In Massachusetts--are we protected from creditors?

Can a cap be put on a matching formula, such as 50% of deferrals capped at 3% of compensation? There is no mention of a cap in the document. Following is the exact wording in the Volume Submitter document concerning the match formula:

"For each Plan Year, the Employer shall contribute to the Plan:

(a).........

(B) On behalf of each Participant who is eligible to share in matching contributions for the Plan Year, a discretionary matching contribution equal to a uniform percentage of each Participant's Deferred Compensation, the exact percentage, if any, to be determined each year by the Employer, which amount, if any, shall be deemed an Employer Non-Elective Contribution.

©.........

(d).........

(e).........

We are advising clients that they can put a cap on the match, based on a percentage of comp for each individual participant, as described above in the first paragraph. I don't think that the document language above allows that, because if a cap is used then the match is no longer a "uniform percentage of each such Participant's Deferred Compensation."

By the way, of course each year the cap we advise them to use may be a different % of comp, whatever puts the most match in the HCEs account.

Adding a cap to a matching formula or varying the cap percentage changes the dollar amount of the match and the allocation to the individual participants. I don't see how this can be definitely determinable. Any ideas about if this is OK.

I mistakenly opened my Roth Ira with a deposit of $3400 dollars. My question is this: Does the $2000 per year limit mean just that, or can I put $4000 in this year, and nothing next year? If that is not allowed, do I need to withdraw $1400 now to get to the $2000 threshold? Thanks for an help.

An employee terminates and receives a distribution of his vested account balance. The unvested account balance is forfeited. The participant is rehired two years later and repays the distribution. There are no current forfeitures to use to restore the participant's forfeited amount. The employer contributes the amount necessary to reinstate the participant's prior forfeitures.

Does the contribution used to reinstate forfeitures count toward the 404 deductibility limits? It would seem to me that it should not, since it was counted already for deductibility purposes when it was first contributed to the plan. This just reinstates the original contribution.

[This message has been edited by Richard Anderson (edited 09-05-1999).]

We have an existing profit sharing plan that excludes union members. One union member, who has worked for the employer for 5 years, dropped out of the union last month. The plan has a one-year eligibility requirement. When can this employee enter the plan? A year from the date they left the union? Do we give credit for prior service? Do we exclude all salary paid while the employee was in the union?

Thanks for your assistance.

Do churches have to submit 403(B) Plan Documents for IRS approval? I know church plans are not under ERISA, but is it ERISA that requires the Plan Documents or the 403(B) code? I've gotten very uncertain answers on this. Please help!!

I understand that there are no clear guidelines for terminating a 403(B) plan. If this is so, how does one terminate a plan? And once the plan has been terminated, how can one be sure that the Form 5500 filing requirements are gone? Do the filing requirements continue until the last person has reached 59 and 1/2, etc., or can the plan terminate earlier?

Also, with regard to ERISA statute of limitations, when do they accrue?

Thanks in advance.

Does anyone of you know a good source to obtain information about cost sharing trend nowadays? What I'd like to find is how it has changed from it used to be in the future (used to be fully covered by employers, but not anymore at this time). Thanks in advance.

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Yenni M. Djajalaksana

Is there any authority out there re whether a distribution pursuant to a TEFRA 242(b)election is an "eligible rollover election"? It technically is not a distribution under 401(a)(9).

2 questions:

(1) With respect to APRSC's favorable letter requirement, can a plan sponsor that wishes to correct an ADP violation under APRSC claim that it has a favorable letter if the Prototype Plan Sponsor has an Opinion letter?

(2) Plan sponsor has a 1997 ADP test failure, makes corrective distributions within the appropriate period, but in 1999, based on revised figures, discovers that it has not fully corrected the error. Plan sponsor filed a 5330 to report the excess contributions based on the original tests. Can we now file an amended 5330 to report the additional excess contributions without paying any penalties? We are past the due date for filing for a 1997 failure.

Thanks.

