Assume that an employer stock fund held by a 401(k) will be designated as an ESOP.

The Plan currently provides that participants may elect to take distribution in the form of a lump sum or annual installment payments up to 15 installments.

Question: Does the Plan need to change its distribution requirements in order to meet the requirements of Section 409(o)?

Thanks in advance!

Does anyone have any idea how payroll companies will be handling the age 50 catch-up contributions? Will payroll companies be collecting participants' dates of birth? Will payroll companies that currently stop deferrals at the 402(g) limit now stop deferrals for plans that use catch-up at the 402(g) plus age 50 catch-up limit? How will payroll companies identify age 50 catch-up contributions that become age 50 catch-up due to the ADP limit?

We have a plan whose employer wants to convert their 401k to an ESOP in order to take advantage of the Code 404(k) deduction. Obviously, one of the investment options in the 401k is employer stock.

My concern lies with the fact that the employer wishes to allow participants to continue to direct their investments (deferral and match - the plan has no profit sharing component). Basically, they want to continue to operate as a 401k, but on an ESOP document.

I have never heard of an ESOP where a participant could opt out of company stock via an investment election. This employer's accounting firm is really pushing this issue, stating they have done this same thing with other clients.

Am I missing something, or can participants (under 55) in an ESOP opt out of investing in the company stock and the plan is still an ESOP? Any suggestions, cites etc. would be greatly appreciated.

I have a Money Purchase Plan and a Profit Sharing Plan. With the new EGTRRA maximums in the Profit Sharing Plan in 2002, we want to dump the Money Purchase Plan. Is it better to merge the two plans or terminate the Money Purchase and roll proceeds to the Profit Sharing?

If merging is the better way to go, what steps do I need to take? (i.e. notification to employees, amendment, final 5500 etc.)I have been unable to find clear instructions on merging in my research.

Thank you.

Situation: A privately held company makes its match in company stock and gives its employees the right to sell the stock and to move the proceeds into any one of a variety of other choices (which presumably qualify under 404©). The company does not allow the employees to reinvest the funds in the company stock account, however. Does the plan qualify under ERISA 404©? I need any assistance. Thanks.

My question is regarding eligibility. We have a plan that has it service requirement as 6 months and an employee can enter semi -annually. The employer wants to amend their plan effective 1/1/2002 so that the service requirements are one year and quarterly entry. My question is regarding an employee that is hired 9/1/01. They will not have met their eligibility requirements by the end of the year to participate in the plan. Since the amendment takes effect in 1/1/02, when would that person be eligible to participate in the plan? Do you follow the old service requirements or does that employee fall under the new amendment and has to wait one year?

Any thoughts would be greatly appreciated.

Assume that Company A, a Fortune 500 Company, is in the process of making a number of acquisitions. Company A maintains Plan X, a 401 (k) plan. What are people doing in each of the following situations to protect the qualification of Plan X: (a) Company A buys Company B and merges its Plan Y into Plan X; (B) Company A buys the assets of a trade or business of Company C, another Fortune 500 Company, where the trade or business employs 75 employees; © Company A transfers 30 employees of Company A's subsidiary, A-1, and wants to transfer their account balances under Company A-1's plan, Plan Z, into Plan X. Company A-1 has taken a number of aggressive positions on a number of issues involving Plan Z; and (d) assume the same facts as in example ©, except that Company A-1's CEO is transferred to Company A and only her account balance under Plan Z is spun off into Plan X.

How do the requirements of USERRA work with a multi-employer plan? Obviously, the employee works or can work for several employers during any period of time. If this multi-employer plan participant goes on military leave, how are the USERRA benefits and contributions made up? How are the credits allocated between employers? As you can tell I don't work with multi-employer plans but was asked the question. I figured I could learn something so I am looking into the matter. Thanks!

I have read conflicting items as to the proper definition of compensation for determining the match in a SIMPLE plan. Is it the 401(a)(17) definition or something else?

After leaving employment at a private, Catholic affiliated hospital, my wife rolled her 403(B) plan to her IRA. It has been a complete nightmare, primarily due to the plan's administrator, Lincoln Life. Their delays and general lack of cooperation caused her account to lose over $3000 in value, plus an additional $150 in illegal fees.

I call them illegal because the process for acount liquidation is clearly defined in my wife's contract. The loss in account value also occurred because LL did not adhere to their own policies, also outlined in the contract.

We have been informed by her former employer that this plan does not fall under ERISA, therefore the Dept. of Labor will not intervene. Can anyone suggest another avenue? Lincoln Life obviously insists that they have done no wrong, and hiring an attorney would exceed any possible financial recovery (as LL well knows !!). Any help or suggestions would be GREATLY appreciated. Thanks.

Doug

This is intended as a poll of how the different readers of this message board would handle the following situations.

Assume Company A is a Fortune 500 company and maintains Plan X. Company A is in the process of making several acquisitions. In certain cases, Company A merges the plan of the acquired business. How would you determine the qualification of the plan that is being merged into or that is spinning off a portion of its plan into Plan X in the following situations: (a) Company A buys Company B and merges Plan Y into Plan X? (B) Company A buys the assets of a small trade or business of Company C and has Plan Z spin off the account balances of the employees of the sold trade or business into Plan X?; © Company A takes Officer M from its subsidiary A-1 and wants to spinoff his account balance under Plan W?

