Our non-standardized plan's definition of compensation excludes overtime. This definition is used for allocation purposes and the inclusion test is passed demonstrating nhces are not being discriminated against. For ADP/ACP testing purposes, can this definition of compensation also be used or must total compensation be used for the ADP/ACP testing?

Our client is on a fiscal year which ends on September 30 and which also corresponds to the year end for their defined contribution plan. The plan defines compensation as "all amounts paid during the plan year." However, in practice, they have included bonuses which accrued during the plan year but which are not being paid until after the plan year. We would like to amend the plan document to reflect what is being done in practice, but I was told that accruals not paid until after the end of the plan year cannot be included in the compensation definition for allocation purposes. Is there any reason that the amendment can't be made?

Maybe. The total amount an individual may contribute to IRAs for a year is the lesser of earned income or $2,000. Anyone who is under 70 1/2 and has earned income may contribute to a traditional IRA. Anyone who meets the income restrictions (MAGI under $150,000 for a married couple filing a joint return or $95,000 for a single individual) may contribute to a Roth IRA. You may contribute $1,000 to one and $1,000 to another or any combination which falls within the limits mentioned above as long as the total does not exceed the lesser of your earned income or $2,000.

Some people who are covered by a qualified plan at work and whose income falls with in the phase out range for deductibiltiy contribute up to the deductible amount to their traditional IRA and the rest of the $2,000 to a Roth. Some people who are in the phase out range for a Roth (between $150,000 and $160,000 for a married couple filing a joint return) contribute the maximum allowed to the Roth and the rest of the $2,000 limit to their traditional.

Again I say, aren't all the options great!?!?!?!?!

If Joe is a 5% stockholder and his "son-in-law" works at the company is he a Key Employee or HCE? Likewise with Joe's "mother-in-law" is she a HCE or a Key under IRC Sec. 318.

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If a plan allows a dependent care election change based on the participant's relocation of residence (where this is only a legitimate change in family status for purposes of changing health/accident/life insurance) are the only consequences to the particpant e.g., loss of income exclusion) or are there potential plan-wide consequences? I thought that only violation of nondiscrimination rules conduct could disqualify the entire plan. In this particular instance the relocation is only by a few blocks and does not impact availability of dependent care.

I started a traditional IRA a few years ago and would like to get into a Roth account. Is it possible to just start a Roth IRA and have one of both? (I don't want to pay taxes on what's in my traditional even though I know it would be better in the long run!)

Would appreciate any comments.

I am seeking information on general coverage testing where an employer may have a controlled group or eliminate coverage for employees in a separate line of business. Are these normally included in a full service program. If so what is the cost?

Would a former Trustmark client be willing to share their conversion experience and present level of satisfaction with Quantech? Specifically, anything you'd do differently if you had it to do again? ease of the conversion? time frame from time the decision was made to the day you went live on Quantech? training and support from the folks at Corbel? Thanks.

My husband is 52. He is being recruited by a firm where the substantial financial appeal is in the alleged defined benefit pension. Since he is talking to a CEO type, he doesn't have more than generalities to offer("our objective is to provide sr. execs with 80% of their pay in retirement). It is a service business, all the stock held by about 20 people. What specifically do I need to get from these people to be able to confirm the financial soundness of the plan, and that he will qualify with only 13 years working before retirement? Or do I hire an actuary?

gin gin

Does anyone have any experience with a retiree in a flexible spending plan? He will be getting a payout over a few years, and wants to "payroll deduct" for his unreimbursed medical expenses and his wife's COBRA premiums.

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Employee transfers from parent to a wholly owned subsidiary. Both have group health plans that are comparable. Any COBRA notification necessary upon transfer? Cites?

The deductible limit under section 404 of the code is a plan wide limit and is 15% of eligible compensation (defined by the plan document) which is total compensation of eligible employees reduced by any salary deferrals for cafeteria plans, 401(k), 403(B) or SARSEP (SIMPLE too I assume?????), limited to $160,000.

The individual limits found in section 415 of the Code apply on a participant by participant basis and are the lesser of 25% of compensation (Net Earned Income for partner/self-employed) or $30,000. If your plan allocates on an "integrated" or "new comparability" formula, it is entirely possible for someone to receive an allocation of 22% of Net Earned Income.

If you are disabled but do recive forms W-2 that must be reported on your tax return, are you eligible for an IRA... traditional or Roth?

This is in some defense of the life insurance 401(k) product which is based upon a group variable annuity. Now I am somewhat biased since I represent one of the top insurance companies in the country with a strong market share in the small to micro market (i.e. $500,000 to $3M assets with 300 or less participants)but I sell solely thru FULL DISLCOSURE

Article after article in regard to plan fees tend to state that the variable annuity is NOT the way to go due to high fees (i.e. mortality and expense, commissions )and I have no clue where some of these supposed fees that are stated come from.

