Rev. Proc. 97-41 says that 403(B) plans must be amended for SBJPA by the end of the 1998 plan year, but that qualified plans have until the end of the 1999 plan year to be amended for the GUSt requirements generally. Any ideas about why the IRS chose the require 403(B) plans and contracts to be amended earlier?

This seems like a simple-minded question, but I'll ask it anyway. For a non-ERISA plan, what would be the consequences if the amendment is late? As 403(B) plans aren't qualified, what can the IRS do about incorrect documents? The audit guidelines focus on operational errors.

(As you might have guessed, I have a new client that missed the 12/31/98 amendment date.)

I do not believe any employer contributions other than top heavy can be made to a SARSEP.

Does anyone have a cite for this?

Thanks,

Steve

It has been several years since I have compared a DB Plan with a Profit Sharing Plan. Where is the best place in the code or Regs to start my review?

Which "must have" ERISA/EB books/outlines do people recommend for someone in this field?

Client has 401(k) plan which provides for quarterly investment changes and quarterly participant reports. Client wants to permit participants to make investment changes more frequently but at their expense. Investment manager proposes to charge a flat fee for each additional change (eg, $200 per change). Client also wants to let participants request "enhanced" reporting which would

include info not required in standard reports(eg, performance of participant's account versus S&P 500). Again, participants would have to pay a flat fee ($200) for each enhanced report. I believe that the fees (if reasonable) can be paid by plan an charged against accounts of appropriate participants. Is ther any discrimination problem because the HCEs (who likely have the larger balances) can more easily afford the fees?

A pension plan was terminated and purchased annuities through an insurance co. about 12 yrs ago. Can a person still have rights to obtain plan documents and review his pension calc. Is the insurance co. the trustee who has all files and responsibility of administering plan in accordance w/ provisions? And do we request such documents from the ins. co. in same manner as if it were the plan sponsor?

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Upon enrollment, do newly hired employees need to be notified in writing SEPARATE FROM THE SUMMARY PLAN DESCRIPTION, that the plan has a pre-existing condition limitation which may be reduced by credible coverage under HIPAA?

Does having this information in the SPD suffice?

So far, I have gotten conflicting answers.

Two key employees from company A leave and start company B, in which they are 50/50 owners. A & B are not common ownership.

Company B establishes plan, and they roll their funds from A's plans into it. Rolled funds are substantial and represent 96% of B's balances.

For top-heavy test, are the rollover funds considered related to B's plan or are they tested under A's plan? I only ask this as the individuals were key employees in both companys.

Can a governmental 401(a) plan have mandatory pre-tax contributions? Would this be allowed under section 414(h)? If so, should there be special language in the Plan Document to allow for the pre-tax contributions?

We are investigating the outsourcing of our COBRA / HIPPA administration. I would be interested in hearing of experiences with vendors (good or bad) of others who have gone through this process.

If you have comments that you would rather not post to the list, please feel free to email me directly at shakes@lenscrafters.com.

Thanks in advance.

Scott Hakes,Director of Benefits

LensCrafters

Cincinnati, OH

In a recent discussion with another practioner, I heard about this method for correcting a failed ADP for one HCE : the HCE requests his/her w-2 corrected for the year in question and the plan administrator deems the excess to be an advance contribution for the next year. Has anyone used or heard of this approach ?

Do you know of any conferences or training materials dealing with non qualified plans.

There sure seems to be an awful lot of confusion out there about Roth IRA conversions/ Transfers. We, the custodian of a Roth IRA, sent a conversion request on behalf of one of our investors to the trustee of her traditional IRA requesting that they transfer it to us as a Roth Conversion. The form she signed clearly indicated her intention to convert the traditional to a Roth and our letter clearly indicated we would accept the transfer into a Roth IRA. However, the transferring trustee is now telling her that they will not issue a 1099-R because they are treating it as a trustee-to-trustee transfer between traditional IRAs, a transaction which is not reported to the IRS at all. They are telling her we should have transferred the money into a traditional IRA and then done the conversion for her to a Roth from there. This seems a pointless waste of time, energy and paperwork since our conversion form and acceptance letter were clear that she was requesting a distribution from her IRA with the intention of converting to the Roth (the hope being that the 1099R would show premature distribution with an known exception to the penalty). Has anyone else run into similar situations? Are there any logical explanations for this approach?

Can contributions to a Roth IRA come from distributions of a 457B plan. I'm retired with no other W-2 income.

I tell clients that it's a provision where the IRS acknowledges the fact that your SS benefit decreases as your income increases. The integration is the level of income you pick to determine which employees you want to receive a "larger piece of the profit sharing pie."

Also tell them that it is one of very few qualified plan provisions that permits the plan to favor the highly paid people (as long as they stay within IRS guidelines of course).

Is the portion of an defined contribution account balance attributable to a direct rollover includible in the account balance for the cash out rules?

Does anyone out there have any expereince designing/implementing any sick and/or vacation donation programs? A program where an emp. can donate hours to another emp. due to a serios illness, etc.?

I am looking for any rulings, cases, precedents where a court has used a literal reading of a Plan document and SPD, where the intent was clear but contradictory to the Plan.

Specifically, in a Plan using an Offset where the Offset was improperly named.

Is there a 404© risk to an employer if the employer recommends that retiring employees roll their plan distribution to a particular company's IRA annuity program? It would seem to me that the employer is assuming SOME sort of liability if they endorse a particular company in communications given to employees at the time that they are receiving the usual information packets and notices at the point of separation from service. Is it safer for the employer to make no recommendation or to provide information on several IRA companies rather than one company?

We administer a plan where the plan sponsor has been over reporting hours for the last five years. Many participants who did not work 1,000 hours were reported as doing so, and incorrectly given a year of vesting service. About 30 former participants are involved with total overpayments of approximately $8,000. Total plan assets exceed $1,000,000, so no single participant is significantly impacted.

What is the proper correction method? Is the plan sponsor required to attempt collection of small sums of money from the overpaid former participants, even if they could be found? If the sponsor elects to deposit the overpaid amounts, is the contribution deductible? Would earnings need to be paid on the deposited amounts? Would all prior years with excess distributions need to be reallocated? The problem has been corrected for the past year. Can the sponsor simple ignore the excess payments? Thanks.