Can a plan pay the premium for the ERISA required fidelity bond? I have reviewed the recent DOL guidance, and while it doesn't appear to mention bond premiums, it seems that the premiums would be a "fiduciary" expense which can be paid from the plan.

I have a profit sharing plan that has not made a contribution in about 3 years. In 1999 line 6, BOY participants of the 5500 was 109. Line 7f of the same 5500 was 148. I am assuming that 148 is my BOY, for the 2000 form 5500. Up until the new forms this client always filed the ez form because they were always under 100 participants.

I am correct that for the 2000 5500 this client needs an audit report??

Thanks

susan

I was wondering if anyone could tell me their practices with respect to how frequently they value stock under an executive comp plan? I have an ISO plan and a non-qualified stock option plan (not a 423 plan) and regularly have annual valuations by an outside appraiser conducted to determine the fair market value of stock issued under these plans. With respect to ISOs, I know the stock must be granted at its fair market value on the date of grant. In theory, if I had a number of corporate events occur after I valued my stock and I granted additional ISOs using a value I ascertained 6 months ago during my annual valuation, aren't I in danger of having my ISOs recharacterized as NQSOs? But my main question is how often are people out there valuing their stocks? Annually? Quarterly? Thanks so much everyone! (I posted this message on the deferred comp board as well).

I was wondering if anyone could tell me their practices with respect to how frequently they value stock under an executive comp plan? I have an ISO plan and a non-qualified stock option plan (not a 423 plan) and regularly have annual valuations by an outside appraiser conducted to determine the fair market value of stock issued under these plans. With respect to ISOs, I know the stock must be granted at its fair market value on the date of grant. In theory, if I had a number of corporate events occur after I valued my stock and I granted additional ISOs using a value I ascertained 6 months ago during my annual valuation, aren't I in danger of having my ISOs recharacterized as NQSOs? But my main question is how often are people out there valuing their stocks? Annually? Quarterly? Thanks so much everyone!

Rev. Proc. 2000-27 provides that the remedial amendment period for a government plan expires as follows:

.01 The remedial amendment period for governmental plans, as defined in sec. 414(d), is extended to the later of (i) the last day of the first plan year beginning on or after January 1, 2001, or (ii) the last day of the first plan year beginning on or after the "2000 legislative date" (that is, the 90th day after the opening of the first legislative session beginning after December 31, 1999, of the governing body with authority to amend the plan, if that body does not meet continuously).

Technically the "2000 legislative date" would allow calendar year state plans to amend their plan no later than the end of 2002 if a legislature did not meet in 2000, but met in 2001. However, I do not know how that exception has been interpreted. For example, is it broadly interpreted to allow an extended date for all plans created by state law in which the state legislature does not meet continuously. Or is there also a requirement that in order for this exception to apply that the state plan must be unable to be amended except by act of the legislature?

Would it matter if the state agency that has administers the plan has the express or implied authority to amend the plan in matters that don't affect substantive rights of participants?

I need to file an amended return for a 12/31/00 return. Anyone know how long it takes the PWBA to process these returns or how I can "confirm" the processing of the original as per the instructions?

If I missed an instruction somewhere, let me know that, too!

Thanks.

Ervin Barham

What is a person's average comp as of 1/1/2002 in a calendar plan, when the person has always earned $200,000? Does the new limit apply to past years? I've read a couple of arguments that it should be applied retroactively, but IRS' guidance is needed.

Any recent developments, or indication of whether or when guidance will be issued?

Employer sponsors a profit sharing / 401(k) plan. Employer currently contributes 5% of pay to all eligible employees and an additional 5% of pay on compensation that exceeds the social security wage base.

Employer is considering contributing $40,000 for employees who also are 5% owners but otherwise not changing the allocation formula. General 401(a)(4) test on a benefits (age-weighted) basis is run without imputing permitted disparity and passes easily. Because all NHCEs receive at least a 5% allocation and no HCEs receive an allocation greater than 20% when measured on a contributions basis, the new cross-testing regulations don't pose a problem.

Employer is also considering fully vested the contribution (and meeting other requirements of qualified nonelective contributions) and using it to satisfy the 3% of pay employer nonmatching option for a 401(k) safe harbor so that no ADP testing is required. My question (finally!) is whether this is permitted for contributions that are allocated using the social security wage base as the integration level if the actual 401(a)(4) testing does not impute permitted disparity.

I heard the IRS is either significantly reducing or eliminating user fees effective 2002!

Where can I find the IRS announcement/notice to that effect?

Here's the situation: Company A adopts a new pension plan at the end of 2000 with retroactive effect to January 1, 2000. Company A funds the plan within the prescribed time after the end of 2000. Company A does not file the first 5500 for the new plan until the 2001 plan year even though the plan was effective in 2000 and was funded.

Company A advances several arguments in favor of this approach: B5 accounting firm said it was OK and we really really don't want to file for 2000; it's OK to combine what would nominally be the first year's filing with the second year's filing as long as the first year is "really" only a couple of months; or the plan is deemed to have been established on the last day of 2000 because that was technically when it was funded.

None of these seem particularly satisfying, mainly because there doesn't appear to be any authority for any of them. It appears that if you adopt a plan, whether on December 31, 2000 or January 1, 2000, it's up and running for 2000 and you have a potential filing obligation even if the plan was not actually funded until the first couple of months of 2001.

Anyone have any input on this? Is it DFVC time?

I hope this is the correct forum to post this question.

I am currently 44 years old and my employer is getting rid of our pension plan. I have been told I can get $1,105.23 at age 65. However, I can elect to receive this as a lump sum of approx. $29,400 now.

