I have an client who owns two companies and are hwat is called a Limited Liability Company part of a controlled group. There are two separate documents that are identical to each other with the exception of the effective date (one company has always had a plan and the other just started one).

For testing purposes, I tested the employees together (less than 20 employees combined). Is this the correct thing to do?

And, should there be one 5500 or two?

Thanks

I am working on a plan that our firm took over earlier this year. It was a Trustee directed Profit Sharing Plan. It was run on a fiscal year end 11/30. There are several former participants that have requested their benefits, and from anything that I can see, other than the former TPA's distribution forms, these participants are entitled to their vested balance at 11/30/02. Of course the market has dropped since then so the account balances for these individuals is considerably lower than it was at 11/30. What am I missing here? Can I distribute just their current vested account balance or does the plan have to make up for the losses taken to their accounts, which would in turn penalize the pther participants in the plan.

We have a client that sponsors a prevailing wage plan. The client would like to make the prevailing wage contribution as a QNEC and use it in the ADP test. The client would also like to use that QNEC towards the profit sharing allocation. In other words, if the client makes a 5% profit sharing contribution, those employees that received a prevailing wage QNEC will receive a lesser or no profit sharing contribution. Is that acceptable?

Any help would be appreciated.

My company wants to amend our plan to provide for safe harbor hardship withdrawals because the admin committee doesn't have the time to review hardship applications and decide on a facts-and-circumstances basis. We also have a stock purchase plan that creates a major part of employees' compensation. The 401(k) regs require participants who take a hardship withdrawal to stop contributing to other plans, such as a stock purchase plan, for 6 months. If we don't go with safe harbor, we will probably stop allowing hardship withdrawals because of the time drain.

Can anyone suggest a way to get around the 6-month suspension from the stock purchase plan? Could some one who has a client with safe harbor hardship withdrawals and stock based compensation plans share what their client does about the 6-month suspension period? Do company's with stock plans have plan documents that provide for the facts-and-circumstances standard, but in reality operate with safe harbor standard and disregard the 6-month suspension?

Thanks

Special Enrollment allows for coverage to become effective the first of the month following receipt of application by the insurer (assuming it was within the 30 days after the event qualifying for special enrollment).

Many administrators are requiring documentation of the loss in coverage (not necessarily a Cert of Qual Coverage - letter from prior employer) before they will allow enrollment under the special enrollment provision.

From what I can tell, this creates the potential for a person who is eligible for COBRA to have a lapse in coverage for the following reasons:

1) If they elect COBRA, they no longer are eligible for special enrollment rights.

2) If they lose coverage and apply during the 30 days, the plan administrator can enroll them the first of the following month, which leaves that gap in the month.

I am talking with a plan administrator whose policy is to not allow employees to make application for their own plan (*hospital who does it's own insurance plan) unless they provide documentation that their coverage has terminated / will terminate.

None of this seems in the spirit of the intent of the law, and I'm hoping there is some huge piece of the coordination of these two laws that I am missing.

I could use some guidance:

I recently received notice from a benefit administrator that I am eligible for distribution of benefits from my former employer's 401(k) plan. It is my understanding that the plan is terminating.

I worked for this employer from 12/98 to 10/99, and again from 10/01 to 4/02. The plan was in effect from 1/99 to the present.

Thus, the plan was in effect the entire time that I worked for this employer and, despite my repeated requests for information so that I could participate in the plan, the office manager hadn't provided them to me.

In 1999, a partner in this firm came to me and said that they were terminating the 401(k) plan and not to bother with the forms.

I now learn that the plan was in effect all the time but that I was denied participation -- yet am being told that I'm entitled to a distribution.

I'm really angry and confused about this. There must be laws protecting employees from this type of misrepresentation. Any suggestions?

Sponsor of a non-leveraged ESOP wants to get stock out of the plan but does not have sufficient cash to terminate the ESOP and buy everyone out at once.

Alternate option - freeze the ESOP and periodically buy back stock, hiring an independent fiduciary to represent the interests of the plan participants, and obtaining an annual third-party valuation of the company/stock.

Under the frozen plan scenario, though, when the stock repurchases reduce the ESOP's level of company stock to, say, less than 20% of total plan assets, is the plan in disqualified status? If so, can this be cured or prevented by converting the ESOP, either at the time of freezing or thereafter, to a profit sharing plan? The sponsor wants to establish a PSP but intended to do so separately from the ESOP.

