A company's defined benefit plan provides that, except for thos participants whose present value of accrued benefit does not exceed $5,000, upon termination of employment with a vested benefit or retirement, the employer will purchase an annuity contract to guarantee such participant's accrued benefit. Under Titles I and IV of ERISA, the affected participants cease to be participants once their accrued benefits are guaranteed by an annuity contract.

I have the following question: do we need to file a Schedule SSA for those participants whose accrued benefit is guaranteed by the purchase of an annuity contract? I looked at the instructions for Schedule SSA, but did not see anything anologous to this situation. Obviioulsly, I understand that the participant's whose accrued benefit is cashed out is not reported. Please let me have your thoughts on this.

I have a plan that has over 100 participants and is required to have a 5500 audit each year. Can the fees for the 5500 audit be paid from the plan?? I believe they can, but can't find any confirmation, is there a site that mentions it?? Thanks.

I've read some information on a disaggregated safe harbor plan and was hoping that someone wouldn't mind verifying my understanding of the rules.

The plan has a 3 month wait for salary deferrals, but statutory requirements for the safe harbor non-elective. Am I correct in that if there is an HCE among the excludables an ADP test must be run and that the provision that allows for the HCE to be considered non-excludable would not apply in this case?

Also because the plan now consists of two separate plans for testing, the safe harbor "top heavy" exception no longer applies?

So anyone not termed during the plan year would need the 3% top heavy, assuming the plan is top heavy?

Thank you.

May an alternate payee designate a beneficiary of his or her account under a QDRO? Recent case law (Branco) suggests that this does not work for a shared benefit QDRO in a defined benefit plan. However, if there is a separate benefit in a DB plan, or a segregated account in a DC plan, does the alternate payee have the ability, under the Code and ERISA, to designate a beneficiary? In other words, can a plan pay a benefit to someone who is not a participant or a beneficiary under the plan?

say a plan uses elapsed time method for service credit.

for eg. date of hire is 1/3/89 and there were severances and starts w/r/t employment. generally due to the part time or temporary status of employment.

during the time from 1/3/89 - 2/17/2001 there were no severances of 12 months or more. under the elapsed method it would appear all service s/b counted for all purposes. perhaps the breaks could have been excluded for accrual purposes if it specified, but it did not.

any observations?

the plan only gave credit from the point of regular full time employee. but the employee was employed prior to that designation and it would appear s/ have received credit for that period also.

thanks,

gary

often plans exclude certain classes of employees such as union or hourly, etc.

however, it seems that part time employees and the like cannot be excluded if they meet the service requirement as it would be an illegal way to keep them from joining the plan 1.410(a)-3(e)(1). and if it is an elapsed time service method plan then the part time employee would be required to participate at same time as full time employees.

a plan i reviewed excluded supplemental employees (and they worked a full 40 hour week) for eg. it seems on the same basis such an employee s/ not be excluded for that reason if they would otherwise be included in plan.

this would have effect of increasing permitted max service condition.

so at first blush i disagree w/ the exclusion of such employees.

any comments?

thanks

gary

I have an individual who is 100% owner of co. A and 50% owner of co. B. He doesn't participate or receive compensation from co. A but draws compensation and participates in co. B's 401(K) plan.

Co. A's plan is not top heavy but co B's plan is top heavy. My question is can these plans be aggregated to satisfy top heavy for plan B. Also would aggregating the plans have to be done on a yearly basis?

The two plans in question are first year plans (2002) and it is my understanding that December 31, 2002 is the determination date for top heavy issues.

there have been lawsuits in situations where an employee was promised a benefit and then the sponsor says it was a mistake and s/b less. some courts have upheld the incorrect benefit due to reliance on such a benefit.

does or can this apply when a pensioner has been receiving a pension for a few years and then the sponsor says there was a mistake and it s/b lower?

i.e. can the potentially incorrect original benefit be upheld?

thanks.

gary

Plan had a participant that terminated. Upon terminated, the payroll service failed to take participant off the system, so an additional contribution (under $130) was made to fund account, and immediately returned to the employer since the contributions are ACH.

Participant cleared out account and rolled money out of plan.

Question - Is there anything that needs to be done in regards to the small amount that went in by mistake?

