I am trying to find a reference that indicates if hours paid while on workman's compensation should be counted toward hours for vesting purposes.

Just got back from the Mid-Atlantic Employee Benefits Conference. To the consternation of a number of people in the audience Shultz and Holland said that the following plan designs raise impermissible CODA issues.

Two Groups--One group is the sole director and shareholder of a corporation and the other group is everyone else. Corporate formalities are followed at the end of the year and corporate minutes reflect the allocation to be given to each group. Shultz and Holland commented that this may be an impermissible CODA on behalf of the owner.

Multiple Groups--Each shareholder is in his or her own group and everyone else is in a final group. Each shareholder informally expresses his or her recommendation on how much he or she wants for an allocation for his or her group and the Board adopts the recommendation with formal corporate action. Shultz and Holland commented that this may be an impermissible CODA for the shareholders.

Shultz commented that this may be an area deserving some "soft guidance."

The non-Service people on the panel commented that if this raises impermissible CODA/qualification issues, you will probably have a number of doctors out there with plans subject to disqualification.

If a frozen accrual, non-US DB plan, which has been around for awhile, has never done FAS87 costs, how does it work if they now want to start recognizing it? Can we just start it fresh now, computing the initial net obligation/asset as of the 1st recognition date (i.e. 1/1/2002)? Are there any special rules to follow?

Thanks.

Can anyone provide a reference to an article, etc., discussing

the ability of owners, directors, incorporators, sole proprietors, etc.,

to participate in a multiemployer DB/DC plan?

Some of our plans allow former bargaining unit alums to

participate in a limited fashion, while other prohibit it

altogether.

I need a refresher on the IRS/DOL guidelines.

Thanks

This is probably a common question. We have a wave plan that also has a pay to pay allocation only given to those active on the last day of the plan year. After all was said and done they did not pass the general test as contributions. They do pass as benefits. However, they don't pass the gateway because they can't meet the 1/3 test and one benefiting participant did not receive 5%. Is it acceptable to do a corrective amendment to bring the one person up to 5% if a reasonable business criteria can be found for giving this employee a Qnec?

Thanks

Suzie

If a single former employee elects COBRA coverage and while on COBRA coverage gives birth, what are the time frames with respect to the following:

1) when the former employee must notify the employer of the birth

2) when the former employee must pay the premium for the newborn

I have been unable to find anything in the regs regarding the above. Does the 45-time to pay rule also apply for purposes of paying for the newborn child? Is it only with respect to the premium for the newborn, or does the former employee have 45 days to pay for both his or her coverage and the newborns? Any guidance/direction would be appreciated.

We have two closely controlled corporations under one plan. We also have a separate company that is currently not under the plan, but we would like to add it. It is not a corporation, but a sole proprietorship, if that matters. All 3 are 100% owned by the same person.

We contacted our broker to look into adding the third company to our plan. She talked with the carriers (or one anyway) and is now telling us that we can't do that because they all have separate tax ID#s. So we are confused. Is what they are telling us correct? Wouldn't the insurance contract be with the plan and not the company, so if the plan included multiple companies then so would the contract? But I assume they would have to agree to that, and is it common that an insurance company wouldn't? They are saying that we would have to have separate contracts for each tax ID#, but can you have separate contracts for one carrier under a single plan. That just seems weird.

Any thoughts on this would be greatly appreciated.

Thank you!

Edit to add - Especially confusing is because we already have two taxIDs that we consider as part of the plan, so are we then in violation of our contract because they are only using one taxID#?

I have a client that owned 100% of a sub. The parent and sub employees were both under the parent's 401(k) plan. The parent sold 50% of the sub to an unrelated 3rd party. The sub then adopted the parent's plan as a multi-employer plan. The sub employees have a lot of loans in the plan.

Question 1 - Is there a distribution problem with the loans when the sub adopts the parent's mulit-employer plan?

The sub now wants to adopt the third party's multi-employer plan and get out of the parent's plan. Question 2 - When the sub adopts the third party's plan and the assets and loans are transferred to the third party's plan is there a distribution problem? If this is a distribution, it is my understanding that loans cannot be rolled over.

A plan computes lump sum using the gatt basis.

The plan uses the greater lump sum amount under gatt or a basis that uses 6% for lump sums under 3,500.

