Does 415(e), which has been repealed eff. for plan years beg. in 2000, need to be considered for 1999 for an ongoing plan? Do any IRS guidelines exist?

Company's practice for DC plan is to pass the 410(B) coverage test for

controlled group, then apply the 401(k) discrimination tests separately. Company indicates on Form 5500 that it is mandatorily disaggregates. Company defines plan as ESOP (not leveraged), participant directed and 401(k). Former ESOP in existence in 1977 merged into 401(k) plan several years ago. Employer pays match in Employer stock.

What is mandatory disaggregation? What is its purpose? Is this an

exception since ESOP existed in 1977 and is now merged into 401(k)?

I have a plan that wants to include the

investment option of "any stock of participant's choice". Then 2 HCE's want to purchase a retiring partner's

Employer stock with part of their 401(k)

money. Would this be permissible? The

retiring partner would not sell this

stock to any employees other than the

two HCE's.

The following was taken from a recent edition of "Educated Choices" (Vol.8,No.1), a retirement benefits newsletter that addresses fiduciary responsibility. It states: "ERISA dictates the duties, responsibilities and liabilities of only those fiduciaries working in private schools, colleges and universities. Those who work in church organizations or the public education sector are exempt from ERISA rules. Who then has the fiduciary responsibility on the administration of a self insured group health plan for a junior college? Who then is libel if ERISA rules are broken or exceptions are made? Or is this information relating only to retirment plans/savings managenent?

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I have a client who transferred assets from a Traditional IRA to a Roth IRA prior to December 31, 1998. He is presently single but will be getting married in the very near future. He transferred the money to the Roth IRA so he could have access to the funds for a down payment on the purchase of his first home. His future wife has an existing home. QUESTION #1: If he puts his name on the title of his future wifes home (after they are married) will he still be able to access the money is his Roth IRA to purchase a home? (He plans to make this purchase in five years if that matters.) QUESTION #2: Can you "borrow" against a Roth IRA, or is it considered a distribution and how is it taxed or penalized?

Thanks for the help!!

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Hi Everyone,

Need some input on this one.

I am aware of a case where a husband and wife were each named as reciprocal primary beneficiary on each other's IRA with their adult children as contingent benficiaires on each. The IRA's are

Trusteed by a bank headquartered in Delaware with the domcile residence of the decedent couple in Florida.

Husband and wife were killed in an auto crash in Florida and experienced a Simultaneous Death. This was stated on the Death Certificate issued by the Coroner in Florida. Their Estates are being probabted in Florida.

The Delaware based Bank will not pay to the contingent beneficcaires and insists on paying only to the Estates of each of the Deceased claiming that Simultaneous Death Law in Delaware prohibits payment of these proceeds to anyone other than the Estates under this circumstance.

Other IRA's and insurance policies held elsewhere were successfully paid to the contingent beneficiaries.

My understanding is that most states

provide that as a result of simultaneous death the decedent survives his or her beneficiary. In that case the proceeds would be payable to the contingent beneficiary(ies)of the assets.

Why is this situation a problem?

1. The Attorney in Florida handling the estate is avoiding the research in this matter. Not interested in challenging.

2. These IRA assets if paid to the decedent's estates and not the contingent beneficiaires will be the only income generating estate assets neccessitating filing of an Estate Income Tax Return and taxation at potentilly higher rates than the contingents as individuals.

3. Access to state by state law in this matter has been difficult to locate.

Looking for your thoughts.

Have a client with a existing 401(k) plan. he will be moving all his employees into a leasing company arrangement so all the employee tax reporting etc. will be handled by the leasing company. I'm thinking that my client should term his 401(k) because they all want to be in the leasing company 401(k). I do not know if the leasing company has a multiple employer plan or if my client (soon to be former!) will be a co-sponsor of the plan or exactly how the leasing company plan will "cover" employees working for a recipient. This situation seems to be occuring frequently with the increased popularity of the leasing concept. I wonder what other questions to ask and if they should term their existing plan? Anybody already resolved these issues?

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What is the most commonly used practice in determining the effective date of a benefit change request in a qualified life status event? Current regulations state the effective date can be as early as the date of the event or not later than the first of the month following the actual receipt of the enrollment change request as long as it is within the 31 day grace period.

