I know that the Simple 401(k) plans do not have to worry about the ADP/ACP testing, however what tests DO they need to worry about? I know that the Section 415 limits apply and I think that the 410(B) test applies ... any others?

Can I "borrow" my original investment amount from my Roth IRA? If so, do I have to replace it within a certain time frame?

Can anyone tell me where to fine the results of the 1997 and 1998 US Chamber of Commerce benefits survey? This survey shows each benefits item as a percentage of payroll. Thanks for any assistance anyone can provide.

After considerable analysis, my wife and I decided that conversion of a sizable portion of our IRA holdings to a Roth IRA made sense -- the thought of tax free distributions seemed to dance through our heads. Around the time of our conversion, however, I started doing some reading, and having conversations with others, about the various alternative "income tax" systems (e.g., flat tax, national sales tax, VAT, etc.) being considered as a replacement to our current mess.

Without getting into all of the pros and cons of each alternative, let me say that the National Sales Tax (NST)intrigued me because as a tax on consumption, instead of income, it should go a long way toward capturing the current lost taxes on unreported legal, and illegal, activity. I believe that this unreported activity is easily 25% - 33% of what is reported today, and therefore if "collected" would lower the tax burden for the rest of us who pay taxes on everything we earn (assuming overall tax revenues collected remain the same).

The problem with this NST is that my dollars being distributed from a "tax free" Roth IRA look and spend just like any other dollars, and as such will be taxed via the NST when I go out to buy a car, or a shirt, or a Coke. I have not heard or read of anyone to date raising the issue that I have raised here, and I would like comments or ideas as to how you might see this being handled (perhaps someone is aware of something in the Roth legislation that covers this possibility). I'm not trying to be cynical here, and I don't give a very high probability to a NST replacing the current income tax, but I certainly don't want to find myself contributing to the "tax bag" with my Roth distributions.

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If the employer wants to be able to vary the contribution percentage why not just put in a profit sharing plan?

Can someone give a simple example of the advantages of funding employee (current, not terminated employee) life insurance through a 419A(f)(6) plan than through any other method?

How often must a 401(k) participant be allowed to change the amount of (or discontinue) their deferrals? If a plan is only valued once a year and has only one entry date (first day of plan year nearest completion of requirements), can the plan only allow participants to change their elections or discontinue deferring as of the first day of the plan year?

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Michael Spaid

Called in to review a case where a plan is filing a Standard Termination with the PBGC. There exists one individual who retired over 10 years ago and who elected 10 Year C&C Annuity (this is a small plan that offered lump sum option - uncommon for someone to elect an annuity form to say the least). Retired participant has been receiving monthly payments since then.

Another firm is doing the plan termination. In the course of termination, they sent distribution packages out to all participants, including the retired participant, showing a lump sum optional form of payment.

My thoughts are that the participant has already made her election of form of payment and that Plan must purchase an annuity contract providing monthly payment for life (10cc guaranty has long expired). I don't see why lump sum option would be available to a retiree at termination (already turned it down at retirement). In addition, if I recall past readings, that if she somehow was able to elect a lump sum, that the lump sum would be ineligible for rollover as she has been receiving periodic distributions, so that amount would be currently taxable.

Any comments would be appreciated (this is a rank and file employee by the way, not the owner's mother or any such nonsense).

Who are some vendors of IVR enrollment

for smaller businesses?

Just seeing who's out there...

Who are good vendors of IVR for enrollment of participants for smaller businesses?

Just trying to see who's out there...

Hello! Here's a question that I need some help on. Facts: husband recently died at age 49 after 30 years of service. The company has a DB pension plan with early retirement age at 55 plus 10 years service or age 65. The plan includes a formula to calculate both the benefit and the "early retirement" benefit.

On the first day of what would be the month of his death, he notified the company that he wanted to retire as of that same day. He died on the 15th day of that month. The wife filed w/ the company to receive her surviving spouse annuity under the DB plan. The company granted this to her, but reduced the amount because the company claimed that because the husband had 4 weeks of vacation left at the time he purported to retire, the company still treated him as an "active employee" and said he could not retire until the first of the next month. As such, he (and in turn she) was entitled to a lesser amount. [i don't get this part.]

