chris

Employer wants to put plan in place whereby e/ee's can choose between year-end bonus or medical/dental expense reimbursement. First, employer will need to adopt 1)a cafeteria plan and 2) a medical/dental expense reimbursement plan(FSA?), correct? Second, is it as simple as providing in the cafeteria plan document that the employer will make discretionary contributions only (i.e., bonuses)and that e/ee's can elect to either receive said bonuses or direct that said amount go towards an FSA in their name? Third, despite the fact that the bonus will be entirely discretionary are there any constructive receipt issues since the bonus will be based on services performed previously? I mainly deal with profit sharing and pension plans so any help would be greatly appreciated. Merry Christmas! I recently ran across Reg. 1.105-11(b)(1) which indicates that the reimbursement plan would need to be a separate written document from the cafeteria plan document. My main question deals with the drafting of the specific provision re: bonus or med/dental exp reimbursement. Thanks again... [This message has been edited by chris (edited 12-17-1999).]

What is the going rate for setting up a cafeteria plan (medical/dental) for an employer with less than 100 employees? ------------------

What is the going rate to handle all aspects of amending and restating qualified plans for GUST??? ------------------

What is the current/most recent figure for the Taxable Wage Base?? For 1998, $68,400 was the TWB. Is the 1999 TWB out already?? Thanks.. ------------------

Client owns 100% of the shares in Corp A and owns 50% of the shares in Corp B. If Corp A maintained a Profit Sharing Plan, the controlled group rules would not require the e/ee's of Corp B to be covered by the Corp A plan because client does not own more than 50% of Corp B. Is that a fair assessment of the controlled group issue? The other shareholders of Corp B are all individuals unrelated to client. ------------------

Client doctor has account balance in PSP. Doctor is also MAJ s/h, director of P.A. and is trustee on the PSP. Doc is looking at terminating the PSP. Doc has recently hit his RBD and has taken his first RMD. Doc wants to terminate PSP and rollover his account into IRA. Also, doc wants to name his kids as ben's of the rollover IRA. His spouse is currently ben of his plan account balance. His naming different ben's (e.g., his children) after his RBD seems to be O.K., but it appears that he will be stuck with having to use his spouse's life expectancy to figure future RMD's from the IRA. See Prop Reg §1.408-8, A-6, Q & A (second sentence); Prop Reg §1.401(a)(9)-1, G-2, Q & A, (B), and Prop Reg §1.401(a)(9)-1, E-5, © and (d). Any comments or suggestions.....Thanks ------------------

No reason you can't terminate and allow the e/ee's to rollover. That's better than merging the two, since then you would then have to preserve the benefit options with respect to the MPPP funds. ------------------

ak, The mandatory 20% withholding came into effect with UCA '92. The treaty was signed 1994. Just as a note, I called the IRS -- Employee Plans branch and they directed me to Notice 87-7 (which says no withholding if payee certifies residence is outside of U.S.). They were clueless about the 1994 Treaty (even though result is the same). How will Sec. 1441 change this? ------------------

A U. S. corporation has a number of employees who are nonresident aliens from Mexico. Must the employer withhold the mandatory 20% on "eligible rollover distributions" made to these employees? Article 19 of the tax treaty between Mexico and the U.S. (which can be found at 1994-2 C.B. 489 or 1994-34 I.R.B. 1)seems to say that such payments are exempt from U.S. tax, i.e., no withholding. Does anyone have any comments or suggestions?? Thanks in advance... ------------------

Client will make 3% nonelective contribution. Thus, the ADP safe harbor is met. Client will provide matching contributions as follows: 100% on first 3% of compensation; 50% from 3% to 6% of compensation. The matching formula appears to meet the requirements of the ACP safe harbor (see Example 2 of Sec. VI.B. of 98-52). The 3% will be nonforfeitable, etc..... however, the matching contributions will be subject to certain requirements, vesting, last day of the year employment,etc.... Does the above seem to be an accurate interpretation? ------------------

Client will adopt 401(k) plan effective January 1, 2000. Client will be using the safe harbor rules as per Notice 98-52. Could client wait and submit plan for a determination letter re 401(k) as well as the safe harbor provisions closer to December 31, 2000? (This assumes the IRS would've approved safe harbor language by then.) Otherwise, client would need to get a determination letter re qualification under 401(k) and then get another one re safe harbor provisions. That would probably be the more conservative approach although, if possible, it would be easier to do it all at once. Any comments? ------------------

When drafting the allocation provisions for cross-tested ps plan is it necessary to include any allocation percentages in the plan document with respect to each class (or all classes, e.g., 3% allocation to insure top heavy test met)? I know the employer can provide the trustee written notification of the actual percentages to be allocated to each class. The percentages provided to the Trustee would of course be derived from cross-testing based on employee demographics. Would it be enough to: 1) define each class of employees (Group A consists of all physician employees, Group B consists of all para-professional employees, Group C consists of all administrative employees, Group D consists of all employees not in Group A, B, or C.); 2) allocate within each group comp to comp; 3) limit total contribution to each participant to 18.75% of comp; and 4) limit allocation such that maximum annual addition under 415 is not exceeded?? Any comments or suggestions? Thanks in advance..... ------------------

