I have a 401k plan that consists of deferrals and employer match only. The plan became top heavy during FYE 5/31/00. Does the employer have to make a 3% non-elective contribution to all eligible employees for the 5/31/01 plan year?

If the plan adopts a Safe-Harbor formula for FYE 5/31/01, can this 3% top heavy contribution also be used to safisfy the 3% Safe-Harbor non-elective contribution?

Has anyone dealt with the issue of whether an ESOP trust can pay a controlling/majority value for a transaction in which the shareholders sell their shares in stages(i.e 48% in year 1 and 5% three years later). We are looking at this and there appears to be quite a bit of controversy between trustees, lawyers and valuations folks. Everyone who says its OK appear to be hanging their hat on the proposed 3-18 regs. Whereas everyone else seems to think that since those regs may or may not have been pulled, that there is no support for this proposition. I would very much appreciate your comments.

An employer is terminating a plan. His plan does not currently permit lump sums, if the lump sum would exceed a certain amount. The employer considering whether he wants to add the lump sum option for all employees.

In the meantime, the employer is sending out Notice of Plan Benefits (as required by the PBGC). The Notice going to the employees who are over the lump sum threshhold says nothing about lump sums.

Does the fact that the employer has sent out an NOPB that says nothing about a lump sum option cause the employer problems, if the employer later decides to add the lump sum option?

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Sub A is 50% owned by Parent B. Both A and B have their own 401(k) plans. Sub A is sold to another company and 15 ees transfer to Parent B. Will these ees be able to receive a distribution of plan assets from Sub A's 401(k)?

How much time does the code give the plan administrator to made the determination that a (DRO) order is a QDRO? I thought it was 18 months from the date the first payment would be required under the order.

A unit benefit plan provides that the NRD is the 1st day of December nearest the the 65th birthday. The normal form is a joint & 100% survivor annuity. The plan did not elect to come under GATT prior to 2000.

Questions:

1. May the lump sum actuarial equivalent be based upon the plan's normal form or must the AE be a life only?

2. The employer is tax exempt and also sponsors a non ERISA 403(B) (employee deferrals only) - are the 415 limits on the lump sum effected?

3. If the lump sum is not paid until 3 months later may the plan pay interest on the lump sum - if so, what rate may be used? (The retireee's 65th birthday is after the 12/1/99 NRD).

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W.J. Parks, Jr., CLU, ChFC, JD, LLM

hospital wants to know if it must give hours of service credit for on-call time. I could find no guidance in the regs or otherwise. The Wage and Hour Division deals with on-call time to determine whether it is subject to the minimum wage and overtime rules. Basically, those rules say that on-call is compensable if the employee is "engaged to wait" rather than "waiting to be engaged". In my case, the nurses and doctors are being compensated for their on-call time but may not receive enough calls to be considered engaged to wait. If these hours have to be treated as "hours of service" for pension plan purposes, there will probably be a lot of part-timers let into the plan due to on-call time. Has anyone dealt with this issue?

Kurt

employer allows part-time employees to begin participating in self-funded health plan immediately but requires them to make contribution to cover their costs. After 12 months of employment, employer picks up the tab. The result is most part-time employees wait until 12 months have elapsed before entering the plan. The employer's new administrator is taking the position that the 12 month period of unsubsidized coverage is a waiting period thus wiping out the preexisiting condition limitation. I think that employees are immediately eligible and therefore, there is no waiting period. Under my interpretation, employees who wait for the subsidized coverage are late enrollees subject to the 18 month preexisting condition clause. Anyone have an opinion on this issue?

Kurt

I am implementing a full benefits program for an incubator (internet start-ups) company.

Please let me know your thoughts on average cost to employer for everything including medical, dental, life, disability, vision and 401K (per employee). Thank you!

I work for an incubator company for internet start-ups. I am evaluating all different types of HRIS systems and internet based solutions (HR/payroll/benefits interfaces). I know there are so many different companies out there with a lot of capabilities. I have looked at the following companies:

>

> Enwisen

> Employease

> Simpata

> E-Benefits

>

I have a core group of eight employees but I will be working with companies

in our incubator that will leave us with approximately 20-25 employees but

growing (up to and over 100). I am interested in the best 100% internet

solution (payroll/benefits/HR interface) for small and mid size companies

(8 employees to over 100) Any information would be helpful (specific

advantages, disadvantages for certain systems).