I have a plan participant applying for a second hardship for a primary residence. She bought the first home less than 2 years ago, and pending amounts available, wants now to rent this home and buy another one.

I seem to recall some rule about the time you must own the home. Does anyone know of any restrictions in this regard?

We have a plan that failed the adp portion of the test. We were attempting to get all the distributions processed by the 15th (actually we thought we had until today).

If the excess distributions go today, am I correct that the excess amount amount will be taxable in 2002 and 2003 (calendar year plan).

To be clear, let's say the 2002 excess was $1000 and it had a $2.30 gain. The $1,000 will be taxable in 2002 & 2003. The $2.30 gain will be taxable only in 2003. Right??

After searching this site closely, I suspect social security benefits aren't part of the usual discussions, but maybe somebody can point me in the right direction on this one.

My mother-in-law turns 62 this month. She's been a widow for 30 years. She did not take SS as a widow this whole time (not sure why). So now, she is comparing what she could take on widows SS compared to her own SS benefit. Right now, at 62, she could get $900/month on widows vs $650/month on her own.

My understanding right now is that she could go on widow's now at 62, collect $900/month, and continue to work, presumably until age 65. If her own SS benefit is greater than $900 at age 65, could she switch over to that at that time?

Is it just me, or does this seem like she should have been taking widow's SS a long time ago? I presume the amount 30 years ago would have been much less than $900/month. Still, that was money she could have been recieving all these years. I can't see the downside to her taking that benefit all those years, compared to now. If her own SS benefit is near $900/month at 65, that would seem to confirm my suspicions that she lost out on a lot of money.

Wishful thinking here, but are there any options for her to go back and get a lumpsum widows SS benefit for all the years she did not take it and was entitled to it (sorry, had to ask that)?

Thanks for any help.

We have a self-insured dental plan. We are in Oregon. Am I correct that no portability options are required after the exhaustion of COBRA?

Thank you.

A 501c3 entity has terminated their 403b plan and started a 401k. The 403b was an ERISA type with employer contributions and vesting (including a plan document and 5500's). Upon termination of the 403b the employer gave participants the options of leaving their $ in the 403b, transferring their account to the 401k, or taking cash.

I have noticed from my research and other postings on this (excellent) site that terminating a 403b does not change the requirement of needing a distributable event to take money out of the 403b plan. However, it would seem that with all the portability provisions in EGTRRA that there would be a way to at least merge the plans. Is this an oversite ? Are there any recent PLR's on the subject ?

Because March 15th was on Sat., can we still process corrective distributions today????

Is anyone familiar with the rules surrounding the termination of a GVUL plan?

If the employer decides to discontinue the plan, are there any negative consequences to the participants?

In order to keep NHCEs at a 3.5% allocation rate, employer wants to limit HCEs to 10.5%, BUT the formula the employer wants to use is:

3.5% of total compensation, plus 16% of compensation in excess of $100,000, if any.

Would adding: "not to exceed a total overall allocation of 10.5% of compensation" cause any problems?

Many ESOP plan documents allow the Plan Administrator to segregate the vested portion of a participant's account into a separate savings account following the participant's termination of employment. The segregated account is credited with interest, and no longer shares in the Plan's gains or losses attributable to company stock.

The idea, as best as I can summarize, is to limit the rewards and risks of stock ownership to those participants who are still working for the company and thereby contributing to the company's success. (Of course, segregation of accounts into an interest-bearing savings account might turn out to be a good deal for the former employees if the value of the company stock later goes down.)

The ESOP certainly can't force former employees to withdraw their vested benefit (at least in those circumstances where the vested benefit is greater than $5K), but can the ESOP in effect "force" these participants out of company stock (subject of course to the participant's right to later demand distribution in the form of company stock)? What are the statutory/regulatory authorities to permit this?

Thank you.

What appeal rights, if any, does an employee have who is terminated and denied COBRA because the employer says she was guilty of gross misconduct? Are there steps to take to preserve rights and coverage pending resolution of the disagreement?

Can a 401(k) plan allow participants to make salary reduction contributions immediately upon employment, but require the participant to be employed for one full calendar year before being eligible for an employer (profit sharing) contribution? Does this create a 410(B) issue?