Does it make sense that the beneficiary be issued a 1099R for the outstanding loan of a Participant? Somehow this doesn't seem right but this is what the Insurance Co. says is correct! Thanks for any help.

Could an employer make contributions to an ESOP in order to make distributions to participants who have terminated? Where in the Code or Regs. is this allowed or disallowed? Should the employer make an interest free loan?

Historically we have charged plan participants a loan administration fee when he/she takes a loan from a DC plan. We are thinking of charging the participant an annual administration fee as well (paid from plan assets). I have been unable to find any regulations addressing annual fees. Are there restrictions out there I should be aware of? Cites appreciated.

I have an employee who was transferred from our UT office to our KY office mid-year. He had been incurring dependent care expenses in UT and had enrolled in the Dependent Care FSA during open enrollment 1/1/00. Because of his transfer from UT to KY, his wife is no longer working and is keeping the children at home. Does this qualify as a change of status and allow him to terminate his contributions to the FSA?

At a recent Washington D.C. conference (Sept. 1999) on governmental benefit plans, IRS reps indicated that the catch up elections apply on an employer-by-employer basis. I believe that Bob Architect (the 403(B) guru for the Service) made the statement. That is the approach I am taking with regard to the two IRS 403(B) audits I am handling now for school district clients. Hope that helps.

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When terminating a cross-tested plan, what is the answer to question 13(a) on Form 5310: Did the plan satisfy the ratio percentage test of section 410(B)(1)(B)?

Also, on Schedule Q, line 5(o), I assume the answer is average benefit test. Correct? Should line 6 be checked yes and Demo 5 attached? Thanks.

I'm interested in hearing how employers are handling the situation where an employee misses an enrollment deadline, e.g., to enroll a new dependent. Say the plan has a 30 day enrollment window and the employee requests enrollment after the window closes. Do you allow administrative exceptions? What would an employee have to show to qualify for an exception? Ever been sued over this issue? Assume no cafeteria plan issues.

Thanks for your insights.

My wife and I run separate businesses (corporation and partnership respectively). We file separately to keep things neat even though we pay more in taxes.

We are not permitted to convert our IRAs to Roth IRAs and ineligible for contributions since we each make over $10,000.

What justification did Congress have for precluding us from using Roth IRAs?

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In a stock sale by shareholders of an S corp of all the S Corp stock to a C corp- is there a trigger. Since the C-corp will continue to make contributions etc, I think not, but I wonder is the S-corp status makes the analysis any different or if I need to focus on this as an issue. Please give advice. Thanks.

Client is doctor's corporation with a DB plan. The plan is overfunded by approximately $2 million. What are the mechanics of "selling" this overfunded plan to a third party? Is the transaction acheived by merging the doctor's corporation into another entity or is a portion of the plan spun off an then sold? I am a DC guy without much DB experience, so cites to good secondary sources would be helpful.

I am told that the going discount for this sort of transaction is about 30% (ie the doctor will get about $.70 on the dollar). Is this in the ball park?

Thanks in advance.

Effective 1/1/01, a client will permit participants to transfer up to 50% of their account balance into a brokerage account. They will then be able to buy and sell securities that are traded on national exchanges (no options however). Does anyone have a form of waiver that has been used advising participants of the risks associated with such investing and indicating that participants will not look to plan sponsor for redress if the investments perform poorly? Thanks for your help. Ed

A controlled group will exist later this year when six holding companies are merged. Each separate bank currently maintains a 10% money purchase plan and a discretionary profit sharing plan (ranging from 0% to 15%, with an average contribution of 7.5%). Certain HCEs will continue to receive compensation from more than one but less than all banks. New single holding company is trying to determine what to do with plans.

Option 1 would allow the plans to be separately maintained. This would require that each HCE receive compensation from each bank. That would allow each plan to satisfy 410(b)on a stand alone basis. 415 limits would not be exceeded. Instead of an HCE getting $150,000 from bank 1, he might receive $100,000 from bank 1 and $10,000 from each other bank.

Option 2 is to merge the plans. The employer would be required to run the ABT under 410(B). Difficult to predict.

Option 3 is to try to satisfy QSLOB requirements. Difficult to show separate management and 50 employee requirement.

Am I missing anything? Thanks for your thoughts.

We recently took over a PS/(k) Plan that appeared to be a straightforward Plan written into a custom document. Recently, the client and broker have mentionned that the ERISA atty writing these docs said that the plan is a "MEWA". My understanding of MEWAs under ERISA is that these are welfare benefit arrangements, not pension plan arrangements. My ? is - can a pension plan be a MEWA and if so what is different about the document and/or the operation/administration of the plan.

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Our LTD carrier sent us an invoice for the match portion of a person on LTD. It is our first LTD case. This surprised me as I assumed that we would not have to match the employee portion. If the person is in a terminated status (i.e., on LTD), why would I have to pay the "employer" portion? Will I have to continue to pay this forever?

I have a 401(k) plan that has no employer money (deferral only). The plan is top heavy. Does the plan have to be amended to include an employer contribution (source)to accomodate the minimum contributions? Thanks. Any references would be helpful.

we have had our annuity for 10 years and have 35,000. we were denied a loan from this acct. so we need to if we can do an early withdrawl. we are aware of the taxes and penalties that may go along with this idea.can they deny an early withdrawl if we are willing to pay taxes and the penalties? is there something specific we need to request from them? they don offr any info.

A company is acquired in an asset purchase and the acquired company's 401(k) plan is merged with the acquiring company's 401(k) plan.

Is this a related or unrelated rollover, or something else? Included in top heavy test or not?

One company acquires the assets or stock of another company. Both the acquired and acquiring companies have plans. The two plans are merged. I understand that service must be granted in the merged plan for service with the acquired company.

May those employees from the acquired company that meet the eligibility requirements of the merged plan on the date of the merger be required to wait until the next entry date of the plan or must they enter the plan immediately?

Can anyone refer me to articles, briefs, bulletins etc. that expand on Publication 504: Divorced or Separated Individuals? For example, if a QDRO includes child support and alimony from retirement plan, how is tax computed? What if amounts are not detailed and the ex-spouse is named as recipient of all - must all amounts be taxable to the ex-spouse?

What are the ABC's of administrative review? When commencing administrative review/appeal of a rejected claim for life insurance benefits per an employee benefit plan, what is the usual process? How is the record submitted for review and what party determines what the record to be reviewed contains? What does the record normally contain? What access does the claimant have to evidence and/or documents in the record? Can claimant call attention to or request review of certain speicifc items in the record?

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John R