A 401k plan has both a small employer match feature and a discretionary nonelective employer contribution component. Plan allocates discretionary contribution equally among all current participants. Plan enrolls new participants quarterly. Assume employer’s matching and discretionary contributions during the 1st two quarters of year equal, say, 90% of its contribution limit, so that only the matching contribution is made during the 2nd two quarters.

(A) Is there a discrimination problem?

(B) Can the employer require that a portion of a discretionary contribution made, say, June 15 be allocated equally in quarters 2, 3, and 4?

Thanks for any help.

An employee declined our health insurance when first eligible, and later had a health problem and found out our insurance was better than her husbands, so she signed up for ours, and she became the primary insured. Since the husband hadn't lost his insurance, were we obligated to insure her?

I am referring to the profit sharing allocation. If I read you correctly you agree that this can be done in the allocation formula but the cash bonus issue must clearly be an agreement outside but indirectly tied to the plan(except for the 401(k) deferral potential).

TPA firm in Upstate New York. Been using Datair (DC only) for ten years. The bad thing is the lack of downloading capability. Stops us cold in downloading investment data from a variety of investment houses. The good thing is it's all paid for. Quantech seems to be the standard in the industry, but I had a heart attack when I saw the costs. My question in a nutshell --- is QT worth it? We've GOT to get away from manual data input and start downloading FBO accounts. But the thought of writing the kind of checks Corbel wants is scary. I would appreciate any comments, in general, about Quantech. Any former Datair users who changed to QT, your help would be especially appreciated. Thanks very much.

I am collecting data on Flexible Work Options (i.e. telecommuting, job share) and would like to hear from anyone that has had experience in this area or who also has done research and can share their findings with me. I work for a non-profit, christian relief and development company in Washington

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Norene

[This message has been edited by norene (edited 06-16-99).]

This was posted in a Q&A column on BenefitsLink, and I wanted to get the ball rolling here:

Has anyone had any success in getting a plan approved (or believe you will) where the 3% non-elective safe harbor is the only employer allocation to the NHCES and additional Profit Sharing is allocated only to the HCES? Seems to me as long as the general test is passed it should be fine, however I do wonder about the wording in the document.

O.K. We give up. We have been looking for over one hour, in both the 401(k) Answer Book and the Pension Answer Book, for the Q&As regarding the timing of deferral deposits (e.g. 15 days and asap). Appreciate any help you may be able to give.

An employer has two defined contribution

plans (401k and money purchase) and would like to administer them under a

single TRUST. This would simplify some audit and filing issues, but create

some new accounting and compliance issues. Is there a practical article, rules of thumb, or first-hand experience on the pros and cons of this type of master trust?

I have a question for anyone who may know the answer involving the HIPAA special enrollment rules. If I understand correctly HIPAA requires that certain individuals be given special enrollment rights in the employer's health plan if they previously declined enrollment because they had other coverage and they subsequently lose that other coverage. Suppose employee terminates employment and loses coverage under his employer's plan because of such termination, fails to elect COBRA because he has other coverage under his spouse's plan, and then subsequently loses that coverage because spouse loses her job. I would assume that no special reenrollment rights must be given to him by his former employer since he is no longer an eligible employee with respect to his former employer. I believe this view is consistent with the statute and regs but would appreciate any other views.

The definition of "matching contribution" in 401(m) states that "a matching contribution is an employer contribution made to a defined contribution plan...." Does that include a money purchase pension plan? I know the 401(k) piece may not be included in the money purchase pension plan.

Hello! I'm the moderator of the Miscellaneous Benefits area of this fine, fine message board. Now I'm in charge of looking for info on internet recruiting. Does anyone have any experience in this area? Please e-mail me at aburnsafcu@earthlink.net or reply to this post if you can help me out.

Thanks so much.

Sheila K

Okay, now it's my turn to ask for assistance. We are in need of a new network administrator and I wonder if any of you have done any internet recruiting??? If so, please contact me at aburnsafcu@earthlink.net to discuss..

