If you offer a safe harbor 401(k), are you permitted to offer additional matching contributions subject to a vesting schedule? After reviewing Notice 98-52, these are my conclusions, but I could use some help in verifying them:

1. With a 3% nonelective, you could offer a forfeitable match, but you would have to perform ACP testing (non-elective meets ADP & top-heavy, but nothing in 98-52 says it covers ACP safe harbor)

2. By offering a safe harbored match which matches up to 6% of comp, you cannot offer an additional match subject to vesting because VI.B. states the maximum is 6% that may be matched. However, this may only mean you that match up 6% and have it be safe harbored from ACP. Additional matching might be subject ACP or eliminate all of the match from safe harbor status. (Why you would want to offer both a safe harbor & non-safe harbor, I don't really know. But that's the question I need to answer). My interpretation is that you cannot offer an additional match on top of your safe harbor match.

Thanks in advance for your help!!!

If an employer sent a health insurance company monies, the insurance company deposited that money in its account, is the interest earned from those monies considered a plan asset?

Does the 20% withholding requirement for "eligible rollover distributions" apply to amounts distributed to the IRS to satisfy a tax levy on a participant's account? A citation to the applicable authority (if there is any) would be much appreciated. Thanks.

MDE Information Technology, Inc. has developed an educational and analytical tool for employee stock option programs called The Option Optimizer . This tool will help corporations maximize the compensation value of their stock option program, and will strengthen the alliance between employees, the company and shareholders. Please visit http://www.mdegroup.com for further information.

If a self-employed person amends his schedule C and lowers his income, does he need to change or amend his PST contribution as well, if he paid in the maximum? Does he need to receive a refund of part of his prior year contribution, including earnings?

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bravojk

Is there an available securities law exemption for the participant's interest in a voluntary, contributory ESOP?

Plan sponsor dissolved business in 1997 and decided to terminate DB plan. Standard terminaton. Now that we finally have all IRS and PBGC approvals, we are proceeding with distribution of final benefit amounts.

But the custodian of the funds does not do 1099's. Neither do we (actuary). Since there is no longer a corporate entity (I think), who is repsonsible for the 1099's and IRS reporting? Stupid question, since the sponsor is responsible. (The plan is self-trusteed.)

The practical question is what suggestion can I give the former owner of the company to get the tax forms done?

For split-dollar plans, some insurance carriers apparently have added a term rider for two years after a withdrawal, issued at rollout, which maintains the death benefit in the plan. This was an attempt to sidestep the application of Section 7702(f)(7)(E), and delay the cashing out the plan. Any comments on this practice?

Company x owns 51% of stock of z corp., indiv. y owns remaining 49%. according to stock attribution rules of 414©, z corp. is treated as controlled group with x and participates in x's 401(k) plan. Individual y will purchase the remaining 51% of stock in z and start up a new 401(k) plan. Do the z participants in x's plan have a distibutable event upon the acquisition of all the stock in z corp. by individual y?

Does any one know where there is a cite for the definition of the begining of the loan repayment period. I thought the DOL defined this as when the loan funds became available to the participant, not by amortization schedule about four or five years ago. This was due to plans not beginning the payment periods until one or two months after the loan check was issued, but I can't find where the advisory is printed. Can anyone help?

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Philly

Ahhh, one of my favorite issues -- secondment of employees!

First, whether someone is an employee of Z depends on good, old fashioned common law principles. Which company directs and controls the day-to-day activities of the workers? The fact that the workers' compensation is charged to another entity is not determinative.

Second, even if they are common law employees of Z there is no requirement that they actually participate in the plan. I only get involved with individually designed plans so I'm not sure of the limitations of a prototype. Many of the plans I'm familiar with would exclude these employees if the employees are participating in another plan sponsored by the employer (or an affiliate). In this case its a good bet that the employees continue to be covered in their home country plans.

You are right that even if these employees could be excluded you still have to take them into account when running your 410(B) coverage tests. Again, you are right that nonresident alien employees of X can be excluded from 401(B) testing if they have no US source income. But even if these workers are "true employees" of X they cannot be excluded from testing because they have US source income.

