Anyone know of any cases in which TPA was held liable for errors in administration of a qualified plan such that the TPA was held to foot the bill for IRS correction?

Employer has a leveraged ESOP and allocates shares held in the suspense account as the loan is repaid. Employer has a chance to buy employer stock at an arms length transaction, and wants to loan money to the ESOP and have the ESOP buy the stock. So now we would have two loans and two allocations every year. However, the employer wants to keep the amount of shares allocated to participants at the same rate as before the second loan. Can this be done? If the employer were in financial difficulty, there are some PLRs that permit the employer to use the second loan to pay off the first loan as it come due, but not count such repayments for the purpose of determining the amounts to be allocated. But in this case, the employer is not in financial difficulty. Can this same approach be used?

A person is born in 1916 and retired in 1999.

It appears that this person was not required to receive a pension at 70 1/2, since she was over 70 when this became law. I believe this became effective 1/1/88 or 1/1/89, as part of either TRA '86, OBRA '87 or ADEA.

However, wouldn't the plan be required to provide this person with a suspension of benefits notice? I am not sure when this became effective, but even if it became effective say 1/1/88, and she was well over 65 at this time, it would appear that they s/ provide the notice then.

The plan does notprovide for an actuarial increase to the pension for working past age 65 (NRD).

Any comments?

A person is in the second year of taking penalty free pre 59 1/2 substantially equal payments from his IRA. He wants more money and wants to know if he can take advantage of other penalty free exceptions such as withdrawals for education or first time home buyer fTwprom this same IRA?

We just took over a 401(k) plan. The plan is made up of a controlled group of corporations. The prior administator was filing a separate 5500 for each member of the group. I have never seen a situation like this before. How do I correct it?

Any input is appreciated.

Do new small plan audit rules apply to plans that file a Form 5500-EZ?

Is anyone aware of automated or semi-automated software for preparing benefits communications information (e.g. SPDs and other employee communications)? I have a client who is a TPA and is interested in beginning to provide communications.

A participant elects $2000 in a medical FSA at the beginning of the plan year. He claims expenses in excess of the $2000 within the first month of the plan year. The next month, he goes on FMLA. He revokes his election as his FMLA is an allowable family status change. When he comes back from leave, he does not elect to resume his medical FSA contributions. Does the company have any recourse, since they are out the bulk of the $2000? I can't find anything on this except that the company has to allow him to come back in. What if he chooses not to come back in? Can the company make him?

A highly compensated employee who is at the Section 415 limit and has reached normal retirement age would like to transfer the lump sum equivalent of his accrued benefit into a new money purchase plan being established for all of the employees. The existing plan allows for in-service distributions on or after NRA. Assets under the plan are sufficient enough to allow the distribution. The defined benefit plan may be terminated after the transfer or before the transfer, if possible. The intent is for the

distribution to be a transfer and not a rollover. The defined benefit plan is not subject to PBGC rules.

I have a client with an underfunded DB plan. The oldest HCE wants to retire and take a lump sum. After explaining the restriction he is willing to take payment of the unrestricted amount.What election forms does he have to be given? Is he in fact electing a single-life annuity? He would have taken a lump sum if it could have been paid.The plan's normal form of benefit is 10c&l,plus there's the QJSA requirement.What happens if he dies?

Can a school with a cafeteria benefits plan require some employees to purchase (expensive) health insurance through the school, while others (covered by spouses' health insurance) can opt out, or must it let all employees choose where to get their health insurance?

Here is my situation: I have a client who has sold his business and wants to terminate his Profit Sharing Plan. Ten years ago, his father passed away and he has been receiving minimum distributions along with his brothers ever since. There is still a significant amount of money in the father's account. What other options are available besides a taxable distribution of the account to the three sons? Any info will be GREATLY appreciated.

After several contacts with IRA specialists at the IRS, I have been advised I will owe 10% additional tax on a non qualified distribution that I have considered. In 1998, I converted from IRA to a Roth. I have not had any other Roth activity since and have included 25% of the conversion in my 1998,1999,2000 and 2001 taxable income. I was over 60 years old at the time of conversion. I was considering a partial distribution of the conversion amount(say 25%) in 2001 because it would not result in any incremental taxable income. Further, I assumed that being over 60 years old was valid exception to the 10% additional tax rule under section 72(t). I can not find any clear support in tax publications for the IRS advice I have received. Anyone have actual experience on this issue?

We have an employee out on military leave for a period of 11 months. Her family has not made payment for dependent coverage since December. Is there any law that requires us to provide coverage at no cost to her family during her leave. COBRA notice was sent and no response was ever given.

