It appears that an employer that fails to timely remit elective deferrals must, among other things, answer Lines 4a and 4d of Schedule H to Form 5500 in the affirmative and supply an "amount" for each line.

My question is about the "amount" (which I gather would be the same for each line). Is this amount equal to (1) the amount of the late elective deferrals or (2) the fair market value of the use of those late deferrals from the time they were late to the time they were deposited (i.e., the "interest" due on the prohibited "loan" from the plan to the employer) as with the amount listed in Line 26b, Column © of the Form 5330?

Any thoughts would be very much appreciated.

A terminated, retired employee is entitled to a "bonus" three months after the severance from employment date. The individual wantes to defer a portion of the "bonus" in accordance with the salary deferral election that was made when he was actually an employee. Can this be done?

Company wants to adopt a statutory Incentive Stock Option plan under section 422. Company will also adopt a Non-statutory incentive stock option plan for some non-managment employees. If too many employees participate in the plan,won't that subject the plan to ERISA? Don't the plans have to be limited solely to key managment employees in order to be exempt from ERISA? Can anyone list the

statutory exemption for an ISO and also a non-statutory plan to fall outside of ERISA? Any resources to look at?:confused:

If I am making refunds today for a 2000 ACP test failure, would I use the vesting as of today or the vesting as of 12/31/00?

Reg. §1.401(m)-1(e)(1) which provides that "[M]atching contributions (and the income allocable to matching contributions) that are not vested (determined without regard to any increase in vesting that may occur after the date of the forfeiture) may also be forfeited to correct excess aggregate contributions."

I interpret this to mean that if the correction is made today, I would need to consider the vested status as of today.

Anyone have a different opinion and a cite for same?

Is the RP-2000 Table automatically to be used for purposes of 412(l),or is the Service required to make it official by regulation,ruling,etc.?

'Bout time Dave!

I am sure we all have some amusing pension stories.

Once I took a call from someone asking for help regarding a new comparability/cross tested plan- If I recall, it was whether the plan passed testing. The plan was for a lawyer and his employees.

Upon 'prying' for more info, I discovered the allocation used $500,000 (or some obnoxious figure) in comp for the lawyer. I told the person you can't do that but the individual insisted the lawyer knew what he was doing. (I suppose that in itself is a funny thought)

I asked the individual just how are they going to answer the question of the 5500, 'was comp limited to 150,000'?

The response was that the filing would be a 5500-R for the current year, and that question does not appear on the 5500-R, so you don't have to worry about it.

Can't argue with that logic can you? I am still laughung inside over that one.

I've been trying to discover a way to streamline our 401(k)'s QDRO procedures. In particular, I want to amend our policy to specifically include a limitation on "lookback" language in proposed QDROs such that the Plan will not "qualify" any that requires historical account valuations more than twelve months prior to the actual benefit division date. The rationale for this tack is described below.

As you probably know, QDROs on DC plan participant accounts will often establish the "base" award to the alternate payee as of a certain point in time and may require that such account value be adjusted for (a) gains or losses from that point to the actual benefit "division date" and (B) exclude any investment exchanges, loans or withdrawal activity that transacted in that same period.

Unfortunately due to frequent recordkeeper changes in the past and limited access to historical data, we frequently faces three challenges along the above lines:

1. The point in time for the base award is as of a date other than a quarter-end. We have historical quarterly statement data, but very limited access to post-October 1997 daily valuation data.

2. The point in time for the base award is as of a date prior to the start of the IP's current recordkeeper's tenure - roughly October 1997. This requires we access old records at a significant cost with virtually no access to nonquarter-end valuations.

3. Because of the often heavy transaction volume on participant accounts, constructing gains or losses from the base award date to the actual division date can require a large expenses of time and money. In some cases that require gain-loss contruction from a base award date prior to October 1997, the work becomes very imprecise.

Given that ERISA and the Code charge plan administrators with establishing clear, cost-effective and reasonable procedures for determining if a domestic relations order is a QDRO, it would seem that my proposed change should not be a problem.

Any reactions or comments will be appreciated

I was hoping someone could clear up the confusion regarding the change in distribution rules effective 01/01/02. My understanding is that a 457 participant is permitted to receive distributions after termination of service at any age and not be subject to the 10% early withdrawal penalty (under current rules). What will happen in 2002? Some are saying that the participant would be penalized 10% if distributions are received prior to 59 1/2, while others are saying that if the participant leaves the funds in the 457 (and not rollover to an IRA) the 10% would not apply. Any insight would be helpful.

Thank-you.

Under Rule 701, if the aggregate sale price of securities sold in reliance on the Rule exceeds $5,000,000 in a 12-month period, the issuer becomes subject to certain disclosure requirements. One of these requirements is that the issuer deliver to the investors financial statements "no more than 180 days before the sale of the securities" in reliance on Rule 701.

With respect to a stock option granted in reliance on Rule 701 by a company subject to the above-mentioned disclosure requirements, when does the 180 day disclosure reqt for financial statements start? 180 days before the option exercise date? Or 180 days before the option grant date? In other words, which is the "sale" triggering the 180 day reqt -- the grant or the exercise of the option?

