A Plan sponsor (company) sells 88% of its stock to 6 or 7 entities. They will continue to use the remaining stock to make aquisitions. The hiring and firing of all the employees will remain under the control of the original plan sponsor entity. however, all payroll and benefits will be handled by a leasing company going forward.

should these people get paid out or is it a same desk rule scenerio?

Form 5500, Schedule H, Part IV, Question 4i, asks if a plan holds assets for investment? The instructions give a format to use and a whole list of assets that are excluded for this purpose. Mutual funds are one of the assets that appears to be excluded. So, if a daily 401(k) plan is only investing in mutual funds, do you answer question 4i "No" and thus are not required to complete or attach a "Schedule of Assets Held for Investment Purposes at End of Year?

Does anyone have any information or articles regarding the possibility of reinbursement for unpaid/noncovered medical expenses for an executive?

My memory is getting rusty. I cannot remember when the new Dollar Limits for EB Plans are usually released.

Didn't GATT set the requirements for WHEN the limits had to be adjusted for Cost of Living? Was that in October? (I tried searching on the internet (TAG) but couldn't find anything specific, even looking under GATT, Uruaguay Round Agreements or Dollar limits, etc.)

If your plan has a last day requirement for a match contribution, are the participants who are excluded from the match contribution on this basis also excluded from the ACP test?

I have a question I was hoping someone might be able to help me with.

If I elect a Code section 1042 deferral of gain on a sale of employer securities to an ESOP does such an election also operate as a deferral of gain on the sale under California tax law, such that I will not be responsible for California state taxes until I sell such replacement securities?

Thanks!

Must a 457 plan contain language about 401(a)(9) minimum distributions?

May a 457 plan make all required minimum distributions based on the life expectancy of the participant only (without giving the participant a choice to use joint life expectancy with a designated beneficiary)?

I have a prospect whose plan has a CDSC of 2% if they move the plan within the next four years. I have discussed it with my company (we are a bank if it matters) and we are willing to "pay" or "cover" the CDSC to get the plan. I know insurance providers will cover the CDSC but I do not know how it is done.

I have been told that the existing provide will take the CDSC out of the assets before they transfer the plan. How do we properly "replace" the assets to the plan? Can my prospect "require" the existing investment provider to bill the company for the CDSC instead of charging it to plan

assets? Thank you for the assistance?

Plan specifies that gap income is to be attributed to corrective amounts using safe harbor 10% method. The plan year being tested is a short one of three months (10/1/99-12/31/99), so the dollar amounts of both the excess contributions and the attributable income for the plan year are low. Taking 10% of that amount per gap month seems to produce an artifically low gap income amount, and does not jive with what I have always thought was the concept of the safe harbor formula. However I do not find anything requiring any adjustment for a short plan year. Any thoughts?

What happens when a C-Corp. greater than 5% shareholder

borrows from the Profit Sharing Plan and then proceeds

to convert to an S-Corp prior to the loan being paid off?

Is there relief in that the loan was proper at the time

it was made, or is it deemed improper at the point when

he becomes a more than 5% owner of the S-Corp? Anyone have

any ideas or is there guidance?

A small employer sponsors a profit sharing plan. The owner is trustee. The owner is also the world's best investor. On a hot tip he used about 90% of the plan assets to purchase options. Lost about 60% of the plan assets. He wants to make up the losses to all of the participant's accounts, except for his own account.

Can he make restorative payments to the plan based on his own determination that a fiduciary breach has occurred?

If so, can the restorative payments be made to only non-key accounts?

Are the restorative payments deductible for the plan sponsor?

The DOL voluntary fiduciary correction program doesn't cover this; is there a program that would cover this, or does the fiduciary just wait for a DOL audit?

Self insured health plan wants to permit employees to waive health insurance co-pays for the specific purpose of one-day prostate cancer screening. Any ERISA, tax or other issues?

