Our company is thinking about adding company stock as an investment option in our 401(k) plan. I need help! Does anyone know where I can get some good information on how distributions from that plan that include company stock are handled? Are capital gains/losses something we have to worry about?

My question concerns a disabled worker, presently receiving disability benefits, who has elected to take advantage of the offer of family medical and dental insurance coverage if the worker pays for this benefit. During the period of the disability, is the employer obliged to pay for the family medical and dental insurance coverage, offer the disabled worker the opportunity to pay to continue this coverage for the family, or is the employer obliged to discontinue this service during the period of the disability? Is this a matter determined by state or federal law?

I am tasked with benchmarking and making recommendations to a board of directors with respect to the company's executive pay and benefit programs. I have found plenty of survey data with competitive practices for executive pay, but am having trouble finding good data on benefits practices.

Thus, I am looking for survey data that includes competitive data with respect to the whole array of benefits (i.e., health and welfare, retirement, supplemental benefits, perq's, etc.) for executive level employees. Ideally, I need both prevalence data for specific benefits as well as information about competitive practices.

For supplemental benefits and perquisites I have a survey from Watson Wyatt, but for "basic" benefits I haven't found anything to my liking. Does anyone have any suggestions for other data sources?

Apparently the term "spouse", regarding the QJSA and QPSA rules, would include a common law spouse, if the state of the plan sponsor recognizes such. Or is there a definition of the term "spouse" applicable here, to be found in the IRC or ERISA? If the definition does depend on state law, is there common law marriage in California. Also, does California recognize (common law) marriages from other states?

May earnings on elective deferrals be included in the distributable amount for a hardship distribution? I have an institutional trustee who refuses to distribute the earnings (even though the plan document says it's okay) because he says "federal statute" won't allow it. I assume he is referring to the 401(k) regs (1.401(k)-1(d)(2)(ii), but I think he is misreading. Can anyone confirm?

Our company lumps vacation & sick time together, for PTO. Currently, we do not allow employees to cash out unused PTO time. If your company allows a "cash out" of PTO time, I'd be very interested in knowing the policy...is it allowed annually? just for some percentage of the total time? other?

If applicable, please also share any background on the business reasons for enabling a cash out policy, especially if it relates to a high-tech manufacturing environment.

Note: I am NOT talking about cashing out FTO time for terminated employees.

Thanks in advance for any responses.

Corporation A, a closely held corporation that sponsors a 401(k) plan, is being sold in a stock sale transaction (the corporation will be liquidated into a subsidiary of the acquiring company). The acquiring company does not want to assume any responsibility for terminating the 401(k) plan. Therefore, Corporation A is considering creating a new entity to assume sponsorship of the 401(k) plan prior to the sale. The new entity would be owned by the shareholders of Corporation A and its sole purpose for being would be to act as sponsor of the plan while it is being terminated. Is this permissible? For what liabilities of the 401(k) plan would the acquiring company potentially be liable? If it is permissible, what requirements would apply to the new entity in connection with acting as the new sponsor of the 401(k) plan? It is contemplated that the plan would be frozen and terminated prior to or on the closing date of the sale.

We wonder whether we need to include employees who are residents of Puerto Rico in the 410(B) coverage tests for our 401(k) and other plans. Any insight?

I borrowed $90,000 form my partnership's profit sharing plan in 1981. I am a 50% partner. According to the promissory note, I was supposed to pay monthly installments over a 20 year period .... but I made one annual payment at the end of each year (rather than 12 separate monthy payments). I finally paid the entire 35,000 balance off last year. Now I'm trying to determine if the $90,000 was a distribution to me in 1981 (because I may not have followed all the rules). Just one problem ... I can't figure out what the rules are. I've been searching the tax code, ERISA and old tax reform acts for the past four days and I'm as confused as h*ll. It's easy to find the rules presently in effect, but what about the rules that existed in 1981 (that's the hard part).

Here's my questions:

1) It's my understanding that ALL partnership plans are prohibited from making loans to it's partners. (What about my situation ?)

2) It's my understanding that loans are currently supposed to be limited to $50,000. (What about in 1981 ?)

3) It's my understanding that effective 01/01/87, the Tax Reform Act of 1986 amended IRC Sec 72(p)(2) by requiring that all note payments be at least quarterly. (What about my 1981 loan...was I supposed to start making quarterly payments beginning 01/01/87 ?)

4) What is so special about the date "August 13,1982" ? Is that like the date that IRC 72(p) was born into existence. (If so, then was I even required to follow IRC 72(p) on my note since it originated prior to August 13, 1982?)

5) Did any tax code require that I pay this 1981 loan back within 5 years (or is the 5 year requirement simply a new rule that didn't exist back in 1981?)

6) Does anyone know of a web.site that simply & clearly lays out in chronological order all the amended, superseded and current tax rules of defaulted plan loans ?

Hey ...thanks for reading my questions. I don't know if anyone out there can answer them, but I sure hope so.

May earnings attributable to elective deferrals be included in the distributable amount for a hardship distribution? I have an institutional trustee telling me that he will not distribute the earnings because there is a "federal statute." I assume he is referring to 401(k) regs, but I believe that he is misreading them. Can someone confirm for me?

