and contribs be tested for each?

We will be asking the client to consult with counsel, but I am personally curious as to what "the industry" thinks. Thanks for any ideas.

I have a client with a 457 plan and a cafeteria plan. They have two separate plan documents but it has recently come to my attention that they have one election form that includes both cafeteria benefits and a 457 deferral option. I have also been informed that a 457 plan cannot be combined with a cafeteria plan. When is a 457 plan combined with a cafeteria plan? Is the above scenario an impermissible combination? What is the evil that is being prevented?

I have a client who would like to set up a pre-tax premium plan and also make a $5 reimbursement toward prescription drug co-pays. I'm assuming that the prescription drug benefit is a self-insured medical reimbursement plan under 105 and not a flexible spending account because it is paid by the employer. My question is, Can I put both benefits in one document by adding prescription drug reimbursements as a benefit in my standard pre-tax premium plan?

Does anyone know what information an employer,who sponsors a cross tested plan,is required to provide a terminated participant who wants to check the accuracy of his allocation? For example, is the employer required, upon request,to provide 401(a)(4) non-discrimination test results? If not, what information can be requested that would help a terminated participant see if the calculation is in the ballpark?

Is anyone aware of some good case law that addresses the issue of fiduciary duty and outside directors? Thanks. Ed

What type of documentation is required for submitting expenses paid for Elastic Hosery/support stockings?

I don't seem to find anything defined in my Employee Benefits handbook.

Thank You

Would I be correct in assuming that since Section 137 benefits may be included in a cafeteria plan that such expenses may be reimbursed through an FSA?

The trustees must determine that the loan extension is primarily for the benefit of participants under ERISA Section 408(B)(3) and solely in the interest of participants under ERISA Section 404(a)(1). In addition, if the primary benefit test under IRC Section 4975(d)(3) is not met, the IRS may impose an excise tax.

How does the extension benefit the ESOP participants? Or is the extension primarily for the benefit of the company and shareholders other than the ESOP? What percentage of the company does the ESOP own? It is clear that the extension will result in slower release of shares for allocation to participants' accounts. Is there a problem in amortizing the loan (under its current terms) by reason of the limits under IRC Sections 404(a) and 415? Is the reason for the extension to limit the employer's obligation to make ESOP contributions?

For your information, the IRS has an official position that it will not issue private letter rulings regarding compliance with the primary benefit rule of IRC Section 4975(d)(3) in connection with the refinancing and/or extension of an ESOP loan. In addition, the DOL has recently expressed concerns about the actions of fiduciaries in approving extensions of ESOP loans. The two agencies have been discussing how they can reconcile their respective positions under IRC Section 4975(d)(3) and ERISA Section 408(B)(3).

[This message has been edited by RLL (edited 07-15-99).]

If a plan is amended, SPDs incorporating the changes must be distributed essentially five years after the last SPD (even if a summary of material modifications is provided in the interim). Given the timing of TRA '86 amendments, this means that many retirement plans (including plans that did nothing more than add an entry date, for example) would be required to distribute new SPDs before GUST changes are made. This seems ridiculous. Is anyone aware of a DOL enforcement position on this issue? Or have you taken a position on this?

(ERISA Sec. 104(B) and DOL Reg. Sec. 2520.104b-2(B).)

Can anyone refer me to a good site that summarizes record retention requirements for 403(B) and retirement paperwork? If not, could anyone provide comments as to your company's guidelines. We are trying to build a general policy and need help!

Can anyone refer me to a good site that summarizes record retention requirements for employee insurance paperwork? If not, could anyone provide comments as to your company's guidelines. We are trying to build a general policy and procedure and need help!

Are voluntary pre-tax contributions allowed in 401(a) plans? If so, are there any restrictions?

Tax-exempt non-governmental employer has a 403(B) Tax-deferred Annuity Plan and a 403(B) Defined Contribution (Money Purchase)Plan with TIAA-CREF funding vehicles. Employer contributes 4% of regular salary to the Def. Cont. Plan annually. Employer sends the contributions to TIAA-CREF. Vesting under the Def. Cont. Plan is two year cliff. If employees do not meet the two year requirement, TIAA-CREF returns the portion of the contributions made on that employee's behalf to the employer. According to TIAA-CREF, the employer can use the returned contribution amounts to reduce future contributions or it can use them for whatever purpose it wants and the employer does not have to maintain any type of separate suspense account or otherwise segregate the funds. Per TIAA-CREF, that is the standard practice. The Def. Cont. Plan contains a provision regarding "no reversion of contributions to the employer..." I deal exclusively with 401(a) plans and am not extremely well-versed in the 403 area, however, it appears to me that there clearly is a reversion of plan assets here. Do 403(B) plans really work that way or am I just hung up on 401(a)(2)?? Any comments or suggestions that may help?????

After originally posting above paragraph I took a look at 403(a), 404(a)(2) and 4980. Looks like, per 403(a) via 404(a)(2), even a 403(a) plan is not subject to 401(a)(2). With respect to 4980 (tax on reversion of qualified plan assets to employer), 4980 applies to 401(a) plans and 403(a) plans but in no event to a plan maintained by a tax exempt employer. I'm still concerned that the plan document speaks to no reversion but, in fact, there is a reversion. Also, wondering if 403©(1) of ERISA applies. There's no trust arrangement with a 403(B) plan, however, a 403(B) plan is subject to ERISA. Any comments or suggestions???

