It is my understanding per a 9th Circuit Court Opinion that if a lump sum was received (ERISA or NOT) it is considered Exempt from levy (or exempt from creditors). That is only on disability benefits received. I believe it is Standard Ins. co. v Saklad in 1997. Basically it states that in almost all states that disability benefits are exempt from levy. Does anyone know much about this? I also understand that it can refer to the "offset" or "setoff" of SSDI benefits too. In otherwords, they can't take them out..

Any thoughts would be of great help and interest. Thanks.

Employer adopts a restated Plan containing all GUST admendments in 2001. The plan year is the calendar year, as is the Employer's tax year. The last day of the GUST remedial amendment period (RAP) applicable to the plan is December 31, 2001 (per Announcement 2001-12). I need the answer to the following two questions:

1) What is the latest date Employer can file for a determination letter that covers all of the GUST RAP? Is it: a) December 31, 2001; b) the time prescribed by law, including extensions, for filing the income tax return for 2001; or c) some other date.

2) What is the latest date Employer can file for a determination letter so that, if the IRS requires changes to the plan, those changes will relate back to the entire GUST RAP? Is it: a) December 31, 2001; b) the time prescribed by law, including extensions, for filing the income tax return for 2001; or c) some other date.

Do the answers above change if the restated plan was adopted in 2000 rather than in 2001?

Thanks for any cites and advice you can give me.

Yuck!!!! We've got a potentially ugly situation. We have a cross-tested plan that also has an excluded class of employees. The excluded class includes NHCEs. Obviously, the plan has passed 401(a)(4) previously with these NHCEs not benefitting, but in 2002, I don't see any way to keep these previously excluded ees out! Any comments?

In reading Notice 2000-3 Q10, it appears that as long as ee's not having met stat elig but that are elig under the terms of the plan do not have to receive the safe harbor contribution as long as the non stat group meets coverage and ADP on it's own. This may be a dumb question, but are 401k and 410b test passing the only stipulations?

The reason I ask is when I search in Benefitslink for Ntc 2000-3, part of Q10 is cut off and the last sentence seems to state "However, in such a case, the plan must specifically provide that elective contributions (and, if applicable, matching contributions) on behalf of those employees will satisfy the ADP test (and, if applicable, the..." and that's where it ends.

Does this mean that if the plan doc does not stipulate that normal matching contribs must be used to satisfy the ADP test and are 100% vested, then the non stat elig's must receive the safe harbor contribution? I haven't come across the non stat elig issue in practice before, any clarification would be appreciated.

What are the implications of having investment management fees for self-directed brokerage account within 401k paid by the corporation, not from the assets of the plan? I.E. Owners and some employees self direct utilizing a money manager and other employees utilize mutual funds and the corporation not plan assets pay fees for individual money managers.

I just had a call from a client. One of their plan participants changed their salary deferral election from 5% to 10% in 1999. The person who does the payroll never made the adjustment. Suddenly the participant has noticed this error - almost 2 years later - and thinks he should receive a matching contribution on the missing salary deferral contributions. I guess I believe that even though the company obviously made a mistake, the participant has some responsibility to pay attention to what is being withheld from his paycheck. Does anyone have an idea of whether or not the employer has to do anything to make up for this error?

Deceased Participant was single and the plan administrator has no beneficiary designation. The plan document states that in this case the distribution goes to the estate of the deceased. The sister of the deceased informs the plan administrator that the deceased had no will, and that the legal costs of establishing an estate for this purpose would be more than the amount of distribution. Is there a solution that would allow the plan administrator to be sensitive to the issue but keep the plan in compliance? Thanks.

Could someone explain why a public school district would want to set up a 401(a) plan rather than or in addition to a 403(B) plan? Thank you.

We are a not-for-profit (a 403©6). We already have a 401(k) plan and a DB plan. We are looking at putting in a NQDC arrangement. We had been looking at 457(f) and its substantial risk of forfeiture because contributions to 457(B) would be offset by our 401(k) plan.

Under the new tax bill, however, it appears that contributions to 457(B) plans would NOT be reduced by 401(k) contributions. What's more, the limit under 457 (B) is being increased to $11,000 and balances will be eligible for rollover! These changes are all be effective in 2002.

