I have a client that is converting its DB plan to a Cash Balance Plan and a couple of issues have come up and I cannot seem to find guidance - perhaps the answer is so simple that there is no guidance out there - please help if you can:

1) if a participant terminates employment with the employer, but is not going to commence benefits until a later date, can the employer require the employee to make a choice as to whether he is going to keep his benefits under the old DB plan or whether he will elect the cash balance benefits at the time of termination -- instead of allowing the employee to defer the decision until he actually decides to retire?

2) my client will have two categories - group A has a choice between the DB plan and the cash balance plan, group B has to choose the cash balance plan. If an employee transfers from group A to group B what what is the consequence, since now the employee is a member of a group who does not have the option of participating in the DB plan?

Forgive me if these questions seem elementary, but I am a new attorney just getting started in the employee benefits area. Thanks for your help.

A small closly held employer with a non-leveraged ESOP wants to terminate the plan before this year end, and begin distributions immediately. It is a calendar year plan. Must a new stock valuation be done, and if so, what date is the valuation for? The termination date?

Distributions of amounts less than $200 are not required to be eligible for direct rollover and are not subject to mandatory withholding. The language in the 402(f) notice does not apply to these situations. Therefore, shouldn't plan administrators be able to immediately make distributions to terminated participants with less than $200 vested account balances without providing the 402(f) notice and without waiting 30 days? It would seem a cover letter with the check explaining the 60 day rollover rule would suffice.

QDRO- Should the segregated funds due a QDRO recipient unpon retirement of the Plan Participant be reported on the SSA in the year in which the funds are segregated? I believe so, and intend to report them as such. Any comments?

Does a foreign governmental health plan qualify as "health insurance coverage" so that loss of such coverage qualifies an individual for a Special Enrollment Period?

To qualify for a Special Enrollment Period, Section 2590.701-6(a)(3) of the HIPAA regs state that the individual had to have been covered under another group health plan or had other insurance coverage at the time the coverage was previously declined.

It is clear that a foreign governmental health plan would not meet the definition of "group health plan" set forth in IRS Code Section 50000(B)(1).

Section 2590.701-2, Definitions, of the HIPAA regs defines "health insurance coverage" as benefits consisting of medical care (provided directly, through medical insurance, reimbursement, or otherwise) under any hospital or medical service policy or certificate, hospital or medical service plan contract, or HMO contract offered by a health insurance issuer.

On the surface, a foreign governmental health plan does not appear to qualify as "health insurance coverage," except perhaps as a medical service plan contract.

If you've had any experience with this issue, please advise!

Can anyone give me some insight into who may serve as custodian for a 403(B)(7) custodial account? Doesn't a bank typically serve as custodian? I'm dealing with a situation where an individual believes he is the custodian of the current mutual fund accounts. Is this permissible?

Employer maintains a 401(k) and an ESOP with identical eligibility requirements. Both plans provide for a discretionary match based on deferrals to the 401(k). Each year the Employer determines the dollar amount it will contribute for the plan year. Then that amount is split in halfbetween the two plans and allocated as a discretionary match based on deferrals to the 401(k). If a

participant has not deferred to the 401(k), he does not share in the contribution in either plan. A

participant in both plans will receive an identical amount in each plan.

Example: Participant defers $5,000 to 401(k). Employer decides to contribute 50% of the amount

deferred. The participant receives $1250 in the 401(k) and $1250 in the ESOP.

Q-1: May the ESOP allocate its matching contribution based on deferrals to another plan?

Q-2: Should the ACP test be run for the combined plans so that the numerator of this individuals’s

ratio is $2500, OR should there be two separate identical ACP tests using $1250 as the numerator

in his ratio?

Any thoughts will be appreciated.

I am looking for a definition of a Governmental Plan. How does one determine whether your Insurance Benefit programs qualify as a governmental plan.?

I work with a local Commission in Louisiana that is considered to be a component part of Louisanan State Government. This commission offers Health,Accidental Death and Life insurance benefits to its employees. The employees do pay a portion of these benefits through payroll deduction.

These insurance benefits are provided by National Insurance Carriers. Although during fiscal year 99 (11/01/98 - 10/31/99) the Commissions Health Insurance Program was Self Insured with an Insurance Agency providing administration of the Health Benefits.

I am trying to determine whether this commission is required to file form 5500 for these insurance benefits. The 5500 instructions indicate that Governmental Plans are exempted from reporting requirements. However there is no defintion of Governmental Plan in the instructions.

Any quidance reagrding this matter is be appreciated.

Thanks

Can anyone suggest any ideas for a small TPA looking for a service/web site/individual that makes salary/benefit comparisons for positions in our company to similiar positions in other companies in the southeast?

I am interested in any feedback from recordkeepers and other service providers that have been audited by the DOL. What were the expected vs unexpected issues that arose from the audit?

