When paying estimated taxes, 4Q98 due Jan 15, 1999, will there be any penalties associated with a large over payment? This question is due in part to unresolved issues surrounding my converted Roth IRA's. I'd rather pay them more than less just to cover my options. Thanks.

I have heard ERISA says it should be 15 days after the end of the month of the paycheck. Where can you go for help with this if it is true and your employer does not respond?

If you have more than one corporation in a controlled group, can you have more than one ESOP, assuming you can pass coverage tests? Can you have an ESOP at Co. 1 with stock issued by Co1, and an ESOP at Co. 2 with stock issued by Co. 2? Something tells me the definition of "employer securities" under 409(l) precludes multiple classes of stock issued by different corporations .

Small DB Plan terminated with PBGC and all EEs paid off. Sole Shareholder was paid balance of Plan Trust after all other EEs paid off. Now one of the NHCE's checks has bounced and Trustee realizes that sole shareholder recd too much $, due to a miscalculation of the "balance in the trust" (because one check had not been cashed). All funds have been rolled to IRA's and there are no remaining funds in Plan and we owe the PVAB of $7,000 to 1 EE. Does anyone have experience in solving this - how to approach IRA custodian (insurance co) and how to approach overpaid HCE? Must they relinquish the excess funds by law?

1) the employer ded limit for a psp is 15% of comp. On a 401(k) is the comp number before or after deferral. Ex: $100,000 payroll, $5,000 deferral. Is it 15% of $100K or $95K?

2) What is the actual employer deduction on tax return. The employer match, the employee deferral or both. Ex: EE deferral $5,000, ER match $2,500. Is the line item $5k or $7.5k limited by 15 percent of question 1?

Basic, but confusing!

Thanks

Can you put the safe harbor match in place (100% to 3%; 50% on 3% to 5%), but also have a portion of match on top of the safe harbor that is subject to vesting? I am also having trouble understanding the enhanced matching formulas in Notice 98-52. Can anyone explain more clearly? Thanks!

We are a not-for-profit organization with an existing voluntary 401(k) plan (no employer match) and a discretionary gainsharing plan (a % of gross comp, paid quarterly) for all ee except executives and other HCEs. Could we pay the gainsharing directly to the 401k plan and what might the ramifications be from a testing standpoint? Our plan participation is currently about 30% of eligibles.

We are revamping our daily 401(k) plan are changing the investment options. We are mapping each existing option to a new option. After the conversion, participants can use the VRU to make election changes.

Any samples which have been useful would be appreciated.

An employer's group health plan will only cover an employee's spouse if the spouse is not covered under his/her own employer's health plan or if the spouse's employer's health plan pays less than 50% (or some other designated percentage) of the premium. Does anyone know of employers who are utilizing this type of plan design? If so, how does it work? How is it received by employees? How was it transitioned in? This type of design could clearly save an employer substantial dollars. Any thoughts or feedback would be appreciated. Thank you.

You need to look at the plan's early retirement provision. If the employee, as of the date he leaves the employer, has the years of service that would entitle him to a benefit (if he were age 55), then he will be entitled to a benefit at age 55.

The amount of the benefit at age 55 may or may not be the amount shown on the statement. Check the caveats on the statement. Is the stement truly showing the participant's accrued benefit? Or is it showing a projected accrued benefit?

Also, note that early retirement benefits are frequently "subsidized" for employees who remain employed until early retirement age (55 in your case). If the participant is entitled to a benefit at age 52, it may be reduced more dramatically than is shown on the statement.

Geta copy of your client's SPD. Some of the answers should be there.

Say I convert at the end of 1998, when the market finishes on a relatively high note, can I recharacterize (or revalue) my portfolio (for tax purposes) if the market goes down (spring '99) and I make no changes to my portfolio mix during that time....or can you only recharacterize if you are beyond AGI limits or some other qualifying factor?

Per news articles posted on Roth IRA we site, I redeemed all shares in a traditional IRA and received a check for a "premature distribution" from my existing traditional IRA. Check is dated 29 Dec 98. According to the articles, I should be able to place the funds directly into a Roth IRA account, within 60 days, and use 4-year tax treatment. However, Janus, Vanguard and Schwab state this is not possible--funds must go into traditional IRA first; and, then be converted to a Roth. This defeats the purpose as I cannot then use 4-year treatment (as stated in the articles). Where can I put this "distribution" from my traditional IRA in 1998 to qualify as a Roth to pay tax over 4 years? All companies I have spoken to state the "conversion" had to be accomplished in 1998 to qualify (redemption and conversion). I am at a loss. Obviously, I have to act within 60 days for the rollover; but, I would like to put it into a Roth for the 4-year treatment. According to the companies, the only option is to place the entire amount in a traditional IRA and convert 1/4 in 99. Any ideas would be greatly appreciated.

If an employee purchases on his own a health insurance policy (e.g., Blue Shield) that covers the employee for expenses of medical care, can the employee be reimbursed for his premium payments under his employer's cafeteria plan? Prop Regs under section 1.125-2 Q&A 7 state that "health FSA may not treat participant's premium payments for "other health coverage" as reimbursable expenses" -- but, I don't know what is meant by "other health coverage". It seems to me that premium is a "medical expense" under Code section 213. Any thoughts, comments? Thanks.

Reg 54.4974-2 Q-1A states that the RMD for a calendar year to be distributed during the calendar year. If the RMD's were processed from the Recordkeeping system in 98 but the checks are dated in 99, does this comply with 54.4974-2? Where else may this be clearly defined?

Client with 401(k) plan will merge into another employer with its own 401(k) plan. Client's employees prefer not to merge plans since investment funds available under survivor's plan are unattractive. I am considering terminating client's plan and making distributions before merger. However, Reg 1.401(k)-1 (d)(3) appears to prohibit this since the employer (ie, the survivor) would maintain a successor DC plan (ie, the survivor's 401(k) plan) within 12 months after termination. Any ideas? The reg doesn't seem to make much sense in a merger of unrelated employers. What would we have done if client had terminated plan for reasons unrelated to the merger and then entered into merger talks? Would the merger have retroactively invalidated the distributions?

I'm gettng married soon. I understand that married couples can only contribute $3000.00 jointly. Would it be wise to each start one now and would this allow us to continue to contribute $2000.00 each after we get married or does anyone know how this works? Thanks...

Met a prospect last week that has a SARSEP for 1997; his accountant just told him that testing had to be done!! (not surprised).

I think it's some sort of prototype, with a 3 month eligibility. I'm used to the qualified rules, whether the eligibility was met as of the plan entry date, whiuch is usually the first day of the plan year.

How do you determine eligibility under the SARSEP rules???

Would prescribed weight loss drugs be a reimbursable expense under a cafeteria plan? Thanks.

In an acquisition where a target company ("Target") maintains a cafeteria plan, what is Acquirer's potential liability if Acquirier assumes liability for the plan and the Target cannot produce documentation for the cafeteria plan. It is my understanding that there is no VCR or CAP-type program with respect to Cafeteria Plans, and even if there were, what application with respect to a plan with no documentation?

Has anyone decided to go ahead and stop withholding on these distributions despite Notice 99-5's extention to January 1, 2000? In addition, my reading of the notice would indicate participant's may still elect to roll this money over until the end of 1999, despite the plan's election on how to treat withholding. Any insight?