Must all 401(k) plans allow participants to stop deferrals at anytime, or only those plans that allow hardships under the safe harbor rules?

TR 1.401(k)-1(d)(2)(iii)(B)(3) under "necessary to satisfy a financial need" provides for the "cessation of elective contributions", as a criteria of the financial need test under safe harbor. I have always interpreted this to require that these safe harbor plans allow participants to stop deferrals at any time as a way to possibly avoid a hardship withdrawal. Am I correct?

Is there anything that extends to all 401(k)s?

Are there any examples out there yet?

We have an individual who is on House Arrest right now. He is living with a family member.

He is trying to qualify for a Hardship Withdrawal so he has money to pay for first month's rent and such once he is released from House Arrest.

I don't think this qualifies...your thoughts?

A 501©(3) organization maintains a 403(B) plan which allows all employees to make deferrals commencing at any time after date of hire (to comply with the availability requirements in 403(B)(12)(A)(ii)). The plan also allows eligible employees (i.e., those working more than 1000 hours per year) to make a one-time irrevocable election to defer 2% of compensation after 6 months of employment. An eligible employee who makes the election will receive an integrated employer contribution. Both the initial employee contribuion (available to all employees) and the 2% contribution are made pursuant to the same 403(B) document but are made to different funding contracts. Are there any thoughts on whether the employer can take the position that the 2% contribution is not a salary reduction contribution under 403(B)(12) and is not an elective deferral under 1.402(g)-1©, even though employees are allowed to make employee contributions immidiately upon hire and do not make their 2% irrevocable elections until satisfying the 6 month eligiblity requirement? (If the 2% contributions are elective deferals, they would be subject to the 402(g) limit, various inservice distribution restrictions, and the employer's integrated contribution would also appear to be a matching contribution.)

What are the effective dates for SPD and claims procedure regs?

SPD regs are "applicable as of the first day of the second plan year beginning on or after 1/22/01 = 1/1/03 for calendar year plans. So, do SPDs need to be updated and distributed by that date? Some have interpreted that there are 210 days after that time to get SMM or SPD out. This sounds nice, but doesn't make sense to me. For example, if an SPD has to have a statement that QDRO procedures are available, how does the rule that you get "210 days after the close of the plan year in which the modification was adopted" fit? It is not really a modification being adopted, but an additional requirement imposed by the DOL.

Also, for calendar year retirement plans, claims procedures are effective 1/1/02, health plans, 1/1/03. Do the procedures need to be reflected in the SPD at the same time as above? What about in the plan document?

A self-employed taxpayer with no employees has a SIMPLE plan. He has made one small contribution in 2002. However, it has been determined he can contribute much more to a single 401(k). Can he adopt the 401(k), making the SIMPLE plan unavailable, and request a distribution from the custodian of the 2002 SIMPLE plan contribution?

A life/disability plan written out of the U.S. to specifically cover local nationals in Norway.

Is this plan governed by ERISA if it does not cover U.S. citizens? We are not sure whether an SPD needs to be written, distributed, and a 5500 filed.

Where do I go to open a Roth IRA for a person under 18 years old?

ESOP buys company shares & takes out loan on the last day of the plan year (12/31/01). Loan principal & interest payments begin as of 2/1/02. Per research I've done, they can deduct up to 25% of covered payroll even though payments aren't made until the extended due date of their tax return (9/15/02) provided contributions are allocated as of 12/31/01 & 2001 compensation is used as the basis for making the allocations.

My question is do I just allocate cash as of 12/31/01? Or would I calculate shares released by the subsequent payments on the loan made through 9/15/02 and allocate those shares (this option doesn't make sense to me?).

Has anyone else had this situation come up? I'd like to hear how you handled it.

We recently had equipment failure that lasted for several days. On one of those days, one department was sent home and told that they could use vacation time, earned time, or accept a loss of pay.

In a different department, the supervisor told employees that leaving was voluntary. If they wanted to go home, they could use vacation time, earned time, SICK TIME, or accept a loss of pay. (There was no company-wide announcement or memo, so one department had no idea what the other was being told.)

At least one employee in the second department left under the assumption that she could use sick time. The next day, she was told that she couldn't.

Our written policy regarding the use of sick time is very specific, but the hourly employee thought that, due to the special circumstances, use of it was being allowed for non-sick time.

Is it acceptable to tell an hourly employee one thing on one day and another thing AFTER they've already acted on the first?

I questioned HR, asking if the problem shouldn't be worked out at the supervisory/management level rather than punishing the hourly employee for believing what her boss told her.

Any thoughts?

Through Limited partnership fund, Corporation A investment manager is about to purchase additional shares in a company that would result will own a majority (about 60%) of Company B. Does owning a majority of a company have any

accounting consequences for the Fund?

any ERISA issues????

