My client has a non leveraged ESOP where the plan document specifies that until an Annuity Start Date, meaning NRD, disability, death or 1 year after term date, the account will be maintained in the Trust. After the Annuity start date, but before the actual distribution date, the Participant's account shall not be revalued. There is only ER stock in these accounts. If the stock price rises $10 per share, can they legally say to a terminee, you are not entitled to the current market value?

I especially don't like this because my software gives terminees the market value of the stock. My only work around would seem to be to define terminees stock as a different class of stock.

In a situation where a terminated employee elects COBRA on day 1 of their 60 day election period, and just for grins, let's say that date is August 1, if they wait the full 45 days to pay the premium, do they need to pay August and September?

Or do they pay August in full and half of September?

Thanks!

I'm not too versed in cafeteria plans.

Question: If an employer wants to pretax health insurance premiums, does a formal plan document have to be in place? Even if they are not required to file a 5500 due to participants being under 100?

Thank You,

CConnell

I was just reading the most recent questions and realized you had answered many question similiar to one I have, so.....

Co A is a medical practice with a 401(k) plan being acquired in an asset acquisition.

The acquiring business, Co B, is a non-profit with a 403(b) plan.

The doctors of Co A want to keep their plan the way it is (in the 401(k) funds) and separate from the acquiring employer's plan. IRA rollovers are not an option because the accounts are subject to creditors.

Is it possible for the Dr's to not liquidate subsequent to the acqusition and continue to sponsor the plan. Does the fact that employees actually had a severence from employment force the termination of the plan?

I am working with a medical practice that will be acquired in an asset acquistion by a non-profit organization in the very near future. The practice has a 401(k) plan and the doctors do not want to roll those accounts to the new employers plan, or into an IRA where the law will not protect the assets from creditors.

If the medical practice fails to liquidate following the sale of all it's assets, could the practice still sponsor the plan and make distributions to doctors come retirement (noting filing requirements, costs, etc).

Does the fact that the employees will sever employment require the distribution of accounts?

The problem I have is that the doctors want their accounts to remain in the 401(k) plan, DFA Fund options and are willing to pay a pretty high cost to maintain the plan in order to accomplish that goal. To date, they have already spent a huge amount of money asking these questions of their TPA and not getting an answer they are comfortable with.

I appreciate any help.

I'd appreciate some help or direction on the following: If a plan participant has begun his distribution and is receeiving a monthly annuity that has a guaranteed period and dies, what rollover rules apply to a non-spouse beneficiary? Since the participant was receiving his benefit the beneficiary benefit must be distributed as rapidly. The plan gives the beneficiary the choice of continuing the monthly annuity until the end of the guaranteed period or taking the benefit within 3 months as a lump sum. Can a non-spouse designated beneficiary roll this amount over and take distributions based on the beneficiary's life expectancy from the inherited IRA? Also, does it matter if the participant at death was under his RMD, that is, are the options for the beneficiary different if the participant was 65 or 75. I seem to only find info on the new non-spouse rollover option for situations prior to a participant taking a distribution.

Client has a 403(b) plan that started as a non-ERISA plan but became an ERISA plan when the employer decided to make matching contributions. Client doesn't believe a plan document was established when the employer matching contributions began. In addition, we know for a fact 5500's have not been filed.

It is my understanding the non-filings can be corrected by submitting the 5500's for each year they are due along with the $1,500 penalty.

What are the options for not having a document?

In addition, what about the administration of the plan since it became an ERISA plan?

Thanks in advance for your help!

Relevant Background Information

----------------------

Company A maintains a 401(k) plan.

Company B is buying the assets, not the stock, of Company A.

Specific Question

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Is there anyway for Company B to assume the role of Sponsor for the 401(k) plan? If so, what needs to be done?

Thanks!!

An unmarried person living in a community property state has an IRA naming his three adult children as beneficiaries. Then he marries, a year later he dies without changing the beneficiary designation. Can the beneficiary designation be undone by the surviving spouse? Is there a requirement that the IRA owner change the IRA beneficiary designation upon marriage? Does it matter that although its a community property state, all contributions were separate property as they were made prior to marriage?

