Is it a requirement for all cafeteria plans to be amended by 1/1/2001, or do the final regs merely make it possible to amend for the new provisions?

I have a client that wants to terminate his Corporation's ESOP. He feels that it is too expensive to maintain and the participants do not appreciate the plan. The Corporation has been successful (the stock's value has increased by 300% over 7 years). He wishes to terminate the ESOP. The Corporation also sponsors a 401(k) plan and after the termination the Corporation will add a more generous match and make discretionary employer contributions to the 401(k) plan. The ESOP owns 75% of the Corporation's stock. There is one outside shareholder that owns 25% of the Corporation's stock. An independent trustee will be hired to review the redemption price. The annual appraisal values the stock at approx. $30 per share. An appraisal will be commissioned for purposes of the Corporation's redemption of the ESOP's stock.

My problem is that the outside shareholder has been talking with an investor. The investor is willing to buy common stock from the Corporation for a premium price that will exceed the appraised price of the common stock for purposes of redeeming the ESOP's shares. The investor will not buy the stock unless the ESOP is terminated. Has anyone dealt with this situation and how did they resolve the issue? I am concerned that the price that the Corporation is willing to pay for the ESOP's stock is not fair market value.

My company is evaluating it's preventive care benefit. I am wondering if anyone has any idea of resources out there that would give us statistics, information, etc. on what other employers are offering.

Thanks.

What is the procedure for filing 5500s for merged plans in the following example - 3 plans with the same plan years (1-1) intend on merging effective 1-1-01. Separate testing and 5500s would be completed for each of the 3 plans for their respective 12-31-00 plan year end. Do you then have to complete a final 5500 for each of the 2 merging plans (#1 and #2) for January 1, '01 (a 1 day 5500) reflective of the fact they have merged into plan #3? Or is there a procedure or some permissable method of doing the 2000 Form 5500 for these merging plans (1 & 2) and attach a statement saying they are merging into plan #3 on 1-1-01?

A dependent child did not attend college during the summer, and due to financial issues, worked fall semester, but will return to school in the winter. I know that there is something relative to an allowance for a kid in college to continue coverage when taking off for summer type of scenario, with the intention of enrolling for the following term, but is there anyway to extend that until winter term? OR Did they loose all COBRA rights because of failure to notify the plan within 60 days from the time she knew she would not return in the fall?

My question is regarding the 1 of 10 employees rule owning a 1/2 percent of the company making more than $30,000 per year. My manager is telling me to apply this rule all of the time and I have always been under the impression that you just apply this rule when you are dealing with a large company with a lot of owners. According to my manager anyone owning a 1/2 percent making $30000 would be considered key. But then what is the point of even having the 5% and 1% rule wouldn't those people already be key since they own a 1/2 percent?

Plan sponsor started a cross-tested plan in August of 1996 and the document was drafted by maximizing the owners and minimizing the nhce's at 5.75%. Upon receiving the year-end census, it was determined that the hce's could hit their maximums and pass at 3% to NHCE's. This formula was utilized for 1996 & 1997. In 1998, the plan was transfered to a different tpa and when the 1998 calculation was being completed, it was determined that there was never an amendment done to the plan to change to the 3% level. What are the issues, options for resolution and potential results(penalties, fines or other) at this point?

Company A and Company B are going to form a joint venture into which both will contribute assets and employees. Rightly or wrongly, it has been determined that the same desk rule will apply. Company A has a profit sharing plan that includes a 401(k) element. Company A is considering a spin-off with respect to the employees that are being terminated and offered positions with the joint venture. What assets can be spun-off? The entire balance of participants accounts? Only the 401(k) portion that is covered by the same desk rule? Wouldn't you be violating the terms of the plan if you don't distribute the profit sharing portion because the employees have terminated employment?

Company A and Company B are going to form a joint venture into which both will contribute assets and employees. Rightly or wrongly, it has been determined that the same desk rule will apply. Company A has a profit sharing plan that includes a 401(k) element. Company A is considering a spin-off with respect to the employees that are being terminated and offered positions with the joint venture. What assets can be spun-off? The entire balance of participants accounts? Only the 401(k) portion that is covered by the same desk rule? Wouldn't you be violating the terms of the plan if you don't distribute the profit sharing portion because the employees have terminated employment?

Does anyone know what insurance companies are currently wrirting Group Executive Medical policies (Section 105(h)) plans?

Company intended to start a 401(k) plan on 1/1/00. It got around to signing the plan document on 2/15/00. Election forms were distributed to eligible employees on 1/17 and all employees enrolled by 1/31. The first deposit into the 401(k) plan was on 2/15 and it supposedly consisted of deductions from 1/1 to 1/31.

The deferrals for January seem wrong because the plan document was not executed at the time that that compensation was earned. Some of the January deferrals seem wrong too because they were retroactive to the beginning of the month on compensation that was earned before an election form was signed. Isn’t that wrong?! What Code or regulation sections were violated?

Have learned that a participant has rolled money from a 401(k) plan to a Roth IRA.

What are the consequences or items that need attention for the trustee, plan administrator, and former participant?

20% withholding was not done.

Thanks.

What are the consequences (deemed distribution and/or plan disqualification and/or ?) of a more than 10% partner receiving a loan from the partnership's Profit Sharing Plan?

Is there any corrective remedy available under EPCRS?

Thanks for any and all responses.

Is there any instance where where a reversion of plan assets to the employer would not constitute a violation of Sec. 4980 (or prohibited transaction)? Client claims overfunding on a money purchase/profit-sharing -

I actually have a plan in which the following might occur for the year 2001. well, some of us actually do look ahead in the planning stage to see what might happen.

Plan is a SARSEP.

ee makes 15%, plan is integrated.

so I figure 415 limit is

for the owner

lesser of

15% * 170,000 = 25,500

or 30,000 - (80,400 * 5.7%) = 25417.20

correct?

if ee defers 10,500 then if contribution was 6% + 5,7% in excess, ee gets capped at the lower figure?

I need information/laws dealing with controlled groups and their coverage in a group health insurance plan.

For corporations, the 25% rule is the maximum overall plan participation for key employees.

My question is, on the C-corp are the family members of the key employees also part of the 25% for the company pretax?

We do our coding here at ADP as owner/key as follows: XN11P

Would we code the children and spouse the same?

A company has a self-funded insurance plan with annual premiums of $108,000 and annual administrative expenses of $60,000. The plan has received reimbursement of claims from secondary insurance and doesn't know how to treat these funds. Can the plan keep these reimbursements to cover future medical claims? Or does the plan have to refund the money to the company?

Profit Sharing Plan participant begins taking substantially equal periodic payments at age 54. Participant becomes disabled at age 57.

Due to disability, can participant modify the substantially equal period payments without invoking 10% early withdrawal penalty?

Note: This is prior to the later of 5 years from date of first equal payments or age 59 1/2.

I need help on distribution codes on Form 1099R's. What date is used to determine the distribution code, the distribution date or the date the participant separated from service. This is regarding to the additional 10% tax that is imposed by IRC 72(t). IRC Section 402(a) stated that distributions are taxed in the distributing year while 72(t) talked about when distribution is excluded from additional 10% tax.