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.

Can a Plan Sponsor that sponsors a 403(B) plan and a 401(k) plan, merge the 403(B) plan with the 401(k) plan in light of EGGTRA?

Assuming they want to terminate the 403(B) plan, what are the main issues to consider?

Can the participants be directed to roll their 403(B) money into the 401(K) plan in light of EGGTRA? Will the termination constitute a distributable event?

Can a Plan Sponsor that sponsors a 403(B) plan and a 401(k) plan, merge the 403(B) plan with the 401(k) plan in light of EGGTRA?

Assuming they want to terminate the 403(B) plan, what are the main issues to consider?

Can the participants be directed to roll their 403(B) money into the 401(K) plan in light of EGGTRA? Will the termination constitute a distributable event?

Situation: Client maintains a 401(k) & a 403(B) plan. They are considering terminating the 403(B) plan and then allowing participants to roll their distributions into their 401(k).

If a participant, with a 403(B) rollover in his account, terminates from the 401(k) plan, can his entire account be subject to 10 year forward averaging?

Does anyone know a good source for information on the applicability of the provisions of EGTRRA '01 to church plans? For example, I recently was informed that the new vesting schedule for matching contributions does not apply to church plans, but none of the published EGTRRA overviews that I have seen thus far make this distinction.

My thanks in advance to anyone who can assist me in this regard.

I have an underfunded DB plan. An HCE wants to retire and take a lump sum. The plan does not meet any of the exeptions of 1.401(a)(4)-5(B)(3)(iv). The HCE's benefits are as follows:

annual benefit=$100,000 single life annuity

actuarial equivalent PVAB=$1,000,000

417(e) PVAB=$1,250,000

everything is within the 415 limits

I told him that he'have to post a bond or put up security based on the difference between his lump sum and his annual benefit,i.e.,$1,150,000. He went to another actuary who told him the bond/security only had to be baesd on the difference between the PVABs,only $250,000.This is a new approach. Anyone have any comments?

Hypothetical Situation: A 401(k) participant has contributed $1000 to the Plan in the year since he was hired. The company contributed a match of $500. The participant has a qualifying financial hardship. The hardship regs say he can only withdraw the money he has contributed; he cannot withdraw earnings on that money. But what if his earnings were negative? For example, what if his $1000 is now worth $900? Can he withdraw the $1000 or can he only withdraw $900?

Is anyone selling indemnity insurance for deferred compensation plans? AIG? Lloyds?

Has there been any discussion regarding the application of Employer Match to the "Catch-UP" contributions authorized in EGTRRA? Some promotional information from some benefit/HR firms, have indicated that this is something employers should investigate. Any thoughts regarding how this will affect testing?

Client A has a paired, standardized MP and PS plan with a year end of 9/30. Sponsor is C Corp. Only one employee and one participant. Sponsor has already funded $30K of current year contribution. Sponsor now wants to install a DB plan for current year to make a $90K contribution. However, there's no way to take back the $30K contribution to the DC plan, precluding the $90K contribution.

If the corporation does not take as a deduction the $30K contribution to the DC plans, the deductible $90K contribution to the DB plan is possible. Sponsor is subject to excise tax for the $30K to DC plan--and this is a small price to pay for Sponsor to get an "extra" $60K of deduction. But this excise tax continues each and every subsequent plan year because reoccurring DB contribution never allows for an allocation of the $30K DC contribution.

Of the facts above I am certain. Now here are my questions. If we terminate the DC Plans and distributes assets, what happens to the $30K? It can't go back to the Corp presumably. Can it get rolled over to the participant? Does the Excise Tax problem simply go away, it being a one time event? So pretty good to me!

Does anyone have experience with this? Can you give me a siting?

Thanks very much.

I know that the determination of the 20% amount is as of the beginning of the year. When answering the question "Did the plan at any time hold 20% or more of its assets in any single security. . ." do I include holdings throughout the year? For example, I determine the 20% amount to be $100,000. On the first day, the plan owns $200,000 of IBM stock. During the year, the IBM stock is sold for $200,000, Exxon stock is purchased for $200,000, later sold for $200,000, and McDonald's stock is purchased for $200,000. Do I report $200,000 as of the beginning of the year or $600,000 for each security held during the year?

Thanks in advance for your help!

Myrtle Beach South Carolina

Southern Users Group Meeting

Fri Aug 17,2001

8:45 - 10:15 Lorraine Dorsa will talk about impact of EGTRRA

10:45-12 Miscelaneous, including impact of EGTRRA on Relius

1:15-2:45 Tom Poje - Nondiscrim/crosstested topics

3:15 - 4:30 Modifying Crystal Reports - SungardCorbel representative.

nonmembers welcome, for more details (costs,etc) contact

Maggi Heffernan

(770) 641-1429

Under a SAR SEP Plan, Can a participant that is still contributing to their SAR SEP and an Employer that makes a matching contribution once a year to their SAR SEP transfer their money out of the SAR SEP to a Traditional IRA and if so, can they only take out what they have contributed or all of the monies? IS there a minimum amount that has to be left in the account?

Does anyone know if you can specify how you want the system to sort your data? I haven't found much help on this nor does it seem that we have much choice.

Specifically, I have a 1000 life case that I need to sort by location. We have imported the locations in under the division thinking we could sort by division. I have been unsuccessful so far. Does anyone have any ideas?? :confused:

In 1970 a PERS launched a variable annuity. Up until that time it offered only a fixed annuity guaranteeing 4% per year.

The number of variable units one accumulates is subject to an "explosion factor" of 4% per year in order to keep pace with the 4% fixed interest option.

Upon retirement one may exchange variable units for fixed dollars.

The result is, at the outset, a measureably larger fixed annuity income than what would otherwise be generated if the participant remained in the variable account. Based on past performance of the variable account, the fixed annuity would yield more income for about the first 8 years of retirement. The fixed annuity uses an AIR of 7% and currently credits the participant's account at the rate of 8.25% per year.

Is the above standard practice? Please elaborate.

Best wishes,

Joel L. Frank

Has anyone seen a plan that allows for the continuation of deferrals to the plan after a hardship distribution has been made? I recently saw a plan document that clearly allows for the continuation of deferrals. This is contrary to what I have seen in the past. I found the following in PPC's guide to employee benefit plans.

"A participant is prohibited from making elective contributions after receiving a hardship withdrawal if the plan has adopted the "deemed necessary" rules of Reg 1.401(k)-1(d)(2)(iv)(B). If the plan has not adopted this rule, the participant may continue making elective contributions. The auditor must review the plan agreement to determine if elective contributions are allowed after hardship withdrawals. If the deemed necessary rules have not been adopted, additional responsibilities related to hardship withdrawals are placed on the plan administrator, such as determining if the participant has other resources available before approving the hardship withdrawal."

The plan document clearly allows the continuation of deferrals. It seems that the IRS would not have issued a determination letter if this was not allowed. Any thoughts?

Could an employer establish a Health Care FSA and make only matching contributions ? For example: Employee A contributes $500 to the FSA Employer matches 2:1 or $1000. Employee B contributes less or nothing and receives the same proportionate match.

Is this OK. Employer wants to help those that need additional funds to pay for eligible expenses, but only if the EE will take some initiative/responsibility and contribute also.

If not OK. Ant other ideas.

It was my understanding that fully-insured medical plans are governed by State Law ... and that self-insured medical plans are governed by ERISA.

Can a participant (whose medical claim is denied by his employer's "self-insured medical plan") ever sue his employer/ plan sponsor in State Court? ... or is he only allowed to sue in Federal Court ?