The DOL office conducting the audit is Boston, MA. The letter received is the initial request for documents with a checklist of 10 items to forward within 20 days. The audit years are 1995 - present. Requested items include:

1. Identify subsidiaries and affilitiates of the our company.

2. Identify all plans serviced.

3. All written guidelines.

4. List of all persons responsible for servicing the plan.

5. Copies of plan documents.

6. Copies of sample service / administrative agreements.

In our 403b plan, we have a group of employees who normally do not receive retirement contributions, however, they are not specifically excluded from plan participation in the Plan document. If one of these employees exceeds 1,000 hours, does that mean that we need to make retroactive contributions for those employees or would we do that on a prospective basis. If retro contributons should be given, would they be given back to the beginning of the calendar year or the employee's anniversary date.

(FYI, we monitor this group's hours to ensure that they do not exceed the 1,000 hour cap, but sometimes it is necessary to retain one of these employees for longer than 1,000 hours.)

Is anyone aware of a ruling or case that addresses the situation where a valuation for purposes of a gift for estate planning purposes is not consistent with an ESOP valuation. I recall that there was some guidance on this issue, but can't seem to find it. It seems to me that this should not be a problem as they are very different animals.

Appreciate any guidance.

We have a new group coming on with us and they have a Flex Plan. With their old carrier they had an automatic reimbursement feature where their claims were submitted through the regular health plan and anything that was not covered like deductibles would automatically be put through their Flex Plan for reimbursement through the Health FSA. It was my understanding that participants had to submit these uncovered charges to us with a request form that had a statement on the bottom saying that the claim has not been reimbursed elsewhere, etc. Do they have to have that statement every time or can they sign off on something at the beginning of the plan year so we can do the automatic reimbursement for them? Any regulations on this? Anybody have any information regarding this situation?

Can you help? I am working with a client with a loan taken out in 1986, met the $50,000 limit (which was probably less than 1/2 his vested account balance at the time) secured by his principal residence. The loan papers required that he annually pay accrued interest for the year (at what was probably a reasonable rate at the time)and one twentyfifth of the principal - obviously the loan period is 25 years.

All of this met the terms of the plan document at the time. Now the plan has been amended (let's hope so, right??) to require payments at least quarterly. Are his old loan provisions grandfathered in? or must we make quarterly payments of principal and interest based on the amended document and more recent law changes but contrary to the agreement he signed originally???

Individual converts traditional deductible IRA to Roth IRA in 1998 ($10,000). Individual elects 4 year spread of income ($2,500 spread over 1998, 1999, 2000, 2001).

Individual takes 100% distribution from Roth IRA in 1999 ($7,000) after experiencing an investment loss of ($3,000).

Question:

Is the individual's includible income in 1999 from the distribution and conversion equal to:

$7,500 ($2,500 originally spread to 1999 and accelerated $5,000 original spread to 2000 and 2001)

or

Something less considering the investment loss and total distribution of only $7,000?

If a participant in a qualified plan changes employment status from non-bargaining to bargaining and the plan does not include bargaining employees, is this a distributable event and if not, what is the participant allowed to do with the account? Is the account frozen or will the participant still be able to make changes. If the bargaining plan has its own plan, can the participant roll the assets into the plan?

Question 3 on the Schedule 'T' requests that we check "each statement" that describes the plan; however, the instructions say to check box 3a, 3b, 3c, "or" 3d. Can we check multiple boxes or should we check off just one box? If we are only checking off one box, what is the hierarchy for determining which box to check off?

How are SIMPLE matching and non-elective contributions being reported in question 4(e)? Are they both considered "non-elective" or how is this being treated?

If a Participant has already begun to receive annuity payments under a joint and survivor annuity, with his former wife as the joint annuitant, can a QDRO remove his wife as the joint annuitant? If it does, is it really considered to be "qualified," since one of the requirements of a QDRO is that it must "create or recognize the existence of an alternate payee's right to, or assigns to alternate payee the right to, receive all or a portion of the benefits payable with respect to a participant under a plan...?" In this case it would not create or recognize the former spouse's right to the annuity but would take it away. Is this the correct interpretation? Is there any authority (Regulation, Bulletin, etc.) that interprets this type of situation?

An employer has received several notices from the office of the Texas Attorney General-Child Support Division that the office of the Attorney General has obtained a child support order requiring employees of the employer to provide medical insurance to their children. In the notices, the AG office "requests" the employer to enroll the child in its health plan. The notices do not include a copy of the referenced child support order, however, and the notices themselves are not captioned as an "order" or "decree" of the AG office.

The employer has been taking the position that the notices do not constitute QMCSOs because they are not "judgments, decrees or orders" (under ERISA Section 609). Therefore, the employer has not been complying with the request in the notice to enroll the children. If the child support order were included, the employer would review it to determine if it were a QMCSO. Since nothing is included, however, the employer takes the position that there is no MCSO to review.

Is the employer correct in this position?

A client of mine had an ESOP in the early 80's. It was amended to become a Profit-Sharing Plan. The two sons of the founder were the only participants and have 100% of the stock in the plan.

One of the sons left the company to pursue other interests, and his stock holdings outside the plan were being redeemed.

Remaining participant son calls me up and tells me the corporation was disolved. What do I do about the $200k of "stock" I'm carrying on the books?