I have a state regulated corporation that is making a supplemental securites offering under state law (i.e., not SEC - less than 500 shareholders). The question regards purchase of some of these securities by the company's defined contribuiton profit sharing plan (no 401k features as of now).

The provisions of Sec 407 provide that:

Immediately following the acquisition of such an obligation, the plan may not hold more than 25% of the aggregate amount of the obligations issued in such issue and outstanding at the time of the acquisition and persons independent of the issuer must hold at least 50% of the aggregate amount of that issue.564 Also, after the acquisition, the plan may not have more than 25% of its assets invested in obligations of the employer or its affiliates.

What is the defintion of "persons independent of the issuer" ? Would current directors, shareholders, officers, etc. be excluded from that definintion ?

401k plan administered by insurance company is currently taking the non-vested money from termed participants and placing them in a non-vested account. The participant is then made 100% vested in the remaining balance. They do not make those non-vested funds available to the company, which uses forfeitures to offset contributions. I don't have a problem with that, but they also don't allow the participant to trade that non-vested part of their account. So, should the participant make a trade in his original account and then rehire....we've got a problem. Or do we? Would the participant owe, or be owed based upon the earnings differential, a residual income amount once those forfeited funds are reinstated?

anyone else do this? I don't take forfeited money until the 5 year break or a distribution occurs, but evidently they don't follow this train of thought.

A terminated participant has a balance of $ 107.00 in their account and wants to cash out. Do we have to withhold the mandatory 20% ( $21.00) or can we send them a check for the full balance and have them pay the taxes at tax time?

We have some pretty old benefit files in storage (over five years). These include applications/enrollment forms, billing records and contracts. Many are from carriers we don't use anymore. How long do you keep files in storage? When and what do you shred?

I have a time-sensitive question in connection with the purchase of a business and the associated transfer of assets and liabilities between two DB plans. Participants under Seller's Plan will become Participants under Buyer's Plan as of the Closing Date. NRD under Seller's Plan is 62; under Buyer's Plan, NRD is 65.

Benefits under Seller's Plan will be frozen under Buyer's Plan, and a modified wear-away will be established for active employees, under which the transferred employee's accrued benefit will be the greater of:

Option A - his or her benefit as if he or she had continued under Seller's Plan for up to two years after the Closing Date, or

Option B - his or her frozen Seller's Plan benefit plus the benefit he or she accrues under Buyer's Plan.

My question is with respect to Option B. When calculating the amount attributable to credited service under Buyer's Plan, is it necessary to import the NRD (62) under Seller's Plan? That seems strange (and very complicated to administer), but I'm concerned that using Buyer's Plan's NRD (65) might violate Section 411's vesting rules, under which I think such a change would be treated as if it were an amendment to Seller's Plan. If I'm looking at the question right, it appears to boil down to whether you can amend a DB plan to raise the normal retirement date with respect to credited service after a specified date. Either or both impressions could be wrong, though. BTW, changing the formula is not an option, as it has already been communicated to the transferring employees.

Any comments appreciated.

We are going through two transactions - one stock and one asset sale. One closes in 7/2006 (asset) and the other closes 10/2006 (stock). With regard to the asset sale - we are not assuming any of the plans and will let the transferred employees participate in our plans. With regard to the stock sale, we will terminate the plans at the closing and have the employees participate in our plans.

My boss wants to recognize prior service for purposes of the 401(k) plan, but not for the cafeteria plan.

I found the predecessor employer requirements which appear to apply to the 401(k) plan and the stock transaction - but with regard to the asset transaction - has anyone ever heard of recognizing service for one plan (401(k)) and not another (cafeteria plan)? Also, do the predecessor employer rules (IRC 414(a)) apply to the cafeteria plan? I did find that for self-insured med reimbursement plans prior service does count as service if it is with a predecessor employer per 1.105-11 testing.

I am trying to find out what why so many companies do not have equalizing coverage for mental health and physical health. Any input would be greatly appreciated. Also if you would like to share what your company offers for both it would be great. At The Mental Health Association in Texas we have comprised a list of honor roll companies that do have equalization. If you are one of these companies, we would like to recognize you.

Thanks Deena

We have a profit sharing plan where one of the HCE's wants to amend the plan to allow in-service distributions after the participant has been in the plan for at least 5 years. Then he is going to take a large portion of his account balance (to pay for his personal bankruptcy!), and then he wants to amend the plan again to remove the in-service distribution provision. I know hardships and loans are not considered a protected benefit, but would this type of in-service provision be a protected benefit? If we did the amendment then another amendment to remove the in-service, would part's w/ an acct bal at the time of the initial amendment have to grandfathered into the in-service provision? Finally...he wants to have the in-service provision only open for 2 days...seems to me that it should be open for a longer period...any thoughts?

