In the news stories about the sale of the stock of the former employer/now competitor from the qualified plans, the discussion focused upon the investment decision and whether the sale was made based upon the interests of the employer rather than the interests of the participants, and whether the participants should have been given the opportunity to roll the stock into their own IRAs.

But I didn't see any discussion of the special tax treatment for employer stock.

Is or could that also be an issue in the case?

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Bruce Steiner, attorney

(212) 986-6000 (NY office)

(201) 862-1080 (NJ office)

also admitted in FL

I am working with a 403(B) plan for an employer who offers two fringe benefit programs. The programs pay out lump-sum benefits for vacation or sick days earned by the employee, but not utilized. The payments for the vacation days are available at retirement only; payments for the sick days are available at the end of the calendar year.

My question is this: can a participant in the employer's 403(B) plan elect to defer payment of a portion of these fringe benefit payments into his or her 403(B) plan, subject to thier existing 403(B) salary reduction election?

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AVS

getting conflicting viewpoints on whether we can have 2 roth ira's for our 1 income family (have 401k and make less than 100k). need clear answer and possibly a source to print for backup for tax files. thanks a bunch.

LL - nashville

A prototype adoption agreement was incompletely filled out and signed December 1999, effective 1/1/99. Almost all (about 90%) of the entries were properly filled out, but a key entry (the normal form of annuity) was left blank. A brokerage account in the name of the plan was also established in December 1999.

Was the plan in effect on 1/1/99?

If the plan sponsor doesn't completely and properly fill out the adoption agreement, I believe (but please correct me if I'm wrong) that the plan sponsor cannot rely on prototype status; an IRS determination letter would clearly be advisable.

(If I'm wrong in this statement, then we have no plan for 1999 and the rest of this message is moot.)

Maybe we don't have a plan for 1999 because we don't have definitely determinable benefits. I'm concerned here, since the form of benefits is crucial (the few other entries left blank were minor). Can this be solved by amending the adoption agreement now (April 2000, unfortuantely, we're past March 15) retroactive to 1/1/99 specifying the normal form of annuity (and cleaning up the other stuff)?

FYI - the question for normal form of annuity had two alternative boxes to be checked -- (1) "Standard - Life Annuity", and (2) "Other", with a blank to be filled in. "Standard" was used throughout the adoption agreement; the plan sponsor checked the "Standard" box for virtually each question in which "Standard" was indicated. It could perhaps be argued that the intent(?) was for the normal form to be a life annuity? Hmmm.

Finally, if this can be deemed a qualified plan for 1999 (subject to determination letter request), what normal form of benefit should the actuary assume for 1999?

(I wished they called me 4 months ago!)

From a practical standpoing, how are plans operating the $5,000 cashout in a daily environment where the account could be under $5,000 when starting the process of a cashout, then go over $5,000 before distribution date? Considering the timing of sending paperwork to participants, having them fill it out and send it back for processing, then have the check cut, there are times when the value goes over $5,000.

Suppose you send someone paperwork telling him he will be cashed out, then receive his rollover forms, then go to do the distribution, and the account is now over $5,000? How would you know if you should do the distribution or not, since he may or may not want the distribution to occur in the absence of the mandatory cashout? Perhaps he just went ahead and requested the distribution because he wants it to occur, regardless.

A defined benefit pension plan generally cannot begin distributions until the participant has terminated employment. However, plans can (and many do) allow a participant who has reached normal retirement age to commence receiving benefits, even if the participant is still employed. Similarly, many plans offer an early retirement feature. Could a participant who qualifies for early retirement, but is still employed, elect to begin early retirement benefits? It strikes me as a real administrative pain for the plan, but it seems a plan could offer it if it wanted to. Any thoughts appreciated.

Our companys ESOP Plan defines Credited Service as "The number of Plan Years in which an Employee is credited with at least 1,000 Hours of Service, including one year of credited service for each three full twelve consecutive months of Service prior to the Effective Date."

