If adding a SHMatch account to an existing plan, if it is coded correctly, are there then three accounts shown? (401k, ERMatch and SHMatch). I did this and now only have two accounts, 'losing' the existing ERMatch as it was brought in as the PAB of the SHMatch. Is this due to an error on my part or the way the system works? If due to me, is there a way to get the Plan back to three accounts (two separate match accounts) without re-entering everything? thanks.

my girlfriend just left her company and they now say they are not going to pay her bonus check for the last quarter '99 since she is no longer with the company. is this legal? it is stated in their employee handbook, but how can a company withhold money she has rightfully earned just because she left before the end of the first quarter '00?

I believe the IRS has made informal statements that you can't make 401(k) deferrals out of severance pay.

Every treatise (RIA, CCH and numerous other CLE outlines, ERISA Treatises, etc.), not to mention my (and every other official) Code and Regulation set indicate that Prop. Reg. § 2510.18-3 (the adequate consideration) is alive and kicking. But defendants in litigation have pointed to a 1995 Fed. Register posting indicating that the Prop. Reg. was withdrawn as of 2/1/95, (this is from the March 8, 1995 Federal Register). I cannot understand how every source I've ever seen in this area, and some cases as well indicate that the prop reg is still out there. Does anyone have an explanation? If it is "withdrawn" does anyone still use this since one has to get guidance from somewhere until something more official comes along?

------------------

If an ESOP is established, and cash is contributed to it, but the cash is never used to purchase company stock does this raise qualification, tax and/or fiduciary issues?

Must the cash contributed to the ESOP trust be used to purchase company stock or make payments on a subsequent qualified loan within a specified time period?

Any help would be appreciated.

If a QDRO awards the alternate payee the entire amount of a participant's account, EXCEPT for the outstanding loan, am I correct in assuming that there is now an "adequate security" problem? If the plan does not permit collateral other than the account balance, could this be a reason for rejecting the QDRO on the grounds that this would be contrary to the plan document by requiring outside assets to be used as security for the loan?

Example 1:

01/26/1998

Open an IRA account with a payment of $5,000.

12/31/1998

Fair Market Value of $6,500.

04/15/1999

Create a 5498 with the following values:

IRA Contrib $5,000

FMV $6,500

IRA Box X

05/05/1999

Close IRA account and created Roth Account.

FMV $6,500

12/31/1999

1099-R reporting distribution (rollover)

Fair Market Value of $8,000

04/15/2000

Create the 5498.

Situation 1:

Roth Conv Amt $6,500

FMV $8,000

Roth IRA Box X

Situation 2:

Roth Conv Amt $6,500

FMV $8,000

Roth IRA Box X

Rechar Box X

Situation 3:

Rollover Contrib $6,500

FMV $8,000

Roth IRA Box X

Rechar Box X

Which of the above is correct or what is correct?

Participant in a 401(k) Plan is non highly-compensated and makes 401(k) Contributions in excess of the 402(g) limit. These excess deferrals were matched. Section 411(a)(3)(G)provides that matching contributions related to excess deferrals are to be forfeited. Since the purpose of forfeiting such matching contributions is to avoid a discriminatory rate of match, would such forfeiture be required in the case of a non highly-compensated employee?

Company A (with no employees) owns 100% of the stock of Company B. Company B has 6 employees. In December 1999, Holding Company A acquired 100% of the stock of Company C. Company C has 18 employees.

Company C has a medical plan which covers only employees of Company C. In determining whether Company C's plan is subject to COBRA for 2000, what constitutes the "employer" for purposes of counting employees during 1999 for the small employer exception?

Obviously, A, B and C now constitute a single employer as part of a controlled group. But, must they be considered as if they were a single employer during all of 1999 (in which case the group would have more than 20 employees)? Or can Company C be viewed as a single employer up until its acquisition by A (in which case it probably will meet the small employer exception)?

A participant has a DB fraction of .6 and has 5 years of participation at retirement. I thought that the benefit calculated at retirement is .6*.5*130,000 or 39,000. A friend of mine says that it should be the lesser of .6 or .5 (.5 in this case) times 130,000. Is this correct? I cannot find any citation on this.

I have an employee who was terminated due to a staff reduction. He was given two weeks notice of his termination. This employee went out during lunch on his last day of employement and made a $685.00 purchase at an optical/vision care facility.

The receipt he submitted however is not a detailed receipt, it is just the credit card charge slip.

