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?

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.