This question relates to ESOP fofeitures and when are they allocated to remaining participants, basically a timing question.

We have an ESOP whereby its distribution policy changed from paying out 100% of vested amount upon termination to paying out to 20% of the vested amount over a 5 year period.

With the old policy forfeitures were allocated either upon distribution or after 5 years if the terminated participant had not requested a distribuion.

Now the plan has changed paying out only 20% of the vested amount over a 5 year period. When do forfeitures get allocated out....is it 20% over a 5 year period or upon the entire vested amount being paid out.

The plan document indicates that for the 401(k) forfeitures will be paid out upon the entire vested balance being paid out or after a 5 year period if the terminated participant has not requested a distribuiton.

of which the 401(k) is paid out at 100% at upon request after the plan is valuated for the end of the end of the plan year.

continuing....when the plan document gets to the forfeiture section of the ESOP part of the it states how forfeitures are allocated and then states to refer to the above section.

Please note this plan is an ESOP with a 401(K).

What would be the determining factor of when to allocate forfeitures? thanks.

The division I'm in, in the company I work for was sold to another company. The new company has a plain 401k plan that includes loans. However, they state they cannot roll over the old 401k plan into the new 401k plan, and that it must be rolled over into an IRA (or I guess, can be left where it is since I have more than the 5K min balance). The old company's plan manager is Fidelity, the new one is TRowPrice. Both support 401k loans, but the Fidelity one is apparently some kind of esop/401k hybrid. They did say that a 401k from a previous employer *can* be rolled over into the new 401k, just not the 401k from the division that was aquired-- though in getting clarification that would appear to contain some conditions that weren't mentioned originally.

My main communication on the issue is with the HR dept., and the best I've been able to extract is that the reason we can't rollover is the original plan wasn't just a 401k, but an esop/401k combination of some kind which included employee stock benefits. Supposedly the esop/401k can't be rolled over without adulterating the new company's TRowPrice 401k in some manner-- and could somehow affect all of the new company's existing employees. The company is proposing setting up an optional 1-year loan to pay Fidelity some amount of money up front that the employee can then have deducted over the period of 1 year in order to reduce the loan as much as can be done under those circumstances.

I don't own a home, so I can't use that for a loan source, and the loan offset amount is substantial. My alternatives appear to be-- 1) get a loan from somewhere else to pay the loan offset to Fidelity, or 2) take it as a distribution and then have to pay ~50% of the amount come tax time (28% fed + 10% penalty + state tax), or 3) some combination of one of those and the 1-year loan offered by the "new" company.

However, I'm confused by a couple of things-- what do you suppose my limitations might be in rolling over the Fidelity 401k into another plan of a different employer? While not exactly a preferred option, it would appear that changing jobs at this point to a company who could accept the rollover might save me some serious $$$ here, as the loan is pretty sizable. I would think at least if I were to go self-employed (theoretically, anyway) that I could pick-and-choose my own Solo401k and roll it into that so it seems at least *possible*.

Not only that, since it is possible to transfer from one plan to another either by trustee-to-trustee (check goes direct rather than thru me), or having them send me the check and I've got 60 days to get it into a new plan-- at that point if it's just a check coming from me what connection could it even have with the original plan's characteristics-- would it not isolate the new 401k from any constraints of the original plan? Is it not at least theoretically possible to roll it into another employer's 401k temporarily, then leave them and come back to work here and rollover *that* 401k? Sure, these are kinda goofy options but I kinda get the sense here that there may be some options that have been overlooked due to lazy or overworked HR personnel who may have ended up tasked to address the problem. Yet they are going to some trouble to set up payroll-deduction loans for 1 year in an attempt to solve the problem (seems to make it more complicated, rather than fixing anything)... The company has over 100 people with outstanding loans, so I'm not the only one with this problem, though I may have one of the higher $$$ amounts and this is a small percentage of the totality of employees aquired with the division...

I suppose the 1-year loan thing is just a way to say "we did something" in response to anyone who complains, but I have this nagging feeling that there may be some reasonable options that just haven't been spotted here...

The HR guy that I'm supposed to work this out with suggested I roll it into an IRA and use that for bank loan collateral, which turns out is essentially illegal (causes an immediate distribution) so obviously the guy is not very knowledgable-- also with the acquisition he appears to be rather swamped with other work so this is not particularly a priority issue for him. I don't see any way to keep the original 401k going and paying the loan installments manually, though I suppose Fidelity would know about that if there's any way to do that and I am planning to contact them and see if they can suggest any other options.