I plan to request a detailed receipt listing the services rendered and items purchased to ensure that they are eligible for reimbursement.

What I am wondering; however, is there any provision to protect the employer in cases like these?

The employee in question came into my office the day before he made the purchase and asked several detailed questions about the FSA Plan and the regulations regarding this plan. His questions were specific relating to how much reimbursement he was entitled to, and "Aren't you (the employer) required to pay anything I turn in before I terminate?" and "If I go out and spend $ 600.00 tonight you would have to reimburse me, right?". Unfortunately, since his questions were direct and specific, I could not avoid answering them. I did explain that the expenses had to be 1) incurred between January 1 and his termination date; 2) eligible expenses and 3) turned in within 90 days of her termination date.

Has anyone ever seen any further stipulations regarding employees who know that they are terminating to keep situations like this from occurring?

Thanks,

Carole

An alternate payee is planning to roll her share of assets from a MPP/PSP arrangement to an IRA or IRAs, pursuant to a QDRO. Is there any reason she shouldn't combine the assets from the two plans into one IRA, or conversely is there any reason she should keep each plan's assets in separate IRAs. The assets in each plan are roughly similar.

------------------

My company has been approached by a vendor to implement a program offering products and services to our employees.

One aspect of the program that I'm concerned about is this: the vendor provides each employee with a credit towards the purchase of these products and services. The total credit amount is undecided - it could be somewhere between $25 and $100 and the credit amounts per product vary. Typically, the program is set up so it appears as though the employer is "providing" the credits. This is done for goodwill purposes, building participation based on the employer/employee relationship. My task is to research the credit piece of this with the goal of determining if there is any risk of our company incurring liability of any kind. Does anyone have any experience with anything like this that you can share with me or would anyone be willing to comment? I intend to obtain a legal interpretation but I would prefer hearing from the HR community as well.

Thanks.

401(k) plan has discretionary matching contribution - plan does not say who decides the contribution nor when the decision has to be made. In practice, the BOD set the match in December for the following plan year, beginning January 1. Match is allocated throughout the plan year. The plan contains a true-up provision for matching contributions. Can the BOD decide in June that they don't want to make any further matching contributions since the match is discretionary? Once match is made for the entire plan year, can the BOD decide not to true-up the match? The plan does not state that the true-up is discretionary,though the match is discretionary.

I am married. I have one job and contribute about $7500 per year to a 401K.

My wife works two jobs. She gives $3600 per year to a 403b with her full time job. She has a part time nursing job at a VA hospital and does not contribute to a retirement plan. Our AGI is around $75000. Can my wife or I contribute to a Roth and will the contributions be deductible?

Thanks for any help.

SEARCHING FOR RESPONDENTS WHO ARE VERSED IN THE AREA OF FICA EXEMPTIONS/ESTABLISHING PERSONAL ACCOUNTS FOR THE EXEMPTION/FINANCIAL FIRMS WILLING TO ESTABLISH SUCH A PROGRAM ETC., ETC.,...THANKS!!!!!!

My client is not sure if he filed his 1998 Form 5500-EZ. Does anyone know a phone number or any way to contact the IRS to determine if the filing took place? Thanks.

As a follow up. I know of one situation where a levy was received after a participant's death. IRS took the position that there was a lien on the participant prior to death and they could attach the account balance even though the plan did not receive the levy while the participant was alive. Plan took the position that there was nothing "owed" to the Participant only the beneficiary and therefore levy was invalid. After an interpleader was filed the IRS allowed the beneficiary to keep the distribution.

It depends on how your plan defines matching contributions. A matching formula that requires a "true up" after depositing on a monthly basis would read "x% of deferrals up to x% of Compensation".

A formula that did not require a true-up would read "x% of deferrals up to x% of Compensation per payperiod". In the second option, there is no true-up and once a participant stops deferring the match stops, which is why in these plans participants that max out early lose out on matching dollars.

In the first option it uses the plan's annual definition of Compensation to calculate the matching, so regardless of why they fell short, there would be a true-up required.

The IRS notices on Safe Harbor Plans seem to define the requirements in terms of "eligible employees" or "employees eligible to defer". If a company is part of a controlled group, can only one company participate in a safe harbor plan (assuming 410(B) can be satisfied, or separately satisfied if each has their own plans, one of which is not a safe harbor)?

Can a safe harbor plan exclude employees by classification?