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

Former company permits 401K diversification of 10% of total ESOP valuation as calculated on the last fiscal year, Sept. Employee diversification opportunity notification arrived 3/28.

As an employee of 12+ years, I was notified of termination on 3/20 with a final employment termination date of 4/14.

Termination guarantees employee rights to first distribution which can be rolled into an IRA. The company has complied to this.

Based on review of articles of the plan, it is my contention that I am also entitled to the diversification rollover as an active employee not only for all of fiscal 99 on which the diversification value is based but as an active employee for the first half of fiscal 2000 and through 4/14.

I have made my case to the corp, they have not responded. I am interested in knowing if anyone has found himself in the same situation and was able to obtain a rollover resolution from his company.

Am interested in any law, organizations that represent employee ESOP rights.

We have a profit sharing plan based on a Corbel document that does not seem to address how to correct a failed 410(B) test. There are 13 NHCEs participating at some point during the year in question, but only 9 are entitled to receive an allocation. All of the HCEs are eligible for an allocation - meaning that I need at least 10 NHCEs to pass the test (I assume you have to round up after calculating 70% of NHCEs). Plan is not top heavy.

The document has both a 1,000 hours and a last day of the year requirement for a participant to receive an allocation. The four remaining NHCEs were new participants who terminated during the year, 2 with >1,000 hours and two with 500-1,000 hours.

I've heard about the "failsafe" method that lowers the hours requirement until enough participants receive an allocation so that 410(B) passes, but I don't know how I could use this here - I only need 1 more NHCE and there's 2 with more than 1,000 hours. I'm guessing you can't just give an allocation to the one with the most hours.

Would the solution be to waive the last day requirement as the "failsafe" and give an allocation to the 2 terminated participants with >1,000 hours? Are there other options and can they be used without the document specifying them? Any info is much appreciated.

Can anyone recommend a good source for E and O insurance? I have a small TPA firm (no product) and am surprised that the half dozen or so huge national insurance firms that I contacted at random don't even offer this. I found several firms via the internet (all in other states) and they all recommended using a firm in the state where I'm located - Arizona. All info will be much appreciated.

This would be a prohibited transaction, correct? The brokerage firm is a party-in-interest and they are essentially loaning money to the plan. Has there ever been a DOL exemption for something like this?

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Andy Treece

Employer maintains a number of nonqualified plans for elective deferral of bonus and other incentive compensation. A rabbi trust holds assets to fund such payments in the event of a change in control, etc. Employer is forming a joint venture in which it will have an exact 50% ownership interest. A number of employees who have deferred compensation are being asked to terminate service with the employer and become employees of the joint venture. In ordinary circumstances, their termination of employment would trigger distribution of their nonqualified deferred compensation, but the employer wants to "spin off" the deferred compensation liabilites and transfer rabbi trust assets to a deferred compensation plan and rabbi trust to be established by the joint venture company. The employees will not be given an opportunity to do anything with respect to the proposed process (because of constructive receipt issues).

My question: does anyone know of an IRS

ruling or GCM/TAM which addresses a rabbi trust "spin off" to a non-related entity?

I'm grateful for any thoughts you might have on the proposed transaction.