A NQ Deferred Compensation Plan wishes to change ownership on the annuity being used from the plan sponsor to the annuitant/participant.

Is this allowable?

What tax issues will there be?

Wouldn't this be immediately taxable to the participant?

Do amended and restated Custodial/Trust Agreements and Disclosure Statements have to be mailed to existing accountholders under Rev. Proc. 2002-10? If so, assuming the Model IRS custodial/trust agreement is used (the documents for new business need to be revised by 10/1/02), when do the documents have to be mailed to clients who established accounts prior to 10/1/02? Cites would be helpful.

Can anyone point me to a simplified filing summary for 125 plan, group life, etc. benefit plans. Looking for something simple enough to refer client to. Preferably it would reflect the recent 125 filing notice.

One thing of interest, for example, might be a statement of how a participant is defined for purposes of the 100 participant welfare plan threshold. Thanks.

I'm thinking of taking the C-1 exam. For those of you that have already taken it how much of a time commitment is it?

Thanks!

We've got a few HCE only employer/plans with self directed accounts. Some are affiliated service groups, but still only have HCEs (for example, incorporated dr. groups). I cannot find any exemption for such plans for the 10%/$500,000 bonding requirement in the DOL Regs, but it seems silly that these plans would require bonding (I am not referring to the newer small plan audit/non-qualified asset bonding rules). We don't ask these clients to obtain bonds--but does anyone have a cite or other authority that confirms this (or your analysis of 412 that would confirm exemption for such plans)?

Thanks.

I am sure I should know the answer to this, but I am just not sure.

Can a traditional IRA be rolled over to a Qualified plan? If so, does the document have to stipulate this?

Also, what are the advantages and disadvantages to doing this. Is there something regarding 5 year averaging that can be done with an IRA and not a qualified plan.

Hope this is not to dumb a question.

Does anyone have ANY reg, PLR, cite, or have any experience with the following:

Small Community bank has 401(K) Plan and uses bank CD as the fixed interest/ guaranteed fund. They are currently paying a much higher rate on the CD in the plan than they pay to anyone who comes in off the street witht he same amount of $.

If anyone has ever heard of anything that we should inform the bank about I would appreicate hearing it.

Thanks!

Is there any prohibition on permitting a hardship withdrawal from elective deferrals including catch-up contributions? Catch up contributions are defined in the Code (I think) as elective deferrals. If the plan provides that a hardship distribution cannot exceed the amount of the participant's elective deferrals, then does the plan permit hardship withdrawals from catch-up contributions automatically?

We have a sticky situation and welcome other perspectives.

An employee terminated 1/31/02. She and her spouse were offered COBRA on 2/20/02. They enrolled (and it appears) that both signed the enrollment form on 4/2/02.

On 5/14, they both call (same call, different extensions) stating they are divorced and "think" they divorced in late January (they are unsure of exact date). At that time, we express dismay that they did not notify anyone of divorce within 60 days. Former employee says she did notify someone, but can't tell us who or when. We advise them to submit documentation ASAP as to the actual date of divorce.

We believe that the divorce occured 1/30/02, although we don't have the documentation (we believe another location has received it around 5/24).

We believe it can be shown that they were sent an initial notice, sent to the home, and addressed to both.

The carrier goes "by the book", and we don't believe that they will permit the 36 month extension for failure to notify within 60 days, but can they cancel the ex-spouse off of the coverage. If the divorce did indeed take place 1/30/02, he was a "spouse" at some point during 1/30/02, which is the date before the qualifying event. So is he or isn't he a Qualified Beneficiary that can stay on coverage at least 18 months?

Can the carrier drop the ex-spouse due to failure to notify of the divorce and/or signing up for COBRA as "employee plus spouse"?

LLC (taxed as a partnership) sponsors a Profit Sharing Plan. Plan allows participants to "opt out" on an annual basis.

Other than possibly being considered a deemed CODA if such an "opt out" affects compensation, are there any other issues or considerations - especially with regard to a LLC member opting out?

I seem to recall that with a 401(k) Plan , a partner's opting out had to be irrevocable, but this is a Profit Sharing Plan.

Thanks!

