Could anyone advise me on the rules for disability and termination? I have an employer with a self-funded health plan that terminated an employee while he was on disability, reason unknown. Are there ERISA regs regarding this?

As an added complication, the claims processing company was never notified of any change in status. The SPD for this plan does not address this at all. A new SPD is being produced, and by coincidence one of the questions asked in that process was "Do you provide continuation of benefits during periods of leave, disability or layoff?" The answer was no.

Could the fact that policy was in place but not described in the existing SPD have any effect on the continuation of benefits?

Employer establishes a new 401(k) intending to be a Safe Harbor Plan effective 1-1-01. They distribute Notices in a timely manner and indicate the S-H contribution will be the 3% nonelective. It's now learned that their intent was, and the plan was written, to say the Basic Matching formula will be used.

Will the wrong information in the Notice preclude them from operating as S-H for the 1-1-01 plan year?

My client is purchasing a company that is a participant in a multiple employer 401(k) Plan in a stock deal. The selling company will cease to be a participant in the old plan as of the closing date. All employees will be re-hired under the new company and will participate in my client (the buyer's) 401(k) Plan. The transferring participants would like to roll over their new balances to the buyer plan but appear to be limited by 401(k) distribution rules because, although, the seller is discontinuing contributions in the old plan, it is not terminating this plan. Is there any way that monies can be removed from the multiple employer plan or do the participants have to wait for a distributable event?

I would appreciate any help as soon as possible.

Thanks.

What pricing would be charge to a client who refuses to authorize electronic participant transactions, such as loans,disbursements,and enrollments ?

Corporation A sponsors a 401(k) plan. Corporation B, a wholly-owned subsidiary of A, participates in the plan, along with several other subsidiaries of A. In 1999, Corporation A sells Corporation B to an unrelated purchaser. In connection with the sale, the parties agree to spinoff the assets of the 401(k) plan relating to B's employees to a new plan sponsored by B. The parties also agree that all forfeitures in A's plan as of the date of the spinoff will be allocated to participants' accounts as of that date.

When the transfer of assets to B's plan occurs, A's plan inadvertently transfers too much to B's plan. The excess relates to forfeitures that should have been allocated to employees of other subsidiaries of A not involved in the sale and spinoff--thus, those amounts should have remained in A's plan and should have been allocated to participants in A's plan. How and why the error occurred is not clear. The error is not discovered until approximately a year after the transfer.

Now that the error has been discovered, the parties agree that B's plan owes to A's plan an amount equal to the amount of the excess transfer, plus an earnings factor based on what that amount would have earned in A's plan to date.

The question is, can existing forfeitures in B's plan be used to cover the earnings amount that must be paid to A's plan, or must Corporation B come up with the cash to cover the earnings amount?

Can anyone think of any advantages for a church plan to elect ERISA coverage?

An employer mistakenly distributed participant benefits out of a company account rather then the plan's trust account. Is there a corrective procedure for this type of error? What alternatives corrective measures are available?

I am designing a flextime/compressed workweek policy. I am wondering how other companies deal with the issue of vacation days and sick days for employees who are working a reduced number of days for more hours each day per week. If they have the same number of days off as employees working a five-day week, they are in essence getting more time off than their peers because their "days" are more hours. Has anyone else addressed this issue in a policy?

I'd also love to see a written policy on flextime even if it doesn't address this issue, if any of you are willing to share your company's policy.

Thanks,

Liss

Is it a prohibited transaction for a plan to purchase property from a trust for cash where the grantor of the trust is the spouse of the plans trustee?

I know it is a prohibited transaction for the plan to purchanse real estate from a party in interest/disqualified person (spouse). However, I am thinking that if the spouse is merely a grantor of the trust, whether or not there was a PT might depend on whether the beneficiaries of the trust are actually disqualified persons.

Does the following sound like a legit plan design?

For its annual profit sharing contribution, employer wants to contributes company stock for participants until they hit both age 25 and have 3 years of service. At that point, the contribution gradually involves less company stock and more company dollars. Eventually, at say age 35 and 10 years of service, the participant no longer receives any company stock for the profit sharing contribution, just all dollars.

Is this acceptable and if so, how would it be tested for non-discrimination?

Thanks

If a 401(k) plan allows its participants to take a distribution from employer sources (i.e. profit sharing and/or regular match) "on account of hardship", is there a minimum amount of time that the employer money must be in the plan before it may be withdrawn? If so, does it apply to all pre-retirement/pre-separation withdrawals from employer sources (i.e. inservice and on account of hardship)? Where is this referenced in the Code/regs?