I'm in California, so I don't know if EGGTRA or anything CA-specific is of any help-- the acquired division was uS nationwide and the new company is international but has a large US presence. If the esop portion of the Fidelity plan contributed some money to the account that needs to be tracked separately or something, how could a rollover even to an IRA work-- and rollover IRAs might be later rolled into another employer's 401k-- what kind of strings are likely attached here and how can the funds be freed of them so they can be readily rolled over???

Certainly this is something they never tell you about in 401k loan discussions-- that "leaving your job" isn't all that can trigger a loan default-- as the company changing hands can apparently do it as well.

If you have any ideas of other options I may be unaware of, whether or not these guys are doing something illegal (probably out of ignorance, rather than malice IMHO), or where I lack the understanding of what is possible in rollovers-- I'd appreciate any info you might have...

Thanks,

-- Z

Can anyone suggest a resource that would provide guidance on the steps to take when an employer discovers it has a plan covered by ERISA but only recently realized it. A client has been promising employees retirement income if the employees work until a certain age and have a certain number of years of service. The employer has kept its word and made these payments to employees who retire and meet the requirements. I've determined that this is a pension plan under ERISA, but the employer has never created or funded a trust or filed any 5500s.

We have quite a few 401(k) plans with profit sharing accounts that have 3/20 vesting and are under the impression that the 2007 safe harbor notices can be given to the participants without the plans being amended to 2/20 vesting as prescribed by PPA. Just wanted to be sure - is this correct, and when would the plans actually need this amendment? Or would it just be part of the inevitable PPA restatement that will happen years from now as long as the plan operationally uses the new schedule? All help is appreciated.

We're looking to start a relationship with a new trust company. I was curious to see what feedback people had using either STN or Matrix. I'd appreciate it if users could send me a PM with the good and the bad if you've worked with either of these companies before. Particularly, we are trying to evaluate: client service, ease of daily trading(we use Relius Administration) & accuracy of reporting.

Are there any other platforms people use for daily val trading people might recommend?

I'd prefer not to make this a public forum, hence the PM request.

thanks

Steve

I'm working with an employer who we have determined is a local governmental employer for ERISA and tax purposes.

Their head is maxed out in their defined contribution plan. On their face, the Code sections exempting local governmental plans from minimum participation and discrimination provisions, etc., would appear to allow them to put in a 401(a) qualified DB plan benefitting solely the top person (we've also discussed drafting it to benefit a few other of the key executives). However, this seems a way to permit additional executive deferred comp in a way contrary to the policy of 457(f), and I have not found any PLRs addressing this.

So far, I've found nothing in the state statutes that would prohibit this either.

Has anyone done something like this in practice? I'd appreciate any suggestions or thoughts.

Employer maintains a Safe Harbor 401(k) using the basic match formula. The match is calculated for the whole year, versus payroll by payroll. Safe Harbor notices were given prior to the 2006 plan year. The employer wants to terminate the plan effective 12/31/06. Wouldn't he still need to fund the match for the 2006 plan year?

I read some materials, but now I've totally confused myself. Some of the things I read appear to say that you can terminate a s/h 401(k) plan and not provide the safe harbor match as long as you amend the plan to omit the s/h match, notify participants at least 30 days before term date and run the ADP/ACP test.

But haven't the participants "accrued the benefit" since they were given notice at the beginning of the year? In looking at the document (prior to the final 401(k) amendment) it says you have to make the contribution. But not sure how the amendment affects the language.

I hope this makes sense. Thanks to all who can understand my babbling and can provide some input.

Individual was hired and worked for a company for a number of years. During this time person did deferrals and received employer contribution under qualified 401(k) Plan. Person is 100% vested. (We are talking about a long emploment.)

Problem becomes known after person terminates emploment and "disappears". Turns out that person's documentation (social security card, birth certificate...) were fraudulent!

How does this become know? Social Security Administration contacts employer to alert the firm that it appears that person was using social security number of dead person! Beyond all other related problems, what should be done with monies held for this person under the 401(k) Plan?

VERY vanilla deferred comp agreement needs a current market interest rate to reference. Something like "___ as published in the WSJ . . "

Anybody have a favorite?

A 401k plan has over 100 eligible participants at the beginning of the year for the first time. (90 last year 104 this.) They filed a 5500 last year using schedule I. This year we filed a 5500 again with schedule I and no audit because of the 80 -120 rule.

In the past I have understood that this audit exemption could only be used in the first year the plan went over 100 eligible. However, the instructions for form 5500, (Section5: What To File) seems to indicate that you can elect to file as a large plan or a small plan as long as you do not go over 120.

Questions:

Does a plan need an independent audit if it is the second year that they have between 100 and 120 participants?

Once the plan files schedule H with an audit can they go back to schedule I and no audit if their eligible participants at the beginning of the year drop below 100?

