Has anyone had any experience in counting years of service for a reemployed individual in determining the exclusion allowance. I see nothing in the Code or Regs. that indicates prior years of service are not counted. Publication 571 indicates that years of service need not be continuous. Obviously, if the years of service count then amounts previously excluded are also considered.

The employer has a number of employees who are in a collective bargaining unit. The employer wishes to utilize the statutory exclusion for all those individuals EXCEPT one, who happens to be highly compensated, of course. Does anyone know if there would be any complications which might arise from doing this?

I caught part of a news story that described a change in the way the IRS calculates IRA distributions for multiple beneficiaries. The "old" formula used the age of the oldest person in the case of two or more beneficiaries. This new ruling allows the youngest age to be used instead. Any clarification on this?

What tie-in is required between contributions to a leveraged ESOP and loan repayments on the ESOP loan? Here's a situation:

A company maintains a leveraged ESOP. The plan's loan agreement allows for a late repayment, up to 60 days after the due date. If paid late, company is responsible for paying 1% penalty. If the company pays, for example, the loan payment due 12/31/1999 on, say, 2/15/2000, can the company call that contribution a 2000 contribution (since they will deduct it in 2000) and not release shares to participants until 2000, instead of as of 12/31/1999? Would the answer be determined solely by what the plan document specifies as the allocation date?

I was terminated 1/5/94. I was disabled on

12/17/93 and my physician submitted slips

confirming disability under WC and Short term disability. I went on vacation while on

disability due to a dispute over WC benefits.

Unpon return was terminated. HOw do I seek

STD and LTD (short and Long term disability)

when I submitted the paperwork over and over

again and it was never processed. ANd later the employer closed. The Plan adminsitrator keeps delaying and eventually

declined the claim 1995 for no cause. What

recourse do I have? If an atty. will I have

to pay fees or can I demand fees from the

Employer (who is now merged with another co

under another name?}

i ed

Church group client has overfunded DB plan they want to convert to cash balance. Plan is overfunded. To sweeten conversion, they want to set up a 401(k) plan but make matching contributions to a 414(k) account in the (converted) cash balance plan, using the excess assets. PLR 9723033 addresses the issue for an apparently for-profit plan sponsor, but some of the analysis wouldn't apply to a church group.

Any ideas? Their backup plan is to take a reversion and contribute 100% to the 401(k) plan as pre-funded match, since they don't think they're subject to 404 limits or 4980 excise tax.

A company has salaried employees and also has two collective bargaining units (CBU1 and CBU2). The company maintains a 401(k) plan which, prior to 1998, covered the salaried employees and CBU1 only. Neither CBU1 nor CBU2 had any highly compensated employees (HCEs) prior to 1998 so ADP testing was not performed for the union employees. In 1997, 5 employees in CBU2 earned in excess of $80,000. As of June 1, 1998, CBU2 also became eligible to participate in the 401(k) plan as part of their new collective bargaining agreement. Therefore, in 1998, the union employees eligible for the 401(k) plan are now required to be tested since there are HCEs who are union employees.

Questions: Since the collectively bargained employees must be tested separately, what is the prior year NHCE ADP for the union employees since testing was never required prior to 1998 (and it's not a new 401(k) plan)? Or, is there even a prior year non-HCE ADP? Would the company be required to create the non-HCE ADP for the union employees who were eligible for the plan in 1997, or would they have to use current year data for this group in 1998?

How are people generally addressing the human relations side of cross testing? How do you tell one employee he/she is getting 3% of pay, and another getting 4% of pay when the employees perceive themselves to be in the same job. This is particularly sensitive when you are dealing with giving only NHCE's contributions (ie. the plan is not really cross tested as no HCE is receiving a contribution). We are using a tiered allocation in a profit sharing plan to control the accruals in a floor offset defined benefit plan. The offset arrangement passes muster.

Here is my situation. An employee elects COBRA and his new employer pays the first premium. Coverage is later canceled for lack of payment. 4 months later, it is found that we had received payment, but since it was from a company we do business with, it was credited to their account. There was no remittance advice, or any information attached that it was for COBRA. The employee was sent the HIPAA certificate of coverage when the coverage was canceled (so he should have known that his coverage was canceled). Are we obligated to accept that payment towards the COBRA and retroactively reinstate coverage? If the crediting error was ours, I would say of course, but in this case I'm not sure.

Thanks,

Karen Barnes

A plan participant is currently legally separated from his wife and divorce papers have been filed. The participant wants to change his beneficiary from his almost ex-wife to someone else. Am I correct in telling him that he must wait until the divorce is final to change his beneficiary without her consent?

He is also wondering if he needs to worry about her trying to claim or get some of his 401(k) money in the divorce settlement.

On Plan termination of a Profit Sharing Plan the Service is taking the position that since there were no contributions to the plan for several year there was a plan termination in prior years requiring full vesting. Has anyone else delt with this issue and possible responsces.

Would you agree that a control group exists under the following assumptions?

Owner A Owner B

Company X 100% 0%

Company Y 60% 40%

Furthermore, neither company provides any type of service for each other. Owner A became a 60% owner in company Y in October 1997.

We have a terminated profit-sharing plan and have paid out all of the participants except one participant who cannot be located. What is the proper (or practical) procedure for removing these assets from the plan so that a final 5500 can be filed?

How does the Jarrett Study impact the "minimum required distributions" requirement of tax-deferred retirement accounts?

[This message has been edited by Dave Baker (edited 08-11-1999).]

The first sentence of BPicker might be confusing. You can not selectively convert just the non-deductible amounts of any IRA. Lots of folks think they see a loophole to avoid Roth conversion taxes by converting just the previously taxed component. Not legal. Doesn't work. Forget about it.

Another common confusion is that you can do all these calculations based upon one IRA account. Not true. As BPicker notes, you aggregate ALL the various IRA accounts (brokerage, mutual fund, band, etc.) for one person into one grand total.

On area where couples can get clever is to convert the assets of the couple with the highest percent of non-deductible assets. The IRA tax calculations are seperate for each spouse. Such cleverness could cause later problems in a divorce.

I'm new on this site...I've looked around; I found the 6/22/99 you site--don't see anything constructive in actual actions taken. What have other people actually done? Cut a check and put it in a desk drawer?

My firm handles marketing and administration of 401(k) plans, currently offering a selection of nine funds to our participants. The funds are not publicly traded. We are considering the addition of some publicly traded mutual funds. Can anyone offer some guidance on a timeline for participant notification? Also, if we replace an existing bond fund with a new bond fund, are there special notification and disclosure requirements? We enjoy the protection of Erisa 404c and would not want to do anything to jeopardize this. I'm having trouble finding anything that references communication responsibilities during investment option changesand would love to be pointed towards a reliable source?

Part 2 (Not really related to communication)

Are there certification or licensing requirements for any of our staffwhen we move into publicly traded funds?

When converting to a PTO program, how are exempts handled? Based on FLSA, exempts can't be docked for anything less than a day. What happens if they request 3 hours of PTO from their bank?

Also, how effective is tracking unscheduled PTO by "occurrence" in managing absence control under a PTO plan? Thanks, POK

------------------

POK

An employee's effective date for health insurance was August 1. (He had completed his waiting period.) The employee was actively at work on that date. He had not filled out an enrollment form. He has not show up for work since. Is the employee entitled to COBRA benefits?

Is spousal consent required for a hardship distribution from a 401(k) plan?