We are currently filing one Form 5500 for our Cafeteria Plan. Our plan includes the following: Dependent Care Reimbursement, Medical Reimbursement, Health Insurance Premiums, and Group Life and Disability Premiums. We have over 100 employees, and some of these plans have over 100 participants. Do we need to file separate 5500's for these plans?

We have some employers whose plans were started some years ago who have the Joint Survivor Annuity built into it. Is it possible to remove this with an amendment if that is what the employer or trustee wants?

To compare our plan benefits, defined benefit plus retiree health, I am conducting a survey that compares our benefits to other public systems. This is on both pension and retiree health. I'm looking for sources of information where this data might be found. I am also interested in contrasting the provisions and benefits of defined benefit plans in the public sector to private sector defined benefit plans, specifically in the areas of post retirement adjustments, COLA's, and ad hoc payments based on investment earnings in excess of acturial assumptions. I'd like to know why the public sector offers these enhancements while the private sector may not. I have a thesis on why differences in benefit formulas and post retirement benefits exist but would like to author a paper that would prove my thesis.

Anyone out there have any thoughts on these subjects, or where the data might be available?

Thanks

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Question regarding preparing ADP/ACP testing and utilizing the current and prior year alternatives. I had been preparing ADP/ACP tests using the prior year and current year elections mixed for the ADP/ACP test. For example, I may use 1998 %'s for ADP and 1997 %'s for ACP. At a recent seminar, it was noted that the above procedures were not recommended. The individuals attending didn't have notes on certain citations or reasons to indicate there were issues with preparing tests in the first example.

Can anyone help to cofirm the statements that testing the ADP/ACP with different years is not appropriate. Thanks!!!!!

Are there any problem areas involved in changing custodians?

We have land in a custodial IRA account, and are considering switching to different custodians (banks).

Has anyone ever done one of these transactions?

Thanks!

Is there any way to "fix" a defect in a 457 plan? Specifically, the 457 plan participant made a deferral election, but the employer failed to follow the election. Now the year has closed, the error has been discovered, and the employee would like the deferral election to have been followed. Could the employer make the contribution on behalf of the employee and issue a corrected W-2? In such a case, the employee would reimburse the employer for the contribution.

A company has a frozen PS and MP. Plans are terminated and distributions are processed to all participants. The month following the distributions, the company starts a 401(k) SIMPLE.

I believe the company should have transferred the balances to the 401(k) SIMPLE as this is a successor plan. Is this correct? What actions can the company take to try and correct any plan violations?

We have a plan that has a provision that states" Any other Employee shall be eligible to become a Participant at the beginning of the first month following completion of a Year of Service; provided, however, no such Employee shall become a Participant who had attained the age of Sixty (60) years when his service commenced."

Is this provision legal? If it is not, and the plan has not been amended to removed it, how is it applicable?

The long-proposed COBRA regulations have gone final. IRS issued

them today. Hypertext version is online at

http://www.benefitslink.com/taxregs/54.4980B-final.shtml (click)

An overview, from the preamble to the new final regs:

The regulations are intended to provide clear, administrable

rules regarding COBRA continuation coverage. The regulations

give comprehensive guidance on many questions under COBRA,

with a view to enhancing the certainty and reliance available

to all parties -- including employees, qualified

beneficiaries, employers, employee organizations, and group

health plans -- in determining their COBRA rights and

obligations. The guidance is designed to further the

protective purposes of COBRA without undue administrative

burdens or costs on employers, employee organizations, or

group health plans.

For example, the regulations:

* Prevent group health plans from terminating COBRA

continuation coverage on the basis of other coverage that a

qualified beneficiary had prior to electing COBRA

continuation coverage, in accordance with the Supreme Court's

decision in Geissal v. Moore Medical Corp.

* Give employers and employee organizations significant

flexibility in determining, for purposes of COBRA, the number

of group health plans they maintain. This will reduce burdens

on employers and employee organizations by permitting them to

structure their group health plans in an efficient and cost-

effective manner and to satisfy their COBRA obligations based

upon that structure.

* Provide baseline rules for determining the COBRA

liabilities of buyers and sellers of corporate stock and

corporate assets and permit buyers and sellers to reallocate

and carry out those liabilities by agreement. This will

significantly enhance employers' ability to negotiate and to

plan appropriately for the treatment of qualified

beneficiaries in connection with mergers and acquisitions,

while protecting the rights of qualified beneficiaries

affected by the transactions.

* Limit the application of COBRA for most health flexible

spending arrangements. This will ensure that COBRA

continuation coverage under health flexible spending

arrangements is available in appropriate cases without

requiring continuation coverage where that would not serve

the statutory purposes.

* Eliminate the requirement that group health plans offer

qualified beneficiaries the option to elect only core

(health) coverage under a group health plan that otherwise

provides both core and noncore (vision and dental) coverage.

* Give employers, in determining whether the small-employer

plan exception applies, the option of counting by pay period

rather than by every business day, and provide, for that

exception, for the consistent treatment of part-time

employees through the use of full-time equivalents.

