A division of a company was sold. The employees affected by the sale had prior to a certain date the opportunity to 1) take withdrawal from current plan; 2) rollover to new purchasing employer plan; or, 3)leave money in old plan. If #3 was chosen, money cannot be distributed from old plan until participant terminates from new acquiring employer. No loans are allowed from accounts left under old plan according to plan document since repayment is by payroll deduction and only to parties-in-interest.

Plan also allows for IRS safe harbor reasons.

Question: can a hardship distribution be taken to purchase home by former employee who left money in old plan?

Definition of participant is "eligible employee...whose participation has not been terminated." eligible empoyee is "..person employed by Company.." Company is defined as the old employer and any successor employer.

Follow-up question: Assuming that somehow the answer will be that a hardship withdrawal is allowed, how is the 12 month suspension of salary deferral applied since the withdrawal did not come out of the acquiring employer plan?

Does anyone understand all the DFE stuff for plans with Pooled Separate Accounts? Do you complete a line item for each investment? I keep reading the instructions but can't get a grip! Thanks for any help.

I haven't seen anything come though about what the Insurance Companies are doing for 1999. Have you?

1) If an individual was mistakenly paid too little in a hardship withdrawal in January of 2000, is there any problem with letting the individual withdraw the additional amount that should have been included previously?

2) If a deferral was withheld in 1999, the withdrawal was taken January 9, and the deferral was deposited January 15, should the deferral deposited January 15 be included in determining how much the hardship withdrawal can be?

I have a client (fast food franchise) who wants to start a 401k plan. They want to exclude the hourly ee's. I need to find a plan English explanation of the coverage requirements to further our discussion. Any help will be greatly appreciated.

An HCE has excess deferrals. How is the match associated to that excess treated? Is it treated as a forfeiture and reallocated or used as a credit based on the plan's handling of forfeitures? Is it refunded to the employer? Is it distributed to the HCE? The plan is silent on this situation.

Any comments? Personally, I thought the study materials were inadequate. Quite a bit was inaccurate and ambiguous.

A large part of the required reading was not covered by the exam.

I'd like to hear other opinions.

The answer to this is going to depend on the wording of the merger agreeement (does it say anywhere that the terms of the agreement are intended to amend/modify/change the terms of the plan) and the provisions in the plan document that describes how the plan may be amended. Look at both documents careflly.

Can anyone point to some authority on the following issue (note: I am already aware of DOL Adv. Ops. 82-55A and 82-65A):

Bank trust department wants to pay referral/finder's fees to employees of its affiliate banks who refer qualifed plan trust business to said trust department. Such fee would be an ongoing annual fee as long as the trust business remains with the Trust Dept. and would be based on a percentage of the trustee's fees(which trustee fees would be equal to any 12b-1 fees received from the mutual funds, assuming that such trustee's fees are reasonable in amount).

Ex: Employee A of Bank A tells Company X to call Trust Dept. (an affiliate of Bank A) regarding acting as trustee of Company X's 401(k) plan. Company X makes the call and Trust Dept. becomes trustee of Company X's 401(k) plan. Accordingly, Trust Dept. pays Employee A a referral/finder's fee for so long as Trust Dept. continues to act as trustee of Company X's plan. The referral fee would be based on a percentage of the trustee fees. The trustee fees are equal to any 12b-1 fees/sub-trasfer fees/finder's fees the Trust Dept. receives from mutual funds in connection with the investment of the 401(k)'s assets in said mutual funds.

Prohibited Transaction?

A TPA, an insurer, who has discretionary authority under the plan to decide benefit claims, effectively denied a 47-year old participant's Group LTD Claim for "disability benefits" based on its restrictive determination that the chronic pain disorder associated with a physical disease (i.e., Fibromyalgia, Reflex Sympathy Distrophy, and Myofascial Pain Disorder with "trigger points") suffered by the participant qualified as a "mental disability" only, and not "mental and physical disability". This restrictive finding allowed the TPA to trigger contractual entitlement to 24 months coverage, as opposed to LTD benefits payable until age 65. I need help in finding applicable case law and other documentation that my tend to refute the TPA's analysis and conclusions to lend weight to a court's application of de novo review. Thanks for prompt replies.

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I am the office manager for a small IT start-up. The owners are from another country and when they started this company they assumed 2 weeks vacation was standard in the U.S. I told them that it really depends on the company. They would like to get a sense of the industry standard for a company of our size in the IT industry. We really need a full time off policy - vacation, sick, holiday, floating holiday, etc. The numbers are important.

