On Wensday, April 26, 2000 the near 1000 employees of Burgess-Norton Mfg. Geneva, IL. were informed that effective immediatly that the distribution of there ESOP benifits has been changed. BN is one of eleven companies opperated by Amsted. Around half of these companies employees have ESOP benefits through Amsted.

Wensday at BN employees were informed that the 100% distribution at the end of employment would now be only 20%. The remained of the money would be distributed the following 4 years at 20% portions. However the interest paid during this period would only be a fixed 6.7%. Employees that had already set retirement dates after wensday would also be included.

It is not clear yet as to which company is responcicle for the after the fact notification. The motive however is not: employee retension.

Is there any sort of legal action that could be taken to prevent Amsted from holding on to what is not thiers? If interested in representing the employees of BN and the other effected companies please email to .

Also I would appreciate responses to this posting.

I remember seeing a website that BenefitsLink referenced which listed the 30 most common mistakes concerning plan participants. Anybody remember the website?

A new client of ours has been told by his former TPA (doing 12/31/99 work) that his target benefit plan terminated 5/26/99 based on an ERISA Notice dated 5/15/99. Therefore, he has no accrued liability to the plan for 1999. I cannot find the Notice referred to. Can anyone help? Thanks.

Have there been any predictions, official or otherwise, as to whether the DOL, rather than the IRS, will issue late filing notices and administer their resolution? In my experience the IRS has been fairly lenient in forgiving minor delays or failures to file but it is my understanding that the DOL is not so forgiving (even participation in their late filing amnesty program costs $$$$).

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Is there any reason that in-service withdrawals (that are not hardship withdrawals)cannot avoid the mandatory 20% withholding by being directly rolled over to a traditional IRA? Or does the 20% withholding always apply to in-service withdrawals (that are not hardship withdrawals)? Can in-service withdrawals be rolled over after the 20% withholding?

I currently have a subscription to Research Institute of America Pension and Benefits Weekly Updates. It is quite expensive for a self employed actuary starting out. Does anyone know of either a cheaper service or an internet site or any other means that gives a pension acturay up to date happenings in the pension world as well as applicable interest rates?

Thank you

Is open enrollment permitted when a plan is restated? For example, a new plan may require one YOS and age 21 to participate, but waive these requirements for anyone employed on a certain date, say January 1. Can this also be done when a plan is restated? I was always under the impression that it could be done only for new plans. Thanks.

We have a client with a profit sharing plan with term life insurance. In checking the incidental benefit limitation, there are 2 participants whose premiums exceed the 25% limit. We have looked at all contributions (and forfeitures) allocated to the participant's account, and all premiums paid from the participants account, going back to the participant's original date of participation. My question is what, if any corrections need to be made for this plan year? This is a 12/31/99 calendar year plan.

I'd appreciate any input on this issue.

In the past, if you had a plan that started let's say with 95 particpants and then eventually ended up with more than 100 particpants but less than 120, you did not need to have an audited report sent with the return (you could still use the 5500 C/R series). With the new 5500, will that provision still be available?

In all of the discussion about portability, lack of savings, etc. I have yet to see a good explaination of why Participants are allowed to remove their retirement plan funds, whether DC or DB, from retirement savings and spend it on whatever. The current 10% penalty is no real penalty when the choice is spending or not spending. Other than for a real hardship, ie, mortgage foreclosure, medical emergency, etc. it seems to me that a rational retirement policy would not allow Participants to spend their retirment funds until retirement.Having seen no real discussion of this issue, I do not know what the rationale is for the currrent system, if there is one. Any comments?

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A plan says that eff 11/1/96 all lump sums will be paid under GATT assumptions. The amendment isn't adopted until 8/14/97. A person terminates in May 1997 and receives lump sum in June 1997. Should this lump sum be paid under pre amendment PBGC rates or can it be paid under GATT?

My only concern would be the length of time between the freeze and the unfreeze. The longer, the better. Otherwise it looks like the employer is just trying to get around the minimum funding rules for a few years. Could the employer accomplish the same thing by converting the plan to a discretionary PS plan? Or is there a desire for a higher deductible limit?

It is OK for the employees to deduct the premiums on their individual tax returns if they received a taxable reimbursement. I agree that it would be better for the employee to receive a tax-free reimbursement.

The basic issue in this topic is the impact of excess 402(g) elective deferrals on amounts that must be included in gross income for participants in 403(B) plans. The "IRS Guidelines for Examination of 403(B) Plans" applies a strict interpretation of IRC Section 403(B)(1)(E) and concludes that if excess elective deferrals are made by an employer to a 403(B) contract on behalf of an employee, then the 403(B) contract "loses its 403(B) status" and the entire contribution must be included in gross income. On the other hand, "IRS Publication 571" indicates over and over again that only "the excess deferral" must be included in gross income.

I do not believe that the severe technical interpretation of IRC Section 403(B)(1) adopted by the IRS in the Examination Guidelines was the intent of Congress when it enacted the Tax Reform Act of 1986. The end result when the Examination Guidelines are applied is that participants in 403(B) plans are much more severely penalized for exceeding the elective deferral limit than are participants in qualified defined contribution plans (e.g., 401(k) plans). This seems patently unfair. Has anyone sufficiently researched the legislative history of TRA 86 to determine the intent of Congress on this issue?