I'm drawing a blank on this - it seems to me that I recall that an employer may not make employment conditional upon waiving participation in a qualified plan. But I'm not sure why I think that - is it true? If not, was it ever true, and got changed? It's bugging me, and I can't find anything addressing this specifically. (Even if permissible, it wouldn't work for long as they would fail coverage testing at some point.)

Thanks!

I have a 401(k) Plan that has laid off a group of EE's. It is Safe Harbor Plan with 3% SH contribution.

Some of the EE's were sales people with Cars. They are going to run the Cars through the payroll system because they are now taxable income. The employee is not receiving any cash payment. Just the Car.

With New/Proposed Severence Rules would a Safe Harbor Contribution be due on the Amount of the Car that is being run through Payroll as Part of the Compensation Package?

Document is Corbel Prototype. NonStandardized.

Thanks

P

Employer wishes to start an ERISA 403b plan. They currently sponsor a Non-ERISA 403b plan, but due to surrender charges on current policies, wonders if he can maintain both. Would one 5500 reflecting both plans suffice?

Can a 401(k) plan allow participation to temporary employees (i.e. employees hired by the company for a specific time period to complete an assignment)? If so, are there typically any requirements for eligibility of this group - could it be different than eligibility for regular employees?

How does ERISA section 408(d) work? To whom does it apply?

I can't find much at all on it.

Any help will be appreciated.

Is it possible to designate a higher match level for the NHCE group than the HCE group such as:

NHCE: $ for $ on first 3% then 50% of next 3%

HCE: $ for $ on first 2% then 50% on next 3%...4%

PBGC has released the 2006 PBGC forms to it's software vendors. How are other TPA's proceeding with sending completed PBGC premium payment forms to their clients? Does it make sense to proceed with the calculations of the variable rate premiums for 2006 before Congress has finished work on the pension bills or should we wait to see if we get any relief in interest rates or changes in the actual calculations.

Employer contributes an amount equal to 18% of employee's salary toward the organization's (fully-insured) health plan premiums. If the 18% is more than enough to cover the premiums, then the excess is contributed to the employee's 403(b) plan account. If the 18% is not enough to cover the health plan premiums, the employee must pay for the difference.

Is this arrangement legal? Since the 18% is based upon individual employee salary, higher paid employees are going to get a higher contribution. Presumably, since it is a fully-insured health plan, the health plan contribution piece is fine. But does the arrangement violate 403(b)(12) on the retirement plan side?

I am starting a research paper on Cafeteria plans. I am looking for any input on what you know about disadvantages to the employee on a Cafe plan, both health and daycare.

I know there is the "use it or lose it" rule and that the grace period has been extended to 14 months and 15 days. I also know that the plan reduces your taxable income which can also decrease some of your benefits like social security, pension, disability and life insurance when those benefits are based on taxable income.

I know that you must enroll annually and determine an annual election amount.

I know that you must submit claim forms and wait for reimbursement (some companies have the new Flex Debit Card)

Anyone know of more disadvantages to the EMPLOYEE?

Also, anyone know what the eligibility requirements are to participate in a cafe plan?

I recently retired and attempted to make a redemption from my ERISA qualified 403B--I also wanted to transfer it to an IRA. I was told I need a form signed by myself and the plan adminstrator. When I called my ex employer I found out the plan adminstrator had left three years ago (the former CFO) and no had been named to replace hiim The employer said they were trying to straighten out this problem as they were also in the process of terminating the 403B plan and switching to a 401K. I am just curious. in the absence of a named plan administrator what , if any, options do I have to redeem or transfer my funds to an IRA. This involves considerable money and I am somewhat anxious about how long it will take them and what problems could arise. Thanks fca

Employer contributes an amount equal to 18% of employee's salary toward the organization's health plan premiums. If the 18% is more than enough to cover the premiums, then the excess is contributed to the employee's 403(b) plan account. If the 18% is not enough to cover the health plan premiums, the employee must pay for the difference.

Is this arrangement legal? Since the 18% is based upon individual employee salary, higher paid employees are going to get a higher contribution. I know that 403(b) plans are not subject to discrimination testing, but what about health plans (particularly regarding employer contribution for premiums)? I think this is a fully-insured health plan.

Thanks.

Could a designated beneficiary be changed after a participant's death?