If a leased employee is not considered to be an employee for pension purposes until they complete a year of service, does the compensation which they earned during that first year count in determining if they are an HCE in year 2 or is year 2 considered there first year of service and therefore they could not be and HCE in year 2. For example if a leasted EE earned 100K in year 1 and therefore they would be considered an EE in year 2, would they be considered an HCE in year 2?

An employee plans to terminate in December (prior to end of 1998). The employer says they do not have to make a 401(k) contribution on behalf of this person. Is this necessarily true and where are there Regulations addressing this issue?

I'm trying to find the current owner(?) of THE SINGER COMPANY GPE SALARIED EMPLOYEES RETIREMENT PLAN OF THE SINGER COMPANY. The last owner was Bicoastal Corp of Stamford, CT but they filed for bankruptcy. My address has changed since the last communication in 1991 and I want to be found when I'm ready for retirement. Thank you.

If a plan provides an insured death benefit, is the funding such that the cash value build up is considered a plan asset, thus reducing the retirement benefit funding requirement, but where the total funding is greater due to the additional payment for the premiums? Any thoughts would be appreciated

A business owner wants to start a one person plan for 1998. Is it acceptable for this person to just open up, say a money market account, contribute $1 prior to 1999 and have this be designated as the pension trust? I know it is a very trivial qustion, but I have never actually implemented a new plan.

IRS prescribes the 83 GAM table for 415 and 417. How can it be explained that we use a table with the year 1983, when it is 1998? Curious to hear some thoughts.

If a plan is to have lump sums as a benefit option, how low is a reasonable interest rate for determining the lump sum value? That is how low can the rate be and still not be disallowed by the IRS?

A small company wants to have a db plan where a key ee with a salary of $1,000 (no assumed future pay increases) is to receive a projected benefit of $10,000/yr. , but the plan formula is proposed to be something like 150% of pay. How can they arrive at such a benefit under such circumstances? Even if 415 allows for such a benefit, it doesn't seem to work under this criteria.

A church-affiliated elementary school currently offers school employees a tuition reduction program under IRC Sec. 117(d), where children of school employees can attend the school for reduced tuition. The school wants to offer a comparable benefit to church employees. I believe that Section 117(d) is inapplicable without an employer-employee relationship but was wondering if there are any special interpretations of this requirement due to the church affiliation, or any other way to provide the tuition benefit to the church employees on a tax-free or tax-deferred basis.

What happens to loans in a plan to 5% owners when the corporation converts to an LLC which is taxed as a partnership? Since the LLC can't have loans to greater than 5% shareholders, are the loans deemed distributed as of the date of conversion? Does anyone know of any resources on this issue?

Thanks for your ideas.

Katharine Jungkind

Plan amended in 1995 for TRA 86 etc. Prior to the 1995 amendment, all terminated EEs were paid after a year had elapsed following termination. No language in the Plan to this effect, the Plan allowed employer discretion, and a pattern was established. The 1995 amendment(inadvertently) liberalized timing to specify that a terminated EE would be paid "as soon as administratively feasible" after the end of the Plan Year following termination. No one has terminated since 1989. Now an HCE has terminated abruptly just before the end of the Plan Year, and the owner wants to pay him in 1 year. (terminee is owner's son). Is there any legitimate way to do this?

Can an executor of a dead farmers estate make a SEP contribution on the final return in the year of the farmers death.

A basic question: Employee is in a 401(k) plan that vests 100% in the fifth year of employment. If the employees position is eliminated, is there a rule mandating immediate vesting? The employer provides contract health services at a hospital. There is a chance that the entire contract service provider will be eliminated.

Company has self-insured health plan administered by large insurance co. and under a cafeteria plan. Company's subsidiary wants a bare bones catastrophic coverage plan to start mid-year. May EEs of that sub switch to the new plan (does not sound like a change in family status)? What if the new plan is not a part of the cafeteria plan? What considerations?

If a person wants to roll over their account balance (which contains a large after-tax balance) from one 401(k) plan to another (that does not allow for after-tax contributions), what are their options? If the person rolls, are they forced to take a distribution of their after-tax contributions? Would this be subject to the 10% early distribution penalty? Any comments appreciated.

Hypothetical - John converts $300,000 regular IRA to Roth IRA prior to 12/31/98. Does John report $300,000 of income on his 1998 1040, computes the additional tax due to the $300,000 income inclusion, and then spreads that tax over four years, 25% per year

OR

does he include an additional $75,000 in income during each 1998, 1999, 2000, and 2001?

My understanding from reading technical literature is that mechanically, the latter is the proper way to report. Can anyone confirm this? Thank you!

Notice 96-64 extended the TRA-86 remedial amendment period for plans of tax-exempt employers to the last day of the first plan year beginning on or after 10/1/97. For calendar year plans, this means that the RAP ends on 12/31/98.

Has this deadline been extended by Rev. Proc. 97-41, which generally deals with the RAP for SBJPA, etc. amendments? Specifically, Sec. 6.05 of the Rev. Proc. reads as follows: "The remedial amendment period with respect to all disqualifying provisions of new plans adopted or effective after December 7, 1994, and all disqualifying provisions of existing plans arising from a plan amendments adopted after December 7, 1994, that causes the plan to fail to satisfy the requirements of Sec. 401(a) as of the date the amendment is adopted or effective (whichever is earlier), will not expire earlier than the last day of the first plan year beginning on or after January 1, 1999."

Many tax-exempt employers set up new 401(k) plans in 1997. This Rev. Proc. appears to say that those plans can be submitted the the IRS by the end of the 1999 plan year. Because this language applies to ALL disqualifying provisions, it appears that it could cover also TRA-86 provisions under existing tax-emempt employer plans that are now being restated.

Am I missing something?

Can anyone give me a definitive answer as to how long a transit district can hold employee contributions to a 457 plan before submitting them to the brokerage firm? Thanks for your help.

Here in Maine, public school employees are covered by the state retirement system's defined benefit plan. Both the employee and the state contribute to the employees' retirement fund. My question: do either the state's or the employee's contributions to the defined benefits plan affect the amount which the employee can contribute to a 403(B) plan which is funded exclusively by the employee's dferred compensation contributions?

I read the feedback from Roger Kuehnle that said a mid-year change from safe-harbor to regular is not permitted. What about year-to-year changes? Can a plan choose safe harbor for 1999, then choose a fully discretionary employer contribution for 2000? If going "in and out" year by year is workable, wouldn't a plan amendment be required for each plan year?