We represent a client that is a U.S. based subsidiary of an international holding company. the US company also has several subsidiaries. The US company currently sponsors a non-qualified deferred compensation plan. They would like to expand the scope of the plan and allow some executives from other subsidiaries in to the plan.

What issues does this raise in light of the fact that the contolled group rules in the code are not applicable?

Can this be as simple as amending the plan so that it is open to the executives of the other companies?

any information would be helpful.

Here is situation. Account owner of Traditional IRA dies after required beginning date (80 years of age), December 4, 2000. Two sons are joint beneficiaries, 50% each. They would like to separate the IRAs into two IRAs for several reasons including to give flexibility of one to take cash and other to get stretch. Also if the IRAs are able to be separated, do they each use own life expectancy or the life expectancy of the older of the two sons?

I made excess Roth-IRA contributions for 1998, 1999 & 2000 because I don't have "compensation" in these years. Here is how I did:

For 1998 tax year-I contributed $2000 in 2/99.

For 1999 tax year-I contributed $2000 in 2/99.

For 2000 tax year-I contributed $2000 in 2/00.

In 2/00, I found the mistake and withdraw all excess contribution plus income earned on the excess contributions. I reporated Form 5329 to 1998 and 1999 to pay 6% excise tax for 1998's excess. I also reported $322.00 interest income in 1999 tax returns for the earnings on the exess. In 2001, I received a Form 1099-R indicated that Total distributions are $7942 and taxable amounts are $6016. Is this correct? I thought I only need to report 10%penalty and as taxable income on 1998's $2000 plus $1942 earnings (total around $3942)? Should I deducted the $322.00 earnings that I have already included in 1999 income tax return? Please help!

Now the prospect in my earlier post wants the cross tested employer contribution to be in an existing 403(B) plan, or plans. Are the employer contribution non-discrimination testing rules the same for a 403(B) plan that doesn't satisfy the 403(B) safe harbor nondiscrimination rules? Admittedly, I haven't researched this yet. Anyone done this? Are the 403(B) deferrals included in an average benefits test in the same manner as a cross tested DC 401(a)(4) plan with a 401(k) provision if rate groups are not all at 70%?

Are the testing aggregation rules the same for commonly controlled organizations if such organizations are deemed to be under common control? I'm not asking about how the controlled groups are established, just if they are deemed controlled, are they subject to aggregation for the average benefit test component (if there is one) in the same manner as a plan tested under 401(a)(4)?

The one I'm dealing with has maybe 5 pseudo-related organizations, so I'm trying to figure out the "what if's".

An employee is covered as a dependent under his spouse's group health plan. He now wants to switch to his own employer's group health plan. Can he do so (and add his wife as a dependent) without any change in status other than dissatisfaction with wife's insurance? The example in the Sec. 125 regulation refers to different plan years for the spousal and employee plans - is this a prerequisite for the change??

I am a new york resident. If I become pregnant before my cobra expires (18 months), can I extend cobra coverage for a further period of time?

If a QDRO is established for the alternate payee of a participant in a 401(k) plan, does the participant's "amount available amount for hardship" from Salary Deferrals get prorated so that the Alternate Payee now acquires the right to a hardship distribution?

I have a 401(k) plan with 4 participants. 3 of the participants defer 15%, and the 4th defers 12%. The plan passes the 415 limits, but fails the 404 limits (since deferrals are not included in comp for 404 purposes). How should I correct this? Should I have deferrals returned to the participant with the most deferrals or the participants with the highest deferral percentage (15%)?

Terminating an ESPP - -

The plan provides that the Board may terminate immediately. I believe you need a Board resolution and notice to particpants to terminate the plan. Are there other issues I am overlooking for terminating the ESPP? Any securities issues?

Is my understanding correct - I can use either current or prior year testing for tests I am now running for 12/31/00.

And I have until the end of the GUST remedial amendment period (ie. 12/31/01) to make a commitment to which way I do testing in the future? For example is it ok to use prior year data for 12/31/00 and switch to current 12/31/01? Or current for 12/31/00 and prior for 12/31/01?

However, if I want to make a qnec for 12/31/00 I must use current data right?

Many thanks for clarification!

I have a client that wants a Quantech statement that lists all transactions by date within a time period. Does anyone have a Crystal statement that is similar to a bank statement?

Can a cafeteria plan provide that if the employee does not use up his beneifts by the end of the year, a contribution for the unused portion will be put into a non-Title 403(B) plan?

Can employer contributions be made to a non-Title I 403(B) plan if the employer contributions are not in the form of matching contributions?

How do companies protect executives in there NQDC plans? Any ideas on hot topics etc?

Privately traded company has an ESOP. Distributions are of course, subject to the put requirement in 409(h). Company is being purchased by a publicly traded company. Net result after transaction closes is that the ESOP will hold shares of a publicly traded company. Put option no longer relevant because shares are "readily tradable on an established market". Query: For the first 12 months following the sale, publicly traded stock will be "restricted" under the securities laws and cannot be sold in the public market. After that, stock is freely tradable. Are the shares subject to a "put" whicle they are restricted?

Thanks.

What is the correction for a SAR-SEP that fails the 50% participation test? Seems to me that it is just not a qualified arrangement and all contributions for all participants are taxable.

Then correction. Just treat as an "ADP" failure? Refund by 3/15, include in 2000 compensation and report on 1099-R in 2001(Prior code)?

Or are amended W-2s required? Then earnings are taxed how?

We have a client that has received a DOL audit notice for its defined benefit plan. The client converted the plan from a traditional defined benefit plan to a cash balance plan last year. Does anyone have any experience with DOL audits of converted cash balance plans, and ideas as to what type of unique cash balance plan issues the DOL is likely to focus on in such audits?

FYI - We're aware of the guidance that the DOL has issued on this issue (e.g., (1) the preamble to the final summary plan description regulaion, issued on 11/21/2000, that addresses issues concerning SPDs and cash balance plans and (2) the PWBA's Q&As re: cash balance plans from November 1999).

Thanks for any insights!!

If the correction under an IRS correction program is for the plan sponsor to make a QNEC contribution (for example, a failed ADP tested not corrected by the end of the following plan year), but the plan document does not provide for QNEC contributions, must the plan document be amended before the correcting QNEC contributions can be made?

If a plan sponsor maintains a pooled account as one of their investment options, can the expenses associated with the pooled account option be taken from the participant’s account balances pro-rata (provided the plan document allows it), or must the expenses be paid by the employer?

It is my understanding that corrective distributions of excess contributions and excess aggregate contributions are treated as "distributions" for purposes of determining top heavy status. My basis for including is that such corrective distributions would be considered annual additions.

It has been presented to me that such distributions should not be considered distributions for top heavy purposes? Is there a solid basis for this point of view?