Am I correct that, when Plan A is merged into Plan B, all participants that had been reported on past Schedule SSAs for Plan A (and have not yet been paid or forfeited) should be reported on the Schedule SSA for Plan A in the year of merger as Code C?

If one of our 457 members receives a hardship withdrawal from a 403(B), must we stop his deferral to our 457 plan?

At one time we were part of a university, however, when we split away, we froze our employees' participation in the university's 403(b)and began our 457 plan.

One of our employees has applied for a hardship withdrawal from the 403(B) but not from the 457. (1) He has more funds in the 403(B) and (2) his request meets the 403(B) hardship withdrawal guidelines but not the more restrictive 457 guidelines.

If he were to be approved for a 457 emergency hardship withdrawal, we would stop his current deferrals. But, we cannot find any information on whether a similar withdrawal (from another plan) would have the same requirement.

Are we required to stop his current deferrals.

Assume a pension plan satisfies the QJSA component of the

QJSA/QPSA rules by providing the following benefit forms:

(1) an annuity for the life of the participant with a survivor annuity for the life of his spouse which is 50% of the amount of the annuity payable during the joint lives of the participant and spouse (the "normal form of benefit");

(2) an annuity for the life of the participant with a survivor annuity for the life of his spouse which is 60% of the amount of the annuity payable during the joint lives of the participant and spouse;

(3) an annuity for the life of the participant with a survivor annuity for the life of his spouse which is 70% of the amount of the annuity payable during the joint lives of the participant and spouse; and

(4) a lump sum distribution which is actuarially equivalent to the normal form of benefit.

As I read the final regulations under 411(d)(6) which were

issued last week, the plan could be amended to eliminate,

for example, all benefit options except (1) and not violate

the Code's anticutback rule. Alternatively, the plan could be amended to eliminate (1), (2), and (4), without violating the anticutback rule. Is it true that any combination of optional benefit forms may now be eliminated so long as the plan retains one benefit form that satisfies the QJSA rule?

Assume a pension plan satisfies the QJSA component of the

QJSA/QPSA rules by providing the following benefit forms:

(1) an annuity for the life of the participant with a survivor annuity for the life of his spouse which is 50% of the amount of the annuity payable during the joint lives of the participant and spouse (the "normal form of benefit");

(2) an annuity for the life of the participant with a survivor annuity for the life of his spouse which is 60% of the amount of the annuity payable during the joint lives of the participant and spouse;

(3) an annuity for the life of the participant with a survivor annuity for the life of his spouse which is 70% of the amount of the annuity payable during the joint lives of the participant and spouse; and

(4) a lump sum distribution which is actuarially equivalent to the normal form of benefit.

As I read the final regulations under 411(d)(6) which were

issued last week, the plan could be amended to eliminate,

for example, all benefit options except (1) and not violate

the Code's anticutback rule. Alternatively, the plan could be amended to eliminate (1), (2), and (4), without violating the anticutback rule. Is it true that any combination of optional benefit forms may now be eliminated so long as the plan retains one benefit form that satisfies the QJSA rule?

We are in the process of adding new and/or creative benefits for our <50 employees. Does anyone have any ideas? I've keep hearing about free (to the company) benefits but can't seem to find anything. Any suggestions?

I am inquiring if a Qulaified Plan is allowed to invest in a Limited Partnership and / or a Venture Capital Fund. If allowed, I would appreciate if you can tell me the section of the code where I can find this information. Also, if there is any liability the plan should be concerned about. Any help is greatly appreciated. Sincerely, A Milano

I'm trying to find authority on the issue of whether or not enrollment meeting gifts and giveaways (provided by the plan service provider and not the sponsor) constitute a prohibited transaction. The types of gifts and giveaways we're talking about generally are nominal in scope (calculators, pens, etc.) and may be accompanied by food and beverage (of the adult variety!) as an inducement to get employees (and sometimes spouses) to attend the meetings. I can't seem to find any good discussion or authority on point. Any help would be appreciated....

I would appreciate input on the extent to which the prohibited allocation rules apply to "recycled" shares. PLR 9001035 seems to indicate that shares may be allocated to all participants without regard to the section 1042 rules if they are allocated to "permissible participants" and are either distributed and sold back to the ESOP or are simply reallocated because the participant takes a cash distribution instead of stock.

