We are currently a stand alone system, still on GUPTA & 4.0. We are about to upgrade to a multi-user (3 stations). Would love some suggestions about the logical order of upgrading. We are about to enter our most demanding period for the next six months. Should we go ahead an upgrade to the multi-user and wait on Oracle and 5.0 - or do it all at once? We cannot afford to be caught up in the problems of conversion to 5.0 as I have seen with the reports. All of our reports are in crystal. HELP??

Anyone experience issues with DOL assertion that company acquiring assets of another company has liability to provide benefits to selling company's COBRA participants. Current IRS regs are vague on the subject and IRS has issued proposed regs that address topic. But what has DOL done in terms of current enforcement??

Is it possible to terminate a SEP/SARSEP?

I am going to the Ali-Aba Health Care Law and Litigation Seminar in D.C. next week and I was wondering if anyone I "know" from the Benefitslink message boards is going too.

An accountant called and said that there were new regulations regarding the amount of company stock that is now allowed inside a 401(k) plan. More specifically, the amount that officers can hold. He referenced SEC regulation 16B3. I have not heard of anything new, nor can I find this regulation. Has anyone else come across this issue? Thank you.

The problem is that I.R.C. § 415(e)(5) is the source of the rule that a 403(B) plan is not to be treated as a plan of the employer which actually sponsors it, but only of any business controlled by the participant. Although you are right that the first part of that rule is not explicit (since the statute by its terms mentions only the second part), it is the only part of 415 which could be construed to cause a 403(B) plan sponsored by an employer not to be treated as a plan of that employer for purposes of I.R.C. § 415(f), which calls for all plans of an employer to be combined in applying the 415 limits.

The question may soon be moot, however. TRA '99 would have corrected the problem. While of course TRA '99 was vetoed (isn't that an annual tradition by now?), the general expectation seems to be that the pension plan provisions will eventually turn up in whatever tax bill is passed.

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Employee benefits legal resource site

[This message has been edited by CVCalhoun (edited 10-08-1999).]

If an employer purchases stop loss coverage for a self-funded health plan with VEBA funds (instead of from employer's general assets), is there an anti-inurement or prohibited transaction problem?

Does anyone have a reference or cite for obtaining more information about matching 401(k)deferrals with employer stock? Potential pitfalls, etc.

Employer sponsors self-funded health plan with employer and employee contributions to a VEBA. Employer wants to use VEBA funds to purchase stop loss insurance. I am familiar with the DOL's position that stop loss insurance is not a plan asset if the employer is the beneficiary of the policy and the policy doesn't guarantee payment of plan benefits. Would purchasing a policy with VEBA funds create a prohibited transaction or an anti-inurement problem?

Are Roth IRA's protected from creditors in a lawsuit? I've been led to believe that in a Traditional IRA, only the deductible portion of contributions and the earnings of on the deductible portion are protected from creditors. Anyone have any insight?

An article by Marjorie Martin in the Summer 1999 edition of the Journal of Pension Benefits ("New Attachment to 1998 Form 5500") references an attachment that must be submitted with a plan's 1998 Form 5500 in order for its qualified trust to remain a "domestic trust." This was supposedly a provision in the Small Business Job Protection Act of 1996. Included in the article is a sample attachment.

Is anyone actually using this attachment when completing the 5500's? Are there any exceptions to this filing? Any guidance would be appreciated.

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Considering mandating employee participation in health insurance benefits as a condition to continued employment. Benefit plan is contributory, with employer paying 75% of premium/benefit costs. Employee contributions made via payroll deduction.

Have not found anything that would prohibit requiring employees to participate in health insurance benefits. Employees would have the option of purchasing benefits through the company or relieved of that obligation by providing evidence of coverage through another plan with comparable or better benefits.

Am I missing something in my analysis?

An employee terminates coverage, does not elect Cobra but the dependent spouse does. The spouse has been declared disabled by Social Security. The group was planning on extending his coverage from 18 months (charging 102%) to 29 months (charging 150%). Now we find out that the ex-employee and the spouse have divorced. If we're interpreting things correctly, it seems that the group now must offer the spouse an extension to 36 months at the original 102% of premium. Does this sound correct? Thanks.

Is it correct to say that the 401(m) test on after tax employee contributions is prepared as though all employees of all employers in the plan are a single employer (similar to the coverage test)?

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If a participant has a portion of his balance that was deposited on his behalf in prior to 1972, is the participant eligible for special tax treatment on this money?

A plan has a participant with a loan that is in default. The loan was originated 6/93. The defaulted loan was discovered by the plan auditor. The five year repayment period expired in 1998, however to date a 1099 has not been issued for the loan. May the loan be repaid now via payroll deduction? Could the participant take out a new loan ( the plan allows for multiple loans) and pay off the old loan?

Mr. Lesser, I appreciate very much your reply to my question on improper deferrals. At this point we are trying to decide the best way to "clean up" the situation. The employer has been making a uniform contribution to all eligible employees. The improper salary deferrals are more properly characterized as voluntary employee IRA contributions which have been subject to FICA/Medicare but not income tax. Some of these voluntary EE IRA contributions are in excess of the annual $2,000 limit. The most logical solution and the most time consuming would be to amend the W-2's and personal tax returns of the employees for 1997 and 1998. Their ability to deduct the IRA contribution would then be dependent on their individual income levels and any excess contributions over the annual limit would be subject to the 6% excise tax and need to be refunded.

The most expedient method, if permissable, would be to distribute all of the employee IRA voluntary contributions in 1999 and subject the payment to ordinary income and the 10% penalty, if applicable, in 1999.

Question: Are both of the above methods available without disqualifying the SEP arrangement? Can you recommend a third party administrator for a 457 plan which would permit an independent broker to handle the investment side.

A new employer was added to a mutiple employer plan. This is the employer's first plan year. Currently the other employers in the plan are filing a 5500 R. Since this is the employer's first plan year should a 5500 C be filed for the new employer?

A large plan has surplus assets. Can they transfer part of the surplus out of plan to cover retiree healthcare costs? Where is this addressed in the law? What notfication or other requirements exist or where can they be found? Look forward to comments.

This plan is not being terminated, but they plan on vesting all participants at the time of transfer.

I have not seen our client's plan, but is there a specific rule that requires consent? If so, are there options if spouse refuses to consent?

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Eva F. Stein, Raleigh, NC