A company will offer an early retirement window as part of its qualified DB plan. Participants electing to retire will receive an unreduced pension. The company also wants to give the participants a lump sum severance payment equal to 6 months compensation and would like this benefit to be funded by the DB plan as well. The DB plan will be amended to provide for both of these benefits.

Can the severance payment under the DB plan be set forth as a lump sum amount (i.e., "Upon early retirement, a participant shall receive his accrued benefit plus a lump sum equal to 6 months compensation"), or, since benefits under DB plans are usually phrased in terms of monthly payments for life, must it be set forth as a monthly amount for life in an amount that would have a lump sum present value equal to 6 months compensation? In other words, since the normal form of benefit under a DB plan is a life annuity (or QJSA if married), must the employer determine actuarially a monthly payment for life with a present value equal to the lump sum severance amount and allow early retirees to elect to have the severance amount paid as an annuity?

A client terminated an existing profit-sharing plan and opened a new plan as a non-standardized plan, but with no exclusions. What are the rules about amending the plan, at some point in the future, to a standardized plan? Cites to IRS authority would also be helpful.

Is the Employee Stock Purchase Plan a protected benefit plan under FMLA. I was trying to locate certain language related to stock purchase plans under regulation: CFR825.209, but it is not addressed. I'm trying to determine if employees are still eligible to participate in the plan while on leave (FMLA) or can they enroll when the Initial Offering period occurs. Or, if an employee stops contributing while on leave (FMLA), will they receive the same stock price upon returning to work and starting contributions again? Lastly, is it a SEC requirement for employers to address Leave of Absence provisions in their Employee Stock Purchase Plan Questions and Answers Summary Booklet?

Do you think it is a problem if a financial institution charges individual participants a fee for transferring assets in kind that are held in a directed brokerage account (option) contained within a 401(k)? The reaon for the charge is that it takes alot more time to transfer these assets in kind as opposed to liquidation and then rollover. Is this more appropriately a plan expense?

Any word on whether or not there will be an extension beyond 10/15/2000?

I have a client that has asked about changing the name of his salary reduction agreement..He wants to take out "Salary Reduction Agreement" on the form and replace it with "Benefit Election Form". The employer says that many employees actually think they are signing a form that allows him to reduce their pay or take away pay. Any suggestions?

A company has a Money Purchase Plan and a 401(k) plan. The Company wants to terminate or merge the MPP into the 401(k) plan for ease of administration. Can the two plans be merged so the assets are simply transferred between plans with no acceleration of the vesting schedule (i.e. 100% vested upon termination of a plan)?

Are viaticals considered by the IRS as a prohibited investment for a self-directed IRA?

When using Hyperprep to complete Schedule I, the plan assets at the end of the year auto-calculates zero. When I turn off Autocalc and try to put in the assets, it gives me an error when I validate. Shouldn't the total plan assets at the end of the year be listed in #1 column b?

Assuming a "reasonable error", when must elective deferrals be distributed to correct excess annual additions? Is there a deadline similar to excess deferrals (April 15) or excess contributions (March 15)? If there is a deadline, what are the consequences of a late distribution of the excess? We have just now received census data for a 12/31/99 year end plan, and one participant deferred 31%.

Organization that sponsors 403(B) arrangement with no employer involvement establishes separate 401(a) plan for purposes of making "matching" contributions based on deferrals under non-ERISA 403(B) plan.

Does establishment of parallel 401(a) plan constitute "employer involvement" such that the underlying 403(B) arrangement becomes subject to ERISA?

Earlier this year the IRS or DOL issued some sort of statement implying that if a pension plan gave an ad hoc benefit increase to retired participants, that a new benefit election (ie: spousal consent) must be obtained. This was debated at the EA meeting and most people felt it was a ludicrous position for the gov. to take.

Has anyone heard anything recently?

Under Section 1372 of the Internal Revenue Code, 2% shareholders of S corps. are treated as partners in a partnership for fringe benefit purposes. What if the individual is a 2% shareholder solely because of stock owned in an ESOP plan? Are they considered a 2% owner for Section 1372 purposes?

I am currently working with a highly compensated school superintendent. In november he will be receiving a large severence pay of $58,000. My question is how do I maximize contributions (or shelter additional dollars) to his 403 (B) plan in lieu of $365 per pay current salary reduction? He does not have 15 years with this employer. I believe this severence pay is derived from contract with the employer and not connected with sick pay, accrued benifit, or termination pay.

The next part of my question is how do I determine how much this individual could shelter from income? This calculation does not seem to appear on the current MEA worksheet that I am using.

Thank you,

Brian

Can a county government not allow a disibility as a distributable event? In drafting their 401(a) plan they have removed disability from their plan document It has been marked N/A in the definition section of their adoption agreement.

A cover letter sent with the draft asked them to define disability in the distribution section of their document. They did not respond and even deleted disability from the definition section of the adoption agreement.

We have a client who plans to sign a contract with a "professional employer organization" under which they will become "co-employers" of their employees. The PEO has a cafeteria plan that claims to be a "multiple employer cafeteria plan" so that nondiscrimination testing is done separately for each adopting employer. Is there any authority in the law and regs for a multiple employer cafeteria plan? Any insight on IRS/DOL attitudes toward PEO arrangements? Any help is appreciated.

Can "compensation" for purposes of qualified plan contributions include compensation received from an employer during a period of disability, where employer provides full salary for first 90 days of disability, and provides difference between salary and disability benefits thereafter?

Applicable def. of comp. refers only to all earned income, wages, salary etc. rec'd. for personal services actually rendered in course of employment. Does it matter that disiability is expected to last less than 6 months?

Company A maintains a FSA. Company A sells assets of Division B to Company C. All employees of Division B terminate employment with Company A and become employees of Company C. Many of these employees have unused benefits (i.e., the employee's salary reduction contributions to the FSA have been greater than the amount of eligible expenses the employee has incurred and been reimbursed) under Company A's FSA. The affected employees would, of course, like to continue submitting claims for reimbursement. Company A, however, is telling them that these unused benefits will be forfeited because the employees have terminated employment. What rights do the affected employees have to the unused benefits? Thanks.

On Schedule H, If the auditors are preparing a limited scope audit, do you also mark the opinion box?

Can anyone share their experience with how vendors deal with the company stock confidentiality limits placed on the plan administator offering a company stock fund as an employee dircted investent in their plan? The plan administator cannot view participant level account positions in a company stock fund but must retain an independent fiduciary. Given valuation reports, statements, and sponsor level Internet access all provide Particpant level account positions, how have you seen vendors deal with this?

My sense is sponsor/plan adminstartor notifcation of the rule by the vendor as well as indemnification language in an agreement with the Vendor.

Thoughts?

Thanks. Frank.