I have seen articles that seem to unanimously say otherwise. How are most administrators handling the recycling of 1042 shares? What about forfeiture reallocations (which aren't addressed in the PLR)?

A cash balance plan preserves an early ret. subsidized benefit. The CB plan allows for lump sums, prior plan did not. A person who retires early w/ subsidized annuity benefit wants a lump sum. Must it be required that the person get PVAB of early ret benefit (under 417) or could they pay a lump sum equal to PVAB of deferred to age 65 benefit (under 417)?

It would seem that they s/ get PVAB of immediate annuity.

Any thoughts?

A plan provides a life annuity for retirees and upon death 50% of gross benefit(benefit is reduced at age 65) to surviving spouse. Much like a 50% j&s. However, if the person does not have a spouse he gets a life annuity. It would appear that a person w/out a spouse (or one choosing a life annuity) should get an annuity that is increased in order to be the actuarial equivalent of the normal form w/ a spouse. I am most concerned with opinions related to the case where an individual does have a spouse, but wants a straight life annuity. i.e. should it be increased?

Any thoughts?

Assume a pension plan satisfies the QJSA component of the QJSA/QPSA rules by providing the following benefit forms:

(1) an annuity for the life of the participant with a survivor annuity for the life of his spouse which is 50% of the amount of the annuity payable during the joint lives of the participant and spouse (the "normal form of benefit");

(2) an annuity for the life of the participant with a survivor annuity for the life of his spouse which is 60% of the amount of the annuity payable during the joint lives of the participant and spouse;

(3) an annuity for the life of the participant with a survivor annuity for the life of his spouse which is 70% of the amount of the annuity payable during the joint lives of the participant and spouse; and

(4) a lump sum distribution which is actuarially equivalent to the normal form of benefit.

As I read the final regulations under 411(d)(6) which were issued last week, the plan could be amended to eliminate, for example, all benefit options except (1) and not violate the Code's anticutback rule. Alternatively, the plan could be amended to eliminate (1), (2), and (4), without violating the anticutback rule. Is it true that any combination of optional benefit forms may now be eliminated so long as the plan retains one benefit form that satisfies the QJSA rule?

I have a takeover plan which was amended 12/28/94 from a PIA offset formula to a unit benefit formula. The amendment was made effective 1/1/89. Do I have to grandfather the PIA offset AB as of 12/28/94?

Second question: what might one use as assumptions in calculating the PIA in this situation (ex: actual salary history and then a salary scale going back, level future salaries, 3.5% wage base, 3.5% CPI)? I will try to duplicate the prior administrators work, but some background info will help.

Thanks.

401(k) Plan provides for immediate eligibility and entry into the Plan. Sponsor wants to test "under 21/1 participants" separately in 401(k)/(m) test.

Assuming plan year is calendar, I'll use 1999 plan year for an example. Who is tested separately in the 1999 test?

Is it employees who are hired after 1/1/99 and would not have a year of service as of 12/31/99?

Or is it employees who are hired after 7/2/98 and would not enter the plan if the plan stretched out entry as far as allowable under the code - to the 1/1/ or 7/1 following one year of service?

Has anyone obtained any informal reading from the IRS on the permitted frequency for participant investment election changes under a non-qualified deferred compensation plan? I have seen PLRs approving plans which allow participants to change their investment elections as frequently as monthly and 3x per quarter. Would daily or weekly elections be permitted, analogous to a qualified plan? Theoretically, I see no difference between monthly and daily changes for non-qualified plans; however, this may be

a "smell-test" factor more than anything else. Your views are appreciated. Thanks in advance.

Our cafeteria plan provides for salary reduction for health premium payments by employees. We have an insurance "subsidy" which, if unused to purchase health coverage, is mostly given to the employee. We do not consider this "subsidy" to be part of the cafeteria plan as not all employees (based on date-of-hire) are eligible for the cash-back feature. We have 2-tier premium rates and nothing other than medical insurance coverage for the employee to purchase with the "subsidy".