Thank You

We're currently reviewing an EB conference/ educational seminar that some of the trustees will attend. Part of the conference events include a dinner/dance party and the total cost of the conference includes the dinner/dance party. If trustees wish to bring spouses to the dinner/dance, the spouse's cost is not included (and likewise would not be reimbursed by the plan). Has anyone had any experience with the DOL taking issue with a plan covering the total cost of a conference which includes an event that will likely not be directed towards "plan matters"? Trustees may take part in other social events at an added cost (which likewise would not be reimbursed by the plan), but I'm not sure why the conference sponsors then decided to lump this dinner/dance event into the cost of the conference.

Facts: ABC, Inc. and XYZ, Inc. are members of a controlled group. They have separate plans and each plan passes coverage testing on its own; therefore, the plans are tested separately for nondiscrimination testing. There are key employees that participate in each plan (ABC's key is ABC's plan and XYZ's key is XYZ's plan). ABC, Inc.'s Plan is top-heavy by itself. XYZ's is not. Do the plans have to be aggregated for purposes of determining top-heavy?

Guys I know many of you know this T9 feature when texting using on your cellphones.it made my texting more faster since it uses only 9 keys.anyone using this on your cellphones?

I've used FreeErisa for a while but have discovered a new site. www.free5500.com. Although the site doesn't have as much content, the free search options are more robust and the 5500's are pdf's which makes for better viewing & printing. Better yet, for prospecting, the premium content has updated sponsor contact information. The premium content also allows searches on 50+ fields including content from all the schedules.

Has anyone else used this site? I think it's relatively new but it's awesome.

We have historically worked mainly with 401k and 401a plans but are in the position to take over a current client's Non-Erisa 403b plan and add an employer match to it. My understanding is that this new plan would no longer be Non-Erisa, would be subject to annual 5500 reporting, would require a Plan Document and SPD and the match would be subject to ACP testing. Is this correct? What else do I need to know about 403bs that differs from the 401k atmosphere?

If my assumptions above are correct, for the 5500, would only the employer portion of the plan assets be required to be reported on or would the entire plan assets, including 403b accounts need to be reported?

Also, can the participants have their matching contributions sent along with their deferrals to the annuity or MF of their choice or do they need to be invested separately? (the contributions will be 100% vested)

Finally, would employee benefit statements be required for participants other than what is given to them by their annuity or MF company?

i just spoke with john hancock and they informed me it is possible to pay your life insurance premiums with your 401(k). however, they did not know the rules, the limits (% of your 401(k) bucket...) or anything in general regarding the regulations behind this. i figure that in order for you to be able to do this, there have to be some sort of rules. anyone know them? anyone know where i can find them?

also, how would i go about finding out whether or not you can pay other bills with your 401(k) money.

I have run into a situation in which I am somewhat stumped from a legal standpoint. As of 4/1/06 I resigned from a Bank officer position in which the Bank was organized as a Sub Chapter S Corporation and therefore provided to it's employees an “ESOP with 401k Provisions (KSOP)”.

I had worked for this Bank for nearly five years and upon departure, I inquired with the HR department who administrates the plan as to how I could roll my vested balance from the plan into my existing IRA with Fidelity Investments. Their response was that I would have to wait until after the end of the company's (Bank) fiscal year end (12/31/06) before I could begin the process of accessing my balance. They claim that distributions based on roll-overs not made as part of fiscal management procedures and that they are acting within the laws and boundaries to do so.

I have no concerns that the Bank is whole and that my benefits are safe but I would rather control my own financial affairs than continue to allow an ex-employer to keep what is rightfully mine and distribute at their convenience.

Therefore, my questions is….Are they in fact acting under the law by stating that they can withhold my vested balances until after their fiscal year end based on their organizational status or are they obligated to roll over upon my request?

Participants in this plan get ER stock under the ESOP part of the plan and they can also buy ER stock with their EE deferrals under the 401(k) part of the plan.

The employer is trying to make sure that there is enough cash on hand when employees terminate and want to cash in their stock. The employer asked the TPA to provide a list of participants holding stock so they could determine how many retirements or other terminations might be coming up so that they could make an educated guess about their liquidity needs. The TPA is reluctant to provide that information.

Apparently, the TPA is concerned about the 404c regs relating to confidentiality and the potential for undue employer influence on participants.

Is the employer not entitled to know which participants in the employer sponsored retirement plan own ER stock?

Has anyone seen a sample of the annual Disclosure Notice to give to employees?

Thank you!

In a multiple employer plan where a participant is employed at 2 or more of the employers can the participant elect salary deferrals at one employer but not at the other?

Would it make a difference if the 2 employers were a part of a control group?