Do the qualified plan eligibility rules apply to 403(B) plans for employer contributions? For instance, may a sponsor of a 403(B) plan who makes a 4% contribution require 3 months of service and more than 20 hours per week. Obviously, this is not permitted for qualified plans. Also, may the employer impose a last day requirement to receive the employer contribution? Thanks.

Can an organization pair a voluntary 403(B) for salary reduction contributions, with a SEP for employer contributions, and avoid any need for a plan document as well as a lot of administrative complexity?

Individual account 401k holds employer securities. Voting is typically passed through w/ particpants directing trustee how to vote. Currently some participants want to attend annual meeting of employer w/ proxy in hand and/or to assign the proxy to a shareholder challenging employer management. Aside from the operational headaches, what legal/ERISA concerns for trustee with respect to operating in "best interests of plan" and issues of participant confidentiality?? Could we just issue a revocable proxy to the participant(s) and see what happens at annual meeting? Thanks

Please help settle this - Can a participant receiving severance pay on account of termination continue to actively participate in an employer's 401(k) Plan beyond their last day worked?

I think not, but a former colleague says its OK. I have a lunch bet on this.

Does a 204(h) Notice have to contain language that explains that future accruals will be reduced or need it just summarize the plan change without explicitly saying that there is a reduction in future accruals?

If an employer adopts a plan and elects prior year testing this year, and in November gives notice to qualify for safe harbor in 2001, and then in July 2001 decides to opt out of the Safe Harbor and be subject to testing, which would be current year, is the employer now stuck with current testing for the next 4 years?

[This message has been edited by Phil Schwartz (edited 05-16-2000).]

How are people incorporating the clearer, but still complicated, Health FSA rules in the '99 Proposed Regs into their administative forms?

For example, the facts of a particular case may permit a terminating employee to elect COBRA cont. covg. under the Health FSA for the remainder of the current year, but not permit such cont. covg. beyond that. Because a Health FSA that can so limit its COBRA liability must also offer another Group Health Plan (a HIPAA Excepted Health FSA), the scenario is as follows: a terminating individual is entitled to 18 mos. of COBRA cont. covg. under the "other" Group Health Plan, AND is entitled to "x" number of months of COBRA cont. covg. under the Health FSA for the months remaining in the current year. Therefore, in the section on the Election Form detailing the length of the cont. Covg., there must be a place for the election of "x" months under the Health FSA as well as a place to elect up to 18 months for the other GHP.

This is just an example, but doesn't this make election forms fairly complicated? Are others out there modifying existing forms for Health FSA options or creating separate forms for the Health FSA elections under COBRA? Thanks.

Is there any scenario in which you would need to report the cost basis of a mutual fund when processing a distribution? For example, if the plan allows for distributions in-kind and the participant rolls her balance (in shares) to an IRA. I know you need to keep track of cost basis for employer stock, but I don't think you need to keep cost basis for mutual funds? The issue has come up because our current recordkeeping system (Trustmark) tracks cost and we are switching to another recordkeeping system that does not store this information and we are wondering if we need it?

An ESOP, which by its written distribution policy, provides that distributions to participants who terminate employment (for reasons other than disability, death or retirement) will begin in the sixth plan year following the plan year in which such employment terminates has received a DRO from the spouse of a participant. The participant is over 50 years of age and has a significant account balance in the ESOP.

The ESOP document provides that an alternate payee will be eligible to begin receiving distributions under the ESOP as would any other employee who terminated service on the date the DRO was qualified. (That is the plan specifically provides that the alternate payee distribution options/timing will be determined as if such alternate payee was an employee who terminated on the date the DRO was qualified.)

My question is can the plan delay distributions to the alternate payee until the sixth plan year following the plan year in which the QDRO was qualified?

How does this "jive" with 414(p)(4)(B) "earliest retirement age" language? Since the participant is over 50 ... does the Section 414(p)(4)(B)(ii)(II) language provide that because the plan uses the 409(o) "ESOP extension" for distributions mean the alternate payee can be forced to wait for such a distribution?

How does this "jive" with 414(p)(7)(B) which provides for payments to be paid after the 18 month period during which the Alternate Payee could have received a distribution under the Plan ... i.e. 6 plan years following the plan out into the future?

I guess I am just concerned over the status of 409(o) "extended ESOP timing issues and the 414(p) rules.

