A SARSEP's eligibility is age 19 and $400 earnings during the plan year. An employee is 19 when hired. Does he participate as soon as $400 is earned? Must he be included in discrimination testing?

Also, a SARSEP fails ADP in 1997 and 1998. In 1998, 50% of eligible employees do not defer. Are there any correction methods available other than withdrawal from the IRA's and inclusion of the excess deferrals in income? (Such as QNEC's, etc.) Thanks.

Our company is considering bringing the plan administration (recordkeeping, etc.) of its 401(k) in-house, and wants to try to find a way to charge the plan for expenses incurred. Realizing that we cannot charge what we would charge clients for this service (as that would include a profit to the company), and that we cannot directly charge salaries (we won't allocate a full-time head to the task), what CAN we charge? Has anyone else run into this with their own plan? If so, what was your decision, and did you get DOL guidance?

My wife and I would each like to open Roth IRAs and would like to know what is the maximum that we can contribute. I earn about 30k and she doesn't work.

Assuming a $35000 traditional IRA with a basis of $10000. If I convert the non-deductible $10000 to a Roth IRA shouldn't the basis of my traditional IRA -0- ? On my 8606 I still come up with $10000. Which is correct?

If an employee's recoverable contributions exceed the amount being distributed from post-tax accounts, is the recovered basis limited to the amount distributed from these accounts or can the participant recover the full amount?

For example, Jim has $1000 in recoverable contributions, but lost money in those accts so his ending balance is only $800. However, because his distribution includes pre-tax money, his total distribution is $2000. Would his taxable amount be $1200 or $1000?

(Assume the $1000 has already been established as the amount eligible for tax-free distribution.)

Thanks!

Does a participant in a health care spending account have to first file his medical expenses with his/her insurance before it can be paid under the flex plan?

I have an employee who does not think he needs to file his chiropractic bills with his medical insurance prior to submitting to flex. We have coverage under our medical for chiropractic care and he does have available benefits. I have asked our outside legal council their view and they feel that a medical claim must be filed first for payment or declination. Our plan document also states this.

Our employee seems to think that other companies do not require this and I would like to know if there are in fact companies that do not require the expenses to be filed with medical insurance first. For those companies that don't require medical filing I would like to know what part of the regulation that you used to implement the plan this way so I can review it.

We are a trust and have the need to report on all the plans we administer as a whole. I have tried to customize a report in Report Writer that will count the number of participants in each plan. Sounds easy, but I have had problems with alphabetizing and other. Support said it must be grouped by plan ID then sorted by aplha. Anyone have a report of this type they could share? email: jhagan@flcities.com Thanks!

We have a client who is terminating his Canadian business and relocating to the USA. He wants to establish a qualified plan here in the US on behalf of his new business here. For purposes of eligibility & vesting, he wants to give credit for service with his prior Canadian business.

Anybody see any problem in doing this?

Thanks for the help!!

How long does it take for a retiree to receive their first check (lump sum or annuity) after their retirement date in your plan. We are currently involved in a dispute with the company over this issue and comparative data will help our case. We are a union representing the pilot group.

Thanks.

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Karen L. Browne, C.E.B.S.

Benefits Specialist

Air Line Pilots Association, Int.

In '98 my wife & I rolled over our regular IRAs into a Roth. Line 15b will be approximately $ 30k for four years. We now learn our '98 AGI is $ 102K. In '98 we made a $ 2000 (each of us) Roth contribution. Does the $ 100K maximum for a Roth exclude or include our Roth Conversion income of $ 30K ? If I need to undo this, please advise what is needed. THANKS.

Does the employer have a choice whether or not to contribute in a 401(k) plan, and what are the pros and cons of contributing?

Hi,

I had 2 IRAs in 98, one Contributory IRA and one Rollover IRA which was funded from a 401K plan at an old employer. My contributory IRA had a cost basis from some non deductible as well as deductible contributions but my rollover had no cost basis since it was all pre tax money. I ended up converting all of my Contributory IRA but didn't convert any of my Rollover IRA to a Roth IRA.

On form 8606, it says that I need to include the value of ALL my traditional IRAs. Does that mean that I need to include my rollover as well? If so, then my basis gets spread between the value of the rollover and the value of the new Roth and I can't deduct my entire cost basis from my Roth conversion even though all the non deductible contributions took place in that traditional IRA that was converted to the Roth? Is this the case? Seems a bit unfair to me? Or am I missing something here? Also, that would mean that I would have a cost basis for a rollover IRA which technically shouldn't happen since all of that money came from tax free money in a 401K plan in the first place?

Thanks in advance for the help.

I do not find anywhere nor have I seen in my years of administering the 125K flexible spending account, where both husband and wife employed by the same employer can or cannot be enrolled in both the spending accounts in the same plan year. (health care and dependent care. Would appreciate any comments!

A client would like to spin off a portion of its defined benefit plan and allocate the excess assets entirely to the old plan. The old plan would then cover a group of participants whose benefits are already fully annuitized. The old plan would then be terminated and the annuities distributed. The excess would revert to the employer.

Is there anything wrong with this picture? I know gov't plans aren't subject to the excise tax on reversions, or to the requirements of Code section 414(l). How about the requirement in the Internal Revenue plan termination handbook that the new plan must be fully annuitized in a spin-off/termination? They don't want to do that.

Has anyone had experience with reversions from gov't plans?

Owner and sole participant in a defined benefit plan is 70 1/2 in 1999. Wants to roll his entire account to IRA now and take Minimum required distribution from IRA by 4/1/2000 for both 1999 and 2000. Is this OK or must he take the 1999 distribution prior to rolling to IRA?

Would a requirement that an employee not go to work for the employer's client constitute a substantial risk of forfeiture, for purposes of a nonqualified deferred compensation plan?

This is not technically a non-compete requirement as discussed in section 1.83-3(B)(2) of the regs.

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If an employee is a more than 1% owner and earns more than $150,000, he is a key employee for top heavy purposes. If his wife is also an employee and makes less than $150,000 is she a key employee through the rules of attribution of section 318?

If a C-Corp or LLC taxed as a C-Corp has only one employee (a HCE), can the company set up a Health FSA? While on the surface it seems ok, I remember reading somewhere that since the HCE was getting 100% of the benefits, the plan failed discrimination. Thanks.

Is there any way to get away from annuities as the preferred investment product of 403(B) plans? No serious investor regards annuities as an efficient investment product given everything else that's on the market today.

I'm working in the nonprofit sector and will be contributing to a 403(B) plan.

(1) Can I opt for mutual funds of my own choice at the outset, or do I have to go with my employer's existing choices?

(2) As I don't have an account yet, can I bypass my employer's broker and set up my own account?

Lyric

How does (did) this election work?

It is my understanding that such an election had to have been made prior to 1/1/84. How exactly was it made? A special form on an individual's tax return?

Could someone elect pretty much anything? For example, could someone elect no distributions until age 100? Were there any restrictions.

Thanks for your help.