I was under the impression that a summary annual report was required by the DOL in a year that a sec. 125 Plan (w/less than 100 partic) filed a 5500-C. However, our software package gives me an error message saying "SAR not needed for fringe benefit plan"...

Is the SAR needed?

I am looking for examples of Travel Reimbursement policies. Does your policy reimburse for meals, lodging, etc.? Do you have daily maximums, if so, what is the maximum amount? When are receipts required for reimbursement? Who do you reimburse and how? Any assistance you can provide is greatly appreciated.

My fax number is: (218) 726-4018

My e-mail is: mfurnstahl@smdc.org

Thank you in advance for your assistance.

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I have a client (Company A) that wants its ESOP to purchase Company B through a stock acquisition. Company A and B are both closely-held companies. Assume the ESOP is not leveraged at this point. The plan is to have the ESOP purchase the stock of Company B over a ten-year period on an annual installment basis. To finance the purchase, Company A would make an annual contribution to the ESOP which the ESOP would then use to make its annual installment payment to Company B. Assume a total purchase price of $!00,000 with ten annual installments of $10,000. With each annual installment payment to Company B, Company B would remit its stock to the ESOP which the ESOP would then contribute back to the capital of Company A.

Obviously, an independent appraisal of Company B's stock will be needed to assure a fair price. Also, the trustee of the ESOP must determine that the purchase is in the best interests of the participants of the ESOP.

I would like help on the tax consequences of the proposed transaction to Company A and Company B. Any help would be greatly appreciated.

After a merger, the suviving corporation retains the plans of the "disappearing" corporation. The merger occurs in the middle of a Plan Year. Under the Plan, the match, the 401(a) contribution and the contribution to a separate money purchase plan is made only for those employed at the end of the Plan Year. The disappearing corporation must have a "stub" year for tax purposes ending with the date of the merger.

Do you include deferrals and compensation prior to the merger in calculating the year end contributions? Since the disappearing corporation has already had a "stub" tax year for periods covered by the Plan Year how do you calculate the 404 limits?

We have a need to locate current mailing addresses for thousands of former employees whose whereabouts have not been tracked. What are some reliable--and cost effective--ways of obtaining current addresses? We, of course, have name, SSAN, and last known address. Thanks for the help.

I have a plan with a 1,000 hour and last day requirement for the profit sharing contribution. Previously, the contribution was allocated on an integrated basis. On December 31, 1998, an amendment to change to an age-weighted formula was adopted effective January 1, 1998. This change significantly decreases the contribution to all non-highly ee's.

Isn't this a violation of the anti-cutback rule? Would this amendment be okay if it was executed on 12/30/98 prior to participants satisfying the last day requirement?

A participant has turned in a claim for $1860.00 for Orthodontia. The participant states that all but the monthly checks and removal have been performed. The bill says "mo. charges from 7/1/99 through 12/1/99" and that's all that it says. The Plan year starts 7/1/99. Is it ok to go ahead and pay the $1860.00? Do I need more documentation? It is difficult to get any kind of detailed statement from the dentist. What would you suggest?

Let's say a company has 2 divisions, Division A and Division B, each with a $1 million payroll.

The company has a defined benefit plan which costs 20% of payroll covering only employees of Division A. The company has a defined contribution plan which costs 10% of payroll covering employees of both divisions. The total contribution is $400,000, as shown below.

Division A - $200,000 cost for DB, $100,000 cost for DC.

Division B - no cost for DB, $100,000 cost for DC.

What is the company's total deduction?

1. $350,000 ($250,000 for Division A, because Division A's deduction is limited to 25% of $1 million), plus $100,000 for Division b), with $50,000 carried forward to next year.

OR

2. $400,000 ($300,000 for Division A plus $100,000 for Division b), since the total deduction is limited to 25% of the total payroll of $2 million.

If a company maintains both a DB and a DC plan, its total deduction is limited to the greater of 25% of payroll or the DB minimum. [401(a)(7)]

If the DC plan is a 401(k) plan (with no company match), does the above limitation apply? If so, do the employee deferrals to the 401(k) plan count against the limit?

Example: Company payroll is $400,000, DB contribution requirement is $80,000 and total 401(k) deferrals are $40,000. 25% of $400,000 is $100,000.

Can the company deduct $120,000 ($80,000 for the DB plus $40,000), since the 401(k) deferrals do not count against the $100,000 limit?

Or is the deduction limited to $100,000 ($60,000 for the DB plus $40,000 for the 401k plan, with $20,000 carried forward to next year), since 401(k) deferrals are counted against the $100,000 limit?

Or, ... something else?

(It would seem unfortunate that a hypothetical company with a pension contribution above 25% of payroll could hurt themselves by starting a deferral-only 401k plan; even if it excludes the owners from participating in the 401k plan.)

What is deferred compensation and how does it prove to be useful for employees?

I have seen discussion on using a non-414(s) safe harbor definition of compensation for deferrals then testing the ADP with a safe harbor definition. I have not seen anyone talk about the same with matching contributions and the ACP test.

I have a plan that uses a safe harbor definition for deferrals, but a non-safe harbor for matching contributions (W-2 compensation plus overtime, less bonuses). Can I use the same theory to decide that since the plan passes the ACP with a safe harbor definition, the plan is okay as long as I file for a determination letter disclosing all of this on Demo 3 or Demo 9? How do I pass the nondiscrimnatory availability requirements?

How should a qualified DC plan treat a "QDRO" that an NRA participant undergoes?

If the owner of a SIMPLE IRA account dies before the two year requirement is met, can his spouse beneficiary roll the proceed to her own IRA or would the money have to go to a SIMPLE IRA account in her name?

Can you use your IRA as collateral on a loan in Florida? My initial understanding was no, but when I read on it appears that depending on the state, it is permitted. Does anyone have any experience in using an IRA as collateral? Thanks for your help.

How is that organizations here in Massachusetts can provide a Health benefit to Management staff to Accrue sick leave to better prepare if a future long term illness/injury occurs with paid time off, while other

non-management staff must take their annual allotment of sick days or "lose them" i.e. no opportunity to bank them for any future long term illness etc.???????

Isn't this blatant DISCRIMINATION???

When completing the Form 5500C/R, on the question that asks "Did the plan at any time hold 20% or more of its assets in any single security, debt, mortgage, etc.?", do you consider mutual funds a single security?

We have not, but a book we purchased this year re: completion of 5500's says that mutual funds should be considered a single security for the purposes of this question.

We would appreciate input from other TPA's as to how you answer this question.

I represent a client who is the alternate payee on a QDRO. Can she cash this check without being subject to the 10% early distribution penalty or is this a distribution exempt under 72(t)?

What insurance companies are offering annuities or life insurance products that can be used in a 412(i) defined benefit plan?

See above.

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Susan

Our client is considering whether they should assume the seller's self-insured group health plan. What potential problems/issues should our client be aware of for these types of plans?