Assume that the following:

Plan Information

* matching formula is 50% of deferrals up to 6% of compensation

* maximum deferral rate is 8%

* plan allows for catch-up contributions

* employer wants to match catch-up contribution in same formula as 401(k) deferrals

Participant Information

* compensation = $40,000

* 401(k) = $3,200 or 8% of compensation

* catch-up = $1,000 or 2.5% of compesation

Is the participant's matching contribution $1,200? [40000*.06*.5]

Or is it $1,700? [(40000*.06*.5) + (40000*.025*.5)]

Or does the answer depend upon the verbiage in the plan document?

Can a participant (or the participant's estate) who, on account of the ESOP's termination, receives a distribution of employer securities attributable to an employer contribution take advantage of the exclusion of the net unrealized appreciation if the participant (i) has died, (ii) has separated from service, (iii) has attained age 59 1/2, or (iv) has become disabled? Assume the distribution is paid in one lump sum payment in stock. Thanks in advance.

This passed year I was layed off, and received my severence as a rollover from the company pension plan to my new IRA. How do I report this rollover to the IRS? If it is on form 8606, is it a complicated matter? Thanks in advance.

If an employer offers health coverage, is the employer required to offer the coverage to part-time employees who have over a certain number of hours? If so, what is that number of hours? Cites would be helpful. Thanks

A client has stated rate stable value fund in it's plan, which is in the form of an insurance company issued contract. Currently, the contract has a market value gain (i.e. the market value of the underlying pool of assets exceeds the book value allocated to the participant accounts). The contract is terminable at market value currently. Client wants to terminate the contract (capturing the market value gain) and transfer the funds (including the market value gain) to a new provider, who can guarantee a higher stated rate. Stable Value Advisors say this happens all the time. Outside counsel says the termination of the insurance contract may trigger an "allocatable event" which would require that the market value gain be allocated to the participant accounts currently as an investment gain, and can't be used to support a higher guaranteed rate in the future, on the theory that if it were a market value loss realized, with no replacement fund, the participants' would suffer an investment loss - hence, they should likewise receive any gain. Of course, allocating the MV gain would render the strategy of a provider shift to capture a higher going forward crediting rate impossible. The client would like the higher rate going forward.

On one level, that may sound appropriate, except when you consider that 1) the current insurance company (that issued the contract) is in fact using that gain (amortized over time) to support the rate it is guaranteeing (which is above current market) (which raises the question of whether the fiduciaries should terminate the contract just to capture that gain for allocation purposes only); and 2) the gain was accrued over time, and much of it was accrued previously (i.e. the current investors in the fund may not be the ones who were investors in the fund when the gain was accrued) - hence if an "allocatabel event" occurs, one who invests on the day before the proceeds were realized would benefit equally with one who had been invested in the fund for a period of time.

I have been unable to find any authority to indicate whether the MV gain is an allocatable item to the participants (who were "guaranteed nothing but preservation of principle plus a state interest rate), or can be used to support a rate going forward, with a different issuer. That is, is the act of terminating the contract with a replacement ready to take the assets immediately a realization of the MV gain such that it should be allocated to the participants currently, rather than amortized (and credited to them) as a higher crediting rate going forward? The closest analogy I have found deals with demutualization proceeds. The DOL has apparently indicated that demutualization proceeds may be used to provide future benefits (i.e. higher crediting rates going forward, as opposed to being allocatable to current investors in the fund(s)).

imput appreciated. non-profit. had a profit sharing plan. amended to a 401(k). both er.ee contributions. Issue: also had in place a 403(B). i believe it would have been more app. to continue with the 403(B) and if the er wanted to contribute do so into the 403(B) arrangement. now some are in 401, some in 403 and some in both! in my opinion total mess.

Therefore, my question is: given a none profit under above circumstances what would have been the most appropriate plan design to pursuer?

We are seeking some creative ways of securing an executive's SERP benefit without coming afoul of constructive receipt.

We have thought of a rabbi trust, a secular trust, or a bond (although there is little to no appetite in the bond marketplace for small, single-person transactions).

How else might we secure this benefit in order to give the executive greater comfort in its security? Some form of life insurance?

I would be grateful for some ideas. Thank you.

In our company, employer pays the equivalent of single health coverage. If an employee elects family coverage they pay the difference and can run the premiums through the cafeteria plan. Am I correct in that only the difference (between single and family) for which the employee must pay is included in the 25% test?

Also, the company also provides a flat credit of $20 per month per employee for the Health FSA. Am I correct in including this amount in the 25% test as well?

I am trying to determine what the owners can put in for this year and just need to know that answer to this.

Thanks for any help you can provide. Eventually I'll sort this out.

When an aco****holder dies and the beneficiaries request that assets be put into separate accounts for each beneficiary, how are you doing this? Are you requiring each beneficiiarty to sign paperwork? How do you do that without running afoul of the fact that non-spouse beneficiaries cannot treat the account as their own? That is, how do they sign paperwork setting up the separate accounts and at the same time not treat the account as their own?