Client wants to adopt safe harbor 401(k) effective January 1, 2000. Am I right in thinking that client only needs to set up a plain vanilla 401(k), distribute the notice pursuant to Notice 98-52 in a timely manner, and that client has until December 31, 2000 to amend the plan to bring it into compliance with all safe harbor requirements? Anything special that needs to be in the intital plan document?? ------------------

Currently, PSP provides only for an annual valuation. Employer wants to amend PSP to provide for quarterly valuations and distribute quarterly benefit statements to the employees. Everything in PSP document is geared to annual valuation. Probably would be necessary to go through whole document and amend every reference to annual valuation. Any suggestions?? Is there any way to leave the same message on more than one message board at the same time??? ------------------

Client of mine was employed by a County Hospital for approximately 17 years until 1974. Client left employment. At time client left, Hospital's retirement plan required 20 years service and age 55 for full benefits. Hospital rehired client two and a half years later promising client that prior years of service would count under new retirement plan. Client worked additional 3 1/2 years and then terminated in 1979. Sometime after termination, Hospital employee told client that "he did not think client was eligible for any benefits". Client has asked me to look into the matter. If this were a current plan issue I would normally request a copy of the summary plan description. However, given the lapse of time, and other than calling the HR department at the Hospital, I don't know how to go about getting information to verify if client was/is eligible for retirement benefits. Any suggestions? ------------------

MPPP has last day of plan year requirement for receiving an allocation. PYE 9/30/99. Employer wants to amend MPPP to reduce 8% contribution to 0% contribution for PYE 9/30/99. However, co-trustee (there are 4 other individual co-trustees) of plan has not been removed as he has not received 30-day notice as per plan terms. Even assuming co-trustee is removed before 9/30/99, amendment to reduce contribution from 8% to 0% will not be effective for PYE 9/30/99 as ERISA 204(h) notice will not be given not less than 15 days prior to the effective date of the amendment. Thus, employer stuck with making 8% contribution for PYE 9/30/99. Anyone see it differently?

I would think that the IRS could request the 1120's for the "open" tax years, probably to verify the amount of contributions or that no contributions were in fact made. The interesting issue is how can the IRS require 100% vesting now almost thirteen years after the de facto termination. Has the EP Specialist given you any authority for that yet??? ------------------

I recently submitted a 403(b) question to the IRS via e-mail through the IRS website. The reply directed me to call the Employee Plans Section and speak with an Employee Plans Specialist. The information is as follows: ?'s re 403(b) Plans (202)-622-6074 1:30 - 3:00 p.m. M-F ?'s re all other Plans (877)-829-5500 8 - 4p.m. M-F Hope this helps... ------------------

If the IRS were looking to disqualify the plan, it could only go back to the open tax years. Assuming a Schedule P has been filed with the 5500 and assuming no exceptions apply, then the IRS would only be able to disqualify the plan for the previous three years. That three year statute of limitations applies to assessments and collections and is set forth in Section 6501 of the Internal Revenue Code. Ask the IRS reviewer to provide citation to authority for requiring full vesting retroactively thirteen years. Assuming no one backs down, it would appear that the IRS could assert that the plan does not meet 411(d)(3) and thus should be disqualified retroactively to the earliest open year??

Can anyone give me a range of the fee customarily entailed with respect to setting up a safe-harbor 401(k) plan? ------------------

It would appear that the amendment should have been adopted prior to the last day of the plan year in order to not run afoul of 411(d)(6) of the Internal Revenue Code. Clearly, if adopted on December 30, 1998, the amendment would be O.K.. As the amendment was adopted on the last day of the plan year, I would agree that it may be in violation of §411(d)(6). Anyone else see it differently??? ------------------

Will change of Profit Sharing Plan's plan year, which will result in a short plan year, have any effect on the allocation of the employer's contribution on a cross-tested basis???? ------------------

PSP maintained by employer is currently integrated with Soc. Sec. ( 5.7% of TWB). If PSP is amended to add allocation groups, must any changes be made with respect to the integration provisions?? ------------------

Per Regs. §1.411(d)-6 Q/A-1 and ERISA §204(h)(1) the notice must be provided NLT fifteen (15) days before the effective date of the plan amendment. Nowhere in either is it addressed as to the earliest point in time in which the notice may be provided. ------------------

The IRS published a model 402(f) Notice sometime ago(I believe it was in an Announcement but I can't remember the number right off). The text basically said that the 402(f) Notice provided was only a model notice and that it may have to be modified by the plan sponsor. The text also made mention of the fact that one could not use the enclosed model notice forever, but that it would need to be updated for changes in the law. I think the text of the pronouncement also stated that the plan sponsor could make changes to the actual text of the notice to make it easier to read or more easily understood by the participants. I'll try to find the cite for the IRS guidance. ------------------