I've seen life insurance transferred from a plan by the participant paying its cash value. Can it work in reverse? In other words, can policies held outside a plan be purchased for their cash value as long as the accrued annual 25%/50% limits are not exceeded? Thanks.

If a participant in a 457 plan receives a lump sum payment of vacation or sick leave upon termination of service, can that participant base a deferral on that compensation assuming an election was in effect prior to the payment? Does it matter if some of the leave was "earned" prior to the person electing to participate in the plan?

Would the answer be the same for a 401(k) plan?

I am trying to decide how to apply the net unrealized appreciation rules in the case of a leveraged ESOP.

My facts are as follows...

The company got a $1,000,000 loan to buy 500 shares from an owner. The loan is paid in 10 annual installments (variable interest rate). Based on the chosen share release method, 50 shares will be released each year.

The possibilities that I am considering are that the basis of the shares is...

1. $1,000,000 always

2. The cumulation of the contributions made to the plan to repay the loan (principal + interest)

3. The fair market value of the shares on the dates that they are released.

I'm inclined to think the #1 is correct, but I wasn't sure from reading the regs if any of the examples specifically applied to a leveraged ESOP.

In addition, there is cash contributed to the plan. When employees terminate employment they are not given the opportunity to take shares from the plan. Their shares are purchased with the cash in the plan and the shares are redistributed to the remaining employees. I am also inclined to think that these shares would retain their original cost basis because they have not left the trust. But again I haven't found concrete information to support this.

Any cites and input would be appreciated.

p.s. I do realize that since the plan does not allow a distribution in shares that NUA doesn't apply. I just prefer to track the basis in case the employer changes their mind about the distribution policy in the plan.

Hi, I am a new user to this board, and looking forward to swapping ideas.

Is anyone familiar with how bankruptcy law might impact assets in a 457 plan? The question has arisen as a result of the SBJPA, which now requires assets to be held in trust, annuity contract, or custodial account for the benefit of plan participants and their beneficiaries. I recognize that this was done as a reaction to the Orange County situation several years ago. Therefore, it would be logical to assume that the change caused assets now to be truly no longer reachable by creditors of the entity. However, does anyone who is familiar with bankruptcy law have any comments on that? Also, it is my opinion that assets of the plan are not reachable by creditors of a participant until those dollars are actually distributed. Prior to distribution, the participant has a mere expectation rather than a present interest. Does anyone have a comment on this? Thanks very much!

When a C corporation pays a dividend on stock held by an ESOP, which the ESOP uses to make payments on an exempt loan, the C corporation can take a deduction for the dividend. Does the dividend or the corresponding release of shares by the payment on the loan count towards the Section 415 limitation?

Would the answer to the above question be the same in the case of an S corporation, which does not get a deduction for the payment of dividends?

I'm considering taking ACA Certification Seminar C11, Performance Management--Strategy, Design and Implementation. I'm new to small organization that needs to completely revamp their PM system. Coming from an HR Generalist background, I need help in this area. Hoping to hear from someone who had completed this course. Thanks!!

A 401(k) plan is transferring assets from one fund company to another. The 401(k) includes both ee deferrals and er contributions. The owner and trustee of the company wants to put all prior employees with balances still in the plan in the money market fund at the new fund, regardless of their balance, rather than trying to contact those previous ees and asking them how they would like to be allocated at the new fund. Is that legal?

What's a health care coalition?

Two doctors form a subdivision of another medical group. The two doctors have some ownership in the other medical group. The groups refer clients to one another.

On 6/30, the subdivision split entirely from the bigger medical group. So as of 7/1 do we have an affiliated service group?

For controlled groups, section 1563(b) says that if your not a controlled group for more than 1/2 of the year, then your not a controlled group for that taxable year.

Does the same apple to ASG's and FSO'S?

Can we set up a plan for the once subdivision and retroactively make it effective to 1/1/99 and avoid any ASG issues?

thanks in advance for any info!

