company puts in 25% of pay.

shares to be released is principal/(principal + future principal)

I am using original share price for allocation purposes because it is smaller. This would result in 26% contribution being allocated to participants. Ah, a clear violation of 415 limit.

Which of the following is permissable:

1. Release the shares anyway, but don't allocate them. Hold in 'suspense', but not same 'suspense' as unreleased shares.This would seem to me to imply a penalty for overcontribution.

2. Only release enough shares to cover the 415 limit, and consider the remaining contribution as loan payment for next year.

Plan is 6/30 Year end, and last loan payment was made 6/22, so it is within a week of year end.

Would like to know what one can invest Roth funds with and the potential for delaying capital gains taxes?

The DoL interpretation of what should be included in a SPD calls for a foreign language notice if a threshhold number of participants are literate only in "the same foreign language". 29 CFR 2520.102-2©.

If an employer's regular hiring procedures do not include any inquiry about what language (if any) an employee reads, how does the employer/plan administrator know whether an employee is literate in any foreign language? Assume that literacy in any language, even English, is not a job requirement for the foreign-speaking employees.

Then, if an employer concludes that it might be deemed to have implied knowledge that the applicable number of employees may be literate in a common foreign language, does it make sense to use the DoL-suggested foreign language notice?

That notice is supposed to explain the procedure for obtaining foreign language assistance. A typical sentence in wide use in many SPDs says "ask the plan administrator".

What happens if the plan administrator's human resources office has NO employee who speaks the foreign language? Assume that the only employee who speaks both English and the foreign language is the workers' foreman, who is unprepared and unwilling to attempt to explain the plan.

Is it MISLEADING to use the foreign language notice if the plan administrator has no way to provide foreign language assistance?

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This question relates to the tax treatment of NUA in a NON LUMPSUM distribution. I'll receive a distribution, partly in kind (employer securities with a HUGE NUA), partly cash. I'll rollover the cash into an IRA (I'm aware of the 20% withholding issue). That rollover makes the distribution a non LUMPSUM (pub 575, 1998, page 21, item 12). What is the tax deferral status of the NUA in this case. Page 22 (top) says "this tax deferral applies only to the extend the NUA in employer securities results from EMPLOYEE CONTRIBUTIONS". This last term is undefined and unclear. It does not mean "deductible voluntary employee contributions" a term used for contributions made between 1981 and 1987 (page 20). Does it refer to employee contributions versus matching employer contributions? Does it mean anything else than the deferred compensation used to fund the 401K?

It seems as though an employer which doens't timely make 401(k) deposits (i.e., 15 day rule) is a fiduciary who has engaged in a prohibited transaction. Is that correct. Does the IRS actually assert the excise tax in those situations?

What if, as in my client's case, the employer hired an employee to do this job, but that employee botched it, unbeknownst to the employer (i.e., the owner of the business).

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Matthew B. Newman, P.A.

ERISA Law Firm

<http://www.erisapro.com>

Is interest required to be paid on back benefits if an ERISA appeal is granted? The policy itself does not speak to this. If they don't pay, is that a proh. trans. or a fiduciary breach? Any case law on point?

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Matthew B. Newman, P.A.

ERISA Law Firm

<http://www.erisapro.com>

Does anyone know of any change in the IRS's position (formally or informally) on this issue since the release of several PLRs issued in 1994?

I'd appreciate help in locating a free source of survey information concerning health benefit costs by employee.

A premium only 125 Plan currently has 1 owner/officer. Discrimination testing has been passed. This owner wants to somehow give ownership in the company to the other 6 employees on an equal basis. That means all would own about 14%. There would be no non-key people in the plan. What happens? Do they have to stop the plan or since the plan does not discriminate in favor, can they keep it?

I am looking to establish the criteria for selecting a 401(k) third party administrator in the small case market. For example, how are TPAs selected by Nationwide and Manulife (i.e. years of service, quality of service, etc.)? How are TPAs paid (commissions and/or market allowances)? How many small 401(k) plans are bundled vs. unbundled? What is the sales potential for unbundled plans? What is the trend?

Any info on TPAs would be much appreciated.

Discount broker was supposed to convert my entire IRA account to a Roth IRA. I just got my statement and only stocks and 2 mutual funds were converted. A Money market and a mutual fund are still in the old IRA. The answer I got from them was "too bad, nothing can be done, even if it was their mistake". I wanted the whole IRA converted in 1998. Am I stuck with this mess?

Recently, I have been encountering difficulties with some 403(B) employer payroll submissions. Public school payroll departments and common remitters are occasionally making mistakes in their attempt to submit employee salary reduction contributions to 403(B)(7) custodial accounts. In these instances, contributions are made to one or more accounts in which the participants receiving them are not entitled.

The employer or common remitter subsequently explains that they made an error in their previous payroll submission. To correct the error, they

submit a new payroll for the current month with a negative contribution applied to each participant that previously received an over-contribution. However, only the participant or beneficiary of the custodial account can authorize the removal of money from the 403(B)(7) once it has been deposited.

Does anyone know what other mutual fund companies are doing in these instances?

A US Citizens livig abroad earns $50,000 foreign wages, all of which are excluded as foreign earned income. Question: Do the excluded wages count as "compensation" for Roth IRA purposes? And, are the excluded wages included in Modified AGI?

A small company of 6 employees would like to administrate their own Flexible Spending Plan. Is this still OK according to the IRS?

A spouse (<59 1/2) is the beneficiary of a death benefit from a qualified plan. My understanding is that spouse can (1) roll the proceeds into an IRA, or (2) receive a distribution from the plan.

In scenario (2) the distribution is taxable income to the spouse but the 10% penalty on early withdrawal (<59 1/2)is waived.

If the spouse elects (1) a rollover, then it must be to an IRA. They can not roll to a qualified plan.

My question: If the spouse elects rollover and then takes a distribution from the IRA are they subject to the 10% early withdrawal penalty or is the penalty waived because the IRA is proceeds from a death?

Any cites are welcome. Thank you.

mck

Does anyone know of companies that provide health insurance for parents of employees or allow their employees to purchase the health insurance for their parents? Thanks

Does anyone know where I can get DOL Opinion Letters on the Internet??

Company A is a parent company located in the United Kingdom. Company B is wholly owned by Company A and Company B is located in the US. Company C is also wholly owned by Company A and Company B is also located in the US.

Would you agree that the plans of B and C will require coordination for testing since they are part of the same controlled group (with an overseas parent company)? If my understanding is correct, the employees of A would be excluded from the testing to the extent they are nonresident aliens with no US source income. However, all the employees of B and C would have to be treated as employees of a single employer, right??????????

Can a custodian (i.e. bank, security firm) be named an owner of a Roth IRA?We have received requests for this. If a custodian can be an owner, how do the wage limits for Roths apply?

I am interested in understanding the definition of part time employees and the full time benefits that must be extended to them under law.