Copying from the Pension Answer Book, I see that, from the denominator, you can exclude union employees only if 90% of all employees are covered by the CBA.

My question is, "How do you determine the total # of employees?" Would it be all individuals that performed an hour of service during the plan year?

6. Employees who are covered by a collective bargaining agreement. This exclusion applies, however, only if 90 percent or more of the employees are covered under collective bargaining agreements and the plan does not benefit employees covered under such agreements.

Thanks

We have terminated an employee for stealing from the company. However prior to his termination, he met the eligibility conditions for our retiree medical plan. The retiree medical plan does not contain language currently permitting us to deny him coverage due to his gross misconduct. Is there any way we can deny him coverage?

I remember seeing a PLR or GCM that stated proceeds from a class action suit or similar settlement involving the investment within a plan may be deposited in the plan without being considered a contribution. I did find the PLRs regarding restoratiive payments from employers but I'm unable to find any regarding class actions regarding investments etc. This particular case involves an investment within an IRA.

Thanks for any information that you have.

what are the ramifications if a participant over 59 1/2 wants to take a partial distribution of her account? The plan allows for it - it is my understanding that such a distribution is not subject to the 10% early withdrawal penalty - but is it subject to the 20% mandatory withholding? The distribution is taxable as ordinary income and reported on Form 1099-R, is that correct?

Has anyone noticed the little provision in the proposed regs on statutory options that came out last summer that would provide that an option grant is not complete (and hence the date of grant not fixed for purposes of Sections 421 through 424) until the "maximum number of shares that can be purchased under the option and the minimum option price are fixed and determinable"? How would a Section 423 Employee Stock Purchase Plan look-back plan (e.g., price is 85% of lesser of value on grant date or exercise date) be able to work since the minimum option price won't be known until exercise? It almost seems that this means for purposes of Code Section 423's look-back provisions, date of grant would de facto be the date of exercise and the price, holding period, etc. would all have to be keyed off of that date. I haven't seen any commentary on this issue. Any input would be appreciated. Thanks.

Unfortunately, a company with an ESOP is experiencing dire financial woes, and is seriously considering declaring bankruptcy. How will this affect the ESOP shares? What are the duties of the ESOP fiduciaries in connection with the bankruptcy? Should the ESOP fiduciairies cause a mid-year valuation of the shares? If a participant has requested a diversification distribution and such distributions are made in cash (per the ESOP plan document), should the distribution be made even though the prior year's FMV will be used (which is obviously much higher than the bankruptcy value)? Any help would be appreciated.

I have a situation where an individual who was a participant in an FSA both last year and this year incurred a medical expense last year but due to consistent screw ups by her regular health insurance provider never knew how much of the medical expense would be reimbursed (and hence how much of the net cost she had to pay) until this year. While I understand that the rules provide that the FSA reimbursement must be made generally for the year in which the medical care was provided and, thus, it may be too late, there is also a substantiation requirement that would arguably prohibit FSA reimbursement until it is known how much, if any, is reimbursable from another plan. Does anyone think it would be permissible to approve the reimbursement of this participant's claim this year?

Unmarried participant dies and leaves benefit to children. 2 of the beneficiaries are minor children. How do you handle distribution to minors? They obviously can't complete distribution forms.

A DRO for a DC plan gives the AP 50% of P's vested benefits as of a certain date, adjusted for earnings and losses from that date to date of distribution. The DRO does not treat the AP as surviving spouse of P for any reason.

P then dies before the AP receives a distribution.

What is the result if P dies before the plan receives the DRO?

What is the result if P dies after the plan receives the DRO but before the DRO is qualified?

What is the result if P dies after the DRO is qualified (but before the AP takes a distribution)?

What if (1) P never re-married or (2) P re-married and was married at death.

I have the following situation and need assistance in determining whether spousal consent is required for the loan:

401(k) Plan subject to J & S rules

Participant has current outstanding loan balance of $1100 and is taking a second loan for $4900. The second loan by itself is less than $5000 but the second loan will bring the total outstanding loan balance (and accrued benefit used as security for the loans) over $5,000. Is spousal consent required on the second loan?

Any help would be greatly appreciated.

Thank you.

We have a plan we are currently auditing. The client used to work at a large CPA firm and is telling us that the participant loans for the trustee must be broken out and reported separately from all the other participant loans on the schedules to be filed with the Form 5500. We have never done that and it doesn't seem logical if the trustee loan is done according to the plan's loan policy and the trustee is subject to all the same rules as all other participants (no prohibited transaction type action).

What are everyone else's thoughts and do you have a reference you can point me to? I am sure this person will not believe us without proof.

