A profit sharing plan covering both HCEs and NHCEs is being restated for GUST. The Corporate Resolution and the signature page of the new document were signed December 28, 2000. The effective date of the restatement was set as January 1, 2001 because the employer wanted to add a 401(K) feature for the whole of 2001. Are there regulations mandating that a certain amount of time elapse between the adoption of an amendment and its effective date in such a circumstance, i.e., will the timing of the above execution allow the new document to be valid as of 1/1/2001?

Our Company is interested in beginning a PTO program (sick leave, vacation, personal days). I've looked all over the web for a simple plan based on assigning X amount of hours on the EMPLOYEE'S ANNIVERSARY DATE instead of the normal accrual policy. Does anyone out there do this? Thanks!

My agent represents both Oppenheimer and Nationwide. He says i should put my new 403b contributions into Oppenheimer because even though their funds are load, it will end up costing me less than Nationwide's variable annuity fees. Can this be true?

A stock option plan for a publicly-traded company provides that 5,000,000 shares are reserved for options, and that no more than 1,000,000 shares can be granted to any employee during the 10-year term of the plan. In order to comply with Section 162(m), the plan was approved by the shareholders shortly after it was adopted.

The company wants to amend the plan to increase the number of shares reserved to 10,000,000. The maximum number of shares than can be granted to any employee will stay the same. Is shareholder approval of the amendment required under Section 162(m)?

In the case of a person who has a balance in a plan because the person is an alternate payee of a QDRO, the required minimum distribution rules apply. Whose age is used, the original participant or the alternate payee?

When 415 excesses are returned, is a 5330 required?

I have a two part question:

If a newly hired employee does not enroll in medical benefits during the first 31 days, can they in any instance be allowed to enroll after that if they provide evidence of insurability (this is a sec 125 pre-tax plan)? This is also assuming there is NO change in family status. I read the new HIPAA regs do not allow the use of evidence of insurability but not sure if it applies to this scenario or is just used to keep employers from discriminating from allowing coverage altogether.

Can the employee enroll after the 31 days if they pay for their benefits post-tax? Is there any way that an employee can enroll without violating any regs after the eligibilty period has passed (and outside of annual enrollment)without having a change in family status?

Thanks!

In a Profit Sharing Plan where there are many terminated participants with very small balances (i.e., under $1 to just under $20) and the cost assessed by the investment manager to process a distribution is $40 per distribution, can the small balances be forfeited instead of processed as distributions?

403(B)- My account is now being serviced by a new vendor. There was a blackout period for 5 months, from 6/30/00 thru 12/1/00. The new company now enables you to track your account on a daily basis thru the internet. My question is when should I see capital gains posted to my account? The funds I am invested with paid capital gains on 12/14/00 and 12/21/00. My account balance dropped thousands of dollars and I have yet to see my gains re-invested. When I called the company they were unable to give me a date as to when the gains will be re-investaed. Is there a law as to the time it should take to invest someones capital gains. I am going on a month now, is this par for the course ? Thank You,

I am doing a 5500 Schedule T for a plan which is made up of 50% collectively bargained employees (all NHCEs) and 50% non-highly compensated employees. Should I check both 3(B) and 3© or just 3(B) or file two Schedule T's (one for collective bargained piece and one for the NHCE's).

I'm leaning towards checking only 3(B), although I don't think this is technically correct since the collective bargained piece should be disaggregated from the non-collectively bargained piece, but I don't see anything in the instructions telling me that I have to do two Schedule T's.

Any one have any ideas?

Can anyone tell me if the following could be considered discriminatory and if so, what the site is?

1. Different waiting periods for eligiblity for hourly paid and salaried employees (i.e., salaried employees eligible for health care from date of hire, hourly employees must wait 90 daye)

2. If coverage ends on the last day of the pay period in which the employee terminates - hourly paid employees paid weekly, salaried employees paid 2x month. The salaried employees would probably get a longer period before coverage ends.