A participant is covered under a MP and 401(k) plan. The sum of her MP + Deferrals + Match is greater than $30,000. The 401(k) plan document provides that deferrals may be returned to satisfy 415. What happens to the match associated with the return? Is it forfeited? reallocated? They are failing the ACP test and will make a QMAC.

Another alternative would be to prorate the correction between deferral and match. The excess match would then be used to reduce her matching contribution for the next year.

Any help is appreciated.

One of the plans that I work with is planning on entering into a securities lending arrangement with its trustee. Has anyone had a good or bad experience with this type of arrangement?

My company charges an administration fee and custody fee on the IRA's we service. A client has inquired to have the fees billed to them rather than charged against their IRA Account. What is the tax advantage to this? Are the fees paid directly by the IRA holder tax deductible?

Thank You, AJM

Carol, or anyone else who has filed a determination letter for a governmental plan, do you have the plan send out notice to participants re the letter filing? The regulations concerning the provision of notice (1.7476-1(B)(7) and ©(5)) are not written clearly. My reading of ©(5) is that it was written specifically to draw governmental plans into the requirement to provide notice. However, ©(5) provides that notice must be given for a determination seeking qualification for a year to which section 410©(2) applies. 410©(2) was amended in 1997 to carve out governmental plans from meeting certain "pre-ERISA" requirements. Does this mean that post-1997, notice need not be given for governmental plans? Thanks!! -Shaun

Has anyone addressed whether a pre-1989 distribution election may be changed to meet the current minimum distribution requirements. I understand that the Tax Reform Act of 1986 provides that the minimum distribution requirements will not apply to distributions that were in effect prior to January 1, 1989, but I wasn't sure if this meant that the distribution election was irrevocable, and the distribution amount could not be raised to meet the current MRD requirements.

Consider the following:

An employee elects, prior to the beginning of the plan year, to contribute one thousand two hundred dollars ($1,200) to a Health FSA at the rate of one hundred dollars ($100) per month. The employee incurs reimbursable expenses of two hundred dollars ($200) in February which are reimbursed to the employee in March.

Additionally, the employee incurs reimbursable expenses of seven hundred dollars on June 2. However, the employee's employment is terminated on June 30, at which time the employee has only contributed six hundred dollars ($600) to the Health FSA. Further, the employee's June 2 expenses have not been reimbursed as of the date of the employee's termination of employment.

Is the employee entitled to be reimbursed for the entire amount of his June 2 expenses ($700), even though he only contributed six hundred dollars ($600) to the Health FSA prior to his date of termination, and he was already reimbursed two hundred dollars ($200)?

Consider the following:

An employee elects, prior to the beginning of the plan year, to contribute one thousand two hundred dollars ($1,200) to a Health FSA at the rate of one hundred dollars ($100) per month. The employee incurs reimbursable expenses of two hundred dollars ($200) in February which are reimbursed to the employee in March. Additionally, the employee incurs reimbursable expenses of seven hundred dollars on June 2. However, the employee's employment is terminated on June 30, at which time the employee has only contributed six hundred dollars ($600) to the Health FSA. Further, the employee's June 2 expenses have not been reimbursed as of the date of the employee's termination of employment.

Is the employee entitled to be reimbursed for the entire amount of his June 2 expenses ($700), even though he only contributed six hundred dollars ($600) to the Health FSA prior to his date of termination, and he was already reimbursed two hundred dollars ($200)?

A big client was acquired by an out of state company and will be closing its doors as of June 30, 2000. Most employers either have been, or will be let go. June will be the last payroll. The 401(k) has 22 loans outstanding as of this date with approx. $277k outstanding. The loan feature was just added May 1, 1999.

Other than the possibility of the acquirer's plan permitting the receipt of rollover loans, any suggestions?

Do any of you have letters to participants with loans explaining options at plan termination?

Any words of wisdom?

Employee divorced spouse last fall, failed to notify Plan administrator to delete spouse within 30 days. Now has remarried and wants to add new spouse, can we allow him to delete old spouse or must he wait until open enrollment? Also, he wants to purchase COBRA coverage on x-spouse, do we charge him retro to divorce date, even though he has been paying for her coverage through his regular premium payment? Technically, the x-spouse is no longer eligible as of divorce date, even though the employee failed to properly and timely notify the Plan administator.

California courts routinely seek to join plans when QDROs are presented. There is a string of cases where the DOL has argued that ERISA preempts this type of joinder. The courts usually find there is no preemption (with some exceptions). Can anyone point me to a DOL document that sets forth its opinion on this matter? Thanks.