Can an employer allow a participant to have a Self-Directed account "frozen" to any new money, and not allow the rest of the employees to have one? Any cite?

My wife is a nurse and was injuried at work. We have been paying our health insurance to the hospital since June of 2000. As of April 2001 my wife received a certified letter terminating her employment with the hospital. We then received the forms for Cobra. On the form is a termination date. We contacted the hospital and they informed us that they would input the date. They said our Cobra payments started in June 2000 and will be ending November of 2001. My understanding is that Cobra starts after termination, not unable to work under Doctors orders. We have never signed anything from the hospital pertaining to Cobra. Do we have grounds to fight this?

County hospital authority had a defined benefit plan that was convered into a cash balance pension plan many years ago. Effective 1/1/99, assets of cash balance plan were transferred to new profit sharing plan. Accounts in cash balance plan were fully vested, but no annuities were purchased to fund benefits and participants were not given an election to receive a distribution from the cash balance plan. Instead, assets were transferred "en masse" to trustee of PSP plan. The old cash balance assets in the PSP are not subject to payment in the form of required survivor annuities. PSP doesn't even mention the old cash balance plan. We were retained to update PSP for GUST. However, I am reluctant to do so because I do not know "how" the cash balance assets were transferred to the PSP in the first place. I know the cash balance plan was not subject to PBGC standard termination filing, but I didn't think you could simply turn a defined benefit plan into a defined contribution plan. Certainly can't do that with a single employer plan. Can one argue that cash balance plan was merged into the PSP? That argument would not "work" for non government plan because a merger of a DB plan into a DC plan is a de facto termination of the DB plan and when a DB plan is terminated (de facto or "regular") one must make distributions or purchase annuities to provide the distributions. Any ideas on the authority for transferring the assets from the cash balance plan to the PSP? Authority for elimininating the annuity form of distribution?

Does anybody know the IRS position as to whether a retired "disassociated priest" (for example, one who left the church with permission to get married) can use the parsonage allowance exclusion under Code 107?

I know that "retired ministers" are eligible for the parsonage allowance exclusion under Code 107; however, I could not find in any of my research whether the term "retired minister" includes a disassociated priest. Would a disassociated priest be considered ineligible because he is no longer a "minister of the gospel" (i.e., he can no longer celebrate Mass or perform other "ordinary duties of a minister of the gospel")? Or would a disassociated priest be eligible for the exclusion because the parsonage allowance is paid as compensation for past services which were "ordinary duties of a minister of the gospel"?

Thanks in advance for any insights.

Strange, but true: Former HCE requested direct rollover distribution from plan to conduit IRA. Balance much > $5K. Check properly written and sent to custodian (small bank), but 6 months later not cashed. TPA cancels payment on stale check and reissues payable to custodian of IRA FBO Mr. HCE, as originally requested and remails. Check returned a month later by post office: Addressee unknown. (The custodian was aquired, changed names or went away -- we don't know.) Sent certified letters to former HCE asking what's up/what to do. Green cards come back, but no response. He's not missing, just not talking. (Probably just to mess with me.)

TPA says it's a taxable distribution because it missed the 60-day window on rollovers. Proposes to send 1099R for 2000 (date of original check) and put funds into plan's forfeiture account and offer to restore account if/when requested.

That seems wrong to me. Before you get to the question of whether 60-day limit applies to direct rollover, you have to decide if there has been a "distribution to the distributee". If not, there can't be taxable income and money should go back (or stay??) in former HCEs account and remain invested per his prior instructions, subject to plan rules, etc. I say there's been no distribution because (1) he didn't actually receive the money (check wasn't payable to him and he didn't receive it), (2) no constructive receipt (we can't make him take and he hasn't asked), and (3) no payment to/for his benefit or receipt by his agent or assignee, etc.

Problem: TPA has been using that procedure on NHCEs and is loath to change it now just because we noticed it on a much bigger amount.

If anyone's got some guidance here, please bring it on.

If an individual owns 2 corporations, can a qualified retirement plan be adopted for only one of the corporations?

I have a profit sharing plan which added a coda feature and an employer match provision to the plan effective 3/1/2000 (First day of Plan Year). This plan was top heavy for the 2000 Plan Year and is top heavy for 2001. The Company did not make any discretionary employer contributions last plan year and they did not for the 2001 plan year (2/28/01). The plan is already using a top heavy vesting schedule, and for the 2001 plan year refunds of excess contributions and excess aggregate contributons are required. Since the employer made matching contributions to the plan will they be required to make an additional top heavy contribution for the 2001 plan year???

If so, will I have to look at the matching percentages of all the non-key employees who received matching contributions?????

Assume a ERISA Welfare Plan sponsor does not revise its SPD and PLan to include the new claims procedures, etc. Assume the SPD is completely non-compliant. Moreover, assume the Plan never decides a benefit claim and always denies claims by default- (ie making no decision within the time periods set forth in the regulations).

What is the liability (other then paying benefits due and legal fees if a participant sues or if a participant requests and spd in writing and one is not provided as required)

I am trying to see what the motivation is for an employer to spend dollars to fix SPD and Plan documents if the risks are relatively small. Please comment on the risks.

