It is clear that a plan sponsor has a fiduciary liability to select and monitorinvestment advisers. What is the typical cost for this service?

1. Initial selection of funds?

2. On going monitoring?

We are a small business in Colorado with approximately 25 employees. Our current policy for vacation involves a monthly accrual commencing upon date of hire. Vacation can then be used after three months. Any unused vacation upon anniversary date is lost. We do not compensate the employee for unused time. As I stated earlier we are a small business and do not have a human resources employee. I know there are better policies out there and I am looking at making a few suggestions for the new year. However I want to make sure that our current plan is not violationg any state or federal labor laws. Thanks in advance for any help.

Does anyone have any thoughts (or even better, IRS input!) as to whether "negative elections" under a 401(k) plan could be implemented, say effective as of the first day of the next plan year, for current employees who have not elected to defer as well as for newly hired employees?

I am inclined to say no, because those employees have, in effect, already made a “negative election” not to participate. The IRS guidance, of course, only discusses “negative elections” for new employees.

May a profit sharing plan use forfeitures to pay administrative expenses? Rev. Rul. 84-156 addressed this issue in the context of a money purchase plan. Is this all the guidance that exists? Any thoughts? Thanks. Ed

I am looking for a study/article, etc. that analyses the invesment performance for plan participant in a daily valuation environment vs. a non-daily valuation inviroment.

It is my guess (at this point) that the cost of the daily valuation option + the effects of market timing on the part of plan participants results in lower rates of return but have nothing to back up my hunch.

Please help!

It is my understanding that transit and employee parking expenses quality for Section 125 flexible spending accounts. Do you need to set up a new Section 125 account (vs use Dependent Care or Healthcare Expenses?). Can anyone point me towards the regulations on this issue?

DC plan using balance forward valuation wants to amend so that terminated participant gets balance as of quarterly valuation date FOLLOWING termination rather than quarterly valuation date PRECEDING termination. Purpose is to prevent terminee from sticking other participants with losses occurring between preceding quarterly valuation date and termination date. Plan says that distribution will be made as sonn as administratively practical after termination.

The change in the valuation date appears ok under 1.411(d)-4 Q&A-1(d)(8). The change will, however, necessarily result in a longer period of time between termination and distribution which appears to violate 1.411(d)-4 Q&A-2(B)(2)(ix). Is this right or is proposed amendment ok with respect to current employees because they don't "accrue"

the "benefit" of an earlier distribution until they terminate?

I am in the middle of a complex project to link payroll systems of multiple employers to multiple insurance carriers. The idea is to update one database and have it automatically update payroll of those employers and insurance carrier information for billing. Know of any high tech companies with experience in this area?

I work for a company that publishes law books. It is a small company and the owners are attorneys. I am considered a part-time employee as I work 30 hours a week, more if my children are home from school. I have been with the company for 14 months. I had to fight for my health benefits even though Florida law states that an employee that works over 25 hours a week is considered full time and entitled to the benefit. Here is my problem...am I also entitled to holiday pay? They require that we work all of the week of the holiday and the week after (not day before and day after). I worked this past Saturday so that I would not be short 2 days pay for the Thanksgiving holiday. Company policy states you must work a 40 hour week to be eligible for holiday pay. Is this legal when Fl states a full time employee is anyone with over 25 hours a week? Also, the same applys to vacation pay. Am I eligible through Fl law for vacation pay? The owners seem to know every way around the laws, they provide just what they have to, we get no retirement benefits at all. Any help would be appreciated.

Sherree Bennie

I have some questions on the "special enrollment" rules for health plans under HIPAA. [ERISA 701(f); IRC 9801(f)]

1. How are employers dealing with the rule that employees/dependents have a right to special enrollment only if, when they declined enrollment, they stated in writing that they were declining because they had other coverage?

2. How are employers dealing with the related rule that the above condition can only be imposed if the plan provides that such a written statement is required, and only if the employee was notified of that requirement at the time coverage was declined?

-- Are plans even using the "had other coverage" limitation in Rule #1 at all?

-- What language do plans use, if they apply Rule #1 and have people "decline in writing"?

-- Do employers just put the "had other coverage" language in the enrollment forms?

-- What language is used by plans to meet Rule #2 and describe the "decline in writing" requirement?

-- What procedures are used by employers to ensure that employees are properly "notified" of Rule #2?

AND -- How do you deal with persons who declined initial enrollment before HIPAA was enacted (and therefore before the plan would ever have met the requirement in Rule #2, and before any employee would have been notified of the requirement)? Is it just not possible to use Rule #1 and deny special enrollment to such persons?

As 1/1/99 approaches, there is more and more discussion (and interest) concerning safe harbor 401(k) Plans. Do you think it's a good idea?

My preliminary thoughts on it:

Pro - It eliminates cost and aggravation of 401(k)/(m) testing. It allows employees at the lowere end of the HCE pay scale ($80k - $100k) to defer more.

Con - It eliminates an incentive for sponsors to adequately communicate and explain the Plan to its NHCE group. The only requirement will be the annual notice to employees.

I have a question regarding payroll deduction plans. This is a non qualified, after-tax deduction. The "Plan" consists of a small life insurance policy and a selection from three accumulation accounts. One of them is a mutual fund.

My question is, when the employer deducts the payroll how soon must he deposit the monies to the accounts? Must it be transfered that same day or can it be mailed 3 to 5 weeks later. If it is going to the mutual fund then this is a securities transaction.

Thank you for your assistance.

Miguel Gutierrez

We know that there is a federal bankruptcy exemption for most retirement plan benefits. In most states an individual may choose either the federal exemptions or the state exemptions. If the latter are chosen (because in many other cases they are more comprehensive), is the federal exemption lost, i.e., are only the state retirement plan exemptions(if any)available?

Are there any web sites that provide information on state exemptions?

Our company sponsors a 401(k) plan. By design, the Plan excludes a certain class of employees from participation. For 1997, the plan barely passed the 410(B) coverage test. Effective 12/31/97, we sold off some business units. As a result, the 410(B) coverage test has dropped to about 55%--the units sold off did not employ the exluded class of workers.

For Plan Year 1998 (calendar year plan), the 410(B) test is shot. However, I understand that there are rules regarding a "free year" when there is a change in coverage as a result of a transaction. In our case, will these rules allow us to ignore the 410(B) problem for this plan year, and correct it next year? Do such rules still provide relief for the plan, notwithstanding the fact that we could have covered all these employees this year and avoided any problems? (Hindsight is always 20/20.)

When a participant receives and excess distribution due to clerical or other error, and recovery is unsuccessful, is the plan sponsor required to reimburse the plan? If yes, how is this done? The TPA is carrying the amount as a receiveable now.

these proposed regulations indicate that a DB plan may not, directly or indirectly, b/c of attainment of age, disregard compensation after attainment of such age.

Thoughts?? It is still in Corbel's DB checklist.

I recently lost a parttime job which I relied on to supplement my income. This was unexpected and I have found myself unable to pay my bills. I applied for an emergency withdrawal from my 457 plan. My employer wouldnt make a decision on whether or not to approve the withdrawal. They sent the application to the plan administrator who stated that they didnt believe it was an emergency and that if my employer authorized the withdrawal that they could not support them if they were audited. My employer is afraid of repercussions if they authorize this withdrawal. Any ideas on what I might do next.

When a health plan is replaced by a similar plan at the employer's desire, must COBRA benefits be offered to those employees who decline the new plan. Thanks.

Census information getting ready to be sent to clients with 12/31 year ends. Has "Key Employee" definition changed or is it same as previous year?

[This message has been edited by PWBAer (edited 11-19-98).]