Company A acquires Company B. A maintains Plan X and B maintains Plan Y, both 401(k) plans. Company A would like to merge Plan Y into Plan X. However, Plan Y never received a determination letter, and Company A is cautious. So Company A decides to allow Company B employees to participate in Plan A, and further decides to freeze Plan Y pending it's decision as to whether or not to seek a determination letter for Plan Y, and whether or not to merge the plans.

While this is pending, Company B dismisses a large number of employees. The number of employees released would be significant with respect to Plan B but not Plan A.

The questions are:

1. Must Plan B participants be vested because there has been a discontinuance of contributions to Plan B?

2. If the answer to (1) is no (because either there is an intent to merge the plans, or because the pre-ERISA concept of substituting a comparable plan applies), then does the dismissal of employees require a partial termination analysis? With respect to which plan?

3. Should I change professions?

thanks-

rob

Within a cafeteria plan, is a stand-alone dental plan (not bundled with medical) considered a "group health plan"? What about a vision plan? LTD? AD&D? Do the special enrollment rights of HIPAA apply to these plans?

Two plans. A 401k which covers only owners and a cross tested plan which covers owners and all employees, the non-owners are all from a leasing company which sponsors it's own 401k. For average benefits testing should the non-owner employees' 401k contributions to the leasing company plan be included in the sponsoring employer's cross-tested plan??

Can a company merge an underfunded DB plan with a related (same sponsor) overfunded plan to eliminate the underfunding? The underfunded plan has already been granted a waiver of the minimum funding standard.

If a plan uses a cash basis to determine a Required Minimum Distribution (and there is an accrued contribution), is there a plan defect? The proposed regulation clearly states that an accrual basis should be used, but the regulation is neither temporary nor final, only proposed - so would the fact that the regulation is only proposed be enough to prevent using a cash basis from being a plan defect?

If a plan sponsored by a sole proprietor terminates 10/31 and Schedule C earnings for the year is $150,000, can pension comp be treated as 10/12 of $150,000, or must it be treated as made available 12/31, with no "comp" through 10/31?

Assume there are no large deductions ocurring after 10/31 such as a pension contribution, if that matters.

Tess was a precocious eight year old when she heard her Mom and Dad talking about her little brother, Andrew. All she knew was that he was very sick and they were completely out of money. They were moving to an apartment complex next month because Daddy didn't have the money for the doctor bills and our house.

Only a very costly surgery could save him now and it was looking like there was no-one to loan them the money.

She heard Daddy say to her tearful Mother with whispered desperation, "Only a miracle can save him now."

Tess went to her bedroom and pulled a glass jelly jar from its hiding place in the closet. She poured all the change out on the floor and counted carefully.

Three times, even. The total had to be exactly perfect. No chance here for mistakes. Carefully placing the coins back in the jar and twisting on the cap, she slipped out the back door and made her way 6 blocks to Rexall's Drug Store with the big red Indian Chief sign above the door. She waited patiently for the pharmacist to give her some attention but he was too busy at this moment. Tess twisted her feet to make a scuffing noise.

Nothing.

She cleared her throat with the most disgusting sound she could muster. No good.

Finally she took a quarter from her jar and banged it on the glass counter. That did it!

"And what do you want?" the pharmacist asked in an annoyed tone of voice. "I'm talking to my brother from Chicago whom I haven't seen in ages," he said without waiting for a reply to his question.

"Well, I want to talk to you about my brother," Tess answered back in the same annoyed tone. "He's really, really sick... and I want to buy a miracle."

"I beg your pardon?" said the pharmacist.

"His name is Andrew and he has something bad growing inside his head and my Daddy says only a miracle can save him now. So how much does a miracle cost?"

"We don't sell miracles here, little girl. I'm sorry but I can't help you," the pharmacist said, softening a little.

"Listen, I have the money to pay for it. If it isn't enough, I will get the rest. Just tell me how much it costs."

The pharmacist's brother was a well dressed man. He stooped down and asked the little girl, "What kind of a miracle does you brother need?"

"I don't know," Tess replied with her eyes welling up. "I just know he's really sick and Mommy says he needs an operation. But my Daddy can't pay for it, so I want to use my money.

"How much do you have?" asked the man from Chicago.

"One dollar and eleven cents," Tess answered barely audibly. "And it's all the money I have, but I can get some more if I need to.

"Well, what a coincidence," smiled the man. "A dollar and eleven cents-- the exact price of a miracle for little brothers." He took her money in one hand and with the other hand he grasped her mitten and said "Take me to where you live. I want to see your brother and meet your parents.

Let's see if I have the kind of miracle you need."

That well dressed man was Dr. Carlton Armstrong, a surgeon, specializing in neuro-surgery. The operation was completed without charge and it wasn't long until Andrew was home again and doing well. Mom and Dad were happily talking about the chain of events that had led them to this place.

"That surgery," her Mom whispered. "was a real miracle. I wonder how much it would have cost?"

Tess smiled. She knew exactly how much a miracle cost... one dollar and eleven cents... plus the faith of a little child.

A miracle is not the suspension of natural law, but the operation of a higher law.

(Author unknown; thanks to Cindy L. Lambert for this contribution!)

I have a client who is terminating their plan. Approximately one year ago the plan went through a partial termination, since that time people have come and gone and the plan has accumulated a large sum of forfeitures. All partial termination rules were followed. Everyone involved in the partial termination was 100% vested. Now that the plan is terminating what can be done with the forfeitures? The plan document says you use the forfeitures to reduce the Employer contributions, but there haven't been any significant contributions to reduce the forfeiture account to zero. Any thoughts on this scenario?

When, if ever, is a Summary Annual Report required to be provided to participants in a Section 125 plan? I have seen an SAR provided for a POP when the health plan had more than 100 participants. Have also been told:

SAR is required for a Medical Reimbursement FSA plan.