Employer changed an employee from salaried to "per diem" and somehow admin/payroll or someone accidentally "coded" this person as terminated for the plan purposes. This participant was provided the opportunity to receive a distribution from the 401(k) plan, and, of course, took the money (only about $1,000 or so). There is no specific correction for this qualification failure in Rev Proc 2000-16 (EPCRS), but we have advised the client to seek repayment from the participant in the manner described for overpayment due to vesting error or 415 overpayment. The employer will probably have to put the $$ back (plus interest)--they already know that the participant won't do it. We have also advised them that they can reduce future payments to this participant to recoup the amount (as allowed for 415 corrections). Does anyone see a problem with this for a 401(k) plan self-correction? Any input would be appreciated.

We currently have an ESOP client (bank holding company) that we just discovered also has a SIMPLE IRA. Both plans were established in 1999 and contributions allocated under both for 1999 and 2000. What happens in this situation? Are the SIMPLE contributions disqualified?

If a person is diagnosed with End Stage Renal Disease, thereby entitling the person to Medicare, will Cobra coverage be terminated?

Employer with several hundred employees has group term life with one insurer and has been filing its 5500s. The employer is adding optional 100% employee paid group term life with another insurer. What is the general practice:

1) Take the position that the OGTL is not a Plan and simply ignore it for 5500 purposes.

2) Assign the same Plan number for the OGTL as you do for the GTL (even though they are through separate insurance companies) and treat it all as one Plan and simply include two Schedule A's.

3) Get a separate plan number for the OGTL and file a separate 5500.

4) Other?

Employer with several hundred employees has group term life with one insurer and has been filing its 5500s. The employer is adding optional 100% employee paid group term life with another insurer. What is the general practice:

1) Take the position that the OGTL is not a Plan and simply ignore it for 5500 purposes.

2) Assign the same Plan number for the OGTL as you do for the GTL (even though they are through separate insurance companies) and treat it all as one Plan and simply include two Schedule A's.

3) Get a separate plan number for the OGTL and file a separate 5500.

4) Other?

If a participant in a stand alone DC plan has annual additions in excess of the 415 limit, it seems clear that Code Section 404(j) and IRS Notice 83-10 do NOT permit the employer to take a tax deduction for the amounts in excess of the 415 limit.

Assume the primary limit under Section 404 is $100,000 and the employer makes a profit sharing contribution of $25,000 in order to bring total contributions to exactly $100,000. Further assume that an employee has a $1,000 415 excess after the profit sharing is allocated and before the 415 test is computed.

If the employer refunded the $1,000 of salary deferral contributions as a 415 excess, would you agree that the company could only deduct $99,000 on its corporate tax return?

Is the 415 excess deductible under a different Code Section? I find it hard to believe it simply wouldn't be deductible at all.

Thanks.

I just got these unusual questions from a seminar participant; unusual because I rarely see employee benefit plans with any foreign investments:

1) Are all ERISA financial transactions reported in Base currency? - (USD as base)

2) Should the Fx Gain and loss be included in the Acquire & Dispose and Revalued cost schedules?

3) If so how should it be classified? (FX gain or loss or included in the overall gain or loss total)?

My initial thought is that the currency changes would be included in the appreciation/depreciation in fair value of investments. I don't recall seeing any other guidance.

Does anyone else have suggestions?

Client's husband was a physician and sole participant in a profit sharing plan with a corporate trust company as trustee. After his death at age 75 we discovered that minimum distributions had never been made and the trust company had never informed him of the need to do so.

Since learning of the problem she has received the minimum distributions for the years after his death, terminated the plan and the services of the trustee, rolled the funds over to a new IRA and begun receiving minimum distributions from the IRA. However, there are still 3 years for which no distributions were made and excise taxes on Form 5329 are due.

The instructions say the IRS may waive the tax if it was due to reasonable error and "you are taking appropriate steps to remedy the shortfall."

Assuming that blaming the Trustee is accepted as reasonable error, will the IRS require a distribution of the minimum distribution amounts from the 3 earlier years in addition to the amount for the current year as a condition of the waiver? If so, must the client make the distribution before the waiver request and run the risk of having it denied? Is there any chance that merely correcting the errors going forward will be sufficient for the waiver without making the distribution for the earlier 3 years?

Thanks

May a hardship withdrawal from a 457 plan include earnings or is it limited to the deferrals?