Is it legal for a company that is in serious financial trouble to "freeze" 401(k) plan assets of former employees who would normally be eligible to rollover the assets into an individual IRA? I have been told that I cannot touch the money, even though it is 100% vested.

First of all, what is the difference technically between a 403(B) Thrift Plan and any other 403(B) plan?

Secondly, I don't like the investment choices provided by the insurance company we are contracted with (annuities). Is it permissible by law to transfer contributions from my employer's 403(B) Thrift Plan to a different financial institution (as a trustee to trustee transfer, either into a traditional IRA or perhaps a self-directed 403(B) plan)?

I would not be eligible for a so-called 90-24 transfer because there is a small employer match (3%), but I would be vested immediately. If I'm significantly better off with a different institution, I might be willing to forego the 3% employer match.

I'm trying not to tie up my contributions in annuities. I was thinking of opting for a money market fund simply to hold my contributions prior to transferring them elsewhere on a regular basis. There seem to be no surrender fees, but the insurance company's booklets and prospectus don't actual mention transfers between institutions, only transfers between investment alternatives that they hold.

Your thoughts?

For purposes of this question, an employee (in the top 25) will not be able to receive a lump sum payout due to 1.401(a)(4)-5(B) and plans to work until he dies. The plan provides that survivng spouses receive the account balance converted to an annuity based on her life expectency or a lump sum

Please confirm that the surviving spouse is also restricted from receiving a lump sum because she would be receiving a death benefit not funded by life insurance on behalf of a restricted employee.

Are there any options other than:

(1) take a life annuity,

(2) provide a surety arrangement for 125% of the lump sum amount pursuant to Rev. Rul. 92-76

(3) amend the plan to add a new distribution option that is an annuity with a cash refund feature.

Thanks for your thoughts

Anybody know anything about the new "Stark" regulations that take effect in January of 2002, specifically regarding any effect on qualified plans? As far as I know, (and my knowledge is severly limited on this!) they do not supercede ERISA, nor the normal IRC rules and regs pertaining to qualified plans. They may have effects(major/minor - don't know) and cause employers to make changes to the entity structure and ownership arrangements in various medical practice situations, but that can be dealt with under the existing rules for qualified plans.

All opinions appreciated.

I need a refresher on withdrawing excess SEP contributions:

1. What is the deadline for withdrawing the excess without penalty?

2. What is penalty if the excess is withdrawn after deadline?

3. How are "earnings" treated, especially when the value of the SEP account is worth less than the contributions made (negative earnings)?

Thank you.

Question:

Our Cafeteria Plan Provider filed a 5500 for us, as did our 401K provider. It has just come to my attention that our medical/dental/ancillary provider does not file on our behalf. I am certain that I've missed the deadline. At this point can I file an amendment and include this other info on one of the 5500s that have already been filed? Should I bother? I am new at this and have no experience with completing this form. Our Cafeteria plan provider is different from our health provider, does this make a difference in amending the 5500? What do you suggest? We have one medical carrier and one dental/ancillary carrier, our plan has over 100 participants, employees do not contribute. Thanks

Anyone have any idea how long it takes to get approval of an entity as a nonbank trustee for regular IRAs under section 1.408-2 of the Regulations? Also, I would like to speak with someone at the IRS who knows about these procedures. If you have recently filed one and have a contact name, I would be very appreciative if you would share it. I have spoken to 4 or 5 IRS no-nothings and keep getting the run around or the wrong person. Thanks!

A New York Times article reports that some families of victims of the September 11 terrorist attacks are criticizing Marsh & McLennan for the way it proposes to fund its decision to provide 3 years of free health benefits for the families. Here is the article:

http://www.nytimes.com/2001/12/26/nyregion/26MARS.html

The fund was set up by the company to provide relief for the victims' families, but some family members say the health benefits should be paid by the company in addition to the amounts in the relief fund.

What is your opinion? Are these individuals justified in feeling cheated? Or does the source of funding obscure the point that the employer was under no obligation to provide any health benefits for the victims' families to begin with? What do the expectations of these family members say about employee benefits in general?

Can a plan document be amended by a firm that uses a different document provider? Should the plan be restated onto the document we sponsor? Thanks.

We are eliminating the option for a flat dollar election, and requesting that everyone change to a percentage. If they have been notified of this change and been given an opportunity to change to a percent of their choosing, can we go in to their account and make a blanket change to 1% for all who have a flat dollar election?

DOL has made it clear that demutualization proceeds representing the payment to a plan that is a polcyholder by way of a group annuity contract are plan assets. Please advise how these should be reported on Form 5500?

Prior threads have indicated that such payments are to be regarded as investment gains. Is there agreement and/or disagreement with this approach?

As youngsters, my sister and I had a pair of stuffed animals. They were a set - by that I mean, they hugged each other with slightly exaggerated arms with velcro on the hands. They did this with a number of animal pairs (we had the monkeys as well) - but our prized pair were skunks!