I was talking with an employee benefits attorney the other day about whether a governmental plan should obtain a favorable determination letter from the IRS that the plan satisfies those portions of the qualified plan rules applicable to governmental plans.

The attorney mentioned that if the governmental plan applies for a determination letter, the plan is now, somehow, subject to some or all of the qualified plan rules from which the plan would otherwise be exempt.

Is this true?

While I have only very limited experience with governmental plans, this seems like an odd rule to me. Nothing in the Form 5300 instructions suggests such a rule.

If, in fact, there is such a rule, does anyone have a citation? The attorney who mentioned it did not?

Thank you very much!

Is there any guidance within top-heavy regulation regarding the correct way to test plan year the amends from fiscal to calendar, thus creating a short plan year?

Plan Year #1: 07/01/98 - 6/30/99

Plan Year #2: 07/01/99 - 12/31/99

Plean Year #3: 01/01/00 - 12/31/00

What is the correct determination dates to test this plan for year 2 & 3?

We have several profit sharing plans with 401(k) & 401(m) provisions. In several of the plans the (k) & (m) benefit all eleigible NHCE's and there is no profit sharing contribution made. In completing Line 3 do I complete separate Schedule T's for the disaggregated parts or do I just check 3(B) & 3(d)?

Line 4 provides space for disaggregated parts, but I don't get to line 4 and Line 3 does not provide space for disaggregated parts.

Any guidance is appreciated.

I am currently testing a new comparability formula under the final Regulations adopted in 1991. Under these regulations, there are two parts required for use of the average benefit test. 1). The plan must pass the ABP test of 410(B)-5 and 2). Each rate group must satisfy a modified coverage test under Reg. 1.401(a)(4)-3©(3). Part 1 is easy enough to test, but Part 2 is a little confusing. Am I correct in that each rate group only has to be at least as great as the lesser of the NHCE midpoint or the plan's ratio %? For example, if Rate group #1 has ratio % of 45% (which clearly fails the ratio % test), and a midpoint of 21.88% (95% NHCE Concentration), does Rate group #1 pass the modified facts and circumstances portion of the Average Benefit Test? (assuming Plan passes plan ABP test of part1).

These testing seems to stretch the interpretation of new comparability testing. I am hesitant to proceed further with any plan designing since this modified testing is not "in the normal testing parameters" as well as the Treasuries current inquiries.

Any insight would be much appreciated.

Can a plan choose to designate the same method of minimum required distribution (for example, single life for all paticipants, even if married) for all participants, or must participants be given a choice? Is the answer different for 457 plans?

In Connecticut, a husband and wife can have what is called a "mediated divorce", wherein the court appoints a mediator and the happy couple agrees who gets what. The mediator prepares documents for the court to sign that, among other things, provides for a distribution to the former spouse from the qualified plan. This document is not a DRO and I'm not convinced the plan should accept it. Obviously, the participant does not wish to incur attorney fees, but I am inclined to insist on a real DRO before processing the distribution. Question is - is there any type of agreement, other than a QDRO that would be acceptable? I have heard that in some instances, there is.

SAR (hyperprep generated) for 1999 plan year the first paragraph indicates that the annual report has been filed with the Internal Revenue Service, as required under ERISA ..... Is this still true especially since the Form 5500 is now filed with DOL?????

Here's a completely theoretical question but thought-provoking.... Let's say a plan year just ended on 6-30-2000, and now the company is changing to a 12-31 year end, so there's a short plan year for the rest of 2000.

We have an HCE who already deferred $10,500 in the first half of 2000. I would like to at least suggest that the participant is not eligible to participate in the 401(k) arrangement in the plan year, or the 401(m) match arrangement (assume no post-tax allowed.) I mean, it could be lousy not having a zero in your ADP test (not eligible to defer), but it may improve your coverage ratio for the 401(m) part of the plan.

I doubt there's any code to back me up, but what do the experts say?

--bri