I have a client that recently, through a stock acquisition, acquired another company. The client maintains a MP plan and the employees of the acquired company ("acquired employees") began participating in the plan on September 1, 1999 (effective date of acquisition). The plan year is Jan. 1 to Dec. 31.

In determining the amount of the contribution due to the acquired employees under the plan, the client wants to use the compensation paid to that employee for the entire calendar year (which would include compensation paid to the employee from its former employer that my client acquired) rather than using compensation from the date of participation.

I understand that if an employee is employed by the same employer (or within the controlled group) for the entire plan year but only participated in the plan for a portion of the plan year, the plan can state that compensation for the entire plan year will be used rather than from the date of participation.

My thought is that you can only use the compensation actually paid by the employer (or the employer's controlled group)and that commpensation paid by the acquired company to the acquired employees prior to the date of the acquisition cannot be considered.

Any thoughts? Thanks in advance for any comments.

Please share your experience with negative or passive enrollment in a 401(k) plan? Would you recommend implementing it to others? What was employee response? Any words of wisdom? Words of caution?

This falls into the category of "can I have my cake and eat it too?"

In Natalie Choate's "Life and Death Planning for Retirement Benefits", she indicates that the IRS has allowed (PLR 8538062 6/25/85) a participant to elect NUA treatment on an ER stock distribution and then allowed them to roll the amount of the stock representing basis into an IRA. Thus, no tax was incurred on the distribution and the participant will be able to pay taxes on the NUA amount as LTCG.

Can this be right? I couldn't find the cited PLR on my RIA Pensions CD, which led me to believe that the PLR had been contradicted by later rulings. I'm guessing that the IRS wouldn't allow the participant to elect an accounting method such as FIFO on the ER stock that was different from the method the plan trustee elected for the ESOP trust.

Thanks for your help, Dan.

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My clients are a H(65) and W (59) who each have children from a former marriage. They have one large IRA (W is participating spouse) that will be their only retirement assets. They would like proceeds to go 1/3 to his kids and 2/3 to hers. In the event of an early death, how do I provide for the surviving spouse and at the same time ensure that the deceased spouse's beneficiary choices are honored after the death of the first spouse? Is it possible to draft an addendum to the standard IRA beneficiary designation form articulating their wishes as to the ultimate distribution of the IRA proceeds or do they need to put the IRA into a qualified QTIP trust ( I would rather not do the latter as it is quite complex and expensive given the relatively small size of their estate).

MPPP has last day of plan year requirement for receiving an allocation. PYE 9/30/99. Employer wants to amend MPPP to reduce 8% contribution to 0% contribution for PYE 9/30/99. However, co-trustee (there are 4 other individual co-trustees) of plan has not been removed as he has not received 30-day notice as per plan terms. Even assuming co-trustee is removed before 9/30/99, amendment to reduce contribution from 8% to 0% will not be effective for PYE 9/30/99 as ERISA 204(h) notice will not be given not less than 15 days prior to the effective date of the amendment. Thus, employer stuck with making 8% contribution for PYE 9/30/99. Anyone see it differently?

In a split dollar life insurance plan with a collateral assignment of the policy to the employer, who owns the stock when an insurance company demutualizes? If it is the participant, can you amend the plan to provide that the employer will receive the stock?

For purposes of the minimum distribution rules, are QVECs (otherwise known as VDECs or DECs) subject to the IRA minimum distribution rules or the qualified plan minimum distribution rules? This is critical in 2 respects: the ability or inability of an active employee to defer the required beginning date to retirement and the ability of a deceased spouse to consider the QVEC as his/her own.

My research has not disclosed any answer. Under ERTA proposed regs, no deductible contributions could be made to QVECs after 70 1/2. However, for distribution purposes, the QVEC was subject to the rules of Code Section 402(suggesting it was a type of qualified plan).

This is not an academic question, so I would sincerely appreciate any thoughts anyone may have on this subject.

Final Regs. 54.4980B-6 Q&A 6

States that “each qualified beneficiary must be offered the opportunity to make an independent election to receive COBRA continuation coverage.”

In a scenario where an employee who covers his spouse only as a dependent and the employee terminates employment, can the spouse and the employee elect to be covered separately under single COBRA coverage as apposed to jointly under family coverage? Single coverage for each would be the cheapest way to obtain COBRA coverage.

Some insurers are saying they cannot elect single coverage on an individual basis, but must be covered by a family contract (or two-person contract). My contention is that they should be allowed to have single coverage, because of the above referenced Q&A 6.

Anyone have a decision on this?

2 401k prototype plans are adopted. One plan

covers non-union only. In operation it is intended that the second plan covers only union (although not an option to exclude nonunion). There are no HCE in union. If both plans provide for same salary deferral but "union only" receives match and /or profit sharing, will this pass 410(B) if the nonunion do not receive the same match or profit sharing?

Client was under the age of 55, retired from her employer. The 401k plan has before and after tax contributions. The before tax dollars and all earnings are going to an IRA. The after tax dollars can not be rolled, but what about the 10% penalty? A CPA is stating that she is subject to the penalty because she didn't retire at age 55 or any other 10% penalty exception.

Sorry...I'm not experienced enough to create hyperlinks. Here's the address:

http://wire.ap.org/APnews/center_story.htm...ID=APIS6V6PAQG0

Why is Rep. Bernie Sanders only looking at

what IBM did to its older workers.

DADE-Behring did it to its workers and

admitted giving them the Smallest amount

allowed under this Law. My Pension was cut

by about 60%.

An employee's son is diagnosed with dyslexia and dysgraphia. It was suggested by the physician/speech pathologist that her son use a laptop for school. The question is can she use this required purchase of a laptop, for her dyslexic son, towards her health care flexible spending account?

If an employee is covered elsewhere and declines coverage by employer, can the premium be reallocated? For example, could the employer use the $$'s to increase the employee's wages?

A 1999 required minimum distribution should be made if the decedent's required beginning date was reached prior to death.

Did the beneficiaries rollover their portion of the inherited IRA to their own IRA with the use of their own life expectancies in the computation of their own required minimum distributions? Please advise.

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An insured group health plan wants to exclude dependent spouses if they are eligible for coverage under their own employers' plans. Dependent children can be covered regardless of other plans. Alternatively, allow all dependent spouses to participate but impose a higher charge on spouses who have alternative coverage available. Excluding any discrimination issues based on marital or family status, is this a problem? I am aware of the case law against "escape clauses" applicble in the coordination of benefits ("COB") area and am wondering if the concept extends from the participant to beneficiary level.

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What is the maximum contribution an owner employer can make to a Keogh. Is it 25% of income?

Thanks for your help.

I'm trying to find out which fianicial management companies (fidelity, merrill lynch, etc.) provide IRAs and to how many people - a market survey or sorts. Does anyone know where/how I might find such information? The information can but does not need to be limited to Roth IRAs. Please share any thoughts on the subject.

Child is 10, and has earned income. Does the AGI limits apply to the child or the parents of the child since the child is still a dependent? The regs address earned income and maritial status.

A DB Plan document allows for an employee who has reached NRA under the Plan to segregate the PVAB in the Plan. How does this impact funding of the plan. Can you run a seperate cost caculation for this individule? What the client woulf like to do is have the segreagted assets only available to pay benefits for the doctor who has reached NRA. Is this possible.