I think the question is best asked with an example. 1995 and 1996 there was a matching contribution and an ACP test performed. For the 1997 plan year, matching contributions were not made, t hus no ACP test performed. For 1998, a match was made and the ACP test performed. The 1998 ADP test is failing and would pass using prior year %'s. (Please note the plan is on a prototype document that prohibits us from mixing prior and current results for ADP/ACP testing).

From reading notices issued by the IRS, if an ACP test had never been performed, I could rely on the 3% default for the year. However, there has been ACP tests in prior years. Do you agree that the 3% default is not available?

Can I use prior year ADP and use current year ACP since there arent' ACP results available from the prior year?

Is there any recent guidance issued by the IRS regarding the above issue.

Thanks

During the course of the 1998 plan year, 2 HCEs terminated and took distributions from the plan. One did a direct rollover and the other took a cash distribution. Now it appears that the plan fails its ADP test for 1998 and that these employees should have received distributions of excess contributions. Any thoughts or guidance on how to resolve this? Additionally, does this mean that HCEs can't take distributions during the plan year? In this situation, HCEs were advised to not defer to this level because they wouldn't pass the test but some continued to defer anyways. A further complication, the plan has now terminated.

Inclusion of COBRA continuation rights in the SPD is standard practice, so you're fine.

Karen:

Without much detail about the nature of your claims problems, I'll have to address the general areas in which I've seen difficulties in the past.

First, every claim system has a table that compares the "procedure code" of the medical service performed against the "diagnosis code" that the doctor or facility provides as part of the claim. If the system does not recognize a procedure as being a valid one given the diagnosis (for instance, a tonsilectomy on a patient with heart disease), the claim will be denied.

Second, we see problems arise due to "unbundling." Modern provider contracts often feature "case rates," which provide a fixed fee for the treatment of a particular diagnosis, and rate structures that incorporate a number of different procedures under one payment code. For example, a carrier may, under a procedure code for tonsilectomy, write in the contract that the payment for the tonsilectomy includes all charges for anethesia. If the provider then bills separately for the anethesia (or "unbundles" it), that service is denied.

Finally, there is a problem peculiar to point of service plans, particularly capitated ones. We have found that if a patient self-refers to a physician who is a member of the same medical group that the patient is enrolled with, the claim is returned to the medical group by the carrier. The reason for this is that, in the carrier's reasoning, the member may have been referred by his or her primary care provider to that specialist, in which case the specialist should be paid by the medical group, and not the carrier. If I had a dollar for every time this happened, I could probably retire. What is required is that the specialist make sure that the claim form is clearly marked that there was no HMO referral involved, then *maybe* it will go through without a hitch. Maybe.

Hope this helps. -Kevin

I don't know who to ask so I'm hoping somene can help me understand. I signed a prenuptial agreement in October 1997 and married in October 1998. I signed away all my rights as a spouse when it came to his money. I was not marrying him for his money so it didn't matter. I have had a hard time with his family, they didn't want their widowed father (10 years) to marry me a widow (23years). I raised my boys by myself and put myself through school. After we were married he told me to put $860 a month in a joint account to pay expenses. I live in his house. He has property and investments and is 29 years older than me. He still works full time at age 77.

He gave me a paper to sign from his daughter the lawyer. It gives them permission to determine the beneficiaries of his pension plan to be his 2 daughters and their families. The property and cars etc. will also go to them, that's fine. But what I don't understand is why after a year of marriage I have to sign it again! Is there something I need to know? I told him I wouldn't sign anymore papers because I feel his family is testing me further and I feel this is a nasty way of trying to break us up. Is there a reason I need to sign it again?

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Diane

Employer maintains a SEP. Only has himself and one employee. Can he only make the employer contribution to the employee (NHCE) and not give himself one (HCE)?

I made a partial conversion to a Roth in 1998. Am paying off all the federal tax due to a low AGI in 1998 (illness). Is it true that CA is forcing us to pay it off over 4 years??? (They don't want the money now if we offer it??) If true must one do this on the CA adjustments? Just subtract 75% from the Federal amount? Thanks, Lee

Do loans from 401(k) plans legally require spousal consent? Thanks!

