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?

We have a 401(k)/ESOP where co. match is in stock. We match dollar for dollar up to 4%. We always fail ADP/ACP test. I read somewhere that beginning in 1999 if a co matches dollar for dollar up to 3% and 50 cents on next two percent that we will no longer be subject to ADP/ACP testing. Is this true and when is it effective. Quick response please as Board of Directors sets annual match percent at the 10/29 meeting.

Wife covers husband under health plan under a cafeteria arrangement. Husband is hired by same employer. Son comes into the US as an alien. Husband desires to stay on wife's plan and add son. (Husband could always elect his own coverage, drop out of his wife's coverage, and husband could pick up the son -- if no issue with son's alien status) May wife pick up son under CIFS rules? Issues: (1) under pre/post 11/97 cafeteria regulations? (2) is the husband's new hire status sufficiently related to adding on the son for coverage?

What is the income tax impact on S Corp shareholders in a self funded (or partially self funded) plan? Several folks have told me that they thought the rules were changed under HIPAA.

We are a TPA firm with no asset or insurance affiliate. For the plans that we administer who are self trusteed, we file the federal withholding, prepare the 1099's, 1096, and 945's. We currently get one trust number for each of these plans, get a coupon book, and file when there is a distribution. Does anyone else do this, or do they set-up one trust number and file all distribution withholding through that one number? Thanks.

Has anyone had experience with converting a year end transaction file from Equitable/Momentum Services, so that it imports electronically to Quantech? I would apreciate any direction, advice, import routines, or other resources to guide me. Thank you.

My employer has indicated that our group life insurance policy does not cover suspended employees because the LI carrier says that suspended employees do not fit the definition of "actively at work." YET, our bargaining agreement says that the employer will provide LI for all employees. A suspended employee is still an employee, no? Does anyone have an opinion on this? Are there other locals that have come across this problem? Our LI carrier says that excluding suspended employees from coverage is an industry norm. Thank you in advance for any help you can provide.

I am an employee who is interested to get my company to go into the POP plan. Can anyone tell me the cost, limits, and repercussion for misuse.

Thanks,

Kev.

I am looking for articles/example policies regarding the benefits/policies/procedures of employees who are rehired by a company.

Is anyone familiar with the hybrid DB/DC plan set up by NationsBank as a Cash Balance plan in which plan participants can roll over 401(k) balances into the Cash Balance plan and direct investments? I am interested in any information you might have on how they have addressed issues such as separate account requirements and crediting the underlying pension plan return to the cash balance accounts.

We are hiring a third party administrator to pass all eligibility to our HMOs and pay our premiums with a charge back to us. Can we add the monthly per employee fee from this administrator to the HMO premiums (and then load 102%) for COBRA. Does anyone have any experience with this?

Its late, but there is still time to register

Fall Training Meeting / Southern Users Group

Fri Nov 6 12:30 - 5:15

Sat Nov 7 8:30 - 4:30

Nashville

Marriott Hotel

$109 through Oct 14th

(800) Marriott or

(615) 883-9500

$150 for members of Southern User Group

$175 for other user group members

$200 for non members

FRIDAY:

12:30 - 1:45 Crystal Reports

Terri Ely, Lorraine Dorsa & Associates

1:45-2:00 Break

Choose one of the following

2:00 - 3:15 Non-discrim, cross testing plans

Tom Poje, LD & A

2:00 - 3:15 Quantech Hardware and Networking issues, Mitch Ely from Corbel

3:15 - 4:00 Break

Pick one of the following sessions

4:00 - 5:15 Nondisrcim continued

4:00 - 5:15 Defined Benefit Plan Administration for Defined Contribution Administrators

Lorraine Dorsa, LD & A

5:30 - 6:00 Reception

SATURDAY

All topics taught by Quantech instructor

8:00-8:30 Continental Breakfast

8:30 - 10:10 Employers with Multiple Divisions or plans

also Eligibility issues

10:25-12:05 Transaction posting

12:05 - 1:00 Lunch

1:00 - 2:40 Reporting options

Security/Data Management

2:40 - 2:55 Break

2:55 - 4:30 Loan processing

Questions? Call Maggie Heffernan (770) 641-1429

or Lorraine Dorsa (User Group Empress) 904 249-9171

The organization I work for currently pends all health insurance claims during the COBRA election period to ensure that we don't pay claims for an individual who may later decide to waive coverage. I have heard that it may be legal to send a sort of denial during this time frame stating that coverage has been suspended. Can anyone tell me if this is true, and what you do? Thanks in advance for your help.

An individual owns 100% of the stock in Coproration A and 100% of the stock in Corporation B. Individual intends to sell stck in Corporation A to ESOP. Individual will use proceeds to purchase additional stock issued by Corporation B. Corporation A and corporation B are brother/sister controlled group. Will purchase of Corporation B stock constitute qualified replament property? Note that 1042 excludes only stock in parent/subsidiary controlled group. Any thoughts? Thanks. Ed

Looking for no or low cost ideas and plan design to start up an employee referral bonus plan.

Would like suggestions, ideas, or info on how other companies are implementing this type of program.

Please email reply or fax info to (408) 432-8373.

Thank you.

We have a 401(k) plan with two sources of money- deferral and match. The match has always been 100% vested. The client would like to amend the plan changing the vesting schedule for the match to a 6 year graded (20% 2nd year). He is wanting to have the "future" match contributions under the new schedule. Does anyone presently have plans where an individual participant has two different vesting schedules going? Assuming the document can be drafted properly, I have a concern that it might be next to impossible to monitor because the participants can move funds between the various investment accounts. Anyone dealt with this issue? Any thoughts would be appreciated.

In determining top heavy status for a plan (of which this is the first year) and the ADP test does not pass and a portion of the contributions need to be refunded to a key employee, can I subtract the amount of the corrective distribution from that employee's account balance as of the determination date in computing top heavy status?

Thank you for your assistance in this matter.

The 1978 IRS Form W2 contains Box 16 that reads: "Box 16 Pension Plan coverage? yes/no". I would like to know what the instructions are for that box for that particular year. 1979 would also suffice.

In particular I'm trying to learn if a person was a participant in a defined contribution plan in 1978 would the answer be "Yes". I already assume the answer would be "yes" if the person was covered by a defined benefit plan.