Thanks...Sheila K

Under Code Section 3121(B)(7)(F), the wages of an employee of a state or local government who does not participate in a "retirement system" are subject to FICA withholding. Under the regulations, a 457(B) plan constitutes a "retirement system" if a participant defers at least 7.5% of his or her compensation. The Texas Teachers' Retirement System does not cover part-time and temporary employees. A school district desires to establish a 457(B) plan for part-time and temporary employees, under which the employees would be required to make salary reduction contributions of 7.5% of their wages, so that the plan constitutes a "retirement system" and the district does not have to withhold FICA taxes.

It appears to me that this strategy should work, with one possible exception. Section 457(B)(4) states that a plan must provide that "compensation will be deferred for any calendar month only if an agreement providing for such deferral has been entered into before the beginning of such month." If part-time and temporary employees are required to defer 7.5% of their wages as a condition of employment, does this satisfy the requirement of an "agreement providing for such deferral"?

I would appreciate any comments or help from anyone who has looked into this issue.

If a participant in a 401(k) Profit Sharing Plan is called up for Qualified Military Leave, should that participant be credited with hours and compensation as if they had never left? Also, if the participant would have normally worked 1000+ hours, should the participant be credited with 1000+ hours or only 501 hours as to not incur a break in service for purposes of vesting and calculating a profit sharing contribution?

Thank you.

Kim

Situation is a overfunded multiple-employer DB plan(2 employers)where each company now wants to split off and have a seperate plan and investment pool. What special reporting requirements will there be? Is a 5310-A required? What about the PBGC? Would this be treated as two new plans receiving a transfer and therefore a final 5500 required for the multiple-employer plan and new effective dates for the spun off plans? Any guidance would be appreciated.

1st Golbal has set up a program that requires participants to make investment changes and transfers online (no 800 access). I was wondering what anyones thoughts on this approach are?

Not everyone has internet access. COuld this create a DOL issue. At a minimum it will shift additional responsiblity back to the employer to make sure all participants have access to their account information.

Although this may not seem like a retirement related question, it goes to the heart of the long term problem:

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Why do employers continue to provide a coverage that is not a benefit to all but 8 tenths of 1 percent of a group?

Group term life insurance does not work. It does not accomplish the goal of being a benefit. It is a lottery ticket, at best, for someones benefiary.

The reason group life does not work is because no consideration was made for the fact that people are living to be 80+ years of age. When the first group term coverage was written in 1911 the average at death was 49 years old. By 1940 the average was 65. Today, the price of term goes down, but so does likelihood of a benefit being payable when it is truly needed. According to LIMRA, there are 38 million households who do not have life insurance. I would assume this does not take into account coverage through an employer, but again, that isn't much.

Employers/Employess can get Group Universal Life that provides death benefit only or allows for cash accumulation and paid-up coverage, for less than 10% more than group term.

Why is there such a resistance to change?

Can someone tell me the advantages of a safe harbor plan or where I might find some useful information on these types of plans?

I have been receiving disability benefits through my former employer since Sept. 1995. I have recently been awarded Social Security Disability Benefits, effective date 9/96. I received a check from Social Security for back benefits. The disability company through my employer says I have been overpaid since Social Security is paying me for the same benefit period, and I must send them the check from Social Security. Can this be done? Also, I have been receiving benefits totalling 60% of my salary and recently read that it should be 80% of my salary. The discrepency between these two percentages came from 1. The policy sent to the employer regarding coverage limits (they said 80%) and 2. The benefits statement I received the day I began working for the company (they said 60%). The disability company is saying 60%, they do not agree with the written test in the policy guidelines. Another problem. Since the employer paid the premiums on the policy, I have had to pay income taxes on the benefits I received (at the end of the year I receive a W-2 with no taxes deducted). Now I am supposed to pay taxes on the Social Security benefits. How do I deduct the taxes from the lump sum check from Social Security if it does indeed have to go to the disability company? I certainley don't want to pay Fed. taxes AND then give the taxes back to the disability company. The disability company is reducing my benefits by the amount that Social Security will pay me monthly. For some reason, I feel that disability insurance is provided above and beyond Federal funds. Why do we (in this case the employer) pay for this insurance just to have it taken away? Is this disability coverage not a "perk" when you decide to work for the company? It sure hasn't been a "perk" for me recently, Major Headaches.........

Is this correct? If anyone can help me understand all of this (if anyone CAN understand all this) I would greatly appreciate it. Many Thanks,

Dolores