>

At last! The web site has been fixed, and I have put a bunch of reports out there - please download the notes as well. I use a number of the user defined fields and you will need these.

There is a Schedule I, a number of ADP tests (they incorporate 'shifting' of unused deferrals) (sorry, no refund is suggested yet)

also a number of certificates for different scenarios, including one with a pie chart.

can't guarantee an error might not crop up from time to time, but what do you expect for free? actually, I think I cleaned up most of the problems, but watch the vesting!

many of the certs require an extra step - see the notes.

comments/suggestions always welcome.

web site is LDA-FCPA.com

[This message has been edited by Tom Poje (edited 06-14-2000).]

I've been told that in an ESPP the max # of shares an ee can purchase is set in stone as of the first day of the purchase period (equal to the $ amount deferred divided by the lesser of the purchase prices offered throughout the purchase period), such that if the purchase price drops, the ee gets the benefit of the lower purchase price, but can't purchase more shares than they would have purchased at the beginning of the purchase period under the higher price. The difference is refunded to the ee.

Does anyone have a source that will confirm this principle? Many thanks.

Under the commonly used registration exemptions the sale from an employer to participants is exempt from registration. How does a 1042 transaction fit into this? Is this considered a sale directly from the selling shareholder to the participants and therefore not eligible for an exemption? Or is the employer considered to be offering the securities to the plan by permitting the 1042 sale? Can the selling shareholder sell to the employer who in turn sells to the ESOP and still be eligible for 1042 and the exemption?

An employee failed to enroll for health coverage during a mandatory open enrollment (Oct. 99) so her previous coverage was terminated eff. Jan. 2000. Employee now states that she was never notified that there was an open enrollment and should have been notified that coverage was terminated and should have received a COBRA notice. Since loss of coverage due to Open Enrollment is not a COBRA event do we have anything to worry about? Employee is threatening to sue the Company based on failure to advise her of OE and COBRA. What are our risks?

Does anyone have a good source for these rates on the net?

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dmt

Is there such a thing as a top hat severance plan? Specifically, a severance plan that does not meet all three elements of the exemption from ERISA pension plan status under DOL Reg. Section 2510.3-2(B) BUT which is limited to a select group of highly compensated or management employees?

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Scenario: Two-corporation controlled group 401k plan with match that is 100% vested. Each employer is contributing to the accounts of their employees only.

Question: To properly complete form 5500, should box A(2) be marked (single-employer plan), and a separate 5500 completed for each member of the controlled group? If so, are assets, participant count etc. reported in total on each form, or divided and reported on the respective member form?

This is my understanding of the instructions (page 10). It seems very illogical. Any suggestions will be appreciated.

A plan does not provide a lump sum option, but pays lump sums < 5,000 using PBGC rates. The company is merged w/ another company into a new plan. The new plan allows for lump sums under GATT (includes lump sums > 5,000). Is it reasonable to require that for a participant that was in pre merged plan to say that his pension accrued at time of merger must preserve the PBGC rates for his lump sum (even though a lump sum was not an option, except for small pensions)?

Say an ee retires at age 60. The cash balance plan states that the immediate annuity is equal to the act equiv of his account balance. Isn't it required that the plan determine accd ben. as the account balance projected to 65, then converted to an annuity at age 65, then reduced for early commencement at age 60? Is it allowed to have the early ret ben as simply the act equiv of acct bal at rerm date?

An ee retires at age 50 w/ an early ret ben reduced by 50%. He is rehired at 55 and retires at 58. His pension ceased upon reemployment, but no notice was given. The law provides that his pension s/b actuarially increased if Notice is not given. My question is what pension s/ act increased? His original reduced early ret ben., his original early ret ben (ignoring the early ret reduction), his final accd ben at his age 58 ret, or something else?

Curious to hear any comments.