Example: Employee is on plan A. Plan A premium is $180 for single, $480 for family. $460 per month in "subsidy" is available to the employee, so employee's monthly cost for coverage is $20, which is taken pre-tax.

If an employee receiving the "subsidy" drops their last dependent, their rate goes down by a significant amount and they would be eligible to receive most of the "subsidy" amount in their paycheck. This is fine during Annual Enrollment or if we are within 30 days of a family status change event.

But it is now September and the employee comes in to drop their spouse and it is determined that the date of the divorce decree was April 6th. We can make the premium change prospective, effective October 1, and drop the spouse retroactive to May 1 (if the plan allows). We will take whatever credit the carrier permits. The employee wants the premium credit back to May 1 ($300 per month).

1) Based on the regs, we cannot retro the election change for the employee, thus the employee's $20 per month salary reduction for June-Sept cannot be refunded.

2) But what about the "subsidy" dollars, which are not considered part of the Cafeteria Plan? Can these be refunded to the employee or are they also forfeitted?

Sorry for the long winded story. Any thoughts or comments greatly appreciated.

I am inquiring if a 401(k) plan is allowed to invest in a Limited Partnership and / or a Venture Capital Fund. If allowed, I would appreciate if you can tell me the section of the code where I can find this information. Any help is greatly appreciated. Sincerely, A Milano

It is unbelieveable that the Schedule SSA instructions do not define what the phrase "deferred vested benefits" mean.

Here's my situation:

I am a sole proprietor. My business has a profit sharing plan with 15 employee/ participants. I make discretionary contributions to the plan each year for each participant. The plan has "NO" 401(k) feature and the employees "DO NOT" contribute to the plan on either a pretax or after tax basis. All contributions are from me (the employer).

Some participants (with a vested balance) have terminated employment with my business. Their vested account is still in the plan. The plan expects to make a "lump-sum" distribution to them in a couple of years.

Here's my questions:

1) Is their vested account balance (which is still held by the plan) deemed a "deferred vested benefit", which requires the plan to attach a Schedule SSA to its Form 5500 until the lumpsum distribution is made ?

2) Since no employee deferred funds were contributed to the plan, does the plan even have to file a Schedule SSA ?

3) What in the world is a "deferred vested benefit ?

We have a profit sharing plan adopted in 1999. No contributions were made during 1999. It is my understanding that a 5500 still must be filed. However, it has been expressed to me that since there is no money, a trust has not been established and the 5500 filing is not required. Which view is correct?

Which type of plan do you use if the employer wants to offer only voluntary pre-tax employee contributions - no employer contributions. Very small employer.

On August 2, 2000, the California Attorney General issued Opinion No. 00-204 to the California Department of Financial Institutions regarding California 457 plans, though it may have implications for 401(a) plans and may serve as a precedent in other states. The conclusion is both puzzling and troubling, and will directly impact any bank or trust company holding custody of California 457 plan assets. Indirectly, it could have a significant (adverse) cost impact on California plans.

The opinion states, in essence, that a bank or trust company holding assets in trust for a 457 plan must pledge collateral against the bank's insolvency, bankruptcy, etc. By way of background, state governments (and, I believe, the Treasury Department) require that state assets placed on deposit with private banking institutions must be protected via a pledge of securities (based on a legal list). In other words, unlike most depositors, a governmental entity becomes a secured creditor of the bank. Banks agree to this b/c of the huge amounts of $$ involved. But, this is usually thought of as applying to commercial accounts, not trust accounts.

In California, it appears that the amount required to be pledged ranges from 105% to 150% of the value of the assets on deposit, depending on the types of assets pledged. Moreover, the pledged assets (1) must be held by a California-based institution and (2) generally are limited to certain low-risk/low return securities. In other words, for every $1 held in trust, the bank may have to have up to $2.50 in assets set aside.

Am I missing something here? Aren't trust assets in effect already fully secured against the bank's general creditors?

Perhaps worse, as the main point of the legislation is to ensure the return of principal, does this in effect turn every California 457 trust into a form of synthetic BIC, with the bank required to guarantee against loss of principal?

Finally, note that logic of the AG's opinion would appear to apply equally to 401(a) and other trusts.