Does anyone know if a plan is or is not allowed to designate different beneficiaries for different sources (1 beneficiary for 401(k) deferrals and a different beneficiary for profit sharing)? Any cite?

Hello, my husband has about $6000 sitting in a 401k plan from an employer he left 5 years ago (only was employed there for one year). We recently realized that we really need to start planning for our children's future college education (we have a 2 1/2 year old, a 10 month old, and new baby on the way, and we do plan on having more children later) Rather than dipping into our short term savings accounts to start college funds, we would prefer to roll the money over from the old 401K plan. My understanding is that in order to not pay a penalty, we would need to roll it over into an actual plan, not just invest in mutual funds. Any suggestions on a good plan to roll that 401K $ into for college savings? Also, we don't want the money in the kid's names because it could hurt their chances of receiving financial aid in the future.

Thanks for any feedback!

Interesting question for something just taken over. Plan starts in 1999 with short plan year. Deferrals and match are small with low participation (refunds made). No P/S made. Based on deferrals & match, plan would be top heavy. However, if full 3% top heavy is made only to the non-keys, this would make the plan non-top heavy. Since this is the first plan year, the P/S contribution should be counted.

The P/S contribution was not made within the 2000 plan year, so there are some corrections that have to be made.

Any thoughts as to whether the plan is top heavy for 1999?

Thanks!

Ervin Barham

Is anyone aware of a specific reg. or code which addresses "Layoffs" as either a separation from service or a distributable event? This is for a 401(k)/PS prototype plan with nonunion employees and the plan document does not specifically address the handling of layoffs.

Any insight would be appreciated. Thanks!

I am not familiar with 403(B)s...are there any GUST checklists out there specifically addressing required changes to 403(B)s?

I'd appreciate views on a tricky situation

Underfunded DB plan (85% CL basis) restricts HCEs from (unbonded/secured) lump sum distributions as required. Principal owner gets divorced. 100% of owner's benefits assigned to ex-spouse.

Is alternate payee's benefit subject to same lump sum restrictions as owner was?

Couple of questions here: Is the ex-spouse an HCE, and what role does the QDRO assignment play? If not for the QDRO, the plan would not have allowed unrestriced payment of lump sum.

Corp P (parent) owns 100% of Corp S (subsidiary), an obvious controlled group. Corp P has a retirement plan.... Corp S has no retirement plan. In which of the following type plans of Corp P may the Corp P's "plan document" exclude employees of Corp S from eligibility in P's plan ?

1) Standardized profit sharing plan

2) NonStandardized profit sharing plan

3) Standardized profit sharing plan -- with 401(k) feature

4) NonStandardized profit sharing plan - with 401(k) feature

I had heard that if I work for an employer for at least 5 years and retire anytime after age 60, I can keep COBRA until eligible for Medicare (age 65). True? If so, is it in writing anywhere so I can show my employer? Thanks.

Suppose an employee is hired January 1 and receives her first paycheck on January 15 for the period January 1 through January 12. Further, the employer offers the employee the option of paying for health insurance coverage with pre-tax dollars through a cafeteria plan. The employee has thirty (30) days from her date of hire to elect to participate in the plan. As the plan is currently administered, if our employee elects to pay for health insurance coverage with pre-tax dollars on January 20, the election is retroactively effective to January 1. The premium cost that should have been deducted from the employee's January 12 paycheck is spread over the employee's remaining paychecks during that same year.

Is there a constructive receipt problem? In other words, because under Proposed Regulation 1.125-1, Q&A-6, a salary reduction agreement must relate to compensation that has not been actually or constructively received by the participant and does not become currently available to the participant, since the participant's election is retroactive, is the participant in constructive receipt of the premiums that are used to pay for the retroactive coverage which were not deducted from her January 12 paycheck?

Can anybody tell me where I can get a copy of the 1983 Group Annuity Mortality Table 50% male 50% female. Prefferably on the web.

Thanks ina advance.

Anyone know if Lafayette Life Insurance Co. still sponsors a target benefit pension plan document?

Our firm, a TPA, has a large 401(k) Plan for a Plan Sponsor who has a high turnover rate. There are usually 800-1000 employment termination distributions each quarter. Terminated employees send us the Request for Withdrawal form, then we instruct the trustee to issue the check. The problem we are having is the volume of phone calls and correspondence in this process. Used to be, both our firm and the Plan Sponsor received hundreds of calls each quarter from people asking if we received their Request for Withdrawal form, then those same people would later call back to find out exactly when their check was going in the mail. We decided to acknowledge each Request for Withdrawal form by mail, and not accept phone calls asking if we received their form, Of course that now means we send out hundreds of acknowledgement letters. And people still call wanting to know if their check has been mailed, even though the acknowledgement letters tells them they should have it within 14 days.

There are root causes here that we as TPA can't do anything about, like the high turnover, and the young, transient workforce who for a variety of reasons are distrustful of the process when they leave the company. We were wondering how others out there handle this process. We have a website and an automated phone system and have tried to think how we could use that to help, but haven't come up with any brilliant ideas.