Has anyone had a chance to review AB 1401 which took effect for events after 1/1/03? As I understand it, anyone who experiences a COBRA event after 1/1/03 in the state of California who was covered by an insured group plan is eligible for 36 months of COBRA.

A few years back, California tried to extend COBRA for indidivuals over age 60 until they became eligible for Medicare. This was quickly challenged in court and ERISA preempted it. The law was rewritten as part of the Insurance Code and the insurance companies, not the employers or COBRA administrators, became liable for carrying these folks for the extra period of time. The only obligation the employer or COBRA administrator has is to notify these individuals of their right to elect continued coverage by contacting the carrier after COBRA expires.

What I'm trying to determine is if the new AB1401 works the same way? i.e., the employer or COBRA administrator carries the COBRA participant for their normal 18 or 29 month period (if disabled) and then the insurance carrier is responsible for billing and administration of the remaining 36 months.

Any thoughts?

Here's a good one:

During 2002, client pre-funds 2002 profit sharing to the tune of 50k. Instead of just parking the pre-fund $$ in the money market, it was invested in mutual funds offered by the plan. On 12/31/02 the pre-fund money is down to 40k. I'd appreciate comments about how other people have handled this.

My first reaction is that the participants don't have a right to the money until 12/31/02, so their p.s. allocations should add up to the 50k total. Okay, so the employer makes up the 10k of losses, how do you account for the 10k?

There are threads about other situations where the ER puts $$ in the plan to make participants whole (e.g., a deposit equal to surrender charges assessed when the employer changes fund companies), but I didn't see anything similar to this scenario. Thanks.

This question concerns Notice 2000-56. I am setting up a rabbi trust for employees of a subsidiary corporation that intends to invest in stock of the parent corporation. Is it necessary for the rabbi trust assets to be subject to the claims of creditors of the parent and the subsidiary. If so, why? I was hoping that read Tom Brisendine's 5 page explanation in BNA would help clarify the issue - it did not. Any thoughts or guidance is appreciated. Thanks.:confused:

Employer maintained a prior plan and now wants to setup a new plan

Can service prior to effective date of new plan be excluded for vesting purposes?

IRC 411(a)(4) seems to say "no" but I vaguely remember there being exception to this, perhaps a 5-year rule?

my plan wants to convert to a provider that doesn't accept insurance policies. Out of 750 people I only have 20 insurance policies and a lot of them have lagged on payments. How can I get these policies out of the plan and what how will they affect the participants that have the policies? I have heard that the participants can pay the cash surrender value and the policies can be moved out of the plan into the participants name, is this true? If so is it a taxable event?

Should individual ESOP shares be valued on a minority interest basis, even though the ESOP shares in the aggregate represent control of the company? I've always considered that to have been the conclusion of the court in the U.S. News case, but it's also my understanding that most valuation experts argue that the ESOP should be treated as one shareholder.

Is there a general consensus out there on this question? Thanks.

A restaurant client wants to add a flexible benefit feature to the premium only plan. He wishes to excluded the tipped employees who are already in the premium only plan. I think this is discriminatory, since they are already participating in the premium only portion. Now the employer wants to add the flex feature and allow only full time employees to participate.

I don't see around including the tipped employees without it being discriminatory.

Any comments?

We have a control group - number of companies and facilities.

It appears we have partial withdrawal liablility for 2002 withdrawal. Under the regs. as we read them - amount of liability can not be determined until after 2003 is completed.

Question - since there is no way to know the amount - when does MPP send us the bill? Can they estimate or do some interim calc under the regs? Can you give me cite?

Help!

For purposes of determining when a Participant has attained age 50, do you use the calendar year or plan year? For example, assume the plan year is July 1, 2003 to June 30, 2004 and Participant A will attain age 50 on July 1, 2004.

According to IRS guidance, an individual will be deemed to have attained age 50 as of January 1 of the calendar year in which he actually attains age 50. So, in this scenario, Participant A will be deemed to have attained age 50 on January 1, 2004 (during the middle of the plan year). Therefore, may Participant A make catch-up contributions for the plan year ending June 30, 2004 or must he wait until the plan year in which he actually attains age 50?

What schedules should the Trust ID be used on? I have been told that it should be used on the Schedule P and Schedule R and that the Employer ID is used everywhere else. Is this correct?

Thanks for your help!

Rachel Diederich

Is the cost of umbilical cord blood storage an expense which may be paid under a health flexible spending account? I suspect that the answer is no, particularly in light of the statement by the IRS in PLR 200140017 that "[t]he collection and storage of DNA is not medical care by itself." Is the cost of obtaining umbilical cord blood a medical expense under Code Section 213 (i.e. payble through a health flexible spending account)?