We have a client with a 9/30 yearend, on corporate extension, must make the er match by 6/15. Year ending testing required returns for HC to pass ADP/ACP tests based on a 100% employer match. Now the owner has decided to add an additional $25,000 to the original match amount. (Now, 117% match!) With this addition, again not passing ADP/ACP so we will forfeit the additional match %'s for the HC's (too bad) but, additionally this extra money is causing about 10 415 violations in the NHC's. Don't we need to return the deferral money first to pass 415? Then I expect we will have more kicking over 25% once the first wave is cleared. Any suggestions? I told the owner he would have been better off paying himself a $25k bonus!

An employee, participating in a cash or deferred arrangement ( 401(k))that is part of a profit sharing plan takes a hardship withdrawal and is suspended from making contributions for 12 months. Additionally, if the cited employee is also making deferred contributions to a medical reimbursement account, it is my understanding that deferred contributions to medical reimbursement account must be suspended as well. Is this correct??

What kind of recent experiences have you had with a

Department of Labor ESOP Examination? A client is

about to undergo an ESOP examination, and we would

appreciate information from anyone who has recently been through the examination process.

I admit that I have not read the Supreme Court's decision to deny cert. in the Erie County case. However, I haven't been able to figure out why Erie County wasn't rendered moot by the Supreme Court's decision in Kimel v. Florida Board of Regents, 120 S. Ct. 631 (2000). Kimel affirmed an Eleventh Circuit Court of Appeals decision finding that the State of Florida had immunity from suit by a group of university librarians claiming violation of the Age Discrimination in Employment Act (ADEA). How is the Retirees Association able to able to maintain its ADEA action against Erie County?

Itzhak Perlman

Article from the Houston Chronicle On Nov. 18, 1995

Itzhak Perlman, the violinist, came on stage to give a concert at Avery Fisher Hall at Lincoln Center in New York City. If you have ever been to a Perlman concert, you know that getting on stage is no small achievement for him. He was stricken with polio as a child, and so he has braces on both legs and walks with the aid of two crutches. To see him walk across the stage one step at a time, painfully and slowly, is an unforgettable sight. He walks painfully, yet majestically, until he reaches his chair. Then he sits down, slowly, puts his crutches on the floor, undoes the clasps on his legs, tucks one foot back and extends the other foot forward. Then he bends down and picks up the violin, puts it under his chin, nods to the conductor and proceeds to play.

By now, the audience is used to this ritual. They sit quietly while he makes his way across the stage to his chair. They remain reverently silent while he undoes the clasps on his legs. They wait until he is ready to play.

But this time, something went wrong. Just as he finished the first few bars, one of the strings on his violin broke. You could hear it snap - it went off like gunfire across the room. There was no mistaking what that sound meant. There was no mistaking what he had to do. People who were there that night thought to themselves: "We figured that he would have to get up, put on the clasps again, pick up the crutches and limp his way off stage - to either find another violin or else find another string for this one."

But he didn't. Instead, he waited a moment, closed his eyes then signaled the conductor to begin again. The orchestra began, and he played from where he had left off. And he played with such passion and such power and such purity as they had never heard before.

Of course, anyone knows that it is impossible to play a symphonic work with just three strings. I know that, and you know that, but that night Itzhak Perlman refused to know that. You could see him modulating, changing, recomposing the piece in his head. At one point, it sounded like he was de-tuning the strings to get new sounds from them that they had never made before.

When he finished, there was an awesome silence in the room. And then people rose and cheered. There was an extraordinary outburst of applause from every corner of the auditorium. We were all on our feet, screaming and cheering, doing everything we could to show how much we appreciated what he had done. He smiled, wiped the sweat from this brow, raised his bow to quiet us, and then he said, not boastfully, but in a quiet, pensive, reverent tone, "You know, sometimes it is the artist's task to find out how much music you can still make with what you have left."

What a powerful line that is. It has stayed in my mind ever since I heard it. And who knows? Perhaps that is the way of life - not just for artists but for all of us. Here is a man who has prepared all his life to make music on a violin of four strings, who, all of a sudden, in the middle of a concert, finds himself with only three strings. So he makes music with three strings, and the music he made that night with just three strings was more beautiful, more sacred, more memorable, than any that he had ever made before, when he had four strings.

So, perhaps our task in this shaky, fast-changing, bewildering world in which we live is to make music, at first with all that we have, and then, when that is no longer possible, to make music with what we have left.

Current employee will become a non-employee consultant as of 7/1. He will cease to be eligible as a group health plan participant, but he'll have COBRA rights. Under the cafeteria plan rules, can he prepay his COBRA premiums on a pre-tax basis from his final paycheck? I think this is permissible, but isn't he limited to pre-tax deductions to pay for coverage during the current plan year?