Bank A made loan to Employer A ("Bank Loan"). Employer A lent proceeds of Bank Loan to ESOP ("ESOP Loan"). Bank Loan qualified as a a securities acquisition loan under Section 133 of the Code. Bank Loan was made prior to 1989, and was not subject to the pass through voting requirements. Prior to the full repayment of Bank Loan, Employer A refinances Bank Loan with Bank B. Bank B does not utilize the 50% interest deduction. The refinancing extends the term of the loan past the term of the original loan, possibliy triggering the pass through voting rules. Can we argue that pass through voting is not applicable because the lender is not utilizing the 50% interest deduction of Section 133?

I've read differing deadlines for amending governmental plans (e.g., GATT, etc.). Is it the end of the 1999 or the 2000 plan year?

Thank You

A self funded group of mine has approved coverage for the employee's "domestic partners". What, if any, cobra benefits are available to "domestic partners"? And what qualifies as a "qualifying event" in this situation(as domestic partners rarely get married)?

Also, per a new negotiated contract, the employees are contributing a higher percentage of their premium. I have been told that this qualifies as an open ennrollment. Does it?

After an employer/participant (this is a one person sole proprietorship plan) has received a reversion of excess assets from a defined benefit plan, and has paid the IRS the 50% excise penalty on the reversion,....how is this reversion handled for the individual on his 1040? Does the individual pay taxes on the entire reversion, or on only the part that has not already been sent to the IRS in the form of the 50% excise penalty?

Situation: 12/31 plan w/ immediate entry date for 401(k); 2 YOS requirement & 1/1 7/1 entry dates for discretionary (profit sharing) contribution.

Question: can/should 401(k) deferred & compensation earned by participants eligible to defer, but not yet eligible for profit sharing due to 2 YOS requirement, be included in the deductibility calculation?

I understand including these amounts in the calculation when the only reason they're not "participating" in the profit sharing is due to a 1000 hour or last day requirement, but am unsure of how to handle in this situation.

Can you cite any Codes / Regs?

We have been using MHM Software for almost 10 years. Recently, DataPath has been sending information which looks very interesting. Does anyone out there use DataPath? If so, I would like to ask you how you like it and how it fits certain situations. Thanks

What can you do with uncashed distribution payments from a 401(k) or other Defined Contribution Plans after all methods to locate the participant has failed?

Can the amounts be escheated? Any legal references would help.

Thanks

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?