Is an employer legally required to withhold 401(k) deferrals from an employee if the payroll department forgot to withhold from 2 checks. The employee does not want the employer to double up on the withholding from the next paycheck. Does the employer have to withhold this money or can they ignore the first two deferrals that were not made?

A U.S. company has employees who are U.S. citizens in a foreign country. The employees are leased employees, and the leasing organization and the U.S. company have no common ownership. However, all leased employees of the leasing organization are employed by the U.S. company. Also, the earnings of the U.S. citizens are not taxable as U.S. income. The employees do not receive a W-2 or any type of 1099.

The foreign government has mandated that all employees of the leasing organization be covered under qualified plan. In this case, the plan is a salary deferral plan with a matching contribution. The U.S. company also provides a 401(k) plan for its rank and file employees. The leased employees are not listed as an excluded group. In considering ADP testing, are the U.S. citizen employees considered "common law" employees of the U.S. corporation? If so, are their deferral and matching contributions treated as a benefit under the U.S. company's 401(k) plan, or are they disregarded for this plan? If the contributions are disregarded and the employees are not listed in the plan document as an excluded group, are they treated as benefiting under the U.S. company's 401(k) plan with a 0% deferral, or are they excluded since they do not earn U.S. income?

The particular situation is one in which two highly compensated and approximately 15 non-highly compensated employees are in the deferral plan of the leasing organization. For the U.S. company's 401(k) plan, I have treated all employees of the leasing organization as non-excludable, non-benefiting, and the resulting 410(B) coverage percentage is 98%. The most beneficial scenario for the U.S. corporation would be to include these employees as non-excluded, benefiting at 0% deferral. The impact of the non-hce's would be minimal, and the impact of the hce's deferring 0% would help the hce group of the U.S. company. However, if I need to take into account the contributions to the leasing organization's plan, there would be no benefit and a possible detriment. In that case, I would recommend excluding the employee group in the plan document as long as coverage is not an issue.

Any help anyone can provide is extremely welcome!!! Thanks!!!

I am an administrator of a school affiliated with the US Consulate in Karachi, Pakistan and need help with a number of Roth questions:

1) My wife and I converted our IRAs to Roths in '98, and at the time we met the AGI and joint filing requirements. Since then our income has increased making it no longer possible to file jointly because we each need to take advantage of the $74,000 Foreign Earned Income exclusion (Form 2555) in order to protect that part of our income. What are my options at this point? Must I recharacterize back to a traditional IRA? Or can I keep the Roth, but no longer contribute to it until I return to joint filing status, which I anticipate in 3? If so, can I establish a traditional IRA in the interim and make contributions therein?

2) To further complicate matters, I misunderstood the Roth IRA tax implications in '98 and need to submit an amended tax return for '98 and '99. I am in the need of a tax advisor available for consulatation over the internet, as I will not be returning to the US until February.

Any recommendations would be greatly appreciated.

Glenn

I am an administrator of a school affiliated with the US Consulate in Karachi, Pakistan and need help with a number of Roth questions:

1) My wife and I converted our IRAs to Roths in '98, and at the time we met the AGI and joint filing requirements. Since then our income has increased making it no longer possible to file jointly because we each need to take advantage of the $74,000 Foreign Earned Income exclusion (Form 2555) in order to protect that part of our income. What are my options at this point? Must I recharacterize back to a traditional IRA? Or can I keep the Roth, but no longer contribute to it until I return to joint filing status, which I anticipate in 3? If so, can I establish a traditional IRA in the interim and make contributions therein?

2) To further complicate matters, I misunderstood the Roth IRA tax implications in '98 and need to submit an amended tax return for '98 and '99. I am in the need of a tax advisor available for consultation over the internet, as I will not be returning to the US until February.

Any recommendations would be greatly appreciated.

Glenn

Can a church affiliated health care organization convert an acquired (through a corporate acquisition) ERISA db retirement plan to church plan status?

I noticed in the Special Tax Notice that the 10% penalty is not required for medical expensed in excess of 7 1/2%. Are there any other times when the 10% doesn't apply?

Where is the best place to learn about new comparability plans on a self study basis?

My client has a 403(B) plan that has a matching contribution and is therefore subject to ERISA. I am preparing the 5500 for the plan and per the 1999 5500 instructions need only complete Parts I and II (lines 1-5 and 8). What do I do about the SAR? The SAR is a summary of the 5500. The 5500 has very little info. on it. Per the DOL regs, "any portion of the SAR which would require info which is not required to be reported on the 5500 may be omitted on the SAR." Do plan sponsors even do SAR's for 403b's or is there an abbreviated version that is suggested?

Individual is a sole proprietor w/ a sep plan, this yr he became a 1/3 partner in an LLC. If the LLC establishes a plan my opinion is he is able to participate in that plan without any consideration given to the sep. He will continue to have income from both and wants to continue to fund his sep.

no affiliated service group exists.

Am I missing anything?

When doing top heavy testing, is the forfeited portion of a distribution included?