Should an IRA be included in a Joint Living Trust? What are the pros and cons. I can see where there is no need, if the beneficiary gets the proceeds in any event without probate, but how about when one of the grantors becomes incompetent? I've had advice both ways?

Our recordkeeper informs me that for Plan years beginning in 1999, we may exclude from testing employees who have less than a year of service or are under age 21 even if the Plan allows such employees to participate.

As a means of helping our ADP test, we are thinking of amending our Plan to allow employees to begin contributions to our 401(k) from date of hire (or after, say 3 months) in the hopes that more employees will begin contributing and keep contributing after completing a year of service. Currently, our Plan requires 1 year of service and 1,000 hours worked.

Does anyone have any thoughts on this topic or legal pitfalls we should be aware of?

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Company A is being acquired effective 10-1 and will terminate their 401(k) effective 9-30 which is their fiscal and plan year end. The plan allows for bonuses paid within 2-1/2 months after PYE to count as comp and eligible for deferral for the preceding PYE. If the employees elect to defer specific dollar amounts before the termination date(hence there would be a receivable...the bonus would not be paid until Nov.) can these deferrals be accomplished since the bonus is treated as comp for the period before termination? How about a declared P/S contribution as a receivable to be deposited after the proposed termination date? Anyone see how this can be done? Thanks!

I have a client who said the company would make a $50,000 contribution to its PS Plan. Benefit statements and 5500 C/R were prepared. Now, it's possible the company can't/won't come up with the money.

I don't know if the 1120 and/or 5500 have been filed yet. I'm fairly sure the benefit statements have been distributed.

Has the company irrevocably commited to the contribution?

is anyone aware of any data regarding how many plans have received 414(e) exemptions as church plans?

DB plan is giving one time choice to convert to either a more portable pension equity plan (PEP) or an "enhanced" DB plan that has better early retirement subsidies. What considerations for transaction to take place? (204(h) notice? nondiscrimination testing?) Any good references for a checklist?

Is it necessary to include the definition of Highly Compensated Employee in a 401(a) plan for LOCAL GOVERNMENT AGENCY since they are exempt from the provisions that use this definition?

Our group coverage currently enrolls 150 employees plus dependents.One of our employees wishes to add her 48 year old husband who is currently on Medicare from disability. He has NOT lost his Medicare. They want to add him to the company coverage so that he will have RX. Will our company coverage automatically become primary? Is there any way around this?

I have long believed that a business can sponsor both a qualified plan and a SEP-IRA, as long as the SEP-IRA is an IRS approved prototype and NOT the IRS Model SEP (5305-A). Still have to comply with 415 and 404 aggregating the two arrangements, but OK to have both. Any other opinions? If you disagree, can you give me a cite? Thanks.

Would you agree with the following testing scenario:

A profit sharing plan has multiple rates of allocation and is also integrated to the allowable extent under 401(l), using the taxable wage base. For 1998, let's say that group 1 employees with salary below the TWB get a 2.0% allocation, and those above the TWB get 4.0%. For group 2, those under get 4.0%, and those over get 8.0%. Further complicating things is that a non-414(s) definition of compensation is used for allocations.

The plan needs to pass the amounts test of (a)(4) using the general test. In order to pass testing, can this plan impute permitted disparity as provided under 1.401(a)(4)-2©, even though the plan already had actual permitted disparity in the basic formula?

The introduction part of 1.401(a)(4)-7 seems to say that it can be imputed, regardless of the underlying formula that led to the allocations you're working on.

I am putting together an ESOP plan and I would really like to have several sets of the plan documents and trusts so that I can study them as I put together my set of documents. for some reason, everyone seems to feel that their documents need to be hidden, but I promise confidentiality, I just want the documents to judge writing style and format and maybe to borrow a paragraph or two as I put my documents together. I just want to be able to see how different people are addressing ESOP issues and then put together my own style and format of documents. Please send ESOP documents by E-mail to me at Babs474@Cloudnet.com Otherwise, is there a good public source? Where? Thank you very, very much -- you are really being a godsend.

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Babs

I have a client who has been told by their attorney, that in the first plan year they can make two separate top 20% elections. They are going to make an election for the 401(k) test and not make an election for 410(B) purposes. Is this possible? I thought if you made the election it applied to all discrimination testing. I was not aware of an exception in the first plan year.

I am interested in establishing guidelines for placement of employees upon completion of an employer funded MBA. My company (captive finance) presently does not have a policy regarding these employees (i.e. no promotion or lateral moves are usually achieved upon completion)and, subsequently, we lose many employees upon graduation. I am not looking to make any hard-fast promises to employees in programs as I recognize that circumstances are changeable, but I am looking for alternatives to the current "pat on the back" that many feel is their only present reward. Any information on what other companies do would be appreciated. Thanks!

Must an employer offer employees the choice to pay for their medical coverage contibutions with pre or post tax dollars?

regarding qualification as a s.414(e) "church plan"- is there any difference between DOL Opinion Letters and IRS Private Letter Rulings? Are both necessary? Most opinion letters defer to PLR decisions, none of which seem to deny exempt status. Also, is there any case law on this other than Fuxan?

[This message has been edited by keltonk (edited 06-11-99).]

Participant has life insurance and real property in his QRP account. I know the life insurance cannot be rolled into an IRA. How is he to treat the real property? More specifically, how is it characterized as property in an IRA? What documents are needed to do this?

Regarding participant counting, I have a plan which execeeded 120 participants on 1/1/98. there are approx. 18 terminated participants from prior years 3 who we have been unable to locate and subsequently distribute.

Can I hold their balances in a suspense acocutn and avoid having to have an audit and file long form 5500?

I recieved this in the mail today from my HR person:

When you were hired, you were notified that a weekly employee contribution is requried for the group medical/dental coverage. We have recently discovered that group medical employee contributions are not being deducted from your paychecks. It is now necessary to retroactively make deductions to cover your contribution for your medical insurance. Your insurance when into effect June 30, 1997. The total retroactive amount is $582.30, you will see retroactive deductions of $16.60 over the next 58 weeks, along with the normal by-weekly deduction of $16.60. We regret any inconvenience this may cause.

Do I have to take this ? It doesn't seem fair to me. I do not work in the main office, have never received any benefits counseling, I don't beleive anyone ever told me there were suppose to be weekly deductions, it seems like they screwed up and now I'm getting dinged.

I am working on a deferred compensation plan for a company and a consultant wants to add a "SERP swap" feature in which the employees can choose to forego deferred compensation benefits and the employer then enters into a split dollar life insurance arrangement in which the insurance is owned by an irrevocable life insurance trust with a collateral assignment to the company. I am concerned with taxability to the executive at the time of the swap to the split dollar. If you have worked on this issue, I'd appreciate your input.

I always understood that 50% of the IRA, if it is community property, would be includible in your estate for estate tax purposes. The balance would be your wife's community interest and thus excluded from your estate. If you named your wife as beneficiary for the non-community half, it would be eligble for the estate tax marital deduction.

None of this addresses the better income tax elections available if the IRA goes to your wife in full.

If this is critical to your estate planning you should check with a California attorney.

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[This message has been edited by P A Weick (edited 06-11-99).]