Assuming that a small "tiered" Profit Sharing plan- with an "end of the year" allocation requirement - meets 410(B) coverage ratio percentage tests because more than 70% of all NHCES benefit under the Plan - then when contributions are allocated to the groups in the tiered plan, how are the participants who terminated with greater than 500 hours - and therefore do not "benefit" under the Plan - treated for

401(a)(4) testing? Are they ignored completely or counted as having a zero accrual rate? Thanks for input...

I have a client (board of trustees of a multiemployer savings/401(k) plan) who is wanting to move into participant-directed accounts. Assuming the investment choices are mutual funds, I'm looking for ways of providing for operating expenses, since the only expenses paid from investment income of the funds are their own internal expenses, and there is no employer sponsor to step up to the plate and cover the expenses?

Calendar Client with Target Benefit has closed up shop and wants to terminate plan, say 9/30/99, but make a final contribution for the year.

Question bugging me is, do I have to pro-rate the compensation limit of $160,000?

A governmental thrift plan has not been complying with the plan document on two issues for several years.

We will amend the document at this time. However, is there any liabitily for past non-compliance?

Does anyone audit these plans?

What is the legal authority for vesting service and credited service for employees who transfer from company in a control group to another? (Regulations, PLRs, cases, etc.) For example, Co. A does not participate in pension plan, and transfers to Co. B which does participate in pension plan. Both cos. are in same control group. Plan document is silent on this issue.

I am looking for an IRA Distribution Software that can calculate 72t distributions using ALL approved methods, as well as RMD at 70 1/2 and offer some graphics that I can show to clients. I am looking for a program under $400, if possible. I would like to be able to download a demo version of the program before I purchase it and would like to be able to get the program off of the internet. I have looked at a few of the offerings over the internet and have not found anything I like so far. We have two large organizations that are doing massive layoffs and many of the people are under 59 1/2. I would greatly appreciate any help in this matter!! Thank you!

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Individual rolled 401k account into existing IRA and now would like to roll it back into a 401k plan.

Am I correct that he is now unable to do this based on the above?

I understand some states have provided a means for indexing deferred benefits for all or some portion of inflation between the termination date and the benefit effective date.Does anyone have an example?

A 79 year old client passed away this year. He had been using the recalculation method. He had originally started joint life recalc with his spouse, but his spouse died six years and he has been using single life since. His beneficiaries are his four children. They have to take out the remaining balance by the 12/31/2000 because life expectancy will be reduced to zero. The question, for 1999, the accounts have been split with each getting 25% of the balance, does each of the benes have to take 25% of the min. dist. or as long as the min. dist. is satisfied in aggregate, some could take less than others? Any cites to back your answer would be greatly appreciated. Thanks.

If an extension has been filed for 1998 5500 to October 15, can anything be done to extend this?

On behalf of a client (small investment company), who is the directed trustee, we are submitting an "orphan" 401(k) plan to the IRS for a letter of determination on its termination (5310).

The principals of the company went out of business in July of 1997, when the SEC and other government agencies seized corporate records and files. I do not know what happened to corporate assets. Two of the principals are currently incarcerated and the other is on the lam somewhere in South America (just a guess).

The only contributions ever made to the plan were elective deferrals, and there are currently 8 participants (including one of the principals) with account balances.

It has come to light that some of the elective deferrals were never remitted to the trust.

Questions:

Who should pay the 8717 filer fee ($225)for the submission? We are advancing the fee until this is sorted out. Our client is currently on the hook for our legal fees. This seems unfair.

Is there any way of attaching the account balance of the remaining principal prior to distribution or will our client and the other participants have to sue her after her account has been distributed? (She has the largest balance - probably enough to cover the filing fee and all missing elective deferrals.)

We are using a current (9/13/99) termination date on the submission. However, the plan provides that there is a deemed termination upon corporate dissolution. Should we have used a retroactive termination date?

Has anyone had any luck with the DOL pursuing such a situation and suing the principals for missing elective deferrals, fee, etc.? In corresondence, they appear to have given up on the situtation.

In providing records of all actions taken to terminate the plan, our client had drafted a "Record of Action" rather than corporate resolutions. They do not want to be in any position of assuming further responsibility/liability. Will this be acceptable to the IRS, given the situation?

Any thoughts would be appreciated.