A relative of mine has been on COBRA coverage since she left her job to care for her mother. Her last month (18th) month of coverage was May, 1999. During that month, she went for a physical and cancer was disovered. She underwent surgery and had a radical mastectomy. The surgery was performed in May. She will obviously need more medical attention / follow-up and possibly some radiation. Is there any way for her to extend her COBRA coverage - what options does she have at this point?

MPPP has 1,000 hours and last day of plan year requirement. E/er required contribution is 10% of compensation. E/er is going to amend MPPP to freeze contributions and change contribution percentage for current plan year to 0% of compensation. Does anyone see any problems with this?

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I understand that the distributions are tax free (under the qualifying rules of the Roth). However I wonder if the Dividends/Capital Gains paid in, for instance a mutual fund, that are reinvested are taxable. Can somebody answer this maybe simple question for me.

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Bernard Hamburger

Treas.Reg. 3121(v)(2)-1(d)(2)(i)© does not define what is a reasonable rate of interest for taking into account income attributable to an account balance plan (for purposes of the non-duplication rule). What authority could be used to test a rate such as the long-term applicable federal rate or, E.G., 110% of the LT AFR? Considering that the AFR's, especially the mid-term AFR, are relatively conservative, what are the guidelines?

Can anyone advise if a participant who has terminated employment and has an outstanding loan balance can repay the loan after termination? If so, what is the time limit in which he has to repay? The reason is, I have a client who wants to send a letter to terminated participants offering them a chance to pay their outstanding loan amount. Can they do this?

Thanks!

I am a TPA. One of our clients was taken over by a larger parent company. The Flex plan only affects the client. Does their plan need to be restated to be in compliance?

Does anyone have any experience with a 401(k) plan that has eliminated plan loan availability?

I am curious as to what you think would be the reaction if we eliminated plan loans - but adopted a safe harbor plan with the safe harbor match and a discretionary profit sharing contribution. Our current design has a match and profit sharing - together in the last few years if participants contributed 4% they would get about 7% in employer contributions to the plan.

If we went with a safe harbor match, old participants would not care too much about the immediate vesting - would they give much credence to the guaranteed 4%? How about if we added, at the same time, some type of broad-based stock plan - like an ESOP or maybe stock options for all employees? We'll keep hardship distributions available so in a real pinch they can get something.

With a safe harbor we obviously don't need to entice people to participate (although we do want them to) and the loans are just a bear to administer and are the source of lots of complaints (besides being a stupid thing to do - but if people want to do it - its their decision). Besides the screams from the few who abuse the program - how negatively would this be perceived?

Does anyone know if a 401(k) can have direct investments in Drips as a plan investment.

I spoke with one person who said the transfer agent probably would not allow the investment to be held in the name of a qualified plan becaue they would not want to be construed as a trustee.

Any thoughts?

What effect do contributions under other plans mainained by the E/er have on determining whether a cross-tested plan is within the requirements of the Regs?? For example, assume E/er has a 401(k) plan, a new comparability PSP and a MPPP, and the E/er is obligated to make a 10% contribution under the MPPP. How does the 10% contribution under the MPPP affect the determination of the allocation percentages under the new comp. PSP?? Any suggestions??

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Please share with me your ideas on Employee Wellness Programs - (i.e. on site chol. screening/blood pressure/health fair)

I'm reviewing a 401(k) plan that includes a disability retirement provision. Disability is defined as the inability to meet the requirements of the Participant's "customary employment" ... Can this definition be changed to inability to "engage in any substantial gainful activity"... without violating Code Section 411(d)(6) anti-cut back rules? Certainly the inability to perform one's assigned job would result in disability faster than exploring whether the participant can perform any gainful activity. The question is whether disability benefits under a retirement plan are protected similar to early retirement benefits?

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AJM

[This message has been edited by April J (edited 06-04-99).]

I am taking over a plan for a law partnership in which several of the partners are PCs. Should plan compensation for these partners be the W-2 income from the partnership?

I have a paired money purchase and profit sharing plan. For the calendar year, there was a $3000 receivable for the MPP, none for the PSP. Each plan had about $3200 in forfietures. The HCE made sure to have his own $30,000 in cash contributions between the two plans in order for him to reach the 415 limit. What do I do about the forfeitures? Both plans have forfeitures reallocated to remaining participants. There are not enough NHCE's to fully absorb all of the forfetures.

It is generally the case in a gov't hospital 403b plan that when a participant files Chapter 7 that the assets in his account are available to creditors, unlike a qualified plan under ERISA?

Plan may not charge participant nor alternate payee directly for fees associated with determining a valid QDRO. QDRO specifies valid formula for determing value AP's portion of DB plan. Is Plan responsible for the costs and adminstrative burden associated with tracking this portion (actuarial costs, etc.)?

1. The plan can't pay out immediately unless the order says to pay out immediately AND the plan itself states that it will pay out immediately if ordered by a qualified order.

If the plan allows immediate payout, you might point this out to the AP and suggest that he/she might want to get the order changed to provide that payment will be made immediately. Without this change in the order, I don't think you can pay out - you'd be violating the terms of the plan and the order.

2. On the after-tax contributions, again I think this is something that should be covered by the order - the order should say something like "take it all from the after-tax account to the extent available."

As plan administrator, you could say that the order was ambiguous because this issue is not addressed and that you won't consider the order qualified unless it is changed to address the issue. If this is a problem, I suppose you'd have to follow some sort of administrative practice - my suggestion would be to split it up eqaully between the parties.

3. So far as not setting up a separate account for the AP, that doesn't make sense to me - it's going to be a lot more of a hassle to the plan to keep track of the earnings for the AP's portion of the benefit if you don't separate - also you get into issues like the after-tax contributions - better to take care of those up front by splitting the account.

I have 14k in a regular IRA account which I would like to roll over into another fund family.

I understand from the new fund family that I must roll over the money into another regular IRA account to start and then if I wished could convert it to a Roth. Is this correct?

I cannot afford to pay taxes on the entire 14k to do a conversion, but can I convert only a portion of the 14k to a Roth IRA to lessen the tax hit?

Can I split my 14k into two different funds to start? Can I split the 14k to two different fund families or does it have to all go to one company (e.g. Vanguard or Janus)?

What is the type of taxes I would have to pay on a conversion? Is it 28% of the $ amount I convert since that is my tax bracket, plus 10% penalty for early withdrawal from the traditional IRA I would be taking it from?

I know this is a lot to ask, but if someone could help I'd be forever greatful for getting some correct info that makes sense to a new investor like myself. I am 30 and the Roth just seems like the way to go.

Thanks!!!

jmwskw

I need to obtain info on whether a roth ira is available to Canadian citizens working in the USA. This individual needs to monitor retirement account activity to insure a proper allocation is set aside in Canadian investments or there are tax implications. Any specific info on Canadian RRA(?) requirements?

What carriers, if any, will offer an employer a health plan for its retirees, which the cost of the plan is paid 100% by the retiree?

In a money purchase plan, an employer makes a quarterly contribution for eligible payroll. The plan has the last day of the plan year provision. The employer makes contributions through the termination date which are never allocated to the participant. What happens to those monies? Does most employers keep track themselves and reduce their next contribution? Do they appear on the plan's financials as over-contributions? Are they returned to the employer? Should these monies be included in the allocation of interest if left in the plan.

Also same questions for forfeitures that are used to reduce employer contributions.

Please give some examples of how these issues are being handled. Thanks.