A not-for-profit hospital is concerned that its group of ten annuity issuers may not be correctly computing the maximum contributions that employees may defer into their tax-deferred annuities. However, before the hospital spends much money to investigate the problem, we wanted to identify the hospital's liability.

We're familiar with IRS audit activities, but what is the employer's possible exposure? IRC 6672 potentially exposes the employer to penalties for failure to withhold on overmax contributions, but only if the hospital was willfully failing to withhold taxes, which seems very difficult for the IRS to prove.

Is there any other basis for liability? Is anyone familiar with a case where the IRS has actually imposed monetary penalties on the employer for overmax contributions to a non-ERISA 403(B)?

I plan to retire on Dec 31, 1998. My organization has told me that I will not be able to rollover my 403(B) until May, 1999. I would like to rollover the funds by Jan 31, 1999 to begin accruing interest. If my organization holds the funds until May, 1999, they will accrue no interest for from Jan-May; therefore, I will be losing money. Could you cite any regulation that would help me with this concern. Thanks.

I believe this issue has been discussed before on the Msg Bds.

If a plan sponsor violates the "deposit deferrals as soon as administratively feasible but not later than 15 days after month following......" rule, how does the TPA calculate earnings on the late deposit? I recognize that the truly correct way to calculate would be to compare the unit value of each participant's investment selection on the date the deposit should have hit, against the unit value of the investment selection on the date it did hit - and the difference should be remitted to the participant's accounts.

Obviously for a large plan these calculations, and researching the investment selections of all participants (assume plan uses the investment company as the recordkeeper and an outside TPA does the compliance work) would be very very time consuming.

Is anyone aware of any safe harbor calculations that might make this process easier? I'm guessing "no," just curious. Thank you.

We are consulting with a Doctor who recently closed his practice and retired. His DB plan paid out benefits to all but one participant (not the Doc) following their separation from service. The Doc would like to terminate the plan, but does not want to lose the excess assets to income and excise taxes. He has been told by a colleague that there are hospitals and other organizations that will buy the practice for as much as 60% of the plan assets and merge the pension into their own under-funded DB plan. However, we have not been able to obtain any names to contact or any other leads.

We have our doubts about this strategy, but feel we should investigate it. Has anyone ever heard of any organizations offering to purchase excess pension assets? Also, is there any pending legislation that may affect the planning for the reversion, or any other strategies that we might be missing?

My wife was with a retail company. Sshe had to leave because she was downgraded from full time 40 hours to part time - less than 30 hours. Lost all benefits including 98 hours of sick time. I want to know if she has any recourse. Nothing in hand book about leaving and loosing payment for benefits. She is receiving pay for vacation time, but they will not pay her for earned sick time. Also I found out that the main reason for demotion is she would not run register. She could't. she has a problem with figurers. and they know that.

I posted this on the wrong message board before. Sorry.

I am currently diabled and it may be permanent.I was working when I fell at home and have health insuance through the company.If I retire can I pick up the companies health insurance. Thank You

We a TPA firm and currently have a voice response unit (VRU) for our Daily Valuation clients, but are interested in getting one for our Cafeteria clients.

Does anyone have a VRU for this purpose? What type of software are you using? We currently use Mayer Hoffman to maintain our cafeteria plans.

Thanks!

Travis Cornes

Systems Admin

Travis@rmeb.com

Rocky Mtn. Employee Benefits

I believe in 1996 the Federal Register published a list of those CPT codes that should not have an allowable modifier 26 billed (ie, all automated lab tests). There is an employee at my organization who now claims that we must pay for all billed modifier 26's. Has this law changed? If so, please give me the Federal Register date of this change so that I may look it up. Thank you.

What affect does the income inclusion from a Roth IRA conversion have on the taxability of Social Security benefits? Is the test eliminated after age 70.5?

A taxpayer who has been receiving minimum distributions for several years from his keogh, rolled the keogh into an IRA. Can he make new elections as to how the minimum distribution will be calculated from the IRA that is differenct from his earlier election for the keogh?

An employer puts a certain dollar amount toward each employee's cafeteria plan. They can either use it in a spending account or toward their employer sponsored health insurance premiums. If an employee elected to use the employer dollars for her health insurance premiums during the enrollment period but now wants to change to her husband's health insurance, can she move the employer dollars to a spending account? The husband has had health insurance coverage for the past 6-8 mos. but was unsure about the stability of the job, so the wife had kept her insurance with her employer just in case he lost the job. The wife has also been notified that her health insurance with her employer will be moved to a different carrier within the next 6 months.

I'd appreciate some help, recommendations, etc. for developing a "request for proposal" to potential 401k plan vendors. We are looking for a "turn-key" vendor for our plan and wish to formalize the search process.

A privately held corporation that is winding up its operations wishes to compensate certain executives with stock in a separate, privately held corporation. The executives may ultimately be working for the separate corporation. Are there any ways to plan the gifts of stock so as to defer taxes?

Seeking information on coordination of vacation trading in flex plan (which prohibits carryover of unused vacation time from year to year), with state labor laws such as California's which prohibit "use it or lose it" policy regarding vacation time.

union portion of the plan should be tested separately from the non union. (In other words, for all practical purposes, you have 2 plans) ACP test is deemed to pass (see 1.401(m)-1(a)(3)Thus no multiple use test for the union portion of the plan.

if ee shifts status, only include that portion of the year ee was union / non union.

see 1.410(B)-7©(4)

Based on your example, if I understand your message, last year you had 200 ees.

My prior years tests are as follows:

150 NHCE nonunion ADP and ACP average

compare to this years HCE nonunion ees

50 NHCE union ADP and ACP average copmare to this years HCE union ees.

at least that is the way I understand it.

no problem. most documents allow anyone to stop deferring anytime during the year. As far as changing or reducing the amount, check document. some changes are only allowed quarterly or whatever.

We are searching for beta testers for our Windows based Profit Sharing/401(k)/Money Purchase Plan administration software. This software will be made free to all who agree to beta test. Software is designed for plans with less than 100 participants. Please email me at samanthaprince@plansoftcorp.com or post a reply here! Thanks!

Is there any limit on timing and payment terms of a company's vacation policy that affect the taxation of the amounts? Here's my real question...

If a company has a policy of paying out unused vacation pay once a year or allowing the employee to leave the amount in the "plan" or vacation bank, does that create some type of constructive receipt that triggers taxation to the employee? With other areas of the IRC it could, but what about with vacation pay? There is basically no forfeiture provision for the vacation pay that is left in the vacation bank.

Can partners participate in a SEP? I seem to remember that they can (as employee-partners), but are they subject to special contribution limits due to their status as partners? For instance, are partner-employee contributions limited to the 402(g) limit ($10,000 in 1998) and NOT the limit otherwise applicable to SEPs (15% of pay up to the maximum contribution of $24,000 = 15% of $160,000). I need help and can't find the answer anywhere.

If anyone has recently dealt with the effects of Social Security integration/offset on an existing State or Local governments plan funding status, I would like to hear about it. Since all existing proposals include mandated coverage which "rescues" Social Security for two years--exchanging 20 billion of income for $3 Trillion in unfunded Social Security liability, I'd like to get opinions on whether State and Local plan funding is effected negatively or positively when Social Security is added.