Any opinions on whether the following two plan designs would satisfy safe-harbor 401(k)?

#1 Design: 401(k) Plan -low match (not safe-harbor) and a leveraged ESOP (covering same ee's) with a 4% of pay (P+I) repayment?

#2 Design: Profit Sharing Plan w/401(k) Provision 2% of pay Profit sharing contribution. ESOP (covering same ee's) with a 2% of pay (P+I) repayment?

If you are a law firm between 400 and 700 total lives, would you take a moment to answer a few questions regarding your next renewal? For confidentiality, you can email me directly at: john_redding@mckennacuneo.com. Thanks:

1. At what percentage increase do you expect to renew your healthcare contract: a/no increase

b/1 to 3%

c/4 to 6%

d/7 to 8%

e/9 to 10%

f/more than 10%

2. Being plan specific, what have you realized is the major contributing factor(s) to this increase?

3. Has this increase cause you to consider other healthcare carriers for 1999? for 2000?

4. Are you instituting any cost containment or adjunct plans to lessen an increase for PY2K?

5. For PY98, did your firm pay the entire cost for self only coverage on your healthcare coverage?

6. Are you planning to continue this practice for 99?

a/If not, what percentage of the self only cost are you asking your employees to pay?

7. For PY98, did your firm pay the entire cost of family coverage on your healthcare coverage?

a/If not, what percentage of the family coverage did you ask your employees to pay?

8. Are you planning to continue this practice in PY99?

a/If not, what perentage of the family coverage will you ask your employees to pay?

9. Is there is a change in policy with regard to self only coverage cost sharing, what prompted the change?

10. If there is a change with regard to gamily coverage cost sharing, what prompted the change?

Please let me know the size of your law firm and the general location. Thanks.

A company excludes overtime earnings from its 401(k) calculations, but includes overtime for purposes of discrimination testing and determining HCEs. Is this appropriate?

What is the future for 401k plan sponsors and their fiduciary responsibilities in regard to providing investment advice to plan participants?

Will plan participants be relegated to seeking/paying for outside financial advice for more in depth analysis and suggestions on their respective 401k plan?

[This message has been edited by MLB (edited 10-14-98).]

We have a number of employees and/or families that are covered for medical/dental insurance through a spouses coverage. We are thinking about sharing with them the premium savings. (We do no have a cafeteria plan.) Does anyone share these savings with employees and how is the amount calculated.

Employer closed out a 403(B) plan, with transfers to individual annuities. Certain transfers were incorrect (too small) for certain participants, due to a clerical error. Employer now wants to make these people whole and was planning on issuing checks and reporting via 1099-R, however checks would be drawn on general account of employer, not on any tax-qualified source. Is there any way to make the corrections to a tax-qualified vehicle for these persons (403(B)/IRA)? The insurance company that maintained the group annuity does not hold any accounts for these individuals. Any comments or ideas are suggested.

Can SAR-SEP IRA contributions be rolled over to a conduit IRA and then into a 401(k)? Would this transaction be permitted by IRS regulations.

Does anyone have the 1999 colas???

Can an active participant default on a loan if they no longer authorize payroll withholding for the loan payments? Does this present any other problems other than a deemed distribution? This is a NHCE.

Would like to hear how you manage benefits for part-timers? Exempt vs non-exempt?

Pro-rate across the board? Anything not offered to Part Timers?

I am reprogramming a pension system for my employer and I want to do it only once so I want to make sure we have got all the possible data items up front for QDRO's. What are the necessary data items for QDRO's that need to maintained in the database other than the identifying items like name, SS#, and address? All data items you have seen would be great. Thanks for any help.!

California Probate Code Secs. 260-295 allows a beneficiary to disclaim a fractional IRA distribution. Can the owner of an IRA leave a 100% interest to her husband with the proviso that to the extent Husband disclaims any portion of the IRA distribution, such disclaimed portion shall go to the Family "by-pass" Trust. Again, the amount to go into the Family Trust is determined solely by husband, NOT IRA owner.

Tuition reduction plans under Code section 117(d) refer to employees of organizations under Code section 170(B)(1)(A)(ii)[educational orgs.] Code Sec. 117(d) does not refer to Code section 170(B)(1)(A)(i)[ a church or a convention or association of churches]. A church-affiliated school would like to sponsor a tuition reimbursement plan under section 117(d) - will this have the intended tax effect (exclusion of amount of tuition reimbursement from employees' income)?

Our business had utilized an employee-leasing service which provided very limited benefits packages, but did include a 401(k) program with the Cafeteria plan. We would now like to set up a 401(k) with Cafeteria plan (contributions before taxes) on our own for our employees -- currently just 2. How might we set-up such a plan with mutual fund and/or IRA providers?

I recently started a new job and wanted to rollover my 401(k) to the new employers plan. However, after receiving the distribution check from my old plan and sending it the new plan administrator, I found out that the new employer has elected not to roll 401(k) funds into their 401(k), but rather into the pension fund. I had planned to take a loan as a downpayment on a home, since I have accumulated about $50,000, and would be eligible to take up to $25,000 for a downpayment. Unfortunately, I don't qualify for a ROTH IRA. Any advice for other ways to reapply my 401(k) so that I can use it or ways to convince my current employer to change the plan?

I have a client who might not have all the data to file a 5500. They are on extension to 10/15 (using form 5558).

What form is used to requesta second extension? How much time do you get and is the request generally granted?

HCE has personal account and directed investment account at same brokerage firm. HCE directed broker to sell investment x in directed investment account. Broker executed sale of investment x in directed investment account. Meanwhile, at some point, HCE had instructed broker to purchase investment y in personal account. Broker transferred sales proceeds from HCE's directed investment account into HCE's personal account inadvertently and the funds were used to purchase investment y in HCE's personal account. Although HCE signed authorization to transfer funds, HCE was not aware that funds were being moved from directed investment account to personal account.

Any advice as to how to correct this error under APRSC or otherwise?

Yes. If the aggregate amount of matching contributions under an alternative formula at any given rate of salary deferrals is at least equal to 100% of the first 3% deferred and 50% of the deferral between 3% and 5%, then the alternative formula will satisfy the safe harbor. However, an alternative formula will not satisfy the safe harbor if the rate of matching increases as the rate of deferrals increases (ie. 100% of the first 3% and 125% of the deferrals between 3% and 5%).

If a 401(k) plan matches deferrals in excess of 6% of compensation, the safe harbor no longer applies to the matching contribution, and those contributions together with any after-tax contributions are subject to discrimination testing. However, the safe harbor still applies to the salary deferral part of the plan.

Please note that the safe harbor requirements do not allow the "last day rule" or the requirement to complete 1,000 hours of service during the plan year to receive the match.

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[This message has been edited by Greg (edited 10-29-98).]

An employee terminates employment and the employee could have taken his vested value when he left employment but did not take the distribution. Should the employee receive a QPSA or QJSA notice? If the employee dies after such termination of employment do QPSA rules still apply?