Richard - a couple of comments w/r to you response.

1) Isn't it true that the lump-sum based on the frozen benefit would change due to a change in interest rates and an increase in participant's age and could go up or down?

2)Isn't the accrued benefit based on the account balance at 65 (assume no early ret subsidy) converted to an annuity (of course grandfathering the frozen benefit)? As opposed to the frozen accrd benefit plus future account balance converted accruals? Or does it depend on the plan design?

3) And based only on the account balance, isn't it possible the lump sum could be greater than the account, due to 417(e) lump sum of accrued benefit?

Like to hear your thoughts

Gary

Bank A grants its employees stock options, plan does not have change of control agreement. Bank B purchases Bank A in a pooling purchase. Bank B does have a change of control agreement in their employee stock option plan. Bank C purchases Bank B, once again pooling purchase, and Bank B's employees are informed that their options immediately vest. Bank B tells original Bank A employees that there is a question as to whether their options will vest. Is this possible or is this discriminatory??

A company currently has a SEP IRA and would like to convert it to a Simple IRA. Does one simply terminate the SEP and then adopt a Simple IRA or is the process more involved? Also, if they have deposited contributions to the SEP IRA for the partners for the current fiscal year, wouldn't they have to deposit any contributions to newly eligible participants before terminating the SEP?

A client has an integrated MPP and a PS plan with a 6/30/99 FYE. The integrated MPP was merged into the PS as of 12/31/98, and the MPP was funded through 12/31/98 (no last day rule). Can the PS be amended to a cross-tested formula for FYE 6/30/99? I wasn't sure if the cross-tested PS plan falls into the same category as an integrated plan. I know you can't have two integrated plans in the same year.

If say a 45 year old person has a cash balance account of $100,000, is that what the lump sum would be if he terminated? Or do you have to project account to 65, convert to an annuity and then determine lump sum of the annuity? And if he wanted to receive an annuity at 65, would the account be credited with interest (based on current year rates) to age 65 and then converted to an annuity?

I am in the middle of researching this but wanted some thoughts. I hear of cases where an employee has an opening cash balance account that is less than their pvab from old plan and that they will not accrue for a long time. And that this happens to older employees. Is it simply due to different assumptions, such as a higher interest rate for cash bal conversion? And are there restrictions as to what assumptions are used for opening account conversions?

A large employer with a fully-insured plan has noticed a trend...employees with family coverage are covering their dependents and their spouse is also covering dependents on their employer's plan. In order to discourage their employees electing this "double coverage", they want to give employees a subsidy, say $100 a week to elect single coverage. Currently they pay around 67% of premiums for each employee, regardless of if single, employee + 1, or family coverage is elected. Can they do this? Is there any reg or law that we can present the employer to show why they can't?

What is the maximum statutory time frame to elect health coverage following a change in family status? What if the participant misses the deadline stipulated in the plan? How common are after tax contributions? What are the administrative concerns associated with them?

1. What is the most authoritative cite for including a loan in determining the AP's portion of a pension plan? (i.e. AP gets 50% of pension. Plan assets of P is made up of $50,000 loans, and $50,000 in mutual funds. AP gets $50K not $25K.)

2. May a QDRO call for the AP to get the benefit of an early retirement subsidy?

Can a plan participant take a loan from a plan that has terminated and is waiting on an IRS determination letter before distributing the plan assets? The plan allows for hardship distributions, but under normal circumstances, the loan would be the participants first option.

I’m hoping someone can help me out on a kind of technical question. I’m looking for an explanation of Tax Code section 401(a)(9)(F). The section states that "... any amount paid to a child shall be treated as if it had been paid to the surviving spouse if such amount will become payable to the surviving spouse upon such child reaching majority(or other designated event permitted under regulation)."

I think the intent of this section is to allow a surviving spouse/beneficiary to treat an inherited IRA as his or her own, even though a dependent child is scheduled to receive payments from the IRA after the IRA owners death and up until the child reaches majority (age 18??).

However, I can't find any tax regulations that talk about this section, or any other information from other publications. The closest I came was a footnote in a 1993 BNA publication that said the IRS hadn’t "provided any such other events, or otherwise promulagated regulations that elaborate upon this statutory provision."

Any thoughts or citations would be appreciated.

What are the proper procedures (legally and for tax purposes) for handling annuity benefits paid to a deceased annuitant, should payments made after the annuitant's death be returned to the insurance company and then distributed to the proper beneficiary or should the insurance company make the next scheduled payment to the proper beneficiary?

We would like to put in a safe harbor plan effective January 1, 2000. We currently have a dollar-for-dollar match of 4%, we allow immediate vesting, and we have both an after-tax and before-tax component for saving. We were told by legal counsel that the IRS has not make it clear that you can have a safe harbor plan with after-tax employee contributions (with employer match against these contributions). Is it correct that we cannot implement a safe harbor plan due to our matching after-tax contributions (as well as before-tax contributions).

It is my understanding that the IRS position is that receipt of ubti (whether or not it is offset by a deduction for a plan contribution)by a tax-exempt organization subjects the entire reversion to the Section 4980 excise tax. Has anyone been successful in contesting this position? Thanks

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Per plan document the vesting schedule is figured on hire date years. If an employee is 40% vested and terminates employment 30 days prior to his anniversary date to become 60% vested does he lose this 20%. The plan document states that if a full vesting year is not accomplished you refer to the plan year which is calendar--this seems to me the employee is out of luck?? please comment

If I make a contribution to a Roth IRA, then later (prior to age 59.5) decide to withdraw some or all of the contribution, not touching the earnings, and without qualifying for any of the exceptions (first home, education, etc.), will I be charged the 10% penalty?

Since Section 1042 is not applicable to sales of S-Corp stock, is it otherwise possible for an S-Corp shareholder to sell shares to an ESOP on a tax-free basis? If so, what is the authority for this?

Employer plan provided for loans; 5 participants elected loans; loan documentation provided for payroll repayment; employer "forgot" to commence repayment until a period longer than the default period but not longer than 5 years. What is the proper correction and what forum (APRSC, VCR etc.) is proper? We would like to correct by reamorizing the loan over the remaining period, but do not want to pay income tax because the default did not occur as a result of "missed payments" on the participant's part, but as a result of an administrative error.

what is the proper correction for non-deductible contributions? I know you file an amended corp return, file 5330 and pay the 10% penalty. Do you need to distribute the excess? gains?

For tax and legal purposes what is the best way to treat distributions made to an annuitant after their death?