Nondiscrimination Module

The NHCE concentration % may be incorrect.

Terminees with less than 500 hours are being included in the concentration test, but not in the ratio percentage test.

example:

3 nhces, 1 hce. one NHCE terminated with less than 500 hrs, one nhce terminated > 500 hrs. terminees do not receive allocation.

while cross testing I get a ratio % of

1/2 divided by 1/1

but my concentration % is showing as 3/4 = 75%.

It should be 2/3 = 66%, or at least that is my understanding of the regs.

This may cause a plan to say it passes, when in reality it fails.

This is the rate group report on an HCE.

..............

create new plan from existing plan (including employees)

have a profit sharing plan. created a money purchase plan, and copied existing employees.

Status code and status date do not get copied, so have to re-key terminees status code and date!

also, participants who I deleted from the

prior year magically reappeared! so I had to delete them from the money purchase.

.........

census request

I am sometimes 'rented' out, so to speak, to do Quantech training. No, I am not working for Quantech, this started as part of something I do for the Southern Users Group. Anyway, I was discussing the top-paid group calculation for HCEs.

One of the items involved is hours - the system checks to make sure ees worked an average of 17 1/2 hours a week.

(e.g. an ee who quits 1/5 with 20 hours is considered in the top paid group count because he averaged over 17 /12 hours a week. [assuming he is over age 21, and has worked at least 6 months in prior year])

One of the trainees pointed out that the census request asks for the following codes: 0 = <500 hrs

1=>500 but < 1000 hrs

2= >= 1000 hrs

I hadn't thought about it before, be he is correct, if all you go by is a simple code like that rather than actually hours, your top paid group count will be incorrect. Most of the time this won't make a difference, but be careful because it might!

see the trainer gets trained!

this is not a bug, but something to watch out for.

The other problems have been reported to Quantech, but I figure this is a good spot to make other people aware of 'possible' bugs. I call them possible bugs, because there is always a chance I coded something wrong, although in the examples cited this seems doubtful.

Can a person who is currently taking substantially equal payments from an IRA convert that IRA to a Roth? (the person is months shy of 59 1/2, at which time his 401(k) and other assets/income will cover his necessary living expenses for a good 20 years).

I need to develop an insurance/beneift survey (health, dental, life, LTD)to survey our employees preferences on coverage, cost, effectiveness, etc. I would prefer not having to recreate the wheel. Does anyone have a stock survey that I may utilize and modify? I would appreciate any assistance.

Do most of you set a goal for the minimum number of billable hours required per week per person? If so, do you track it and evaluate employees (partially? totally?) by it?

How do you address time spent training and marketing?

Any suggetsions would be appreciated! Thanks

Could someone explain to me the integrated plan feature? In a plan that I am working on, they have chosen the integrated plan feature which says that the profit sharing contribution shall be allocated based on a participant's compensation in excess of 65% of the taxable wage base. (The integration % is reduced from 5.7% to 4.3% in this case.)

The employer wants to do a 3% profit share for its employees. Does this mean that all employees will get 3% except for any employees who earn over 65% of the taxable wage base? And, will the employees with the higher compensation get an additional 4.3% profit sharing contribution calculated on their compensation over the 65% of the wage base? I'm confused.

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?