The problem is that the official IRS position is that a plan that violates the qualification requirements and is merged into another plan taints the surviving plan. Should you do a compliance audit on the other plan; obtain an indemnification from the other employer? There is no clear guidance on what would be sufficient to protect the surviving plan. In the area of rollovers, the IRS has published regs stating that if the receiving plan reasonably concludes that the transmitting plan is qualified, the receiving plan is protected if the transmitting plan is later disqualified.

Non traditional investments for pension plans

What creative strategies are there for putting current assets into my IRA?

Has anyone been hired as a contractor by his IRA? Is there anything special needing to be done?

If buying and selling real estate within an IRA, significant profits can be garnered quickly. What triggers an IRS audit of a IRA?

If you have had your pension plan invest in non traditional investments, such as real estate, mortgages, mobile home paper,tax leins, etc., could you express the pitfalls?

Which pension plan custodians administer non traditional investments, brainstorm strategies and help raise funds for their business minded pension plan clients from their other more passive minded pension plan cleints?

Where can I get good info regarding the Unrelated Business Tax issue?

The Demo 9 Instructions are asking me to provide the 415©(3) definition of compensation used in determining total compensation (for purposes of computing the individual ratios). The actuary is telling me that they used the W-2 definition BUT DID NOT INCLUDE DEFERRALS OR ELECTIVE CONTRIBUTIONS.

I know the 415 regulations intimate that your definition can exclude these contributions but aren't these regulations outdated and didn't GUST amend 415©(3) to specifically add these back in? And, wouldn't this apply to the TOTAL COMPENSATION determination under Demo 9? Does this mean, then, that the question of whether you have added deferrals into the definition of total compensation is a trick question on the Demo 9 and that stating NO would be cause for a bounce-back from the IRS?

I appreciate any response! Thanks.

Would Day Care services be reimbursable for a 26 Yr. old with Downs Syndrome? If he gets sick during the year the parents put him in a special needs daycare in order to work would this be a reimbursable expense?

I'm searching for daily val software, and would greatly appreciate any input/advice from anyone who has experience with the software vendors and NSCC clearing agents.

I'm currently looking at ASC, InvestLink, and Trustmark. I don't know of any others, except Quantech. We do complex nondiscrimination testing, and I know InvestLink & Trustmark are weak in this.

Thanks.

When counting the 12 "workweeks" for FMLA, are you allowed to count holidays as FMLA days? For instance, if you have 2 holidays paid at Thanksgiving, do those 2 days count against the 12 workweeks?

I know the Code does not permit distributions upon termination of a 457 plan. I have two questions relating to this point.

Has the IRS ever commented on this issue?

What happens if distributions are made anyway (is it just that the distributions are taxable and can't be transferred or rolled over into another plan or is there more)?

I work for a PEO that has a single employer 125 plan on a calendar year. The vast majority of our clients participate in our self-funded health plan; however, some of our clients maintain their own fully funded health insurance thru BCBS, HAP, etc. which we administer. Whether the client offers our self-funded or a fully insured product, all of our clients are offered the same dental & vision etc. thru the 125.

Problem: our OE is right now, as the plan year starts 1/1. Some of our clients with fully insured products have a mid-year renewal date and, per the contract with the vender, must have OE date that is mid-year. What do I do with these people for OE? Do they have an OE for everything BUT health? Do they have OE for everything (dental, vision etc.) when they have OE per the vendor contract? Do I need one 125 plan for most of our clients and separate 125’s for those clients with off-year renewals? I’m totally baffled. Please help!

A while back, there was a thread that discussed the limited circumstances in which a plan could enforce a bad boy clause. The IRS pronouncement on the topic--Rev. Rul. 85-31--basically says that, if the plan has a more favorable vesting schedule than the statutory minimum, it can enforce a bad boy clause to reduce the wrongdoing participant's vesting to whatever it would have been under the statutory minimum schedule. The ruling addresses one of the old graded vesting schedules.

The prior thread suggested that the ruling specifically precluded a plan with a graded vesting schedule from switching to a cliff schedule under the bad boy clause. I could find no such statement in the ruling and I was wondering if anyone can shed any light on this.

It would make a difference if a plan had a 7 year graded schedule that was more favorable than the 3-7 year schedule in the Code. If you have someone with less than 5 years of service, if you have to stick to the graded mininum schedule, you can only forfeit, say, 40% of the benefit but if you can switch over to the the cliff schedule, you can zero them out (at least prior to when the EGTRRA 3 year cliff rule kicks in).

Any thoughts on this?

We have several 12/31 paired mp & ps plans that our clients would like to merge into one plan. Assuming the joint life and vesting subjects are not an issue and we complete the merger paperwork correctly by 12/31/01, how and when do the funds need to be combined? I am assuming we can update the mp with the gatt provisions and merge into the ps by 12/31/01 and we'll be ok there on paper, but what about the assets. Most of our mp clients don't contribute until the last minute, which will be in Sept 2002. Should the funds be combined on 12/31/01 and then when the contribution receivable arrives simply allocate it to the appropriate participants-- or should we combine only on paper and move the assets in 2002 after the contribution posts to the mp? Bottom line, does the mp money need to zero out of the trust by 12/31/01 to avoid restating the entire plan?

Any feedback or suggestions would be appreciated!