Can someone tell me or give me a site where to find which fund families require no minimum deposit when setting up a Roth with automatic deposit? I wanted to set one up with Vanguard until I found out they required a $1000 min.

Thanks, Stoughton

How does an employer determine the cost basis, to the plan, of an annual match made in the form of employer securities after the plan year has closed? For example, an employer contributes shares as a match on 4/30/99 for the plan year ended 12/31/98. Is the plan's cost basis based on the fmv of the shares as of the date contributed (in this case, 4/30/99), or can the employer use the fmv of the shares as of 12/31/98? Would the answer vary if the shares being contributed are treasury stock, rather than shares purchased on the market by the employer and then contributed to the plan? Finally, if each participant's interest in the stock is tracked on the basis of "units" rather than "shares," how is net unrealized appreciation determined (i.e., does unitization mean the shares have not been allocated to participant accounts for purposes of determining net unrealized appreciation?)

I am new to investing and I converted my Traditional IRA to a ROTH. Do I have to pay taxes on the amount it increased or on the total value? Please advise. Thank you in advance.

A young investor.

Anthony

I have a client who would like to offer to his retirees who have attained age 60 and have 5 years of service the opportunity to continue coverage under the company's group medical plan from age 60 to age 65. Officers whould enter into a co-pay arrangement with the company. Non-officers whould have to pick up the entire cost of the coverage. Does this arrangement produce any non-discrimination or tax problems? If so, are there any ways around these problems?

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I have a custodian who believes that if his church-run school adopts an ERISA-covered 403(B) plan, the school does not have to comply with the 3 optional ways to meet the contribution limits of 403(B)/415©. It seems to me that educational organization employees and church employees are entitled to the special elections of 415©(4), regardless of what the 403(B) document states and regardless of whether the church elects to be covered by ERISA and the Code.

Have I read this incorrectly?

I have a custodian who thinks that if a church adopts an ERISA-covered 403(B) plan his church-run school can avoid giving its employees the 3 church contribution limit options. Is this true?

Does the ADEA apply to retiree medical benefits (not as applied to reducing severance benefits)? E.g., can an employer charge retirees an age based premium without having to satisfy the ADEA's equal benefit/equal cost analysis?

Thank you.

I am working with a plan that will not allow integrated profit sharing contributions to be used for inservice withdrawals. Was this ever restricted by law? If so, what is the cite? Was it part of the LRMs? Thanks!

401(k) top-heavy test % is 60.71. The plan sponsor has decided (via CPA advice) not to make a top-heavy contribution because the ".71" can be dropped, thus resulting in a passing % of 60. CPA also stated it is up to employer to pick a method and keep it consistent year to year. Our consistent method has been to include the .71.

Can not find any reference to state this is right/wrong. Any suggestions?

does anyone know of a report writer software that is compatible with different types of pension software, mainly datair and asc. both have their own proprietary report writer software but we are looking for something better, simpler.

thanks

I have a doctor client who sponsors two plans ps & mp. He has a partner who is an adopting employer. They both contribute 1/2 of the ee's contributions each year. The doctors are splitting. Do the employees going with the "adopting er" lose vesting? Are they terminted for vesting purposes? Are they affected at all if they roll all money into the leaving md's new plan? I may need to give more info.. but any thoughts would be helpful. Thanks

Employer offers a dependent care reimbursement account (DCRA) funded only by employee salary reductions. Is it permissible for the plan and the employer to allow reimbursements up to the annual elected limit, even if the account balance at the time of the reimbursement does not have sufficient funds to support the reimbursement? The employer, in effect, covers the deficit until the salary reductions cover the deficit. If this approach is acceptable, does it present problems for the employer or employee, particularly if the plan has a fiscal year and there is the possibility that reimbursements to an employee could exceed $5,000.00 in a particular calendar year?