Company wants to adopt a statutory Incentive Stock Option plan under section 422. Company will also adopt a Non-statutory incentive stock option plan for some non-managment employees. If too many employees participate in the plan, won't that subject the plan to ERISA? Don't the plans have to be limited solely to key managment employees in order to be exempt from ERISA? Can anyone list the statutory exemption for an ISO and also a non-statutory plan to fall outside of ERISA? Any resources to look at?:confused:

Client's forfeiture allocation policy per an adoption agreement as of 12/31/00 reads “…as an employer contribution for the Plan year in which the forfeiture occurs, as if the participant forfeiture were an additional employer contribution for that Plan year.” Client's third party administrator instead reduced fees by the amount of forfeitures per the latest adoption agreement effective 1/1/2001. These were 2000 forfeitures, so it seems that the earlier adoption agreement would apply. My question related to this would be the following:

1. Is there a possibility that someone who was newly eligible without an account balance (i.e. a participant due to eligibility only) could have received an allocation of the forfeitures allocated if they had been allocated per the adoption agreement in effect at 12/31/00?

Also, the administrator forgot to bill the Plan for 1999 fees. They were accrued as a payable from the plan on the 1999 Form 5500; however, they were not paid until 2001. It would seem that participants in the plan during 1999 who left in 2000 did not get an allocation of the fees. Also, 1999 fees are being charged to some new participants who were not even in the plan in 1999.

Any comments on these two issues?

The tribal wisdom of the Dakota Indians, passed on from one generation to the next, says that when you discover that you are riding a dead horse, the best strategy is to dismount. But in modern business, education and government, because heavy investment factors are taken into consideration, other strategies are often tried with dead horses, including the following:

1. Buying a stronger whip.

2. Changing riders.

3. Threatening the horse with termination.

4. Appointing a committee to study the horse.

5. Arranging to visit other sites to see how they ride dead horses.

6. Lowering the standards so that dead horses can be included.

7. Reclassifying the dead horse as "living-impaired."

8. Hiring outside contractors to ride the dead horse.

9. Harnessing several dead horses together to increase speed.

10. Providing additional funding and/or training to increase the dead horse's performance.

11. Doing a productivity study to see if lighter riders would improve the dead horse's performance.

12. Declaring that the dead horse carries lower overhead and therefore contributes more to the bottom line than some other horses.

13. Rewriting the expected performance requirements for all horses.

14. Promoting the dead horse to a supervisory position.

Has anyone retained a Hospital/Medical bill auditing service as a cost containment solution? What are the potential pitfalls?

Calendar year 401(k) Plan. ER payroll periods are 1-15 (paid the 25th) and 16-EOM (paid the following 10th). One year service required for entry and quarterly entry dates January, April, July and October 1. EE starts January 1, 2000, meets one year service requirement December 31, 2000 and enters plan January 1, 2001. EE first deferral (and related ER match) should begin with the payroll December 16-31, 2000 paid January 10, 2001 OR the payroll January 1-15, 2001 paid January 25, 2001?

Does anyone know if the new tax credits will apply for mandatory contributions to a governmental plan with 414 "pick-up" provisions?

What if an employer's change to accelerated graded vesting schedule under section 633 of EGTRRA (from existing 5 year cliff) will actually result in reduced benefits for some employees? Must or can they be "grandfathered" under old schedule until fully vested? Alternatively, is the employer required to adopt an EGTRRA-mandated schedule that is at least as favorable as existing one?

I made a $2000 contribution for me and $2000 for my husband to a Roth IRA on December 26, 2000. Now I find out that the contribution was ineligible because my husband and I filed our federal tax return with the status of married filing separately. I can go back and amend our returns with the status of married filing jointly but will take a big hit on taxes that I will end up paying at the state level.

If I take out the contribution now (after deadline of filing my 2000 tax return, what are my penalties? I understand I will have to pay 6% of the excess ($4000 x 6% = $240) but do I also have to pay a 10% penalty on top of that?

Need clarification on the Form 5500 instructions for Schedule H, 2b(10).

Plan's only investment type is mutual funds. Are all gains and losses reported on line 10 or are the realized gains reported on line 2b(4) and the unrealized on line 2b(5)? Thanks!

An City employee has been on FMLA for twelve weeks due to her spouse's serious health condition. She requests an extension of her FMLA for an additional month to care for her spouse plus an additional 6 -8 weeks for recovery of an upcoming surgery that she has scheduled for herself for Carpal Tunnel Syndrome (CTS). The employer has a leave of absence policy which is reviewed on a case by case basis which may extend up to a six month period. Her employer has denied the extension of FMLA as well as the additional leave of absence for her surgery stating that more time off will be detrimental to her work unit. The CTS is not being handled as a work related injury as she never filed a claim for workers' comp benefits stating that she has had this problem for a long time due to prior jobs. Does the employer need to look at something else in this case? Can FMLA by denied beyond the 12 week period? Can the employee request 12 weeks of FMLA again the next year for the same reason? In this case, it seems the employee will either resign as a result of the denial for the extension, or will be separated without prejudice in accordance with the leave of absence policy.

Just wondering if there is something more here that someone could shed some light on.

Simple question: are EAP programs considered Welfare plans subject to a 5500 filing? I did a search on BenefitsLink and got some background on EAP, such as does COBRA apply, but I was hoping someone has already done the research for 5500 purposes.