I have a beneficiary of a TSA plan that is 7 years old. Can the check me made out to her or should it be made out to her parents/guardian?

Has anyone seen any authority for (or against) the proposition that a plan may, by its terms, require distributions to be made via direct deposit, where the participant or beneficiary has a checking account to which the direct deposit may be made? The anti-alienation regs permit direct deposits, but are vague as to whether a direct deposit must be initiated by the participant. I'm guessing state laws probably require the employee's consent to direct deposit, but I'm also guessing these state laws would be preempted (I think the DOL opined several years ago that state laws concerning wage withholding were preempted to the extent they would frustrate an ERISA plan's recoupment of plan loan repayments). Any thoughts on the permissibility of requiring that distributions be effected through direct deposit?

[This message has been edited by Ed F (edited 06-23-2000).]

If a minister of a church wants to roll over his plan to another 403(B) TSA, may he do so? The organization holding this account has indicated that the plan is "not governed by federal laws" and that the plan's provisions do not allow for a lump sum settlement.

I have a plan which has a max deferral % of 10%. Two participants exceeded 10% , one an HCE, another an non-HCE. They are not over 25% 415 limit, however.

The k feature was added during 1999

Does anyone see a problem with retroactively amending max deferral % to max allowed by law effective with 1/1/99?

If you do see a problem one can certainly amend in the future but how do I correct current situation? Refund deferral in excess of 10% plus interest? How would this be classified on 1099 reporting?

This may be a ECPRS issue

Thanks

One of the employers from a controlled group of corporations wants to sponsor a health FSA for its employees only. What coverage and discrimination requirements apply?

Must an employer take salary deferrals from a bonus check in a 401(k)safe harbor plan and also can bonuses be excluded when calculating the 4% on the safe harbor match? I believe it depends on the definition of compensation in the plan document but what if the definition of compensation is silent on bonuses.

Spousal beneficiary of a 401(k) plan elected to defer distributions until the April1 of the year following the date her husband would have attained age 70 1/2. The plan failed to make distributions timely so they will need to make 2 to her this year. (Query - does she owe the excise tax or the plan?) Can she rollover the account balance except for the required minimums to her own IRA at this point and can she use her own required minimum distribution date instead of her husbands? She is only 67.

The old 5500s asked you to confirm whether, for a terminated plan, a determination letter had been requested. "No" answers to this question were always viewed as an audit trigger. I cannot find this question on the new form, or the retirement plan schedules. Am I missing something?

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Here is a variation on a previously asked question from 04/06/00. Participant of split dollar policy does not have policy in trust. Upon change of carrier, participant wants to immediately put policy in insurance trust and assign all ownership rights. Does this action invoke Section 2035, three year rule?

I received a voice message from a client indicating that the client wanted assistence in preparing required disclosure about stock option or grant in excess of 1,000,000 made to an employee. I've never heard of anything like this. Any thoughts? Thanks. Ed

Has anyone ever heard of the "flip flop" technique? This seems to be a technique where the Employer can avoid the overall 25% of pay 404a7 deduction limit where they maintain both a db and a mp plan (I realize that this isn't strictly a 401k topic but it seems close).

From what I've seen, this is done by carefully orchestrating the timing of the contributions after the Employer's fiscal year end, and it requiress very careful planning. Has anyone seen an article on this topic? We may have some clients ucurious about it; any guidance w/b appreciated!

When calculating the 15% contribution limit, can forfeitures first be deducted from the total contribution and then 15% be contributed?

For example, 15% of eligible compensation is $50,000. Forfeitures of $1,000 can be used to reduce the contribution. Can I calculate a total contribution of $51,000 so the actual contribution being deposited ($50,000) does not exceed the deduction limit?

Thanks.

Does anyone have any quick references where I can find recent research in participation rates??? You can e-mail me directly if you wish...need info fast!!!

Thanks in advance!!!

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No. Even in the context of a 401(k) plan, a plan need not require employees to suspend contributions if the employer is willing to use other means to determine whether an employee has other resources with which to meet the financial need. In a 457 plan, the safe harbor of requiring the suspension of contributions is not available, so the employer must always verify whether the employee has other financial resources which could be used to meet the financial need. In doing so, the employer should consider whether the employee plans to make future contributions only insofar as discontinuing contributions might in some instances be an alternative way of meeting the need.

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Employee benefits legal resource site

Need some help (case cites especially)on determining permitted uses of dividend or policy surplus funds from group insurance programs. Specifically, have identified excess funds from a plan that is approximately 80% funded by employee contributions and 20% employer contributions. A proposal has been made to refund the money pro rata to the parties who paid in, whether or not they are still employees. (eg. 20% to employer, 80% to current and former employees. The possible universe is 66% current employees, 34% former employees/retirees.) The environment is highly unionized.

Is anyone aware of case law that would either prohibit refunding plan monies to former employees or, conversely, would require refunding plan monies only to current plan participants?

Appreciate any thoughts or leads.

I have a new client who has always reported distributions and withholding under the employer's EIN.

I advised her that she needs to apply for an EIN for the retirement trust and report distributions and withholding under that number. She makes distributions through the plan checking account and wants to deposit the withholding in the company account and use the IRS Electronic Federal Tax Payment System (EFTPS) to deposit the withholding under the company number.

Plan counsel has since advised her that 90% of retirement plans don't have separate EINs for the trust and it is fine to report distributions and withholding under the employer's EIN. I disagree with this, but thought somebody out there might know if there is ever a situation when this would be acceptable.

Also, does anyone have experience with the EFTPS? How difficult is it to set up. This is a small plan and electronic filing is not required.

Would it be crazy to see a call option in an ESOP document providing the employer a right to purchase the stock (purchased with the proceeds of an exempt loan) that has been distributed to the participants? So as to avoid confusion, I am not referring to the Right of First Refusal but rather a full blown call option.

Appreciate your thoughts.

If a hardship withdrawal from a 403(B) plan has been issued and included earnings on the deferral balance after 12/31/1988 in error, what are the penalties, corections that must take place?

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LNM

An employer wants to enter into severance agreements with several highly compensated employees to continue their benefits for several years. The Plan from which they would be receiving benefits is self-insured. This "deal" is not offered to non-highly compensated employees who are terminated. What are the 105(h) implications? These individuals are not "retirees".

Any ideas on how or if this would implicate eligibility testing?

If the amount of severance pay does not make these individuals highly compensated in any testing year are you o.k.?

I have a 414(e) Church with a 403(B)(9) Retirement Income Account Plan. Can this plan be funded by mutual funds within a group custodial arrangement? Does it have to be funded with annuities?