However, the company is treating the husband as having "retired" when it comes to determining his eligibility etc. for other benefits! In other words, they are being very inconsistent from what I can tell.

My questions are (1) can the company claim he was not "retired" because of his accrued vacation time? I understand under state wage laws they have to pay him that same time, but I cannot imagine the need to pretend he was actually working another 4 weeks. Are there any ERISA provisions regarding when someone "retires"? (2) what other ERISA provisions govern this dilemma? I have read the provisions regarding QPSA'a but have not been able to really find something that addresses the issue.

Any thoughts/comments are really appreciated.

The HCE rules under Section 318 provide for attribution between parents, children and legally adopted children. What about step children?

H owns 100% of Company A. Second wife has two children. Are the 2 children included in HCE group? Thanks.

Has anyone compiled a list of factors that must be considered when a group of related companies cease to be a controlled group? Any particular factors to consider when status as a control group is in a state of flux from year to year?

I am looking into all possible issues (including, but not limited to, investment issues such as do we now have a common/collective fund, what about an employer stock fund, etc.)

Anything new on PEO's (EE Leasing Companies) and 401(k) Plans? Do they go the multi ER route , anthing ?

What exactly is considered a receipt when it comes to prescription reimbusements. Does a copy of the prescription need to accompany the paid receipt? Will the receipt work by itself? Please clarify this for me. Thanks so much!

Can the opinion letter date be entered on lin 22b of the 5500. I heard that a plan is more susceptible to audit id line 22c is no and 22b is blank?

What is the filing deadline for a short plan year; let's say from January 1, 1999 to June 30, 1999? Is it - (a) 7 months after the end of the short plan year, or January 31, 2000, or (B) 7 months after 12 months after the beginning of the short plan year, or July 31, 2000.

I vaguely recall the answer is (B), although I can't remember WHAT THE CITE IS.

Also, is the filing deadline for a short plan year different depending on the reason for the short plan year?

For example, short plan years typically occur in the following three situations:

1. When converting from one 12-month period to a different 12-month period, there is a short plan year in between.

2. When merging two plans that are on different plan years, one of the plans has a short plan year.

3. When starting a new plan in the middle of the year (such as a 401k plan), one has a short plan year to allow future plan years to be the calendar year.

Thanks for your help.

I have converted my regular IRA to a Roth IRA in 1998. It is now called a Roth conversion account. All $$ that were converted from the regular IRA were reported to the IRS. I later (April 1st) contributed $2000 for the prior year 1998 into this Roth Conversion account. Is this OK?

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I have an advisor in one of my offices with the following situation. Doctor uses the services of a PEO (Professional Employer Organization). Her employees, as well as, herself are leased thru this PEO to her company. The PEO has a 401(k) plan that covers her employees but this plan excludes highly paid employees from participating in this plan. (So Doctor gets left out) Question-- can the Doctor set up a plan for herself such as a Money Purchase or SEP? What would some of the complications be here since she is also a leased employee? Any help any of you can give would be great as I am a Region Vice President of Retail Retirement Plans with American Express Financial Advisors and we do not have ERISA attorneys in house I can run this by so it is up to me. Thanks.

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Kellie Smith

Is it VCR or Reformation CAP, if the plan document says: in order to provide for a specific feature, the appropriate box on the adoption agreement must be checked off? For instance, the plan says all employees are in the plan except for the types of employees indicated on the adoption agreement. If the sponsor kept out a type of employee but didn't check off the appropriate box, is it an operational defect or form defect. Another example is participating employer who did not adopt the plan. The plan requires an employer other than the sponsor to adopt the plan. The other employer never adopted the plan. Is this an operational defect or a form defect? I guess the principle I am looking for is something that holds: if the plan document requires a plan document change, the failure to do so is a form defect; or if the plan document requires a plan document change, the failure to do so is an operational defect.