Are c-corp owners (more than 50% to 100%, i.e., majority owners) ineligible to participate in cafeteria plans and healthcare reimbursement arrangements (HRAs)? What types of special considerations need to be looked at and addressed in order for them to be allowed to participate?

I somehow got the notion that more than 5% owners of c-corps were ineligible to participate in these types of arrangements. Are they ineligible, or is it just difficult to have them pass all of the necessary nondiscrimination testing?

Also, what kinds of implications does participation of a c-corp owner in a caf or HRA plan have for small employers?

Any guidance on this subject would be greatly appreciated.

I'm new to cross-testing and as they say, if you never ask, you'll never know.

As a way of understanding what I've read so far; does this sound like a scenario that would pass?

-DC plan with a 3% NEC - Therefore a Safe Harbor plan, but also a plan that is not subject to a top heavy minimum.

-Eligable owners (5% or more) who are at least 35 years old get a discretionary contribution of up to 6% of eligable compensation. 3% plus 6% = 9%. The group rates tier from 0 to 6%, which could be problematic, but since the NEC for NHCEs is 1/3 of the highest groups %, this shouldn't be a problem, right?

Could it a plan this simple work in your opinion?

Thanks,

Fender

401ktest.com

We are reviewing a Volume Subitter plan that, effective 10/1/2005 added a sentance in the eligibility section that excluded one participant, by name, from that day forward.

I am concerned that this may be enough of a departure from the VS approved language as to have this considered an Individually Designed.

Any thoughts?

It appears that PPA revoked the "Notice to Participants" such that it is not required in 2007. There seems to be a provision that the DOL would draft a new notice, and at least one reference source said that needed to happen by mid-August 2007. Did it? I'm having trouble finding anything that tell us what the DB participant notice rules are for 2007 other than the SAR. Anybody up on this?

Company X has a COLI/BOLI policy on its key employees. Upon the death of a key employee, Ins. Co. pays the proceeds to Company X. Company X then remits a portion of the proceeds to the designated beneficiary of the key employee. Are the amounts paid to the beneficiary taxable to the beneficiary?

Thanks.

A broker has called with a question - client is on the way to a meeting a needs an answer ASAP.

Company A purchased 100% of the stock of Company B. Company B maintains a 401(k) plan - and employees of Company B will become participants under a DC plan maintained by Company A. Can distributions from all accounts, including elective deferrals, be made to the employees of Company B?

Any guidance/cites are appreciated - thanks.

Sorry for the second question...

For non-calendar year plans it is the the limit in effect at the end of the limitation year that should be used.

This is confusing to me as I always thought 415 was a calendar year limitation.

Does this mean:

A) That 415 tests should be run on a plan year basis? or

B) 415 tests should still be run on a calendar year basis however, using the limitiation in which the plan year ends?

Thanks again for your help!

The regulations provide that a union plan is deemed to satisfy the ACP test however, if the plan allows after-tax contributions to be made to the plan in addition to matching contributions does this mean an ACP test should still be run on the after-tax component?

Thanks for your help!

New Business is established 10/1/07, however it is not operating with employees until 10/15/07, can I still make the effective date of the plan 10/1/07?

Thanks!

Seems I have seen some discussion of this issue before but was unsuccessful in finding prior posts here.

I am seeing a number of severance agreements drafted to provide for 409A-compliant severance payments in periodic installments with the first payment to commence within a certain time following the effective date of a release of claims against the employer (i.e., after a release of claims is signed by the former employee and the revocation period for the release has expired).

Obviously, a timely executed release ties into an employee's separation from service yet the effective date of the release could vary from case to case depending on timing of signing, whether this is a group exit, or other factors. As a result, the beginning date (and thus the entire schedule) of installment payments is not entirely definite. Also, the effective date of a release of claims is not one of the listed 409A triggers for deferred compensation payments. This all seems hyper-technical but it seems to me that having an agreement that ties the period of payments to a non-409A listed trigger could arguably violate 409A on its face.

Question: Is the fact that the release of claims ties directly to a separation of service (i.e., an acceptable 409A distribution trigger) sufficient to allow the payment schedule to trigger off of the effective date of a release of claims or is there reason to think this is a problem. I do not believe I have heard the IRS / Treasury folks address but am wondering if I have missed some informal commentary.

Thanks