I just want to set the record straight:

1) not all group annuity products are created equal...meaning that not all have a mortality and expense fee.

2) the typical group variable annuity will look like this in terms of fees:

(based on $2M in assets with 150 ee's)

a) .90-1% annual asset base charge (which reduces based on plan assets)

(this can typically be dialed up or down based on the service required by client)

b) offer multi-family plan (i.e. 20+ "name brand" families and their funds which the trustees can pick from based on plan objectives whether it be asset mix or lowest internal fees)(i.e Janus,Fidelity, Alliance, Putnam with fund expense ratio's from .39 (large cap class) to 1.6 (internation emerging mkt.class) or somewhere in between based on asset class. These expense ratio's are highly reduced against their "mirror fund" of their fund family (i.e. institutional fund vs. retail). The asset base charge (a) is added to the fund expense ratio (B) for total internal costs.

(example:

mutual fund 401(k) plan might have a growth fund expense ratio for a particular fund of 1.49....that same fund in a group variable annuity may have a fund expense ratio of .65 but you then need to add the asset base charge to it for a possible differential of .15)

c) participant administrative charge of $3.75/qtr.

d) $25 loan set-up with $6/qtr admin.fee

e) plan administrative fees for ADP/ACP testing, 5500 filing, SPD etc (typically using local TPA):

$1200/base + $10 per participant

$500 charge for standard prototype and adoption agreement creation

$500 charge for takeover of assets (i.e. moving from bucket A to bucket B

f) Contingent Withdrawal Charge (Back end hit): does not apply to plan participant but a plan level charge which normally is a 3% 3yr. declining charge

g) Guaranteed Interest Account

As far as services provided which focus on the communication/education of the plan participant the following is what we provide (and I assume is fairly typical):

a) monthly statements mailed to paricipants home

b) 800# VRU for daily val and changes

c) Web access

d) Quarterly on-site Q&A sessions

e) Quarterly trustee meetings

f) One-on-one enrollment for all newly eligible

g) Annual plan recap meeting

It is a fact that a variable annuity 401(k) will typically cost more internally than a mutual fund based 401(k) and should be placed on a grid for side-by-side comparison. But after all is said and done are the monthly statements, guaranteed interest account,multi-family plan,quarterly on-site meetings, one-on-one enrollments etc. worth it for the small,micro employer (which is truly the marketplace that tends to need external education/communication services since they do not have the manpower inhouse to provide it) to enhance participation/deferrals from their non-highly comped employees?

[This message has been edited by andoniangh (edited 03-07-99).]

I have been employed by a seven doctor veterinary practice for 7 years. I resigned on 2/19/99, giving a six week notice, so my last day will be 4/2/99. on 2/2/99 the doctors were informed of a bonus program beginning 1/1/99 that awards $4,000

on 6/31/99 and $4,000 on 12/31/99 for reaching goals set in 3 categories, and will award a percentage of that bonus for that percentage of those goals reached. This bonus is in addition to my hourly wage, and in leiu of a raise that I was due 7/1/98 (according to prior yearly raises). The categories are gross income, number of transactions, and average client transaction. This practice is managed by the owner, who is a veterinarian with no special training in management, sba, or benefits. I have never signed a contract, nor has one been offered. I need to know what I am entitled by law, since I am working through the first quarter of 1999. I need to know this as soon as possible, as the boss is leaving for a 2 week vacation on 3/18/99 and is counting on me to cover his hours (a possible leverage point for negotiations?) I hope not to have to use any leverage here, I want to leave as amicably as humanly possible.

Thanks for any and all help

LD

I currently use the Datair document system, do I have to wait until they come out with the restated document (GUST approved language) before restating and amending my volume submitter and custom documents?

I guess it would make sense to since the amendment language would be already approved by the IRS.

I have a profit sharing plan that I'm taking over from an insurance company that maintained the plan document. The plan has been in effect since 1984. I have a copy of the adoption agreement effective in 1984 and a model amendment to what looks like the insurance company's prototype document to comply with TRA'86. Would this model amendment satisfy the requirements for TRA'86 or does the adoption agreement have to be restated and amended?

Any help would be appreciated.

The Roth IRA final regulations appear to limit Roth IRA reconversions after 1999 to individuals who failed to meet the AGI limit for conversions. Is this an accurate reading?

Can a withdrawal made at age 59 1/2 (no hardship) be repaid to the plan if the participant changes his or her mind? I assume that rollover to an IRA is an option, as discussed in Notice 99-5.

I'm interested in a noload or low maint. educational Roth IRA for my granddaughter as well as same noload/low maint. for my wife and myself.Preference in the area of an aggressive mutual fund. Any ideas?

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