We bought these skunks in Florida during the family trip in the 1970's. We traveled by car - FIVE of us in a 2 door Dodge Colt with no A/C (but this is a whole other story) - and we had pooled our money to buy these.

The ride home was miserable - for everyone in the car but the two of us. The skunks were very active. We did their voices and generally tortured our parents and older brother - six years our senior. The skunks would go everywhere with us - even when we got home and for several months after.

Finally, poor old dad - who I'm sure had been more than patient with the whole thing - broke. On our way to dinner in the car, the two of us - and our skunks - were in the back window waving the skunks at other motorists. Dad chose his moment. He had had enough and this was going to be it. In a loud, booming voice that you knew meant business he said: "NOBODY WANTS TO SEE THAT! PUT THOSE THINGS AWAY!" We did just that. Slumping into the seats and casting only darting glances at each other.

Only moments later, the awkwardness of the moment was broken. The car that had been directly behind us moved into the passing lane, moved up fast and pulled just ahead of us. Much to our delight - and our father's dismay - the back window of their car was alive with stuffed animals waving furiously back at our car in return. The moment was forever broken. We busted out with delightful laughter and our skunks again came alive - though now up into the drivers compartment so we could return the waving of the stuffed animals. It would've been rude not to return the favor - and of course we saw this as affirmation of our own behavior dad had tried to correct. Dad said nothing.

I can still imagine the color draining from dad's face as he was bested by the stuffed animals. Stuffed animals rule!

Forgive me if this issue has been addressed recently. I have only been able to find literature from 1998. Do early withdrawals of contributions still avoid income taxes & 72(t) penalties? With the exception of rollover contributions withdrawn within the 5-year holding period, can contributions be taken out 'whole' at any time, for any reason?

Thanks,

John Fitz

Just wondering if anyone has any input on this issue regarding the flexibility in committing to make a safe harbor contribution (3% nonelective contribution). The plan sponsor has not yet decided on whether or not to make the safe habor contribution for 2002. They would like to provide the initial notice to the participants just in case they decide to go forward (please do not address the timing issue). If they decide to make the contribution next year, they would like the contribution to go to a plan that they are going to adopt in the first few weeks of 2002. Basically, I am wondering whether this is okay. I mean, if you are not committing to make the contribution to the current plan what difference should it make if you don't committ to making a contribution to a plan that hasn't been adopted yet?

Any input would be helpful. Thank you!

I have been searching for the IRS release of the safe harbor language for 402(f) Notice (distribution/rollover notice) that will comply with EGGTRA. The IRS promised it would release the safe harbor/model before the end of 2001. The language for prior years was released in Notice 2000-11. Has anyone seen a new release from the IRS for the safe harbor/model for 402(f) Notice complying with EGGTRA?

I've seen reference to "Premium Only Plans (POP)" and to "Premium Conversion Plans". Do they both refer to the Section 125 "Premium Conversion Only Plan", or they two separate issues?

I am trying to find out if I contribute the max to my SIMPLE IRA can I still contribute the max to my Roth IRA as long as my joint reported income does not exceed the $150,000 limit? Can I even contribute anything to the Roth if I max out my dollars to the SIMPLE? My accountant tells me no to both questions, my investment advisor tells me that I sure can.

I have removed my 2001 Roth funds because of the accountant's advise (at a loss of course) and now don't know what to believe. Any body know for sure the scoop on this stuff?

Thanks

My older brother relayed a story - previously unknown to me - at this years family festivities:

Seems as a young boy (still in the pajamas with the feet) he waited up for Santa Claus. He waited and waited, fighting sleep, until finally mother nature demanded he depart for 30 seconds. Shortly after he departed it seems our father quickly loaded presents around the tree and shouted out a rather believable "Ho-Ho-Ho!"

With this, my brother raced down the stairs (business unfinished) only to find - much to his amazement - that Santa had been there, left presents, eaten the cookies and was gone in the 30 seconds he had to be out of the room. (I would venture a guess that dad - AKA "Santa" was still struggling to swallow the last of the cookies when my brother reached the living room).

Maybe it was the season, maybe it was the spirits, and maybe it was my brother sharing this for the first time ever and mother qualifying it by wondering if the whole experienced hadn't scarred him for life - but we rolled with laughter!

Company A is owned by a brother and four sisters. Bill is married to one of the sisters, and one of trustees for Company A's 401(k) plan. He has no direct ownership in Company A, but is attributed his wife's 20% interest. He is also a trustee of Company B's plan. The companies currently do not constitute a controlled group.

Bill and the other three brothers-in-law have self-directed accounts in the plan. They now want to direct the purchase of shares of Company B, of which Company A owns 50% of. All the brothers-in-law are directors of both companies.

In my opinion, this is clearly a violation of 4975©. Does anyone dissagree?

Up to now I've been contributing $2,000 to my Roth IRA each year, but I gather the maximum is going up. What is the maximum for 2001, and what will be the maximum in 2002?

I'm single and meet all eligibility requirements.

Thanks.

Lyric