If that is the case should the over 3,500 lump sums also mandate that the amount be compared to the 6% basis since it is done for lump sums under 3,500?

Any thoughts?

Gary

Hi,

If you have a pay period that runs from 12/14/02 to 12/28/02, but the actual paycheck is not issued until 1/3/03, when are the deferrals reported. Do you report them as 2002 deferrals because of the pay period or do you report them as 2003 deferrals because that is when the paycheck was received by the participant?

Thanks for your input. I have a Client anxiously awaiting a response and I have had no luck finding any guidance.

Joanne

An employer sponsors 2 plans-a cross-tested profit sharing plan and an ESOP, both with the same eligibility requirements and both covering the same employees.

Both plans pass 410(b) on their own and are not aggregated for 401(a)(4).

If the employer provides a 5% of pay allocation in the ESOP, does that satisfy the gateway and allow him to use cross-testing in the profit sharing without worrying about the gateway?

My client has a 403(b) plan that uses the actual hours worked for purposes of vesting. An issue has come up regarding a salaried employee who is questioning his vesting calculation. He is claiming that he has already worked in excess of 1,000 hours this year because he routinely works over 40 hours a week. I have been unable to locate any guidance on calculating "actual hours worked" for salaried employees. Any help would be appreciated.

We have two separate plans, one is a health fund providing health, prescription and life insurance benefits. the other plan offers legal services, dental and optical. All are funded solely by employer contributions.

What are the ramifications, if any, of merging dental and optical into the health plan? Can assets be transferred?

Any help is appreciated.

Is it correct that the Uniform Lifetime Table is part of the 2002 Regulations and that when determining minimum distribution from a defined benefit plan for 2003 I would not be able to use that table?

Not sure which board is best for this question, but here goes.

A C-corp is converting to an S-corp. An individual owns C-corp shares through a SEP-IRA established by his separate sole proprietorship. Since a SEP-IRA cannot own S-corp shares, the individual (who is also a director of the C-corp) is contemplating establishing a "Uni-K" plan for his sole proprietorship, taking a distribution of the shares from his SEP-IRA, and rolling them over into the Uni-K plan.

Can this be done? A couple of issues that jump out at me are (1) can a Uni-K plan (essentially a Keogh) be an S-corp shareholder, and (2) would the rollover be viewed as a prohibited sale or exchange of property between the individual (who is a disinterested person with respect to the Uni-K plan) and the Uni-K plan?

Any thoughts? Any other issues I'm not thinking of? Thanks to all.

I have been asked to research the incidence and discussion of defined benefit plans adding voluntary and/or involuntary contribution features to their plans. I have been asked for statistics, trends, and demographic information if possible. After researching numerous benefits links on the web, the only information I could find is that school systems and other public sector employers appear to be the main users of this feature. Does anyone have any better data? There are vendors who provide such plan designs, but I was unable to determine how common this design is. Any help would be much appreciated.

we just took over a plan. The past administrator did the 5500's on a cash basis.

We usually do 5500's on an accural basis.

Can we just switch the basis of the 5500 this year? Is there something we have to do to notify the IRS of the change?

Employee/participant filing chapter 13 bankruptcy. Attorney sends letter saying that loan payment should be stopped immediately as they don't want to show "preferential treatment of a creditor".

The plan is protected from any bankruptcy filing as long as it is a benefit held under an ERISA plan.

Does this also mean that a loan MUST be paid back, it can not be defaulted because of a bankdruptcy filing?

This employee/participant is also continuing to contribute 6% to the plan but wants her loan payment to stop.

A plan that was amended as of 1/1/02 to exclude employees who are considered a "Help out" status that only work a few hours per year. These employees are usually former participants in the plan who have terminated/retired but come back to help out. The plan is top heavy so an allocation has always been made in the past to these employees who were former participants now working a few hours a year. Can they be excluded from the top heavy allocation as of 1/1/02 or do they need to be included?

Does anyone know the rules for when an employer must set up a trust for the following plans: (i) a self-funded medical plan, and (ii) vision and dental plans are paid for entirely by employees.

I know that ERISA has an exception and does not require a trust for plans that consist of insurance contracts or policies.

Thank you for any assistance.