A local business planned to roll out a new Chrismass Club savings plan in which the company would match a percentage of the money an employee deferred based on the departments Customer Service Rating. Would this type of plan fall under the provisions of ERISA and if it does what restrictions would that place on the plan

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Dave

Are there any 401k service providers that provide access to the Vanguard Family of funds for small businesses (50 employees)

What states give special treatment to IRA money converted to a Roth? The conversions would result in a high state tax bracket, so without some deduction it would seem prudent to move temporarily (at least the year of conversion) to one of the states with no income tax. Any help will be appreciated.

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paul

I rolled 80k from a 401k to a IRA and then coverted to a Roth in 1998. This increases my income by 20k/year for '98,99,00,01. ok so far. For '98 without the conversion, my tax liability was ~10k. With the conversion, my tax liability increases to ~15600 (10k+(20k*28%)(I'm in the 28% tax bracket). Three courses of action I think; 1) Do I now have to change my witholding to make sure that at least 15600 is withheld instead of at least 10k, or 2)do I have to make estimated tax payments to make up the difference between 10k and 15600, or 3)make sure that at least 10k is withheld and then make a big payment to Uncle Sam on 4/15/00, 4/15/01, & 4/15/02?

Thanks for your help!

If the answer is yes, then does every test need to be restuctured in case the test is restructured in the next year and relies on prior year NHCE%s? Please site any regs. explaining this issue.

Thanks!

Also, if a plan was shifted in prior year and the employer elects to use prior year to pass 1998 testing, are there any other consequences?

A profit sharing/401(k) plan requires eligible employees to complete a year of service before they can participate in the plan.. Two participants either terminated employment or went on leaves of absence. One employee may have incurred a break in service. Are these employees autotically back in plan on their reeployment or do they need to complete another year of service? Plan has no reemployment provision, but break in service rules might apply if break did occur. In that situation, employee would need to complete another year. Any thoughts>

One of our clients is interested in doing cross-testing for 1998. I am of the understanding that it is too late for 1998 and that the client needs to adopt an amendment to do cross-testing for 1999. Am I correct is this assumption? Any help would be appreciated!

Will a profit sharing plan allocation formula that allocates an employer discretionary contribution first a dollar amount equal to 30% of the sum of each participant's total compensation plus excess contribution (amount over TWB) then the balance proportionally on participant's compensation to total compensation of all participants pass general nondiscremenation tests or this is type of allocation formula disallowed?

Husband (H) and Wife (W) own a company with an overfunded DB plan (assets > PVAB) and a DC plan.

Naturally (since this is California), they are getting divorced. As part of the divorce agreement, wife wants to waive all rights to the DB plan and the DC plan (presumably in return for the house, the kids, the dog, whatever).

1. She needs two QDROs, right?

2. His DB benefit for himself and his benefit from his wife (i.e. as an alternate payee?) would be separately subject to IRC 415, not combined. Correct? (What code/reg cites do you have?)

3. Also, the "transfer" of his wife's DC account balance would not count as an annual addition. Correct?

(Let's ignore 415(e) for now since it looks like it will go away in about 10 months.)

Thanks

I'm looking for a technical writer in southern California with the ability to write articles and handbooks on COBRA related issues. You may contact me directly at coreypro@deltanet.com to inquire. (This is a full time regular position.)

A Patients' Bill of Rights bill of some type appears likely to pass Congress this year (or next). What are these rights? What should be included? What should not be included? The right to sue for denied coverage?

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Ray Berry

A plan amended the definition of compensation as of 1/1/96. An employee terminated in 1997. The plan sponsor interprets the employee's accrued benefit using the new def. of compensation for the years 1993 to 1997. However should the old def. of comp. be used for 1993,4 and 5 compensation, or is it reasonable to use the new def. which results in a lower avg. comp.

i have a client that wants to split a combined 401(k)profit sharing plan into one hourly paid ee plan, and one salary paid ee plan. i always thought these types of plan were tested together, but i was told last week by a lawyer that they can be tested separately. now i'm REALLY confused! can someone clear this up for me?

Is it possible to amend an existing 401K plan to a safe harbor 401k for the calendar year 1999? The notification to the employees prior to the plan year is impossible. If it makes a difference, the safe harbor match would be greater than the match currently in existence.

I converted a $2000 non-deductible Traditional IRA (opened in 98 for tax year 97) to a Roth (converted in 1999). In theory I should only have to pay tax on the earnings-$83 (I converted $2083) when I report the conversion for tax year 1999. When I attempt to complete Form 8606, and try to interpret the instructions, it appears that I will wind up paying tax on at least $2000 because I have other traditional IRAs that are reported on line 6 of Part 1. I wasn't able to determine how to complete the form in accordance with the IRS instructions so that I would wind up with a taxable amount on line 16 of $83. Is there a catch? I opened this IRA in the first place because numerous IRA articles talked about how you would only have to pay tax on the earnings of non-deductible traditional IRAs when you converted to a Roth. Now it seems I have been fooled? Is there an example/interpretation of this?

i have a conventional DB plan with a special minimum:

the benefit provided by a prior account under a money purchase plan, with earnings.

That is, the DB plan is a restatement of the money purchase plan. As you might expect, the conventional DB accrual is often less than the benefit from the account balance. By the way, the account balance is credited annually with actual earnings, no min. or max.

Question: what is the guaranteed benefit for PBGC premium purposes?

Is there a safe harbor design for non contributory 403b plans that enable educational institutions to pass all non discrimination tersting such as Minimum Participation, Minimum Coverage, and General Non discrimination?

Please advise.

Thank you.

We have a SARSEP IRA to which the employer contributes 3% to meet top heavy and HCE requirements. What is the maximum salary reduction that can be contributed by the employee? It would seem to be straightforward, however, everythme I read Form 5305A-SEP and Publication 590, I get more and more confused.

For instance:

Publication 590 says on page 52, under Limits on Deferrals, "..the total income you can defer under a salary reduction agreement... is limited to 10,000. This limit applies only to the amounts that represent a reduction from your salary, not to any contributions from employer funds."

But then underOverall Limits on SEP Contributions, it says: Contributions, including elective deferrals (salary reductions), made by your employer to the SEP-IRA are subject to the overall limit of 15% of your compensation or $30,000, whichever is less."

I interpret this to mean that in the case of Joe, who earns $70,000 a year, is eligible to defer the maximum of $10,000 (70000 x .15 = 10500) max is 10000, that is what he can defer. The employer then makes a total contribution of $2100.

Am I interpreting this correctly? What if the employer wants to increas his percentage to 5%? Is that permitted? Please advise.

Regards,

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Darlene

My (S-Corp) company (11 employees, 4 of which are owners/employees) would like to know what options are available to start a retirement plan whereupon large contributions may be made by the employer. It would also be nice if employee contributions were accepted as well, but not required. We already have a SARSEP IRA to which the company contributes 3% of compensation. Most employees max their contributions to that as well. Please advise.

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Darlene