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[This message has been edited by chris (edited 07-14-99).]

Is there any way to fix a situation where money has been roll-over to an "IRA" which turns out does not have a qualified custodian? What are the consequences of this?

For 410(B) a Controlled group of corporations need to be tested. What date would you use if the plans of the Controlled Groups have different Plan Year Ends?

I would like to comment on several items raised by Daily401k. I am one of the designers for the Quantech system so am possibly biased (OK am biased).

Anyone should feel free to make comments positive or negative about the Quantech product on this bulletin board. That is one of the ways to determine future enhancements of the product. Yes, there are Corbel people that view the site BUT negative feedback should NOT be suppressed or prohibited.

Let's look at the individual items you have raised:

1) This requires some explanation. Are you attempting to allocate earnings to a particular fund and that fund is being used to hold forfeitures?? Same question for fees?? (IF yes, I agree that these should be enhancements to the system) Quantech 5.0 will enable you to forfeit simultaneously with the distribution. A non-cash account can now be used for forfeitures including leaving the monies in the funds from which they were forfeited

2) Eligibility requires an understanding of the processes being performed. It is not something that a new user, such as yourself, would feel comfortable with in a short time. It is also one of the areas being reviewed to simplify the calculations and make them more understandable. If you provide some examples of problems you are having there are numerous 'experts' willing to assist you in understanding the logic both on this site and at Corbel

3) Interesting comments on the VRU. I will forward this comment to those working with the VRU

4) Ah yes - trust accounting. Quantech should have trust accounting this fall. Designs are already being reviewed and you should see excellent integration with the participant recordkeeping.

5) This comment refers to the display of transactions at the detail level on the account screen?? Good suggestion! We currently have a plan specification that controls the reports but it sounds reasonable to allow it to control the sorting in Census with an override capability.

6) Activity tracking?? Are you talking client management?

7) Global interest rates for loans is a future project. Loans now use the participant's current payroll schedule. You can currently process a loan and process the fee simultaneously. You are correct that there were issues with straddled transactions. The current release has numerous changes to the loan system which will make it run very smoothly.

8) There is at least one report that perform a reconciliation of some kind. What did you have in mind?

9) Takeovers require extra effort in administration - I remember that from when I did them (even though it was LONG ago). What information did you want to populate with respect to the hardship? There are several new features at 5.0 which may solve these problems for you.

10) Census DER has been expanded to display significantly more characters. The reports should show the match contributions being imported - I will check it out. Recognition of 32 bit filenames is a future enhancement. The easiest way to extract information on any particular date is to use Crystal BUT I will enter an enhancement to allow the user to enter a date for export.

11) I do not understand the issue. I do not believe that it is necessary to reverse the transaction to see what was accomplished. Please offer an example.

12) Hardship distributions have been enhanced in 5.0. Let us know what you think.

13) Many of these items are being reviewed to make them trackable - make a single change and it will carry through. Vesting has been modified at 5.0 to track by source and investment elections have an effective date attached to them which should make things easier.

14) What is a negative match contribution? Is this coming through payroll? This can be processed as an adjustment transaction for the participant.

15) Fund prices are as they are received from our source.

16) Excellent point! Enhancement was already considered to add the transaction identifier to the trade screen.

17) What reports? There is a link to Hyperprep.

18) Good suggestion!

19) What problems are created with pay schedules ending on the same date? Quantech should be handling these situations correctly.

Problems in operating in the daily environment can be dealt with as they are raised by you and the other users. For example, another gentleman suggested that the dollar amount actually posted would appear in the transaction entry screen (after posting) - another good suggestion.

ALL users should continue to post comments and suggestions both positive and negative so that the system can be enhanced.

NOW, all of the above being said, the support provided to our clients does NOT in any way, shape, or form depend on whether a particular client agrees with us. We have many clients who are EXTREMELY vocal regarding deficiencies in the system and they get the best treatment we can provide as do all clients do not complain. Therefore, the reason for the anonymity of this user is troublesome. It is difficult to have communication when parties are unknown.

Please feel free to offer any and all suggestions to me at my email address OR you are certainly welcome to call and discuss any particular items. I will do my best to enter suggestions, resolve issues, or provide the correct avenue to obtain information that I can.

Thanks

Frank Prager

(904) 396-3220 ext 1337

frank.prager@corbel.com

My employer effective 12/31/98 switched

our defined benefit plan to a cash balance plan. Prior to the conversion they amended the plan to provide for the GATT rate to be used for those employees under 50 rather the PBGC rate as called for in the current plan document. The amendment was effective

Nov. 1, l998. I'm 49 years old with over 30 years of service - is what they did legal? It would appear to be a violation of ERISA to discriminate based on age.

A client phoned and stated they have an excellent employee with a 401(k) participant loan who was in a serious car accident and will not be back to work for 4 months. The payroll will run out in 2 weeks and the employee is flat broke (cannot afford to send personal checks in to make the loan payments). Is there any way to avoid having the loan go into default and reporting it on a 1099R?

Any ideas out there?