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.

What is the maximum contribution a public employer may "pickup"? Does this maximum change for 2002?

Best wishes,

Joel L. Frank:)

I have a client who is interested in possibly terminating their defined benefit plan. The plan is overfunded. It is a very small group (5 employees) and the concern is that as top staff leaves the group, a defined benefit plan will be a difficult sell to new management. They would also like to decrease their administrative expense. What are the options available and what is the time line associated with making these changes?

What are the administrative challenges if a 401(k) plan is modified to have the company stock fund designated as an ESOP in order to deduct the dividends. All contributions are participant directed.

1. Does ADP/ACP testing have to be done separately for the ESOP and non-ESOP based on where the contributions were initially deposited?

2. Are there distribution restrictions on the ESOP money? If so, can a participant just transfer their money out of the ESOP/stock fund and move it into the 401(k) investments in order to have access?

3. Does the dividend have to be counted towards the 402(g) limit if the participant elects to have the money deposited into the plan?

Are there other complications?

Thanks

I am going through the processing of my first potential hardship withdrawal. The employee is facing foreclosure.

I know one of the requirements is that she prove to me she's used all other available resources before applying for hardship....she is not eligible for any employee loans, she can't take a 401k loan (her balance is too low)....does she have to prove anything else?

Also, the foreclosure is on the house that she lives in with her boyfriend (they are the parents of a small child and have lived together for years). She can verify that this is her permanent residence but the mortgage is in his name only...is this a problem?

I'd appreciate any help....I'm learning the ropes here!

Hi, I'm currently a full time student at UC Riverside in California. I'm only 19 and am planning to begin investing soon. I'm still looking into options for long term investments and have decided that I will be opening a Roth IRA to begin with. I've been looking around for investment firms to open it with, any good ideas?

Also, I am curious as to how my account will gain interest? When I invest my max. of $2,000 annually, $3,000 starting next year, does it accumulate in the IRA and gain interest in itself. What I'm asking is, is the Roth IRA an actual account that pays interest? Or are my annual deposits going into CDs, stocks, mutual funds, etc. that are under the IRA? This is where my confusion is. When I deposit $2,000 into my IRA, do I have a choice as to where it is going to be invested? Thank you for reading this post and if you have any information or advice for a young, new investor, please contact me at MGutie3957@aol.com.

We have a client that set up a "cafeteria Plan" for 2000, which consists of premium coversion, med reimbursement and deendant care reimbursement.

The only portion they have utilized so far is the premium only portion.

I have only done 5500s for premium only plans, ie page 1 5500 and Schedule F.

Would the filing requirements be the same?

Do you think there are some serious fiduciary problems with the following? An employer requires employees who invest their 401(k) deferrals into employer stock must hold that stock for three years before they can sell? Just doesn't smell right to me.

I have a cross-tested money purchase plan with quarterly allocations. Contributions are 5% of aggregate compensation for employees employed on the last day of each quarter; these are then allocated on age-weighted basis.

The key individual takes quarterly compensation of $32,500. However, in the second quarter he received a $68,000 bonus, which he won't receive in quarters 3 and 4. 1.401(a)(17)-1(B)(3)(iii)(A) seems to indicate that I can't consider more than $42,500 per quarter. As a result, he will get less for the year with the quarterly allocations than he would have with an annual allocation.

Am I reading the reg correctly? The result makes no sense to me.

We have found that TPAs have differing interpretations regarding which divisor to use under the new 401(a)(9) regs. Some say you use the divisor from the MDIB table based only on the participant's age if the beneficiary is not more than 10 years younger (beneficiary in this case is three years older). Some others say you should take the divisor from the Sec. 72 joint annuity tables based on the beneficiary's age and the participant's age less 10 years. Who is right? Any clarification on this would be greatly appreciated.