IRS Guidelines for Examination of 403(B) Plans may be found at the following URL, which requires that you enter certain standard information about yourself (see Section V.A.1(4), especially Section V.A.1(4)(B)2):

http://www.ntsaa.org/compliance.html

IRS Publication 571 for 1999 may be found at the following URL:

http://www.irs.ustreas.gov/prod/forms_pubs/pubs/p571toc.htm

Although the Introduction in Publication 571 clearly states:

"The publication is for employees who participate in TSA plans. It is not for custodians or plan administrators because it does not cover many of the operating requirements of these plans."

It would seem that employers sponsoring 403(B) plans could confidently refer its employees to Pub. 571 as a definitive information source for the rules that apply to 403(B) plans, at the very least for 403(B) plans that allow only elective deferrals. Yet, the fifth paragraph in the Introduction section of Publication 571 states the following (emphasis added with **):

"There is an annual limit on elective deferrals. Generally, you cannot defer more than $10,000 for 1999 for all plans covering you, including TSA plans. If elective deferral contributions on your behalf are more than the allowable amount, you must include **the excess** in your gross income."

The technical interpretation of IRC Section 403(B)(1)(E) as it appears in the Examination Guidelines is in direct conflict with the Publication 571 statement above, and with all additional statements related to this issue, the "Comprehensive Example" at the end of the Exclusion Allowance section, and Worksheet 2. Based on the Examination Guidelines, all of these statements and worksheets should replace "you must include **the excess** in your gross income" with "you must include **the entire 403(B) contribution for the year** in your gross income."

In addition to opinions about the legislative intent behind IRC Section 403(B)(1)(E), I would be interested in whether the IRS has been challenged with respect to its strict interpretation of this Code section in audits of 403(B) plans.

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NCompliance Software and Carruth Compliance Consulting

In December 1999, I filled out all the paperwork at my brokerage/custodian #3 to recharacterize my January 1998 conversion of a traditional IRA to a Roth IRA. The only assets in the account were and still are restricted (not publicly traded) shares of a private placement stock. I had opened the Roth Conversion IRA in Jan 1998 at brokerage #2 which was later bought out (acquired) by the large nationwide discount brokerage #3 in the spring of 1999.

When my Jan 2000 statement didn't show the recharacterization, I called brokerage #3 and was assured they were working on it and the final paperwork would show a December 1999 recharacterization. But after many calls to brokerage #3 complaining about why they were taking so long to complete the recharacterization and after a variety of earlier excuses or reassurances that it would happen soon, brokerage #3 now says that it is their company policy to not hold restricted securities in their accounts so they will not complete the recharacterization.

About 4 weeks ago, they mailed me (I did not request this) the share certificates asking for a "legal opinion" by counsel. I hope this didn't start a clock ticking on an IRA distribution. I've told them that the shares are still restricted.

I have already filed my 1040X and received a refund for the taxes that I had paid on 25% of the conversion value in 1998.

I don't want to pay taxes on non-existent profits... I converted in Jan 1998 because the stock was supposed to have an imminent IPO and a dramatic rise in value. By Dec 1999, it was clear that it was more likely to be worth less than I paid for it. The price I had paid for the private placement stock in 1996 is also what my initial custodian #1 had reported in a 1099R as the Roth conversion value in Jan 1998 when I transferred the account to a Roth conversion at brokerage #2. What a mess! What can I do now?

When I recently began talking about going to the IRS or SEC to complain, brokerage #3 said their compliance dept. could send me a letter explaining their position/the problem. Will that allow me to deposit the certificates in a new traditional IRA with a new custodian?...there still will be no record of the Dec 99 requested recharacterization!

I would appreciate comments from anyone who has looked at whether an independent gospel mission, not associated or affiliated with or controlled by a church, is a church for church plan purposes under ERISA. This gospel mission serves transients, including providing room and board, and requires them to attend daily religious services provided by the mission, which are conducted by licenced minsters employed by the mission.

An employer established a leveraged ESOP. The loan was for 15 years. After 10 years, the employer merely desires to terminate the ESOP. Does the employer have a PT problem under 4975(d)(3)? Assume that the employer is not in any financial trouble nor has any acquisition transaction occurred.

Non-profit plan sponsor wishes to consolidate its C/T Money Purchase Plan and its 401k plan (non-integrated). Since it is a non-profit, the 15% deduction rule doesn't come into play here.

However I am concerned that by merging the two plans, and restating the P/S to be a cross-tested plan, that we may be running afoul of the IRS February 28 deadline since the P/S currently does not have a cross-tested feature.

Any thoughts out there?

Thanks.

I could have sworn that I read somewhere that the spouse's signature is NOT REQUIRED on a Beneficiary Designation as long as the spouse's cut is at least 50%. But now that I need this information, I can't remember where I read this. First of all, does this even sound right? If so, where might I find the documentation to back this up? Thanks for any and all help!

Our client has $1.8 million in a 401(k) plan and is in the process of establishing an ESOP. To facilitate the ESOP purchase, the client proposes to "spin-off" about $300,000 in participant matching and profit-sharing contribution accounts from the 401(k) plan to the newly formed ESOP. The spin-off would be based on a formula developed by management, and would not be elective on the part of the participant. The participant account balances in the two plans after the spin-off would be the same as the 401(k) balances immediately before the spin-off, and participants would be 100% vested in the balances transferred to the ESOP.

The client understands the fiduciary issues related to converting a portion of the 401(k) plan assets to an ESOP. Are there any statutory, regulatory, or administrative guidelines on the appropriate conditions and/or methods for a plan spin-off? Are there other potential pitfalls with the proposed spin-off?

As usual, the client's timetable for the ESOP purchase makes it impractical to request a PLR.