As a related side note ... how is the diversification election handled in a QDRO situation. If the participant is eligible for diversification under the ESOP then:

(1) may the administrator "freeze" this right if a DRO is in process?

(2) may the alternate payee (after an account has been established on his/her behalf) then also diversify his/her portion of the account based on the participants service?

Thanks.

[This message has been edited by svatty (edited 05-15-2000).]

[This message has been edited by svatty (edited 05-15-2000).]

[This message has been edited by svatty (edited 05-15-2000).]

Does Reg. 1.401(m)-1(a)(3) mean that ACP testing never applies to collectively bargained plans? Or could someone give me an example of when an ACP test would be required for a collectively bargained plan?

In determining the cost basis of employer stock in an employee directed 401(k) plan with employer stock as an investment, do you have to take into consideration all transactions that affected the participant's account (i.e. contributions, distributions, transfers, loans taken, loan repayments, etc.) or just contributions?

Employer sponsors separate non-contributory DB plans for salaried and hourly participants. Both plans provide for deminimus lump sum distributions at termination but fail (silent) to address repayment of any previous lump sum distributions upon rehire. A former participant in the hourly plan, who received a lump sum distribution at termination, has now been rehired as a salaried employee and now participates in the salaried plan. How do we treat vesting service in both plans? (A related question, does it matter that more than two years have passed?) Both plans are silent on repayment. Also what if she transfers from salaried to hourly, do we allow her to repay then?

I am looking for IRC support for using "bottom up" QNECs to pass the ADP tests. My understanding is that QNEC contributions may be made on an individual basis, beginning with the non-highly compensated individual with the smallest amount of elective deferrals, until the ADP test is passed. Allocating QNECs in this manner would be the least costly method, but may have other implications. Any thoughts or cites are appreciated.

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If a corporation is being sued, is their pension plan protected against such lawsuit or is it fair game??

Thank you.

God Bless the IRS. Well, not really. Anyway, we have had a very difficult time dealing with the IRS in reagrds to Trust ID numbers for one of our clients. They have sent multiple letters stating that the ID # is wrong, then its ok noe its been assigened in error. Whatever.

So I spoke to the IRS this morning and after 5 transfers, the agent asked why we requested a second number for the company. AGAIN, I explained that the request was for our PS plan trust. She asked why we thought we needed to do that? Am I stupid or aren't we supposed to get these numbers? Can someone tell me what notice/letter/ruling that a retirement plan trust must have an EIN? Thanks for your help.

I understand that the IRS has recently raised questions about such a transaction, even after the change in the "continuity of interest" regulations. I'd check with folks at the IRS National Office before proceeding.

Also, note that Section 1042 requires a sale of shares of the company which maintains the ESOP. If the sale of stock is to the Acquiring Company ESOP, the Target shares must be exchanged for Acquiring Company shares prior to the sale to the ESOP.

[This message has been edited by RLL (edited 05-15-2000).]

Dentist A buys a practice of Dentist B who is not immed. retiring but is cutting back. Employees of B as well as Dentist B and all eqpt of B move to A's office. Seems clear it is an ASG. B never had a plan. A has a plan.

What is the hire date of B's employees for A's plan? Original date of hire or date of acquisition of B by A?

[This message has been edited by Earl (edited 05-13-2000).]

I'm interested in acquiring survey data that provides information about the investment practices of large (more than $1 billion in assets) DB plans. To what extent do these plans use separately managed accounts, commingled trusts, institutional mutual funds, etc. What are typical (average, high, low, etc.) management expenses under each approach? Anyone have suggestions for good data sources?

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Jon C. Chambers

Principal

Schultz Collins Lawson Chambers, Inc.

(415) 291-3004

Parent co of Controlled group is in India. they frequently send ees to US who stay for years. They are not excluded from plan. While working in US, they are pd W2 plus around $9000 in India while working in US.

Does this comp count to determine if HCE? A safe harbor def of 414s references 415 comp which includes foreign earned inc for US citizens and income from related employers.

These are not US citizens, but logically seems that they should be treated equitably.

Any opinions, insights would be appreciated.

we just took over a plan that has a clause which provides that employees who are terminated due to a "reduction in force" will be vested 100%. I have consulted with another attorney on this and he thinks it is not a great thing to have unless it is defined properly. also, use of such a clause will take the document out of prototype status. anyone have any opinions on this.