FYI, this is a follow up to my earlier thread on the topic ....

http://benefitslink.com/boards/index.php?showtopic=11995

415©(3)© has special nondiscrimination rules for determining 415 compensation for disabled participants (although since the 1996 Act took effect the rules have been relatively easy to meet).

Do the rules apply to governmental plans? I can't find an exception.

Thank you

I am looking for something in writing that discusses the limitation on participants paying for their own distribution fees from a qualified plan.

Any help would be appreciated.

One of my neighbors asked what would happen if he opened IRA's for his teenage children who work for him in a family business should they marry and later divorce?

Should they have a pre-nuptial?

What about community property states?

Dick

Our organization administers a 401(k) plan with about 400 participants. A small division consiting of 4 employees will be sold to one of the employees. We would like to allow these 4 participants to become 100% vested in their 401(k) accounts upon the sale.

Any suggestions regarding where to look for the requirements to vest these participants?

Hello, everyone.

I'm a financial journalist working on a story on corporate activism in the mutual fund and pension fund world. Many people have speculated that asset management companies who rely on managing corporate assets have a powerful disincentive to rocking the boat via shareholder activism, since they are vulnerable to retaliation by the withdrawal or withholding of assets.

Can anyone identify specific instances where a company threatened to withdraw or actually withdrew pension assets or 401(k) business in retaliation for shareholder activism on the part of the asset management company?

Does this ever happen?

If needed, your identities will be ferociously guarded--all I ask is that I'm able to verify or corroborate everything I write.

Feel free to respond here, publically or privately, or to email me at Jason_Van_Steenwyk@timeinc.com.

Many thanks,

Jason

Under the new regulations, can an employee change their annual election amount mid-year under the Health FSA, if the employer changes to a higher deductible health insurance program? The plan is 12/31 and their health insurance is 6/30.

Thanks, Joe

When I took over here, several of the plans had individual life policies owned by the Plan. I was told that the cash value, although included in the valuation each year, was not reported as part of the ending value on the 5500.

I have been consistent in not including this in the total assets for the plans where it had not been reported on previous filings.

Is this correct or not.

Marybeth

In preparing a Form 5300 determination request for a governmental defined benefit plan, how should I answer the first question of Line 11a concerning the method for determining accrued benefit?

Is premium paid for medical insurance on domestic partners able to be deducted on a pre-tax basis under Section 125? For example, let's say an employer's medical plan has rates of $200 for single coverage and $500 for family coverage. If an employee has a domestic partner and is required to pay 100% of the cost for dependent coverage, is the $300 able to be deducted pre-tax?

If not, what do most employers do to handle this situation?

My husband's company recently switched from a C corp to an S corp. All along he has paid 100% of his employees medical insurance premiums. He wants to begin have the employees pick up some of the costs by offering a premium only plan and a medical benefits flex plan. In reading information about these plans it seems to me that because he didn't have a formal plan in place before that the "value" of the benefit he was providing to his employees by paying their insurance premiums was suppose to be included in their gross income and they were required to pay taxes on this amount. Is this true? Or am I reading too much into this?

Thanks again for any help?

My husband is a co-owner of an S corporation. I have recently been hired as an employee to establish a cafeteria plan for use by the company's employees. I understand that as a more than 5% sharehold my husband is ineligible to participate in the plan.

However, can I, his spouse participate or am I too exempt because I am his spouse? I am not a share holder. I have received different info from different sources on this and the IRS has been of no help to me as of yet.

Thank you for any insight.

I am posting this for another lady, so hopefully I get all the facts straight!

There is a controlled group of 2 companies (each owned by brothers).

One of the brothers has decided that he wants his company out of the plan (it has come out of full funding and they do not want to make contributions). An additional complication is that the brothers have each tracked their contributions and presumably earnings. The brother who wants out KNOWS that his assets are greater than the PVAB.

First, is there a way (other than a spinoff to get the company out of the plan - including paying off the participants). I do not believe that to be possible.

What gets filed with IRS / PBGC IF there is another way???

One potential problem that I pointed out is whether the plan will still pass coverage and I was assured that it should not be a problem.

Anything else they should be worried about???

Thanks in advance for any insight.

We are trying to decide which type of plan a client actually needs?

They are a Community Services District, specifically the water and Wastewater sytems Department. we are considering having a salary deferral plan with a match. This gets a bit more confusing. They also want to offer PERS to their employees. So question #1 is, what is the determining factor for a 403 b.