Am I missing something? Can I really give my executives the opportunity to defer $11,000 in the 401(k) and another $11,000 in a 457(B) -- all eligible for rollover?

I am also wondering this: can my plan have both a 457(B) side and a 457(f) side to allow executives to defer amounts in excess of $11,000 -- understanding, of course, that any amount that goes over into the 457(f) side is subject to the substantial risk of forfeiture rules?

Thanks for your help.

WilliamC

For a short plan year (new plan 7/1/01, year end 12/31) is the de

401(k) plan failed ADP test for 1999 (calendar year plan year). Corrective distributions to HCEs were not made by the end of 2000. Consequently, correction of failed ADP test for 1999 plan year still needs to be effected. QNECs to all NHCEs would be prohibitively expensive.

I heard, read (or dreamed!) somewhere of a correction method called "dollar for dollar" where corrective distributions are made to the HCEs and a QNEC equal to the total amount of the corrective distributions is made and allocated to the NHCEs.

Can anyone point me to a prior post or information regarding this

subject? Thanks!

I am looking at standardized adoption agreement for a 401(k) plan that our company is taking over. According to this adoption agreement, an otherwise eligible participant must be employed on the last day of the plan year in order to receive an allocation of any employer non-elective contributions and/or employer matching contributions. I hate to sound stupid, but I always thought you could not have a last day of plan year rule in a standardized plan. Could someone please explain this to me?

What makes a severance plan an ERISA plan and have the requirement for a 5500 filing?

Does anyone know of a "third party administrator" for stock option plans? I have a client that wants to outsource all of the administration to a third party. I am aware of software for in-house administration but do not know about parties doing complete outsourcing.

Our plan states that children can only be enrolled in same HMO option as parent. However, very often the custodial parent and children live in a different state/HMO service area than the parent-employee. In these cases, some of our HMO's will enroll the children without covering the employee-parent, and some won't. Does anyone know if the parent lives in a different service area whether an HMO in the child's area MUST enroll the child or not? What experiences have you had regarding this?

I gather that it is possible to transfer accumulated savings from a 403(b) to a 403(b)(7) custodial account (set up, for example with a mutual fund company). My understanding is that this cannot be done with funds contributed by one's employer, but does this mean one can differentiate between funds contributed by the employee and those contributed by the employer (and still transfer the funds contributed by the employee)? My question is driven by the desire to find ways to get better returns than those many annuities offer.

A non-qualified plan defines the employer as the parent, or any of its subsidiaries, and there are participants from several different subsidiaries. Does the parent company (sponsor) get to book the assets on its books even though it is not the one actually paying the specific employees salary? In this case the employees get paid by the subsidiary that employs them.

If, for example, a plan has 10 HCEs benefitting, is there automatically 10 Rate Groups?

What if three of the HCEs all have the same Equivalent Benefit Rates (EBRs), are there then only 8 Rate Groups?

The Ratio Percentage Tests and the Average Benefits Ratio Tests of the three separate Rate Groups of the HCEs with the same EBRs will produce identical results. So does it make any real difference (to the client or the IRS) whether results are presented as 8 Rate Groups vs 10 Rate Groups?

I've seen such test results presented one way vs. the other by different TPAs.

Twice in the last two weeks, I've had an auditor tell me that they cannot perform a limited scope audit if a plan is self trusteed. The first auditor was from a firm that I'm usually sceptical of anyway, so it didn't give the issue a lot of thought. Now the issue has come up again and I can't help but wonder if I'm missing something.

My understanding of the limited scope audit was that if the assets were in the CUSTODY of a bank or insurance company or similarly regulated entity, that the auditor could perform a limited scope audit. The assertion that has been made to me is, that if one of these types of entities is not the TRUSTEE of the plan, a full scope audit must be performed.

I've read 29 CFR 2520.103-8 and do not see the word trustee anywhere. I guess I'm looking for a little reassurance that I'm not off my rocker.

Any input would be appreciated.

Is it expected that when completing Top Heavy Test for 2002 for a calendar year plan (determination date 12/31/01) that we will use the new rules (like what happened for the HCE rules in 1998)?