Do the years of credited prior service count as years of participation for 10 year and age 55 participation requirement on the diversification provisions of the Plan?

Can a participant in a (basic matching) safe harbor 401(k) plan take a loan from those safe harbor contributions? I haven't seen any guidance prohibiting it.

On a related note, has anyone ever seen any commentary on the wisdom of allowing participants to take a loan from their elective deferrals? I realize many plans allow it, but it seems like a loan default in this circumstance (i.e., a deemed distribution) would technically violate 401(k)(10). Any thoughts are appreciated.

Does anyone know of an example of actual disqualification of a plan due to section 125 violations?

When a participant with an outstanding loan from a 401(k) plan discontinues loan payments because of

1) bankruptcy (bankruptcy court not allowing loan payments to be made to plan), or

2) approved leave of absence,

what are acceptable choices when the participant

1) is out of bankruptcy, or

2) returns from leave of absence?

Should of can loan payments be "doubled up" to "catch up" on the loan so the loan is repaid within the amortization schedule? Should or can the loan be considered in default? Should or can the loan be reamortized? Can participants coming out of bankruptcy be treated differently from participants returning from leave of absence?

If an employee is offered an early retirement package and is given the option to take a lump sum distribution, if the lump sum is reinvested elsewhere, can that individual take monthly distributions in the amount that the employer was guaranteeing had the plan stayed with the original company? Can they take any monthly distributions without incurring penalties due to the fact that they are not 59 1/2 years of age? Any help would be appreciated.

Can anyone supply me with a working link to

PLR 9837034 re;same desk rule ? Any other info links on the subject would also be appreciated.

Thanks

Does anyone have any?? I could draft from scratch but am hoping to not have to reinvent this wheel.

I'm doing some research on implementing employee volunteer or community service programs, in which employees are allowed unpaid time off to volunteer in a community project or service. Does anyone have such a program, and if so, what kind of policies govern how and for what reasons employees may be granted time off to volunteer?

Any help would be greatly appreciated!

The employer somehow allowed an NHCE to begin making deferrals to their 401(K) plan about four months before that employee met the eligibility requirements. The employer even made a quarterly match for the employee before her date of entry. Should the employee be given back the deferrals that were made before her DOP and revise her W-2 (consider it a contribution in error)? A 402(g) violation did not occur, so it can't be treated as an excess deferral. It happened to an NHCE, so it seems it shouldn't be treated as an excess contribution. What is the best way to handle this? Would giving the match back to the employer also as a contribution in error be advisable (overall match made throughout the year for her exceeded what she should have been allocated)? All help much appreciated.

Can a participant in a (basic matching) safe harbor 401(k) plan take a loan from the safe harbor contributions? I haven't seen any guidance prohibiting it.

On a related note, has anyone ever seen any commentary on the wisdom of allowing participants to take a loan from their elective deferrals? I realize many plans allow it, but it seems like a default in this circumstance (i.e., a deemed distribution) would technically violate 401(k)(10). Any thoughts are appreciated.

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ATTY

I was an employee of US West through August on 1999. In January I received forms to cash out my pension plan as it was under $5000 and I have yet to receive anything back from them. What are the specific guidelines under the ERISA on how long they can take to pay this out?

Can recordkeepers accepted contributions from a terminated participant? If the plan sponsor sends contributions for a terminated participant can a recordkeeper accept it, or does a refund have to happen?

Participant's spouse will retire in July, and as I understand it this is a status change that would allow the participant to drop the spouse from family coverage before next open enrollment. But, spouse is offered his own insurance now as part of the retirement package even though he won't technically retire for a few more months. Does participant have to wait until July to drop spouse?

Does a multiple employer 125 Plan use the same "333" plan numbering system that you use for multiple employer pension plans? Do you use one form for the plan using the "333" numbers and then separate forms for the employers using the 500 numbers.