In a couple posts here, I've noted that plan termination fees may not be paid from plan assets. We're terminating a Plan and the Trustee asked that our fee be taken from the assets. This is a new experience. So, is it the IRS rules that prohibit termination fees being paid from Plan Assets or is it some Trust documents? Thanks in advance.

Would like to know what others are offering,if anything, as an incentive for waiving health care benefits. What opinion do you have for offering money for someone to waive taking health care insurance?

Would like to know what, if anything, others are offering as an incentative for not "calling off" within a three (3) month period. We have PTO and cannot carry over any unused time into the next anniversary year. This makes it so that at the end of one's anniversary year, you could possibly have quite a lot of PTO left and end up taking time off (so it's not lost) just when you need to be at work (behind, audits, special projects). Most staff do take theirs throughout the year but some find it hard to take off.

A company maintains a self-insured health plan. A 53 year old highly compensated employee who has MS is retiring. The Company would like to have the employee continue to be covered under the self-insured health plan until such time as the HCE is eligible to receive Medicare. The HCE is willing to pay the COBRA costs associated with this coverage. Are there any Code Section 105(h) issues if this coverage is provided under a severance agreement? Any thoughts?

A profit sharing plan terminated in 1997. A determination letter was received on the termination. No distributions have been made since the termination. All 5500s since 1997 have indicated that the plan is terminated. The plan sponsor now wants to "reinstate" the plan. Can the plan be un-terminated? If so, what is the procedure?

The plan document limits a participants deferral amount to a maximum of 10% of compensation, however, one HCE and one NHCE defer in excess of that amount. When performing the 401(k) test, what amounts would be included in the test? Would you include the amounts in excess of the plan limit, not include or include for one and not the other like a 402(g) violation? Please state any cites to back up your response, or perhaps any opinions from the IRS you have heard.

I understand that the plan sponsor can limit the amount an employee may elect under a medical FSA due to the financial risk the uniform coverage rule poses. However, are there any limits set forth under the Code I need to be aware of? Cites would be appreciated.

Can a 401(k) plan accept a rollover from a keogh? The CEBS textbook says yes, and give no qualifications. However, if a Keough can be set up as either a DB or a DC plan, wouldn't there be restrictions?

I have a client with Safe Harbor 401(k) and Age Weighted Profit-Sharing. One of the employees is currently deferring 20% of pay and getting a 3% non discretionary match.

Their plan document and the prototype I use both seem to say the same thing:

If the Employer Contribution would put ANY participant over the maximum permissible amount, the contribution must be scaled back.

Does this sound right? Sounds like the tail wagging the dog.

(The Plan doesn't have a maximum deferral percentage hard coded into it.)

I have a client that has no elligibility requirements. Participants enter the plan on the first of the month coinciding with or next following their date of hire. When the ADP/ACP test is run I can restructure the plan to use the statutory minimum age or service eligibility conditions (age 21 and one year of service). My question is can I go as far to say that I will use semi entry dates versus the currently monthly entry dates? I know if you use age 21 with 1 year of service you must provide at least 2 entry dates. If someone knows where I can find some information on this question I would love to know. So far everything I read does not mention anything about the entry dates. Should I presume that since it is not mentioned there should be no change to the plans entry dates when applying the statutory minimums?

What happens if a participant elects to defer 8%; however, the company only withholds at a rate of 2%? This was found 15 months late. If the correct rate was input, the participant would have deferred an additional $1,800. What liability does the Employer have? I'm assuming they should at least match at the higher rate, but shouldn't the employee have some responsiblity? Do they need to "fund" the employee deferral portion?

This is a personal situation I've encountered. I hope it is appropriate for this Forum.

My wife & I retired from GTE Alaska 1988/1989.

One of our benifits was to be provided with local telephone service, which has been provided for the past 11/12 years.

Now, when GTE merged with Bell Atlantic, they sold off the Alaska division to an independent operator. This sale of GTE Alaska was finalized August 31st, 2000.ic

A week after the sale was finalized, My wife and I received notice that our local phone service retirement benefit was terminated.

I would presume that the obligation would fall on the parent company, when the affilate dissapeared.

Do We have any options?

I have a situation where an employer gives participants with 500 hours of service a 10% contribution at year end. They have a new participant who has less than that amount of hours of service. This participant is ineligible to receive that 10% contribution. I think this is ok. Now, my question is this... if the plan is Top Heavy... that new participant has to receive a 3% contribution right? Well do all the other participant who got the 10% contribution ALSO have to? I don't think they do because they got in excess of the 3%. Next question, ummmmm does this plan run afoul of 401(a)(4) now? I mean if the new guy only gets 3% but everyone else gets 10%?

I feel like I am going around in circles on this one and need a rope out of the hole!

TIA to anyone who drops me a line!

Samantha Prince

According to a recent ASPA seminar that I attended, cross tested plans are supposed to be going away in the next 18 months. Is this timetable still valid for cross tested plans?

Old question that i need to clarify.

If Employer establishes a 401(k)Plan with different matching rates of each group of employyes:

1. Must the plan be cross tested under 410(B) and 401(a) 4

2. What test would be required for 401(a) 26?

3. Does tha that provision take you out of a proto type document and create an individually designed document?

Spouse of a deceased non-vested employee with contributions in DB Retirement Plan wants to roll those contributions to an IRA so that taxes will not have to be paid. However, our bank that sends out the pension payments automatically takes 20% in taxes on distributions. If the spouse receives the money minus 20% for taxes, can she put the money into her IRA anyway and take a tax credit on the 20% that was taken out for taxes?

My (very limited) understanding of 412(i) plans is that each year you purchase a piece of an annuity contract for a participant that will be used to provide projected benefits. At termination, the participant can withdraw the value of the annuity. Is the lump sum value of the annuity subject to 415 limits?

For example, the sole participant starts a plan at age 55. The plan provides for a benefit of $135,000 per year payable at age 65 (assume SSNRA = 65). The insurance company calculates the required contribution each year and provides the value of the annuity that has been purchased to date.

At age 65, the participant retires. The insurance company is willing to provide him with an annual benefit of $135,000, but the participant elects to take the lump sum equivalent. The insurance company pays him whatever they think the annuity is worth based on their rates and mortality tables. They disregard the 30-year treasury rate and the plan's definition of actuarial equivalent which would be required for a normal plan by Seciton 415.

Ignoring the fact that the participant probably is much worse off due to insurance commissions and fees, can a participant avoid 415 limits like this?

I have reviewed the heated thread on this board regarding Keysops (along with Brisendine's articles) and need to know if there is anything new on this topic.

Are the accountants/consultants still selling variations of this product?

Any hints from the IRS about what they are going to do?

Any real-life experiences with the issues and problems involved in using these programs?

I have a company who acquired another and we have mergedthe 2 401(k) plans. Do we need to file a 5500 for the plan that no longer exists?

TIA

Samantha Prince

Has anyone heard of exchanging an employee's restricted stock for an unfunded unsecured promise to pay the same number of shares on a date farther in the future?

Will it work to defer taxation?

Are there any timing or second election issues involved here?