Was looking for a fairly ancient mortality table over the weekend on a takeover case and remembered to check the SOA website. The new version of Table Manager contains hundreds of mortality tables (you can select the country of choice so you're not wading through foreign tables) and also has an Excel add-in. Here's the link:

http://www.soa.org/tablemgr/tablemgr.asp

No connection to the author, but highly recommend this to all. Hope this is of help.

We bought the Relius Software along with the daily valuation platform last September and are still strugling to bring the system up in running. Files are missing the system was not set right and several other problems. When the system was sold the salesperson never metioned everthing in detail and now when we try to contact them and ask them why this module is not there they say there is an extra charge for that. For example when we bought the VRU system it never said on the agreement that it is English or spanish nor the sales person ever mentioned that it is only English VRU. So I just want to cautious everybody who might be thinking on buying the Relius or thinking of moving to their platform to be cautious and get everything in writing what ever you discuss with the sales person in detail. Has anybody else gone through this I would like to know.

Hello, everyone...

A recent study from Merrill Lynch research called "Decomposing Pensions" examines the funding status of DB plans in the S&P 500, looking at both the funding status of ERISA plans alone as well as the funding status of all future obligations, including those not covered by ERISA such as medical benefits.

According to the study, pension and post-retirement benefits are underfunded across the S&P 500 by 23%, expressed as a percentage of fair value of current pension assets.

Some companies are using expected returns on pension plan assets as high as 10% per year (i.e., General Motors), a figure which John C. Bogle, founder of the Vanguard Group, and Big League Bond fund manager Bill Gross dismiss as 'pie in the sky.'

But somewhere, sitting around some conference table, some people are still arguing the case for a 10% expected return on pension assets. Is it a matter of CEOs and Boards of Directors not listening to the arguments of pension trustees? Have ERISA fiduciaries sounded the alarm bell in the past? Have your concerns been dismissed by current-earnings-focused management?

What are the plans at your companies to bring pensions back close to funded status? What are you expecting in terms of future returns on pension plan assets?

Or is the media making too big a deal out of the pension issue?

Your thoughts, comments, concerns, suggestions?

Jason Van Steenwyk

Reporter,

Mutual Funds Magazine

954-229-6907

Jason_Van_Steenwyk@timeinc.com

An employee is notified that he is being let go as of Aug. 31. To date, his FSA has reimbursed his family's health care expenses based his expected annual contributions, leaving him over-reimbursed by about $1,500.

Does anybody know how employers normally handle this situation? As I see it, the employer could reduce the employee's last paycheck by the over-reimbursement (assuming the gross amount of pay is sufficient) or the employer could gross up the employee's total wages on his 2002 Form W-2.

Now that Governmental 457 plans may allow for rollovers of distributions, is the spouse of a deceased 457 plan participant allowed to roll to their own IRA or other eligible plan ? If yes, does anyone know of a cite to refer me to ? Thanks

Hello everyone...

Just recieved this question from a Mutual Funds Magazine reader:

"Is there provision for transfer of a portion of

an IRA (rollover) to a charity prior to death without triggering a tax

liability? I am now widowed with no children, and my present income is

adquate for my needs, retired for 19 years in September, and don't wish to

make a normal IRA withdrawal, take credit as a charitable deuction and pay

fed & state income tax."

Any thoughts? What are some common pitfalls this reader might need to be aware of?

Thanks very much,

Jason Van Steenwyk

Reporter

Mutual Funds Magazine

954-229-6907

We have 79 employees with about 50 on our medical plan. We are located in the state of Florida. We are considering a self fund plan with stop loss insurance. What are the downsides to this type of plan?

Are we large enough for this to make sense?

We have a one person that has major medical problems. What effect will this have?

I have a question regarding the way the system will process someone who terminates in a prior plan year. Version 7.2.

I'm not totally sure of the way it differs from 7.1, but it would appear that unless the entry date is already computed, that a participant who terminates in a prior year, assuming a start-up plan, is evaluated by the system to _Term w/ Brk_. This would probably be more of an issue with very large plans.

I think, but I'm not sure, that I now key the entry date for anyone who terminates prior, then key term and status date as the term date, then key the status as term prior??

Vesting is an issue here ( I would guess )but we were handling that with occasional vesting overrides.

There appears to be a change in the method used to evaluate term priors for takeover plans. I'm sure there must be a way to pattern eligibility processes to suit, but I'm not seeing it. Any comments or suggestions greatly appreciated, even just a light at the end of the tunnel!

Thanks,

Bill

We have 79 employees with about 50 on our medical plan. We are located in the state of Florida. We are considering a self fund plan with stop loss insurance. What are the positives and negtives of this plan?

Are we large enough for this to make sense?

We have a few people that have major medical problems.