My question is, how can I verify the lump sum is correct? I understand that I have to use the plan's interest rate (they tell me it is 8%). Also, that I have to use the mortality factor. I am lost.

I am not completely dumb though. I do understand present values. I assumed that I could calculate the lump sum I was eligible to receive at age 65, and then discount it back to my age now (21 years) using the same 8% rate. Is this correct?

Help.:confused:

What have others (brokers, employers, TPA's) seen in the way of reinsurers' behavior in this ever-tightening market?

We have seen lasers imposed on individuals up to four months after the plan effective date, claims denied because someone was diagnosed and treated (not hospitalized) for an "alarming" diagnosis in the final days of a prior plan year. If a TPA does not have a report that summarizes EVERYTHING that may be "in the hopper" prior ro a carrier change, the employer cannot disclose, but the reinsurer still lasers or denies coverage for non-disclosure.

Employer groups and their TPA's are being held to a standard of PERFECT knowledge, whether it is reasonable or not. Carriers are, it seems, looking for ways to deny claims the moment they appear! "Rules" that were followed only loosly in the past are being adhered to tightly, without any prior notice. New requirements appear out of nowhere! Groups are being completely re-underwritten based on a full 12 months of claim data, and often the final terms are not available until well after the employer group has either lost their prior coverage or given a termination notice!

We understand that carriers and reinsurers are still recovering from two or three very bad years, but the climate seems to be getting hostile! Please tell me we aren't the only ones experiencing this!

A doctor client will soon be creating a new service entity (Service Corp) with 5 other doctors. Each of the doctors will continue to maintain his own professional corporation (PC), and each PC will employ one or more nurses. The Service Corp will employ about 12 administrative, billing and shared employees. We clearly will have an affiliated service group consisting of the Service Corp and the 6 PCs. My question relates to the transition relief under 410(B)(6)© and 401(a)(26)(F). Will this be treated as an "acquisition or disposition" giving rise to the transition relief? If so, will the transition period begin on the date the doctors acquire their interests in the Service Corp or the date on which they are "regularly associated with the Service Corp in performing services for third persons?

We have a plan sponsor who wanted to sell and reallocate participant account balances under $5k to active plan participants because they can not be located. What guidance can I find to let this guy know that this is not a possibility. I discussed forcing them out of the plan, and escheating those balances to the state if we cannot locate the participant. Can anyone think of anywhere I could look on the web to see this in writing, or have some insight on this issue. Thanks,

Jim J.

I'm looking for information on how to add plan specific links to the Quantech Web Module 6.0.

I want to list link(s) specific to the plan that is being accessed.

Any info is greatly appreciated

Thanks

Our 401(k) plan includes a discretionary match, made at the end of the year in company stock. Not surprisingly, participants cannot diversify out of that fund until they are 55 and 100% vested (5 years of service). But the part that I find odd is that the diversification rules apply even after termination of employment.

I don't have any reason to think this is not legal, but my question is whether this is unusual, common or somewhere in between.

RCK

I am looking at using a VEBA to base health benefits out of for an association. The people I am working with indicate that there is no tail end exposure for claims run off since there is an insurance carrier that is insuring the back end.

I am simply concerned that there may be some liability for us since this is effectively a self funded plan. However, as I understand it, I shouldn't be concerned due to the insurance company on the back end.

Any thoughts on this?

Thanks

I was reading an article in the CPA Journal today that contained the following statement:

"The DOL has stated that a plan sponsor will not be liable for the advice provided by a third-party investment advisor if the sponsor acts prudently

in selecting and monitoring the advisor, the advisor is licensed to provide advice, and the sponsor obtains written documentation that the advisor will be acting as a fiduciary."

While I think this is a good statement of the law, I don't know of any formal DOL guidance where this was explicitly stated. Could someone point me to where DOL may have said this? Could it relate to the informal statements made by Olena Berg a few years ago?

Thanks!

card

My understanding on the new EGTRRA rules on automatic distributions indicates that an IRA is the default choice for distribution amounts over $1,000, but under $5,000. However, the fiduciary has liability for this IRA, until the earlier of when the participant moves the money to a different IRA, or 1 year after the date the money goes into the IRA.

A question I have is that if the employer has fiduciary liability for a year, is this still considered a distribution at the time the money goes into this IRA? It would seem odd that the employer can be held liable for amounts that are outside of a Plan.

Also, consider the following scenario: A 401(k) plan has self-directed accounts, in which a participant has made investment elections, lets assume all of which would be considered aggressive investment decisions. This participant terminates with an account balance of $4,000. Plan document instructs the employer to pay out immediately. Paperwork is sent to the participant, who does nothing. Employer sets up an IRA and moves the money into that IRA. For the next year (unless the participant intervenes), employer has liability.

The problem I see with this scenario is that you go from a participant account in a plan in which the participant has made his own investment choices, to an IRA account where for up to a year, the money is invested at the employer's discretion. I realize that most employers will want to make this IRA investment choice prudently, but isn't the employer taking on liability that could otherwise be avoided if the money stayed in the Plan?

Any comments are appreciated.

Finally, am I correct in that these new automatic distribution rules are not effective for up to 3 years, until the Secratary of Labor issues final regs? If so, do you see a problem if an employer would in fact decide to follow them starting now?

Thanks

Our company is planning to offer VEBA benefits to its employees. Which are the existing VEBA trusts in Virginia and consultants/ Plan administrators whom I can turn to for advise in forming / subscribing to VEBA. P.S. We have around 700 employees.

Thanks in advance for your advise.