I have received an opinion that states that rollovers from 457 to IRAs are not permitted if the 457 is established by a non-profit (charitable) organization. I would appreciate any confirmation or rejection of that opinion.

Does the age 75 rule apply to 457 plans? In 403b accounts, it is possible to exclude pre-1987 balances in the MDR calculation until age 75. It is possible to do anything similar in 457 accounts?

Under 412(l)(7)©(i)(I), it states "The rate of interest...shall be the rate of interest under (B)(5)..." and then goes on to restrict it within a particular corridor (i.e., if the rate in (B)(5) is outside the corridor, the rate under 412(l) must be at the limit of the corridor).

412(B)(5) includes both the valuation rate for accrued liabilities and the interest rate for the OBRA'87 current liability. Does anyone know of any official guidance that allows you to ignore the valuation rate in the determination of the 412(l) rate? In other words, should you just be looking at the current liability rate under 412(B), or should you be looking at the valuation rate also? I believe the answer is just the current liability rate, but would like to be convinced with official guidance (or even unofficial guidance from an IRS presentation, etc.).

New plan effective 1/1/00 - Safe Harbor 3% Non Elective Contribution Election effective 1/1/00.

The plan document is written such that the Safe Harbor election will remain in effect until an amendment is made to the plan revoking the Safe Harbor election.

The client decided 1/7/01 that they would not make the 3% Non Elective contribution for the 1/1/01 - 12/31/01 plan year. Simply sent an email to employees stating they would not make the 3% Safe Harbor contribution - rather would make 100% up to 3% Discretionary Match for the 2001 plan year. Amendment was prepared adding 100% up to 3% Discretionary Match (nothing revoking Safe Harbor Election).

Now to my question..due to the way the document was written, is the client required to make the 3% Non Elective Safe Harbor contribution? OR do they simply not make the contribution and test the plan on current year basis?

Any thoughts on this subject are greatly appreciated!

Are there regulations that govern the types of investments that a VEBA may hold? Are mutual funds an acceptable investment option? The VEBA is for a governmental agency. Thanks.

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?