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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I am 28 years old and trying to figure out what the best planning strategy is for my retirement. I just changed jobs and now work for a government agency. I am in the process of rolling over my 401K from my previous employer into an IRA and then converting that into a ROTH (no 401K plan was available with my new employer). My new employer offers a 457 Deferred Compensation plan that I can contribute a max of $8000. I plan on leaving this job when I relocate in 2-5 years. I understand that with the 457 I can only roll it over into another 457 provided my next employer has such a plan.

So my question is should I contribute to the 457 or to a Roth? If I should do both which should be my priority? I can afford to contribute $400/month. Any advice is appreciated. Thanks in advance!

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Irene

If I have a short plan year, say six months, do you half all hours requirements, 500 hours for eligiblity, 500 hours for vesting, etc. instead of 1,000. 250 to avoid a break in service, etc. I know compensation limits and 415 limits would be halfed, but deferral limit would not, $10,000 is for a calendar year, right? Thanks

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I want to set up some mutual funds as IRA's. Are there particular types of mutual funds that are not suited for IRA accounts?

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Mary Sutton

My company is considering an opt out plan to save money on our health insurance costs. Does anyone have a plan they would like to share? I have had suggestions of 40% of premium to flat dollar amounts. I would like some more information before I make my recommendation. Thanks!

IRC section 402©4 defines an "eligible rollover distribution" as "any distribution"............etc.

Yet the IRS is taking the position that only early/taxable distributions under 403(B)(7)(A)(ii) and (11) are eligible for rollover treatment from 403(b)arrangements. This position was sustained by The Court of Appeals for the second circuit in FRANK V. ARRONSON (CA 2nd 96-9456).

403(B)8 and (10) are the eligible rollover distribution provisions of section 403(B) while paragraphs (7)(A)(ii) and (11) are the early/taxable distribution provisions. Contrary to the Court's decision they do not conflate.

By conflating them the Court has rendered the REPEAL OF THE SPECIFIC TRIGGERING EVENTS UNDER 403(B)8 that needed to be satisfied for distributions to be afforded rollover treatment MEANINGLESS. This repeal was authorized by the Unemployment Compensation

Ammendments of 1992, effective 1-1-93.

IF THE CODE REQUIRES THE SATISFACTION OF A TRIGGERING EVENT FOR DISTRIBUTIONS TO BE AFFORDED ROLLOVER TREATMENT WHY ARE THESE TRIGGERING EVENTS NOT ENUMERATED IN THE REGULATORY DEFINITION OF AN "ELIGIBLE ROLLOVER DISTRIBUTION????

They are not enumerated because the 102nd Congress wanted to eliminate the Code's restrictions for distributions to be afforded rollover treatment. The 106th Congress should clarify that the early/taxable distribution provisions do not apply to rollover amounts; and in the absence of the Plan Document requiring a triggering event, the plan participant has the statutory right to effectuate an eligible rollover distribution at his or her personal discretion.

[This message has been edited by Joel Frank (edited 03-05-99).]

I will resign my fulltime employment

position this June in order to return

to school for an MBA. I have a 401k plan with my current company.

(1) Is it possible to roll my 401k

funds over into a Roth IRA?

(2) If yes, is this a good move?

(3) If yes, I am interested in invest-

ing my 401k money into a mutual

fund Roth for high return possibil-

ities over the long-term. Any rec-

ommenations on a good fund company through which to establish my new Roth IRA account?

(4) Should I set up the IRA first with

personal funds? Or should I start

with an initial infusion of funds

directly from my existent 401k?

Which is easier?

(5) Are there any tax consequences from

rolling over from a 401k to a Roth

IRA? Or is it a transparent pro-

cess with no reflection until I

withdraw from my Roth?

An employer is testing the 1998 plan year for the ACP test and would like to consider using part of the elective contributions made to the Plan to pass ACP, as is permitted under 1.401(m)-1(B)(5). The employer uses prior year testing. Is there a way to use elective deferrals under prior year testing? Which deferrals are used for NHCEs? Notice 98-1 only sets forth rules for using QMACs and QNECs.

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GBM

We have a self insured retiree supplemental Medicare plan with approx 200 participants and a paid-up retiree life plan with approx 500 participants. The retirees are in NY. We would like to find a TPA (in NY) to outsource these plans to. Any ideas?

Companies A and B are NOT in the same controlled group (or affiliated service group, etc.) However, there is overlap among these two companies, for historical reasons.

Company A and B each sponsor calendar year pension plans. Management of Company A "administers" both plans. (Don't worry, the named Plan Administrator is the plan sponsor of each plan.)

An employee of B terminated employment and was paid a lump sum -- out of Plan A's assets. Oops! The lump sum represented about 0.01% of Plan A's assets and 1.5% of Plan B's assets. Quite minor.

Now, how to correct? APRSC? VCR? Other? Any time restrictions? (It happened around October 1998; we just discovered it.)

(There is no history of errors or abuses, both plans are properly administered; just "an inadvertent screw-up").