MY company has numerous health plans in place that provide for an extension of medical benefits in disability situations. It has been the company practice to run the extension concurrent with COBRA.

As an example, if an employee goes out on STD or LTD, medical benefits are extended up to the maximum period of disability coverage - and COBRA runs concurrently. However, it has been their practice to send out the COBRA notice AFTER the extension runs out, with only the remaining COBRA coverage period available. So, if an employee is out on STD for 26 weeks, the medical benefit is extended, and at the end of the 26 weeks, a COBRA notice is sent stating that they may elect up to 12 months of coverage under COBRA (the first 6 having been used during the extension and the cost covered by the company). In the case of LTD, they might NEVER send a notice if the extension runs longer than the COBRA coverage period.

In addition, it isn't stated anywhere in the SPDs thast we are running COBRA concurrent with the extension of benefits. The reasoning is thus: "The law gives employers the right to run COBRA concurrently with extended coverage. That being the case, its not necessary to restate those legal rights in the SPD. There are innumerable examples of where administrative procedures are not stated explicitly and it doesn't compromise the exercise of those rights."

I'm concerned over the lack of language in the SPD and the late notices........am I off base here? Any regulations regarding these specific items?

Does anyone have an opinion on whether it is lawful to value bonds in a money purchase pension plan on an amortized cost basis, not for funding purposes, but for benefit accrual purposes i.e. to value individual participant accounts. If you believe this is OK how do you think Rev. Rul 80-155 affects such a determination. Thank you.

An owner-employee who owns more than 5% of an S corporation takes a plan loan in 2001. Although EGTRRA revised the code to permit plan loans to owner-employees, the provision permitting such loans wasn't effective until 1/1/02. Therefore, the loan is a prohibited transaction from the date it was made in 2001 until December 31, 2001.

The loan has not been repaid as of this date. Therefore, what are we dealing with: (a) an ongoing prohibited transaction that was not cured by the EGTRRA change; (B) a prohibited transaction for the applicable part of 2001, but no prohibited transaction during 2002; or © no prohibited transaction for either year because you can't retroactively correct prohibited transaction and as of 1/1/02 it was no longer an ongoing PT?

I haven't been able to find any guidance on this. Anyone have any thoughts?

An ESOP sponsor has one owner/employee who is key to the company operations. It is believed that in the event of his death, the value of the company will greatly decline. The ESOP participants have considerable value in the plan in excess of the cash within the ESOP and the liquidity in the company necessary to redeem all outstanding ESOP shares. The company is growing concerned about the dangerous situation should the key employee die.

Does anyone have any ideas or recommendations on how to hedge this risk? We have considered the purchase of term or whole-life insurance, but understand that this raises different issues. Has anyone delt with this situation before? Your advice/comments would be appreciated.

what is the timeframe for filing an amended 5500 form for a pension fund?

I have a new client w/ a PS only plan which will soon be converted to a 401k plan to take advantage of EGTRRA. In analyzing the situation and requesting takeover data, I came to the conclusion that this plan has no trust document and no 5500 has ever been filed (the assets are about 500K).

So it would seem we really don't have a qualified plan here. The CPA says that the broker was handling all qualified plan requirements. The broker said they never had any responsibility for it. The business owner has no clue about any of this.

Is there any remedy here to preserve the tax qualified (!) status of the plan? Any help is appreciated, thank you.

Does anyone know the percentage of Qualified Beneficiaries that actually elect COBRA upon termination and the average number of months they stay on the COBRA coverage?

Does anyone know if Relius has the ability to produce Spanish SARs?

I have a client that did not make a Top Heavy contribution for 12/31/01. The client did not go on extension so it should have been made on or before 3/15. The amount of the Top Heavy Minimum is only (approx.) $6,500.

If the client deposits the money on 6/15/02 then they would also need to contribute earnings from 3/15-6/15 ??? and file for correction under VCP/VCS????? Is the fee is a flat $350??

Can they deduct the contribution and earnings on the 2002 tax return?

If anyone has any guidance in this it would be greatly appreciated as I have never filed for correction under VCP/VCS.

:confused:

Thank you

Can a hospital that sponsors its own self-funded medical plan direct its employees to the employer hospital through lower copays or deductibles without violating the fiduciary rules of ERISA?