My client's 403(B) program has been audited by the IRS. In order to both prevent a number of individuals from contributing excess in the audit year, and for administrative ease, our client would like to limit the amount that may be deferred to the plan to the amount described in Catch Up C. Basically, this is substituting 415 limit for exclusion allowance for all future years. Of course, no other special catch up elections would be available for certain long-time employees, who would be penalized. Yet requiring that a catch up be used (probally on the annual deferral form) would make life easier on client and satisfy IRS with regard to those who failed exclusion allowance in audit year.One gray area is whether client can require, as a condition of participation in its 403(B) plan, that employees to use a catch up election, because the election is normally used to justify an individuals tax return. Any thoughts? The IRS informally has said that this is probally ok, as long as it does not appear that the IRS is requiring that catch up elections be made.

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My client's 403(B) program has been audited by the IRS. In order to both prevent a number of individuals from contributing excess in the audit year, and for administrative ease, our client would like to limit the amount that may be deferred to the plan to the amount described in Catch Up C. Basically, this is substituting 415 limit for exclusion allowance for all future years. Of course, no other special catch up elections would be available for certain long-time employees, who would be penalized. Yet requiring that a catch up be used (probally on the annual deferral form) would make life easier on client and satisfy IRS with regard to those who failed exclusion allowance in audit year.One gray area is whether client can require, as a condition of participation in its 403(B) plan, that employees to use a catch up election, because the election is normally used to justify an individuals tax return. Any thoughts? The IRS informally has said that this is probally ok, as long as it does not appear that the IRS is requiring that catch up elections be made.

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Trying to understand the regs related to returns on a "predetermined actual investment." It appears one could use the S&P 500 as the PAI and could adopt it for 5 prospective years. If so, is there any "averaging" or carryback or forward of years in which returns were less than S&P?? If in Yr 1, S&P returned +10% and NQDC +5% and in Yr 2 S&P +8% and NQDC +13%, is there any offset between Yrs 1 & 2? Also, if S&P is -10% and NQDC is -6% is there 4% "excess earnings" subject to FICA??

Thanks for your comments.

Can a TPA process a dental benefit claim using their own internal policies on limitations and exclusions even if these are not spelled out in the employee's summary plan description?

We are implementing flexible spending accounts August 1. We have several hundred people on leave of absence (including FMLA). Does anyone out there have any info on how to handle FSAs while on leave? Our vendor said an employee cannot do dependent care while out on leave since purpose is to pay for dependent care so you can work. So do you stop their deductions? Then when they return resume? What about a healthcare FSA? Do you allow employee to keep paying while out (and thus lose the pre-tax benefit) or cancel until they return? Do you let them access the funds while they are on leave? For example, if I go out to have a baby, and I've set aside money to pay for that, it seems I could use my healthcare FSA to pay for expenses.

I recently took over doing the QMCSO (qualified medical child support orders) for our company. I have a checklist that determines whether or not the order is "qualified." It has been my understanding that if my employee is not enrolled in our medical plan, and I received a QMCSO to enroll a dependent, I am not required to provide health coverage since my employee is not enrolled - the employee would be responsible for providing coverage him or herself. But I have heard recently that this could be considered a qualifying event and that the employee must enroll? It seems that a QMCSO is ordering the employee to add a dependent if the employee is already enrolled, but can it force me to enroll my employee?

We are a 501©(3) with a 403(B)/SEP-IRA combination. We are looking into a 401(k) or GROUP 403(B) for our 110 employees but are having a hard time finding something in writing or on the web about the group 403(B) product, sample plans, etc. Any resources that you know of?

Thanks

Do the funding vehicles for a TIAA-CREF 403(B) plan have to be the vehicles offered by TIAA or CREF? Can a participant direct that his salary deferral be sent to XYZ Investment Firm?

Even without looking at the plan, I would think that a participant would not be locked into only TIAA-CREF funding vehicles. The only restriction would seem to be that the XYZ Investment Firm would need to invest in annuity type investments and otherwise comply with the rules under 403(B)....

Any comments????

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forfeitures: I am not sure where the bug lies. I too have had some problems and I am doing dollar accounting. I modified some of the Quantech reports to separate the contributions and forfeitures into separate items. There are 'two' gains items on a lot of the reports. E.g. : sum gains/loss (usually supressed) and dispSsUnrealized gainAmt. Since I am not doing share accounting, I reversed these items...suppressed the unrealized gain and unsupressed the gains items. This solved my problem. Since I am a Crystal 'tinkerer' rather than an 'expert' I figured I might have done something wrong. However, since 'daily' also reports a problem, it sounds like a bug might exist, at least at the report level- but without time to look at deeper I don't know. In the account screen are forfeitures showing as both $ and shares?

2. Eligibility - not sure what is meant here, 'clicking on the first box'. which one? I have had very few problems in this area, but then maybe I have a better understanding of what happens when you click on the different elements. (Lots of experience on this one going back to the old Pentabs system) give an example and maybe I can help.