We have a client (former?) who was an attorney. About two years ago he was indicted and sent to prison. While in prison, he was diagnosed with liver cancer and recently died. His defined benefit plan was established roughly five years ago. He took out a loan and there is only $10,000 left in the trust. His two former employees accrued benefits are valued at more than the $10,000. He did not file his 1997 or 1998 Form 5500 to our knowledge. We actually fired him prior to his prison sentence for failure to pay our bill. Now, we're feeling sorry for the employees and would like to get them some money if possible. Is it worth the trouble? Should the IRS be notified? One employee has already filed a complaint with the DOL. Any suggestions would be appreciated.

Has anyone heard anything new on this?

Is it still the IRS position that OBRA '87 FFL bases need to be maintained and new ones set up after 1998 for aggregate funding methods?

A 401(k) plan requires 1 year of service to enter the 401(k) and 2 years of service to become eligible for the profit sharing. When calculating the cross tested profit sharing contribution, should the participants who are eligible for the 401(k) but not yet eligible for the profit sharing be included in the average benefits test? Any help will be appreciated. Thank you.

Is it common for state retirement systems to allow non-governmental employers to participate in the system? For example, I am working with a credit union (covering state employees) that is currently covered under a state retirement system. The credit union is not funded or otherwise controlled by the state. The credit union wants to withdraw from the system, but cannot (according to the state retirement board). Aren't there controlled group or ERISA issues? Otherwise, what would prevent a state retirement system from covering any employer within the state?

Company going out of business in 60 days.

Investment company will only send all money to Trustee to handle. Can't find some EE's. Two have over $5,000 in plan. What do we do with the money for the people we can't find? After 11-1-99 there will be no Trustees and no company.

An employer has a DB plan and a New Comparability profit sharing plan. The DB plan is integrated with Social Security. The plans are not aggregated for 410(B) or 401(a)(4).

1.401(l) of the regs says that only one plan maintained by an employer may be integrated with Social Security.

I take this to mean that the New Comp plan may not imput permitted disparity in the cross testing to satisfy 401(a)(4) if the DB plan is integrated.

Am I correct?

[This message has been edited by Richard Anderson (edited 09-03-1999).]

Yes, SBJPA allows testing age to be the social security retirement age. Some plan documents will define how the test is done. If the document defines the testing age as 65 or the plan's normal retirement age, then an amendment would be required in order to use a different definition for testing age.

Regarding a qualified governmental (non-ERISA state & local) DB plan:

Most DB separate interest QDROs I've looked over have inadequate provisions for what will happen upon the death of the participant.

Is there any assumption regarding whose life (alternate payee's or participant's) is to be used as the "default" "Measuring Life"?

Note:

* Assume the QDRO either says nothing about what happens if the participant dies before or after benefits begin, states that if the participant dies before the alternate payee receives all of his or her benefit payments, the remainder the alternate payee's benefits are to be paid as a "death benefit".

* Assume the QDRO was "accepted" by the Plan's former TPA over ten years ago.

* The order is clearly a separate interest QDRO that meets all IRC QDRO requirements.

* The Plan is silent as to any treatment of QDROs except that QDROs are the exception to the Plan's anti-assignment provision.

* The Plan Administrator's written QDRO procedures are silent about what is to be done when a participant dies.

Absent any written instructions from the QDRO, the Plan document, or the Plan Administrator, is it assumed benefits follow the participant's life, or will the Plan administrator have to ask the parties to bring back an amended order every time a participant predeceases an alternate payee?

(I will contact a benefits attorney about this, but I'd like to hear some outside opinions as well--supposedly, these QDROs were reviewed years ago by attorneys and actuaries)

Also, the Plan recognizes QPSA and QJSA rights of spouses. Can a QDRO make an alternate payee the participant's (remarried at time of retirement) beneficiary without saying specifically that the alternate payee is to be treated as the participant's spouse, or that the alternate payee is assigned any subsequent spouse's right to be beneficiary?

Any opinion as to whether there is a qualification issue when an employer established an ESOP five years ago, funded the ESOP but none of the funds have been invested in employer securities.

I know that we need to send individuals HIPAA certificates when they terminate or lose coverage.

If the individual elects COBRA coverage, are we required to provide them with another certificate at the end of their COBRA coverage?