SAR should be provided because a 5500 is filed.

SAR used to be required for any Section 125 but no longer.

SAR is required for the underlying welfare benefit plans but not the cafeteria plan itself.

The more I research this, the worse it gets. Any help would be appreciated including a cite. Thanks

We have a Profit Sharing Plan with a last day rule. Each employee self directs his own account. The employer prefunds the employer contribution quarterly directly into each participant's account. There have been occasions where we had to remove a contribution from a participant's account at the end of the year since the participant terminated employment prior to the end of the year.

We keep getting conflicting reports from various sources. Some say we are not allowed to remove contributions already deposited into a participant's account. Others say this is not a problem if it is explained to the participant. Which is correct?

I have a question regarding the laws on cobra. I terminated my position with a major New York based retailer on 11/11/00. I recieved my letter of continuing coverage (cobra) form on 11/26/00. I recieved three messages from Doctors offices on 11/28/00 saying my coverage terminated on 10/11/00. I went back to the letter recieved on Saturday and the date of termination states 10/11/00, however the date the letter is issued states 11/17/00. I have phoned my former employer notifying them that there paper work is incorrect, and causing me alot of embarrasement as well as emotional distress one Dentist wants 585.00 by the end of the week. They have been less than helpfull. I gave a letter of formal resignation effective 11/11/00 and have copies of this, and I was working for this company as a manager until 11/11/00 my last physical day of work was 11/09/00 and the 10th and 11th were vacation days. I have a terminally ill spouse, and I need any advice you can give me. I don't know if they are going to take care of this and correct the paper work, but even if they do they will have violated the 14-day rule for me to recieve a correct form. I'm not sure if I should send in the form I have, I'm afraid that(cobra) will bill me from 10/11/00 and I have already paid for coverage up to 11/11/00. Thanks for any advice you can offer!

Hello, I am trying to work on an academic (read graduate student) piece on the effect of the change of premium structures on employee opt-in insurance products. Specifically I am looking at dental insurance.

Right now I have a large dental insurance enrollment package from a large southern quasi-public organization (85 k eligibles, large public university system). This organization uses the simplest premium structure (EE, or FAM, with both inclusive of ortho whether you want it or not).

I am curious to compare how their employees select dental insurance compared to another organization that uses a more complex premium structure (Three tiered, ortho-optional rider, etc.)

Specifically, I am looking for raw enrollment data for a dental plans, I can do all the work from there.

If you are interested in helping a struggling (read starving) grad student out with his research, I can assure you, your help would be greatly appreciated.

Can an ER who provides flex credits stipulate that the credits NOT be used for FSAs?

Does a non-electing church employer, such as a Catholic Archdiocese, need a qualified plan document if they have a matching provision for some of their employees?

or

Is it sufficient to prepare a "Statement of plan operating provisions" that also states which employee groups are eligible for the match since the church plans are not subject to ERISA?

This particular Archdiocese has a 403(B) custodial program allowing deferrals only for the schools and parishes, while it also has a 403(B) that has a match component for two high schools and the main administrative offices.

Is AD&D subject to IRS status change and HIPAA rules? If I am not currently enrolled, but have a child, can I now (within 30 days) enroll myself and my dependents for coverage? And if so, does coverage for everyone begin as of the date of my child's birth? What if I had a child on Nov. 1, and on Nov. 2 another child had a dismemberment accident that would qualify under the plan. When I call to enroll everyone on, say, Nov. 5th, would I be permitted to enroll that child and would she be covered for the accident sustained between the time of eligibility (birth of child) and actual enrollment?

Does a non-electing church employer, such as a Catholic Archdiocese, need a qualified plan document if they have a matching provision for some of their employees?

or

Is it sufficient to prepare a "Statement of plan operating provisions" that also states which employee groups are eligible for the match since the church plans are not subject to ERISA?

This particular Archdiocese has a 403(B) custodial program allowing deferrals only for the schools and parishes, while it also has a 403(B) that has a match component for two high schools and the main administrative offices.

I have an established 401(k) Plan that uses prior year testing. This is the first year the ER has contributed. What do I use for prior year ACP for NHCEs??

I have two related questions regarding 401k's. My Brother-in-law(B-I-L) owns 60% of a company with an existing 401k. He and the other two shareholders are going to sell the Corp to another person so that the new majority shareholder will own 70%, my B-I-L 30% and the other two no ownership effective June 2001. The new majority owner already owns two S-Corp's and a sole proprietorship. He plans to start up 401k's for the employees of the S-Corps and a Keough for himself and his wife in the sole proprietorship. The new majority owner does not want the employees of the three Corps to know about the cross ownership so he does not want the SPD(s) to show one Corp as sponsor.

First, can he setup separate 401k's and/or a separate 401k and a keough?

Second, what happens to my B-I-L's existing 401k if the new owner already has implemented a separate 401k before he takes over?

I am trying to determine if terminating a Defined Benefit Plan and replacing it with a defined contribution plan makes sense for all employees involved.

I need to calculate what the defined benefits would be for employees aged 35 / 45 / 55 / 60 with 5 / 10 / 15 years of service in the D/B plan.

If I terminate the D/B plan and establish a 401k/money purchase plan will the employees be better off? How can I compare employees lumpsum plan values in theD/B plan against the value at age 65 of a Defined contribution plan earning 8% over the same time periods.

I have a question regarding how the rates for cobra coverage are determind. I terminated my position and was part of a group coverage policy, and I did a fair amount of research on cobra and estimated my payment to increase at 100% plus admin fees. I was completely shocked when my package arrived and the (cobra)insurance rates had tripled plus some! Is this legal and is there anyway for me to find out how these rates were determind? Thank you for your help.