(sorry, thats all for now)

I am in need of benchmarking data for price and service relating to retirement(both pension and 401(k)) plans and welfare plans. What are some good resources?

Here is the set-up. Taxpayer has had a traditional IRA for several years,

making non-deductible contributions for approximately 10 years (therefore a total of $20,000 has been contributed.) The monies were invested in a high-risk fund, consequently the remaining balance is about $3,000. He directs the bank that handles the IRA to transfer the funds to a ROTH managed by one of the big investment firms.

I have a suspicion that he has blown the opportunity to claim the $17,000 loss

by this direct transfer. I am of the opinion, that the only way to preserve the loss is to take physical possession of the $3,000, and even wait out the 60

day period. Then, open a Roth as usual.

Anyone have any comments? I cannot find anything specific when the Traditional IRA has lost so much and then gets converted.

Thanks.

Ken.

Could someone please explain to me in plain and simple terms what taxes I would owe in the following scenarios:

1. I transfer $2000 out of my traditional IRA (currently worth $14K) and use that to open a separate Roth IRA for myself.

2. I take $2000 out of a non-retirement mutual fund account and set up a separate Roth IRA for myself.

Exactly how much in taxes would I have to pay in each scenario. I am currently married, filing jointly in the 28% tax bracket.

A simple explanation would be greatly appreciated since I'm very confused as to which would be the best route to go. We can't afford a big tax bite, but really want to set up Roth's for ourselves to invest in. Can you set up a Roth IRA with an amount less than $2,000. I know that's the maximum individual limit.

Thank you.

I understand that, with a

few exceptions, Section 213

medical expenses can be

reimbursed under a health

care FSA. If an employer

does not wish to allow

reimbursement for a

particular 213 medical

expense (for example, the

newly approved smoking

cessation programs), can a

plan specifically exclude

such expenses from the list

by communicating that

specific expenses is not

eligible for reimbursement

under the plan?

Situation: Employee has money in a retirement plan with previous employer and wants to roll it into plan with new employer. Employee is due required minimum distributions from prior plan due to the attainment of age 70 ½. However, when the money is rolled into the new plan will the employee still have to take RMD's applicable to the rollover money even if the new plan allows for the postponement of the RMD's until termination of employment. (Note, until the money is transfered the RMD's will be taken)

Any cites would be appreciated.

Employer A maintains Plan Z.

Employer B maintains Plan Y.

Plan Z has a 12/31 plan year end.

Plan Y has a 6/30 plan year end.

Employer B bought Employer A.

Plan Z was merged into Plan Y effective 1/1/99.

The question is - how do we do the ADP test for the plan year ending 6/30/99?

For those participants who came over to Plan Y on 1/1/99, do you use only compensation from 1/1/99 through 6/30/99?

All comments and suggestions are welcomed!

An Employer wishs to terminate it's defined benefit plan that is 75,000 under funded. The Employer would like to deduct the full 75,000 in the year of termination. The plan is funded under the individule aggregate method and the contribution produced under the method is less than the required amount to sufficiently fund the plan for PBGC purposes.

The Employer has changes Actuarial firms in the year of termination. Can the new actuary change the funding method to unit credit and get the full deduction to fund the plan?

Any other thoughts to solve this clients problem.

Thank you.

There is an SPD reporting exception in DOL Reg. 2520.105-5 that applies to "qualified HMOs." Can anyone help me with some basic information about what these are? How would I know if ours is one?

I know the DoL doesn't allow a plan's payment of Settlor Expenses. (I forget the cite, can someone help on this.)

However, is the following rationale correct?

The termination of a pension plan involves two types of activities (and related fees).

The first type of activity is the business decision of whether or not to terminate the plan. The issues to be considered include the cost of termination, the need to fully vest employees, the adverse employee relations, etc. This is a business decision, so I believe the fees charged here could not be paid by plan assets.

However, the second type of activity are those tasks in implementing a plan termination; these are part of the administration and continued qualification of a plan. These tasks include plan amendments (or at least the GUST amendments), the 5310 filing, and the administration of employee notices, elections, and benefit payments. So, I believe these can be paid from plan assets.

Since often the decision-making process is fairly cut & dried ("I cannot afford anything for my employees!"), most of the expenses could be paid from plan assets.

OK, let's hear your thoughts. Any actual discussions with DoL on this? Also, has anyone actually had the DoL object to such payments?

Thanks.

Are people generally aware that if employees can purchase employer stock through their Section 401(k) plans with their own contributions, the sale of those shares to them must be registered with the SEC? I've had a number of clients over the years that offered (publicly traded) employer stock as an investment alternative, without any consideration as to the impact that would have under federal securities laws. While compliance with federal securities laws is not too burdensome, it must be done.

I have been told that in the employee's year of retirement they can shelter up to $13,000 of vacation pay and administrative leave pay that they have not used. I can't seem to find anything on this subject. Could someone please point me to a Code Section or something similiar?