I have not been able to find an answer to the following: Two corporations merged. Immediately thereafter, the surviving corporation created a leveraged ESOP. The merger and ESOP legal, accounting and other start up costs totalled about $250,000. Of these costs, what should be capitalized and what should be expensed? I am getting conflicting answers. And for those that are capitalized, over what period of amortization are they expensed? Please help.

I have a plan that distributed all assets as of 7/31/02. We just filed 2001 Form 5500 just before then. I want to file the final 5500 form now. Do I use the 2001 forms and cross out the date in red ink?

We are in the process of terminating a SAR-SEP and replacing it with a safe harbor 401(k). I've seen in prior posts that it's a fairly simple process. It is my understanding that we can prepare a simple amendment to the plan to terminate it. I understand that we have to notify the participants.

Does anyone have a sample notice to participants? Or can it be a simple memo explaining that we are terminating the plan and that salary reduction deferrals will cease. Do we have to give them advanced notice, or can we stop the deferrals immediately?

Is there any citation that backs this up?

Thanks in advance for the help!!

In regard to an administrator’s payment of funds from an individual’s FSA account, is the payment triggered by the occurrence of the eligible expense or by the participant's payment of the eligible expense?

Scenario:

A participant incurs eligible hospital charges of $1,000 within the plan year. A third party insurance contract pays $800, and the hospital bills the patient for the remaining $200 (as evidenced on the hospital invoice or EOB).

Does the participant actually have to pay the $200 first before he can receive the reimbursement payment or can he be reimbursed prior to his actual out of pocket payment?

I’ve heard conflicting statements on this issue and would appreciate other opinions.

Thanks,

Lori Craun

I have a participant who took a lon in Oct 2000 and immediately started to make repayments. In June 2001 he took a hardship. He continued to make loan repayments ($1200 since June '01). He recently applied for another hardship.

My r/k system is telling me that he has no eligible hardship. All money in his account is elective deferral and has always been invested in a Money Market fund.

Is there something that says loan repays after a hardship are not available for future hardships? Or is my system flawed?

Any thoughts will be appreciated.

...bg

DOL 2510.3-102 "the assets of the plan include amounts (other than union dues) that a participant or beneficiary pays to an employer, or amounts that a participant has withheld from his wages by an employer, for contribution to the plan as of the earlies date on which such contributions can reasonably be segregated from the employer's general assets."

The DOL recently issued an advisory opinion [DOL Advisory Opinion 2002-02A (May 17, 2002)] where it takes the position that untimely remittance of loan repayments - and a prohibited transaction - occurs if loan repayments are made later than would be permitted under the participant contribution regulations.

If loan repayments are considered participant contributions for these purposes, are after-tax contributions not also included in this analysis?

I've really only read about correction for late remittance of 401(k) amounts...

:confused:

please help

Does anyone have any sources (websites, articles etc.) that give information on submission requirements and/or tips on filing GUST restatement documents?

What exactly is the defining difference between a "deemed" and "defaulted" loan?

Privately held company is purchasing stock from terminated ESOP participants based on immediately preceding valuation date. The company is having discussions with a potential buyer re: its sale at a substantial premium to the prior valuation. The participants who terminate are not asking about whether the prior valuation is correct or the business prospects of the company. Should the company continue to buy stock from the terminated participants?

In the first year of a plan, a top-heavy calculation performed at the end of the year results in a top-heavy percentage of 70%. Top-heavy minimum contributions are only required for non-key employees, and since this is the first year of the plan, contributions made after the determination date are included in the top-heavy ratio.

When recalculating the top-heavy percent after the top-heavy contribution, the ratio drops below 60%.

Does this mean that for the first plan year, the plan is top-heavy, but for the second year, the plan is not top-heavy? It seems odd since you use the same determination date for the first and second years.

If an enrollment form is submitted after the coverage eligibility/effective date due to an administrative error (the local HR Manager) and no fault of the employee, can the coverage be made effective the first of the month following the discovery of the error or must the coverage be made retroactive to the original eligibility date?

I'm I correct in assuming that if an employer who sponsors a Section 125 Plan with over a 100 participants is still required to file Form 5500 & Schedule F?

Thanks, Joe

I have a participant who had an account balance prior to her marriage. I was under the impression you could exclude this balance from the QDRO and use the amount accumulated after the marriage. Now I am not sure about the earnings on the prior account balance, if you could exclude this or not. This participant's attorney is telling her she will need to divide the prior account balance also in her QDRO. Which is the correct method to use?

Looking for feedback on sources, services for financial institution routing number databases. Any one have suggestions on vendors, etc?

How are the 412m quarterly contribution dates for a short plan year determined?

Employer X maintains an adoption assistance plan for its employees. As required by Section 137 of the Code and its tax credit counterpart, no reimbursement can be made with respect to expenses of adopting a child of the participant's spouse. Employer X allows domestic partner (both same sex and opposite sex) coverage under its medical and dental plans. Employee A wants to adopt the child of her/his domestic partner. The adoption assistance plan does not specifically address this as being other than a qualified adoption expense. Since the Defense of Marriage Act prohibits marriages other than between a man and a woman, would it be reasonable to interpret the adoption as not being covered by the exclusion for adoptions of the child of the participant's spouse? It seems to be a no-brainer to me. Any thoughts?

A mother dies with an IRA that she has been taking minimum distributions from. The beneficiary of the IRA was the father, who predeceases the mother. No contingent beneficiaries were ever named.

The mother's IRA goes through probate, and is now "inherited" equally by brother and sister.

Do minimum distributions continue? If so, on whose life expectancy?

Thanks for any help.

I received a request from the PWBA to correct a problem with the most recent 5500 filing for a DB plan. As usual, we have 30 days to respond to their request.

As I reviewed the filing, I pulled previous 5500s for the plan to compare, and I realized that I may found a "can of worms" that goes back several years. I need to work with our actuary and our ERISA attorney to decide how best to proceed.

In the meantime, I am writing a letter to the PWBA reqeusting an extension of time to answer their question. I would like some advice on composing this letter. In the past, I have requested extensions of time and specifically asked for an extra 30 days and the IRS has been amenable.

I'm not sure if I should ask the PWBA for a certain period of time to respond, or if I should just ask for an extension wtihout naming a deadline? I'm not sure how long it will take us to sort out the problem; and if it takes longer than 30 days, would it be ok to ask for another extension?

Also, I'm not sure how to word the reasoning for the request of extension. If I simply ask for an extra period time and say "so that we may consult with our enrolled actuary and ERISA attorney" is that okay? I don't want to allude to what the problem may be because I'm not even sure yet that I'm correct.

Any thoughts are appreciated! Thank you!

I have situation with a small plan that terminated in 2001, received a favorable IRS letter, but cannot be closed out because there are two participants who refuse to take their distributions for whatever reason. We have contacted them numerous times regarding their balances and options. Each of them has a balance over $5,000 and the Plan does have J&S annuity as the "normal" form of benefit. The Plan document, of course, does not specifically detail what to do in this type of situation -- it only deals with "lost" participants.

My thought is to purchase J&S annuities without their affirmative consent as long as they are informed that is going to happen. Another option would be to rollover their balances to an IRA that can be opened without signatures. Any thoughts on what the best way to go here is? Thanks.

BTH