Thanks!

I've been sent on another mission...BEREAVEMENT LEAVE. Our current policy allows 3 days of paid bereavement leave for an in-state funeral, and five paid days for an out-of-state bereavement. Standard relatives apply.

One "proposal" is for 10 days paid for spouse or child, 5 days for parent or 3 days for the rest of the immediate family, regardless of in or out of state status.

...and your thoughts???

Thanks in advance....

An employer allows its employees to defer either a dollar amount or a percentage per payroll. However, for bonuses, the employer wants to allow deferral contributions for participants who choose a percentage but not for those who choosse a flat dollar amount.

The bonus payrolls are in addition to normal payrolls and occur outside the normal payroll period. The definition of compensation is section 3401(a) compensation.

Can the employer justify his actions?

Thanks!

I don't have any real details, other than that we are being told that there is a corporation (A) that is supposedly owned 50/50 by 2 individuals. Yet one person owns 100% of the stock.

Has anyone ever heard of such a thing? It doesn't even seem possible, and there's probably a lot more to it. But before we go back and say "whaaaaaat?" or something similar, thought I'd toss this out. All I could think of was that perhaps they were talking about voting vs. nonvoting stock.

I have a plan with 6 HCEs and 2 NHCs. A QNEC (greater than 3%) is needed to pass the ADP test. In addition, the plan is top heavy. Does the QNEC also satisfy the top heavy minimum contribution?

In order for a rehire to have forfeited benefits restored, is a plan required to contain a "buy back" provision, as outlined in 1.411(a)-7(d)(4)((iv)? I have a plan with an individually designed document which calls for a restoration of forfeited benefits without requiring the rehired participant to pay back any distributions, and is requiring the establishment of a separate account for tracking vesting on these amounts upon rehire.

????

Let me put my question another way:

If a plan document does not contain the repayment language, am I correct in stating that a plan cannot immediately forfeit a participant's non-vested accrued benefit because the plan does not fully satisfy the "cash out" provisions in 1.411(a). From my interpretation of the Regulations, it seems as if the non-vested portion would remain in the participant's account, unavailable for current forfeiture usage (i.e.- reallocation, other restorations, payment of plan expenses, etc.).

How long does an employer need to keep obsolete plan documents after restatement. For example client adopted a prototype HR-10 plan in 1994. Plan was restated for two sucessive mergers of the sponsor. The assets were then transferred to a prototype plan of different financial organization. The new plan as well as the old plans all had IRS determination letters issued to the ptype sponsor including gust amendments. The client wants to know if the 4 inch stack of prior prototype documents, SPDs, forms and adoption agreements need to be kept indefinitey or can just the prior determination letters and adoption agreements be retained with the current document.

When exactly is an employee "retired" for 401(a)(9) purposes. Is a non-5% owner deemed to be "retired" soley because he works for no compensation? The employer considers him to be an employee as do all of the other employees. This particular individual hasn't received W-2 earnings from this employer in years but is subject to the rules and requirements that all other employees are subject to. I would prefer not to get into a detailed discussion of the facts, but suffice it to say that he is not a volunteer, nor is he a member of the board of trustees (it is a tax-exempt entity). In the 2003 IRS Q/As, the IRS says that "when an employee retires is a facts and circumstances determination....." This would suggest that "compensation" is not required. Any thoughts?

When formatting a number field, you have the option of enabling the currency field.

I suppose the usual would simply be $ or %,

but you could actually write more than that.

For example, if you had a grand total of deferrals on your report, you could make the currency symbol

"Wow. The total deferrals this year was

and the report will print that expression in addition to the total. just make sure to include an extra space at the end of your so called currency symbol. (Or at the beginning if you set the format to print the currency after the field.

Granted, you could accomplish the same thing with a formula, or use two fields - one being a text object and the other being your total field. But then, this tip was for the not-so adept. something easy. a simple modification to the report. shoot, this one is so easy and simple, yet it didn't even make the Crystal Reports for Dummies book.

Date fields have the same option, in fact, you can add a prefix or a suffix or both.

This all came about because we wanted to use the long form of date (e.g. December 31, 2003)

A typical formula is written as

"ADP/ACP Nondiscrimination Test for Plan Year End "+ToText({PLANEEKMTEST.YRENDDATE},"MM/dd/yyyy")

however, the date will print as 12/31/2003

By using prefix you can accomplish the same thing without even having a formula.

hey, I said this was for the not-so adept.

Can you change your plan valuation date from beginning of year to end of year?

i.e. current valuation date is 1/1/2003...can you change this to 12/31/2003?

I'm guessing the answer is no.