An employer wishes to set up a retirement plan with a large brokerage firm and the brokerage firm has different minimum investment limits for various perks. For example, the brokerage firms requires $20,000 to have a "personal advisor" assigned to that account. If the employer creates a retirement plan that uses this brokerage firm, will the employer runa afoul of the discrimination rules? Assuming that the plan itself is open to all employees, and all employees can invest with this brokerage firm, but the only difference being that higher paid employees will probably have the $20k to be able to obtain a personal advisor. The *type* of investment choices (i.e. mutual fund families etc) will be the same for everyone.

May an ESOP borrow money for any other purpose than the three uses (a) to acquire qualifying employer securities; (B) to repay the loan; or © to repay a prior exempt loan? For example, may an ESOP borrow money to invest in something other than qualifying employer securities?

Can anyone provide some insight as to where we start correcting some violations regarding timing in when contributions became plan assets, as subsequent opportunity loss which may have been experienced by participants.

Can you drop the 401(k) safe harbor contributions in mid-year - suppose it was too expensive (because your business was doing poorly)? The change would apply only after participants were notified of the change.

I know that the IRS Notice says that the contributions have to be made for the entire year. But is that just a condition for the safe harbor, or is it something more menacing?

Do you think that the employee notice to participants about the safe harbor, and the plan language, would somehow create an accrued benefit right for the safe harbor contributions for the rest of the year?

I would think under normal accrued benefit concepts that the notice to employees (with the accompanying plan language) would NOT create an accrued benefit right for the rest of the year. You can always suspend accruals in mid-year (provided the proper procedures are followed) so that you wouldn't have to provide a benefit based on compensation after the suspension date.

You also have the argument that you could always terminate the plan in mid-year.

But others differ with this analysis. Has the IRS said anything on this?

Your comments would be appreciated.

The only

If you offer a safe harbor 401(k), are you permitted to offer additional matching contributions subject to a vesting schedule? After reviewing Notice 98-52, these are my conclusions, but I could use some help in verifying them:

1. With a 3% nonelective, you could offer a forfeitable match, but you would have to perform ACP testing (non-elective meets ADP & top-heavy, but nothing in 98-52 says it covers ACP safe harbor)

2. By offering a safe harbored match which matches up to 6% of comp, you cannot offer an additional match subject to vesting because VI.B. states the maximum is 6% that may be matched. However, this may only mean you that match up 6% and have it be safe harbored from ACP. Additional matching might be subject ACP or eliminate all of the match from safe harbor status. (Why you would want to offer both a safe harbor & non-safe harbor, I don't really know. But that's the question I need to answer). My interpretation is that you cannot offer an additional match on top of your safe harbor match.

Thanks in advance for your help!!!

If an employer sent a health insurance company monies, the insurance company deposited that money in its account, is the interest earned from those monies considered a plan asset?

Does the 20% withholding requirement for "eligible rollover distributions" apply to amounts distributed to the IRS to satisfy a tax levy on a participant's account? A citation to the applicable authority (if there is any) would be much appreciated. Thanks.

MDE Information Technology, Inc. has developed an educational and analytical tool for employee stock option programs called The Option Optimizer . This tool will help corporations maximize the compensation value of their stock option program, and will strengthen the alliance between employees, the company and shareholders. Please visit http://www.mdegroup.com for further information.

If a self-employed person amends his schedule C and lowers his income, does he need to change or amend his PST contribution as well, if he paid in the maximum? Does he need to receive a refund of part of his prior year contribution, including earnings?

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bravojk

Is there an available securities law exemption for the participant's interest in a voluntary, contributory ESOP?

Plan sponsor dissolved business in 1997 and decided to terminate DB plan. Standard terminaton. Now that we finally have all IRS and PBGC approvals, we are proceeding with distribution of final benefit amounts.

But the custodian of the funds does not do 1099's. Neither do we (actuary). Since there is no longer a corporate entity (I think), who is repsonsible for the 1099's and IRS reporting? Stupid question, since the sponsor is responsible. (The plan is self-trusteed.)

The practical question is what suggestion can I give the former owner of the company to get the tax forms done?

For split-dollar plans, some insurance carriers apparently have added a term rider for two years after a withdrawal, issued at rollout, which maintains the death benefit in the plan. This was an attempt to sidestep the application of Section 7702(f)(7)(E), and delay the cashing out the plan. Any comments on this practice?