A small employer(less than 50 ees) is a wholly owned subsidiary of a larger corporation (8,000 ees). The larger corp. maintains a DB plan but does not plan to cover the small employer. Can the small employer establish a DB plan and pass 401(a)(26)? There are HCEs in the small employer. Is the only way to apply for a QSLOB determination? We think so, but someone else has advised that they can maintain their own plan as long as it is identical to parent company plan.

I am wondering how FSA administrators typically handle the usual lump sum payment to an OB/GYN for prenatal care & delivery. Do they reimburse the portion for prenatal office visits as they occur or must the participant wait until after the baby is delivered to get reimbursed anything at all? It is a fairly large sum to be out of pocket for six months or so...

I would like to find an educational resource for someone that has no experience in HR benifits. The information would be a very basic overview of how benifits work and laws regulating required benifits. I would perfer to find an online university. Can anyone help me out?

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jstyer@gt.com

there is nothing in concrete. The Erisa Outline Book notes that some (and I stress some) IRS personal will use 3% or less. It becomes more of a facts and circumstances. (I imagine if bonuses are excluded and the hce gets no bunuses, then you fail at 3%. But if the boss had a bonus, then 3% would be ok. That would be my best guesstimate)

Where can complaints about 457 plan administration be addressed? Specifically, a friend of mine participates in a 457 plan, and they are trying to get information on an unregistered annuity option in the 457 plan. The city plan sponsor is not providing any information regarding this investment option, and my friend would like to put some pressure on the sponsor to cooperate. I called the

state department of labor and they incorrectly told me to check with the US department of labor. Does anyone know which government agency (I am assuming state) has oversight over 457s? Thanks in advance.

The plan I am looking is a calendar year plan. Here are my questions:

1) If I use prior year data for NHCEs, do I include in my HCEs a HCE who terminated in the prior year and count him w/ an ADP of 0?

2) Again, if I use prior year data for NHCEs, do I not include in the NHCE pool anyone who gained eligibility in the current year?

3) When I calculate the ADP for NHCEs using prior year data, and new hires have eligible comp less than their gross comp in the prior year, do I use total year comp?

As noted by Dave Baker on the 403(B) Plans message board, "The IRS National Office has published IRS Revenue Procedure 99-13. Excerpt:

This revenue procedure provides a comprehensive system of correction programs and procedures for an employer that offers a plan that is intended to satisfy the requirements of section 403(B) of the Internal Revenue Code (the "Code"), but that has failed to satisfy those requirements because of Operational, Demographic, or Eligibility Failures. This system permits an employer to correct these failures, and thereby provide its employees with retirement benefits on a tax-favored basis. This revenue procedure modifies and amplifies the Employee Plans Compliance Resolution System (EPCRS), set forth in Rev. Proc. 98-22, 1998-12 I.R.B. 11, to include specific programs and procedures relating to 403(B) Plans. In addition, this revenue procedure replaces the program described in Rev. Proc. 95-24, 1995-1 C.B. 694, which established the Tax Sheltered Annuity Voluntary Correction (TVC) program, and which was extended by Rev. Proc. 96-50, 1996-2 C.B. 370. Except as otherwise indicated in this revenue procedure, the specific provisions of EPCRS apply to 403(B) Plans.

Here's a link: http://www.benefitslink.com/IRS/revproc99-13.shtml (click)"

Historically, few governmental plans appear to have taken advantage of the VCR program for correcting defects in qualified plans, in part because of the financial costs of doing so and the historically low level of audits of governmental plans. However, the IRS has clearly been more active lately in auditing public 403(B) plans, particularly those of public hospitals and universities. Anyone have any thoughts on how attractive the TVC program is likely to be to governmental employers which maintain 403(B) plans?

I have recently heard some discussion about the government approving a Roth 401(k) plan. Has it been approved? Where would I find information concerning the Roth 401(k)? Do you think it will have appeal to small businesses; especially Doctors?

[This message has been edited by SPollock (edited 01-25-99).]

