I have a client that maintains a leveraged ESOP. February 2000, the ESOP loaa will be completely repaid. At that point, the client wants to convert the ESOP to either a profit sharing plan or a money purchase plan. My understanding is that this conversion can happen without fully vesting all participants (and, obviously, no cut-backs under 411(d)(6) can occur). However, I am not sure what happens with the stock that has been allocated to participants' accounts. Is it possible to (or required), upon the conversion, replace the stock in each participant's account with cash (assuming an accurate valuation)? If they can't replace the stock with cash (which may not be financially feasible anyway), then

I assume the stock remains in the accounts and no further stock is allocated or contributed by the client. What are our options?

Another issue - an ESOP has to be designed to invest "primarily in employer securities". What minimum percentage of trust assets would need to be invested in employer securities to meet this rule?

Hi,

Does anybody have a protocol for dealing with COBRA employees who have their checks returned when we try to deposit them? Thanks in advance!

Waaaay back in the dark ages, I recall sending HIPAA notices to our staff and setting up a system to provide HIPAA certificates. Then we outsourced and I stopped paying as close attention as I should have.

Now I have a new job and I'm getting all their compliance issues settled. I can't recall if there is a requirement to communicate HIPPA information to our new hires (similar to the initial COBRA notices). Any help?

Thanks,

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

Steve Moss

Benefits Administrator

Can anyone shed any light on the subject of getting 401(k) contributions for unused vacation days. I have a few clients who are interested. An article about this topic first appeared in the Wall St. Journal back in late 1996/early 1997. A company had put this provision in their plan. They received a private letter ruling on it though, which as I understand, does not give other plan sponsors the green light to install this provision. Have there been any recent developments?

Can a state governmental DC plan (established pursuant to 401(a)) receive eligible rollover or plan-to-plan transfers of lump-sum distributions from participants of another eligible retirement plan (either a governmental plan or a nongovernmental plan)? I know that private plans can receive rollovers (if the written plan document allows for it), but am completely unsure if state plans can.

Thank you for your help!

What are the tax consequences of gifting Sec 1042 replacement stock to charity? Does the donor get the full deduction for the current FMV? Any requirement to pick up income?

Has anyone ever received a request to accept a rollover for a terminated participant's PRIOR employer's plan? Adoption agreement is pleasantly vague - says Admin Committee has sole discretion in determining whether to accept rollovers (they currently accept r/o's from any employee - did I just answer my own question?). I can't imagine that would be required but I wanted to run it by this gang of experts!

Can a state governmental DC plan (established pursuant to 401(a)) receive eligible rollover or plan-to-plan transfers of lump-sum distributions from participants of another eligible retirement plan (either a governmental plan or a nongovernmental plan)? I know that private plans can receive rollovers (if the written plan document allows for it), but am completely unsure if state plans can.

Thank you for your help!!!!

Can a state governmental DC plan (established pursuant to 401(a)) receive eligible rollover or plan-to-plan transfers of lump-sum distributions from participants of another eligible retirement plan (either a governmental plan or a nongovernmental plan)? I know that private plans can receive rollovers (if the written plan document allows for it), but am completely unsure if state plans can.

Thank you for your help!

Can a 401(k) profit sharing plan be terminated retroactively? If so, are there any limitations on when termination amendment must be adopted (such as by 2 1/2 months after end of plan year)?

I have several questions regarding completing the 5310 for a profit sharing 401(k) plan termination. The plan terminated and the sponsoring employer was sold during 1998. Account balances have not been paid out yet.

1. Should the "current year" on lines 13b and 16 be 1999(now) or 1998 (the year plan was terminated and company was sold)?

2. On line 9d, should the "last contribution to the plan" take into account 401(k) deferrals and/or match, or just profit sharing contributions?

3. On line 16a, should "Employer contributions" take into account 401(k) deferrals and/or match, or just profit sharing contributions?

4. On line 13b, since business was sold during 1998, should line 13b(5) be 0 for Number at end of plan year?

5. Participants terminated during 1995 with less than 100% vesting, but their balances have not yet been paid out. They were made 100% vested when the plan terminated. Should these participants be counted on line 13b(6) and an attachment done, or can line 13(B)(6) be 0 for 1995 since they were made 100% vested on plan termination?

Help with any or all of the above would be much appreciated. Thanks.

I have a situation in which an employee has passed on. Her beneficiaries were her three daughters, one of which is in prison. I sent out termination paperwork to them. However, I received a note from the sister in prison stating that she would like the check to be made out and sent to one of her sisters. As I understand it, she is waiving her rights as a beneficiary and putting her trust in her sister to send the monies to her. My question is if the small note is sufficient to waive her rights? Is a more legal document required?

I'm a college student who recently started my Roth IRA. I'm wondering about is my ability to trade within the IRA. Can I trade the stocks i buy, or do i have to sit on them till I retire? I'm just confused, and wondering if I sell and use the money for another purchase in my IRA, will I have to pay taxes on the profits? Or is the the real advantage, where I can make 1000 bucks a year on good trades and not have to pay taxes? Any info would be helpful, thanks.

You are correct.

I have a client who just started with our 401(k) service, and after reviewing their prior plan years I have found that they failed the 1998 ADP testing. I have been in contact with the companies prior recordkeeper, and i have been trying to get them to give me the earnings associated with the Excess Contributions and any GAP earnings. The other recordkeeper claims that GAP earnings must be calculated from the 1st day after the plan year until the day the excess contributions are removed. I am under the impression that you only include Gap earnings from March 15th forward. If anyone can give me some guidance or point me to the right section of the code, I may be able to resolve this situation.

I have a group of doctors that want to go with a safe harbor plan for 1999 and were told they could make the plan effective 10/1/99 and could defer the full 10K as long as they gave the NHCEs the 3% nonelective.

Under what circumstasnces can this or can't this be done. There is no PS component to the plan. If we added one and the client din't make a PS contribution could they go ahead with the above scenario.

Obviously, we're fishing here.

When doing a top heavy calculation for a defined contribution pension plan (i.e., money purchase or target benefit plan), it has been my understanding that contributions due as of the determination date are included even if they are not actually made by that date. However, for non-pension plans (i.e., profit sharing plans), only contributions actually made by the determination date are included (except for the initial plan year). Do these same rules apply to 401(k) contributions? Initially, I thought that since 401(k) contributions are required to be deposited in a timely manner, that any 401(k) contributons deposited after the determination date for the prior period should be included when doing the top heavy calculation. However, after reviewing 1.416-1, T-24, it appears that this is incorrect.

I understand that we have to offer COBRA participants the same medical options as we do actives during open enrollment.

the question is this: "we are eliminating 1 of the medical plan options during OE and want to know if we can set a default plan if the COBRA particpant does not respond by electing another plan?" we will be doing this for our actives. does anyone foresee any problem(s)with us doing this? at least we're not cancelling their coverage.

Is anyone aware of rules for IRC Sections 105 or 125 analagous to the QSLOB rules?

Each year our small business gives raises. Some people elect to have a greater portion of their insurance premiums paid by the company instead of directly to them. Is it legal for a company to pay 75% of one employees medical and 95% of anothers?