Bottom line: apply the common law employment test to see which company is actually the employer. Since the employees have US source income they will be taken into account for 410(B) testing regardless of whether employed by X or Z. Your big issue is what does the plan document provide -- if employees of X I think they are in the plan; if employees of Z you can exclude them (again, assuming 410(B) is satisified).

Good luck.

A 401(k) Plan currently provides that employees will be eligible to participate on the January 1 following their date of hire. An amployee hired on February of 1998 would complete a year of service in February of 1999. Due to the 18 month rule, the employee would have to participate in the plan sometime during 1999. Is company able to exclude employee from test (not plan) for 1999? A consulting firm told me that its position is that anyone hired before 7/1/98 could not be excluded from ADP test under 401(k)(3)(F). Any thoughts? Thanks. Ed

When I turn 70.5 and start taking mandatory annual withdrawls from my traditional IRA, can I pay the tax, then convert the remaining part of the withdrawl to a Roth IRA each year? Maybe it ultimately won't matter because the "outside" money will probably never be taxed anyway - my heirs will inherit it with a stepped up basis, tax free. Is this the case?

Can you use an Elapsed Time vesting Method and also exclude plan years prior to adoption of plan?

I wouldn't think you could but can anyone confirm for me.

Thanks.

Can a Roth IRA be set up thru a stockbroker by a qualified adult whereby an infant(no earned income) can be the beneficiary and upon death of the adult,say 20 years later, the built up wealth in the Roth IRA remains untaxed and becomes the Roth IRA of the now 20 year old ?

Te 20 year old would continue on for decades building up more tax free wealth in the same Roth IRA he/she was once the beneficiary of.

Than you for your interest.

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richard paul

We are considering updating to Crystal 6.0, (not on Quantech 5.0 yet). I was wondering how people are finding the additional functionality of Crystal 6, particularly subreports, conditional formatting grouping and running totals. Any success using some of the new features?

I have a general question about HIPAA and college-sponsored health plans.

First, my understanding is that college plans are deemed "bona fide associations" and as such the individual markets rules under HIPAA apply. Is this correct?

If so, what are the ramifications in terms of creditable coverage in each of these situations:

(i) If someone moves from a group plan to a college sponsored plan, must the college sponosred plan apply the creditable coverage from the group plan?

(ii) If someone changes colleges and moves from one college-sponsored plan to another, must the second plan apply the creditable coverage from the first?

(iii) If someone moves from a college-sponsored plan to a group plan, must the group plan apply the creditable coverage against any pre-existing condition exclusion period?

Thanks very much.

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Rob Gutowski

Can an order which otherwise satisfies the Code and ERISA but is not signed by the judge be considered a QDRO? 2nd question: would it be considered a "reasonable procedure" if a plan administrator imposes a time limit on the amendment period for an order which initially fails to satisfy the QDRO reqs.? Is it correct to conclude that if an order is not determined to be a QDRO by the administrator within the 18-month period, the segregation req. is over and the administrator can allow the participant to take a distribution?

Person X owns 100% of Companies A and B; hence both companies are in the same controlled group. Both companies have employees, and both are calendar year companies.

Effective June 1, 1999 (for example), X sells his entire interest of Company B to an unrelated person Y.

When are both companies no longer in the same controlled group?

Can Company A set up a pension plan effective June 1, 1999 (say for a 7 month initial plan year) and ignore employees of Company B?

Or, must Company A wait until January 1, 2000 to set up a pension plan? (In other words, are A and B in the same controlled group for the entire 1999 year?)

Or, must Company A wait until 2001 (or later)because ownership (for determining controlled group status) includes ownership interests in the last 5 years?

Would the answers to the above be any different if the original companies were in the same brother-sister controlled group, and the ownership change resulted in them no longer being in the same brother-sister controlled group?

Never dull!

A sole proprioetor has no employees. The profit sharing plan contribuition is 15% of compensation. What is "compensaton" for this purpose.

I know there are certain adjustments to the bottom-line number in the Schedule C to reflect Social Security -- what are these adjustments?

Thanks