I am dealing with a small dental partnership where the son of one partner has very large medical expenses. The client is considering incorporating to a C corp and starting a flexible spending plan under a cafeteria arrangement. All employees (20-2HCE) would be eligible. I'm am not a medical benefits expert.

Is this a reasonable solution? If the HCE with the ill son contributes up to $10,000 to the plan, how will this affect discrimination testing. I see the key employee concerntration test as a possible problem. Any thoughts and/or guidance?

ERISA S. 104(B)(4) provides the participant the right to request plan documents necessary to review their pension benefit. Does anyone know if there is such a law (either w/in ERISA, DOL, IRS,IRC,etc.) that provides this right to a participant of a governmental plan.

An IRA lets the surviving spouse choose whether benefits will be payable in accordnace with the 5 year rule or as an exception to the 5 year rule. The IRA does not specify the method of distribution after the accountholder's death. If the survivng spouse does not make an election, the regulations provide a default provision. The default is that the distribution method will a life annuity. Under the Code, the survivng spouse can delay distributions under this method until the dime the deceased would have reached 70-1/2. What is the last day on which a survivng spouse may elect to receive benefits in accordance with the 5 year rule or as an exception to the 5 year rule before the default provision becomes operational? Pub. 590 indicates that it's December 31st but I can't reconcile that with the regulations.

Grandfather (age 70) lists Grandson (age 21) as the beneficiary of a $10,000 Roth IRA conversion. Upon Grandfather's death may the Grandson continue the Roth IRA and not take out any tax-free distributions? Could the Grandson leave the inherited Roth IRA in tact and transfer it at his death to his children or grandchildren and still be tax-free Roth IRA money when it is eventually taken out?

How do we exclude minimum age and service in 1999 if we elect prior year ADP for NHCEs? Do we need plan amendment to exclude the minimum age and service group? (Assume all 410(B) tests are ok).

I have seen proposals showing an ER with a 10% MP Plan and a safe harbor 401(k) Plan in which the only contrib is the HCE Deferrals of $10,000/year. Assume plans top-heavy, and there are only 3 EEs total. Is it OK to have NO contrib to the safe harbor plan for NHCEs due to the 10% Money Purchase contrib for all EES - is the safe harbor match covered by the Money Purchase contribution?

Thanks very much for input.

Somebody recommended a book by a Boston Attorney named Natalie Choate entitled "Life and Death Planning for Retirement Benefits." Does anyone know the name of the publisher, or a way of contacting the author so that I may obtain a copy. Thank you.

employer sends contributions, employee and employer, for an employee not eligible to participate yet. the funds have been in participant's account for a month. how should this be corrected?

Is anyone planning on giving the Safe Harbor notice via paperless technologies, i.e. email, website posting etc?

Please log onto

www.ncpa.org/pi/congress/socsec/6-98fcong.html These findings should be known by everyone.

If a year of service is defined as a 12 month period in which an employee works at least 1000 hours -- is one half a year of service a 6 month period in which an employee works at least 500 hours? I am trying to figure eligibility for one of our clients and the only requirements are that the employees are 21 years old and have 1/2 year of service. (The employee is part-time with less than 500 hours per year). I also cannot find anything in the adoption agreement that excludes part-time employees.

I'm drafting my first plan subject to Davis-Bacon and state prevailing wage statutes. The plan will be a profit sharing plan, but a portion of each partcipant's prevailing wage will be contributed to the plan. Does anyone have a sample contribution allocation formula that I could look at? Thanks. Ed

Are out of pocket expenses for a stepchild that is not claimed on my taxes allowable reimbursements from the MDSA? Publ. 502 states that for children of divorced or separated parents, that each parent can include the medical expenses he or she acually pays even if the child is claimed by the other parent as an excemption. This is for itemizing medical expenses. Is the same true for the medical flexible spending?

A 401k used some elective deferrals to pass the 1997 ACP test. The '97 ADP/ACP test was completed on current yr data. Now for the '98 ADP test, the plan would like to test on prior data. Is the NHCE ADP% before the "shift" of the elective deferrals to ACP used? Or is the NHCE ADP % after the "shift" of elective deferrals to ACP used?

Reading Notice 98-1 it leads ms to believe that I should use the after shift NHCE ADP %.

Any help would be appreciated.

A member of a professional corporation signed a one-time, irrevocable waiver of participation in the corporation's money purchase pension plan. He had previously participated in the plan for several years. The member then terminated employment and was rehired a year later. He signed an additional opt-out form upon completion of the eligibility waiting period. However, he "revoked" his irrevocable waiver and entered the plan shortly afterward. The plan is now under IRS audit, and the agent has said that minimum funding deficiencies may apply. Is there a way to proceed so as to minimize potential penalties?

Two questions. Must a sec. 125 plan file a separate 5500 form from that of the underlying benefit, e.g., a medical plan? Also, must a sec. 125 plan advise participants in the underlying plan's SPD that the plan is a sec. 125 arrangement?

Does the maximum amount an employee can defer in a 401K plan for 1999 remain at $10,000?

Also what is maximum amount that an employer can contribute to an employee into an employer sponsored profit sharing plan for 1998 and 1999?

Can my spouse contribute to a Roth without any earned income?

Employer makes several amendments to plan and restates. The prior plan had an immediate distribution policy, but new plan is completed by checking a 1 year break before distributions. This is obviously a 411(d)(6) protected benefit. Employer failed to catch the change.

No terminated employees during this period. Employer wants change plan back to immediate distributions.

Any thoughts on this method of correction? Is this a CAP issue?

The corrections act specifically said that SIMPLE IRAs can be converted to Roth IRAs for past years accumulations, but there is a catch 22. All SIMPLE IRAS are, by definition, 1 year old. The trustee (Franklin) won't convert because ther is a penalty for the first 2 years. Congress must have overlooked this, otherwise there's no point in OKing SIMPLE IRAS for conversion. Any ideas, or other experiences? I'd like to convert by 12/31/98 if I can find a way.