I am with a TPA firm and am preparing some last minute 1099s. When a participant takes a distribution, a fee is charged against the participant's account. If the distribution goes to the participant, the gross amount is taxed, then the fee and tax are deducted and the net sent to the participant. If the dist. is being rolled, the fee is deducted from the gross and the net is sent to the r/o institution. When preparing the 1099, should the fee amount be included in the gross dist? If the dist was rolled, should a seperate 1099 showing the fee amount as taxable to the participant be prepared? Any help would be greatly appreciated!

We have a partnership with a 401(k) plan; 4 partners and no staff. One of the partners wants cash instead of a share in the partnership's profit sharing contribution;Is this ok? Does the plan have to allow it? Is it irrevocable, if allowed? Any thoughts would be appreciated.

Where can I find the historical COL percentages applied to IRC 415 max dollar limits? I need them to apply to deferred benefits after termination of employment. I think they are in Information Releases but are they on-line somewhere?

Situation: One employee is employed by two companies of a controlled group. One of the companies is a participating employer in the plan in 1998, the other does not become a participating employer until 1999. This employee meets the eligibility requirements to participate in 1998 under the company that is a participating employer. The other company is only three months old and the employee "technically" does not have the service under that company to participate. When will his compensation under this new company be able to be counted for deferral purposes? Does he have to meet the eligiblity requirements under that company before he can start deferring part of that salary or does his service under the other company carry over even though the company has only been in existence for 3 months? The payrolls of the companies are separate. Since controlled group rules state it is treated as one company I would think he is eligible to defer on both salaries now and does not have to fulfill any other eligibility requirement. Thanks for the help!

I have a couple questions. 1 - I understand that you may withdrawl from your Roth IRA without penalty for a first time home purchase. Does this mean the original contributions and earned income or just contributions or just income? 2 - Thoughts if this is a good way to save in the short term for a house since the income is tax-free?

I have a need in the context of a litigation to estimate the value of a sociology professor's future earnings and benefits package on average. Does anyone know of a comp and benefits survey or study that could provide a starting point?

I would like to know any information on financial problems caused to any Defined Benefit Public pension funds because a lump sum payment was put into the plan?

Can you tell me of any cases where a pension board was held accountable because a retired member or spouse deminished their lump sum assets?

I have one of those variable life insurance policies, sold to me as a "tax free" method of saving for my son's college expenses. Contributions to it are after tax, and gains and earnings are tax-deferred until I close the account. I was wondering if there's any way to convert the money into a Roth IRA when I close the account so I don't lose any of the capital gains I've made to income taxes. I'd then like to use the Roth account several years later in order to pay for the education expenses. I could just keep paying into the insurance fund until he enters college, but the insurance part of my payment is getting to be too expensive compared to a term policy. I could probably do better on the annual returns and gains with the money elsewhere as well.

Is anyone aware of any videos available to train employees new to the area of 401(k) plan administration?

I have a client whose 401(k) plan is making a QNEC because they did not pass the ADP test. There is no match in the plan. Their corporate CPA is instructing them that the QNEC is to be used to gross up their salary and then addes to the deferral amount shown on the w-2. I thought they were just additional ER contributions to be reflected in the plan account balances Any help?

Employer is a professional corporation. The tax year of the corporation is the calendar year. The corporation maintains a money purchase pension plan. The plan year ends on June 30. Each year the corporation deducts on its tax return the contribution for the plan year which ends within the corporation's tax year.

The corporation adopted a 401(k) plan, effective January 1, 1999. The plan year is the calendar year.

The corporation is contemplating changing the plan year of the money purchase pension plan to a calendar year, effective July 1, 1999.

Can the corporation deduct on its 1999 tax return the money purchase pension plan contribution for the year ended June 30, 1999, the 401(k) contribution for the year ended December 31, 1999, and the money purchase pension plan contribution for the short year ended December 31, 1999, so long as the amount deducted does not exceed 25% of taxable calendar year eligible compensation?

The shareholders will receive a $30,000 allocation under the pension plan for the year ended June 30, 1999. They will contribute $10,000 to the 401(k) plan for the year ended December 31, 1999. Furthermore, they will receive a $10,000 allocation under the pension plan for the short plan year ended December 31, 1999. Does this create any 415 problems?

Are there any other issues which should be addressed?