I thought this had been discussed before, but I cannot seem to find the appropriate thread.

Can a 1999 5500 Form to be used to file for a short plan year beginning and ending in 2000 (and due by March 31, 2001)?

Do you cross out the 1999 and write in 2000?

Company A is comprised of 3 divisions, X, Y, and Z.

Company A wants 1 401(k) plan to cover eligible employees in all 3 divisions. However, company A would like certain provisions to be different for participants in the 3 divisions. Little things, like PS contribution allocation.

I know that for the above to fly, plan will have to pass 410(B) and 401(a)(4), which will ensure (if passing) non-discrimination.

However, they also want different vesting schedules to apply to the divisions. This is a BRF issue and will also need to be non-discriminatory, but how is this actually tested?

Any help is appreciated.

Do Section 457 plans have a required due date for employers to deposit employees payroll deductions? Is there a legal timeline as there is with 401(k) contributions? Thanks for any info - I know nothing about 457 plans.

The use of the early distribution events of sections 403(B)(7)(A)(ii) and 403(b)11 to also govern eligibility for rollover treatment renders the triggering events under section 403(B)8, the rollover provision of section 403(B), which were repealed under the Unemployment Compensation Amendments of 1992, meaningless.

Moreover, insofar as 403(b)11 went into effect on January 1, 1989 the application of section 403(b)11 to rollovers has the result of bifurcating the employee's account balance between pre-1989 and post 1988 amounts with reference to their eligibility for rollover treatment.

Example:

Assume a 12/31/00 balance of $500,000.00 with a balance of $200,000.00 on 12/31/88. The employee is free to rollover only $200,000 at will because the triggering events under section 403(B)8, the rollover provision, were eliminated. The employee may only rollover the post 1988 balance of $300,000.00 upon satisfying one of the early distribution events under section 403(b)11 because section 403(b)11 went into effect on 1/1/89.

Congress never intended that a bifurcation would be the result of its repeal of the distribution events under section 403(B)8, the rollover provision of section 403(B). Is there anyone out there that believes that Congress wanted to repeal rollover distribution events for just pre 1989 amounts? Apparently the United States Court of Appeals for the 2nd Circuit does. See FRANK V. ARRONSON at: http://laws.findlaw.com/2nd/969456.html.

I call on all the pros in the 403(B) community to request a Congressional clarification on this issue.

Joel L. Frank

Can the assets of a terminated Money Purchase Pension Plan be transferred to a defined benefit plan sponsored by the same employer?

My father passed away in 2001 and left three IRA's with 3 children as beneficiaries. As executor (and a child). I would like to do the following:

1) Create 3 sub-accounts for each of the IRA's with equal amounts. Each one titled "DEC John Doe, FBO Jane Doe". (or Jack Doe, or Jim Doe) assuming John Doe as the father and Jane Doe as one of the beneficiaries.

2) Each beneficiary then does a Trustee-to-Trustee Transfer to a new account with the same title.

3) Each beneficiary continues with the minimum withdrawal's using whatever rule is in place that day.

It appears to a Grey area reading all the posts, but right now, that's my plan.

What was allowable deductible contribution into an IRA in 1982?

Client maintains a unfunded welfare plan for payment of small medical and dental claim. Do the COBRA continuation requirements cause this plan to file a form 5500 if someone elects it? There are fewer than 100 employees in this situation.

If someone elects to take COBRA coverage, then the plan has now accepted contributons and thus becoming a "funded" plan, which requires a 5500 form. At least that's the way I read the 5500 instructions.

Anybody know a way out of this?

David:

I had a "bad" year, though I do have the "luxury" of some tax-free disability monies we live off of.

I made a $4000 traditional IRA contribution in Jan 2000 for year 2000.

My taxable AGI is just $7600, and with $23000+ itemized deduction (medical bills!), I owe no tax.

My wife and I have $16,000 each in traditional IRAs (including the $2K added last year).

My question: does it nake sense to take advantage of this year and:

1. recharacterize the year 2000 trad IRAs ($4000) to Roths?

2. convert the trad IRAs ($28000) to Roths and "pay the tax?"

I estimate this might make my tax refund of $600 become a tax bill of $1600; but $1000 out-of-pocket to shield $32,000 from taxes forever sound pretty good, do you think?

I just need some back-up...my wife says it sounds TOO good...

Rick