This topic is "closed," which means that messages cannot be added to it, because it is only intended to provide an anchor to the full text of the final regulations; to post a message about the final regulations please click on "Start a new topic" below.

[This message has been edited by Dave Baker (edited 02-03-99).]

How do you terminate a SIMPLE IRA? Are you required to continue the SIMPLE IRA for the entire year, or can it be terminated by giving a 60-day notice? This question has arisen in an acquisition context where the acquiror would like to bring the acquired company's participants into its plan, but the participants are presently (for 1999) covered by a SIMPLE IRA. Certain provisions of Section 408(p) seem to indicate that it would have to be continued for all of 1999.

401k_question: It seems that employers are more concerned about their liability upon implementing a 401(k) plan than ever before. The vendors say offer employee education, a diversified and quality monitored fund selection, get a bond and that's it. However, as one employer put it, "Today I have no liability because I do not have a 401(k) I want to offer them this benefit, but they are "street smart" now and I want to know exactly what the risks are." A co-trustee can help but isn't it the employer's ultimate liability? Is there anyway he can cover himself completely from lawsuits, such as insurance specific to a 401(k) lawsuits? I can't find anything. This account has one officer and one CEO (the same). Any thoughts?

What does this mean Contributory Roth Ira for 1998 should be set up by 4/15/99. Does this give you a tax break if I contribute $500-2000 by the deadline.

Does anyone know the current status of the impending restatement of plan documents in the 1999 plan year? Has anyone heard any talk of extensions by the IRS and/or opening up of DL program post '98 approval? Time is running short if we're to redo all plans by 12/31/99 (I know that we all have laser printers in 1999 rather than daisywheel printers in 1985, but time is running short!)

Seriously, has anyone have any insights as to when we can expect to start generating documents for ALL of our clients?

My understanding is that cross tested formulas are discretionary. Cross testing is simply the allocation method.

Question: A super integrated formula provides for x% on the first say $54,000 of comp and xx% on comp above that. It would seem that this contribution is required each year. Can someone explain it to me?

I am a key employee in a small business that has great potential. We are publicly traded on the OTCBB. My boss has promised an ESOP for a long time now. He has asked for the input of all the key employees, but does not want us to collaborate on our input. I have no knowledge of standard ESOP models, and need to get some information so I can negotiate a favorable ESOP. I have looked in book stores to no avail. Does anyone have any suggestions as to where to find good info on ESOPs, or have advise or experiences to share with me? Thanks, the Spanish Prisoner (It's a good movie, check it out).

We have a participant who exceeded the 402(g) limit for 1997 and 1998. The vendor has told us that the correct manner to correct the problem is to issue corrected W-2s. Everything our payroll department reads indicates that the vendor should refund the excess contribution (and interest) and issue a 1099-R. (Note: today is 2/2/99 so they'll be late) Has anyone ever dealt with a problem like this and are there sources on the net that can help us? The vendor's general counsel is pushing the W-2 solution, citing Treasury Regs that we can't locate.

I have been unable to determine if 1) an employer can have a SEP and a money purchase plan at the same time, and 2) how the SEP contribution affects the deductibility of the money purchase plan contribution.

The study guide for the Fall 1997 ASPA C2-DC review course states that "a deduction for a contribution to a SEP reduces the amount of deduction otherwise available for contributions to a qualified defined contribution plan", and reference code section 404(h)(2). 404(h)(2) discusses the effect on a stock bonus and a profit sharing trust of a contribution to a SEP plan, but not a money purchase plan. Since the code section does not specifically reference the effect upon money purchase plans, I am hesitant to think that it applies to this type of plan. Any thoughts or experience with this issue?

I have read a number of older posts that indicate that in order for the employer to receive credit for prevailing wage contributions to a plan, those contributions must be fully vested. It is my understanding that this is generally true for a defined benefit or money purchase pension plan. However, according to a knowledgeable DOL person I spoke with a couple of years ago, it is NOT necessary to fully vest profit sharing contributions in order to receive full credit for such under Davis Bacon. The DOL Field Operations Handbook says that compliance with ERISA vesting requirements is all that is necessary. See 15f13(e). It also provides that while profit sharing contributions are not ordinarily creditable toward the employer's prevailing wage obligation this can be remedied by quarterly contributions to a plan or to an escrow account. Does anyone have the bottom line right answer to this issue?

Company A sells Company B, a wholly-owned subsidiary, to Company C. Company A sponsors a 401(k) plan, under which Company B was a participating employer prior to the sale.

Code Section 401(k)(10)(A)(iii) allows for a distribution of elective deferrals in the event of a disposition of a subsidiary, provided certain conditions are satisfied. However, Company A's plan does not specifically provide for such a distribution. Must Company A's plan be amended to provide for the distribution, or can the distribution be made without amending the plan?

Company A wants to clear out the accounts of the employees of Company B. Company A would like to avoid amending the plan because the plan is a prototype document, and such an amendment would cause it to become an individually-designed plan.