Manement group seeking to purchase closely-held corporation from 100% shareholder for, eg, $3,000,000, proposes to set-up leveraged ESOP, borrow $2,000,000 and then raise $1,000,000 by giving employees with balances in profit sharing plan the option to voluntarily

invest those balances, or portion therof, in employer stock.What fiduciary

concerns does this present? Can the employees effectively elect in, without profit sharing plan trustee being later held responsible? Can the profit sharing plan be amended and restated as ESOP or KSOP to effect transaction? Are there securities law issues?

I think that I understand why my spouse rather than our

trust ought to be the beneficary of my regular IRA

What about my Roth IRA

Thanks

Ray -- what do you (or others) think of this idea? This was suggested to me by a very bright lady via email.

We could make "Continuing Professional Association" be a "category" of message boards; turn this one into "General" and then create others for each ASPA certification course, and maybe other courses from other programs.

Quoting:

"Exams are structured as a self-study program. Every exam has

a study-guide that states the required reading (usually Pension

Answer Book and the ERISA Outline Book). Outlines the topic,

reviews key concepts, and has review questions / examples.

However, the answers provided are not always that easy to understand.

Also, there are old exams available with answer key and the study

guide chapter that it pertains to, but again the answers are not

explained and may not be easy to understand if a calculation is required.

So maybe what would be a good approach is a message board by

exam name (ie, ASPA C4, ASPA C1, etc.) Then the posted topic could be

each study guide chapter (ie, Chap 1, IRC 414). This way you would not have

to read all the questions for each exam.

ASPA C1 - Administrative & Qualification Issues

ASPA C2 (DB) - Administrative Issues of Defined Benefit Plans

ASPA C2 (DC) - Administrative Issues of Defined Contribution Plans

ASPA C3 - Financial and Fiduciary Aspects of Qualified Plans

ASPA C4 - Advanced Retirement Plan Consulting"

A client's DB plan defines compensation for benefit accrual purposes as "total salary or wages, excluding allowances and expense reimbursements." First question: Does that fall under a safe harbor definition?

Second question: If it is a safe harbor, would it remain a safe harbor if the definition were amended to exclude severance pay?

If a 401(k) plan has their eligibility requirements set as 1000 hours of service to get into the plan, what happens if in year one an employee has 1000 hours and the second year they only have 600 hours? Are they still eligible to participate in the plan or do they have to quit participating? What are the requirements in regards to this?

Hypo: Company A acquires Company B in 1998. Company B maintains a SARSEP. For 1999, based on 414(B), do all employees of A & B have to be considered in satisfying the 25 or less eligible employee test? Assuming yes and SARSEP passes test, do all eligible employees of A & B who have 3/5 years of service w/either A or B receive contributions? Any guidance/advice is much appreciated.

How does ADP testing work when a 401(k) Plan in which all EEs are HCEs has 2 NHCEs join the Plan as of 4/1/99? This is a calendar year plan. Is 1999 automatically OK due to no NHCEs in 1998? and then 2000 depends on NHCEs deferrals in 1999? Thanks for input.

Does anyone know the requirements to set up a self-insured medical reimbursement plan, and does anything need to be submitted to the IRS? I have heard that there is a one page format that the officer signs, but have been unable to locate any additional information on this topic. I realize this type of plan is not a cafeteria plan, but a cafeteria plan seems to be the closest plan I can come up with.

What is the proper correction method for excess contributions to a Keogh Plan? We have an individual who made contributions to a Keogh Plan that should not have been made because he was employee (w-2 wages) as opposed to self-employment income. Is there anyway to get the excess out of the Plan, as the carryforward correction will not help him as he will not have any self-employment income in the future. Thank you for any assistance.

During the 1998 plan year, the ADP for NHCE's was 1.73% and the ACP was 2.34% As the matching contributions are 100% vested, the plan administrator could have prepared a single ADP test showing a combined ADP for NHCEs of 4.07%. If the employer uses the prior plan testing method, does this mean that for the 1999 plan year, HCEs can have an ADP of 6.07%? Any planning opportunities? Thanks. Ed

Company has 2 401 (k) Plans. Plan 1 benefits only the employees of Division A. Division B is excluded by class. Eligibility for this Plan is age 21/1 year of service and the entry dates are 01/01 and 07/01. Plan 2 benefits only the employees of Division C. There is no age/service requirement and the entry dates are 01/01 and 07/01. The plans are combined for purposes of 410 (B).

With the following data, can I assume I pass the ratio percentage test on a combined basis?

Plan 1:

Total Employees 1183

Total Excludable 1091

NHCE's Benefiting 71

NHCE's Not Benefiting 163

Total Nonexcludable NHCE 234

HCE'S Benefiting 21

HCE's Not Benefiting 0

Total Nonexcludable NHCE 21

Plan 2:

Total Employees 453

Total Excludable 149

NHCE's Benefiting 304

NHCE's Not Benefiting 0

No HCE's in this Plan

Since the two plans have different eligibility requirements, I'm not sure which employees are excludable when testing on a combined basis.

Thanks.

Company has 2 401 (k) Plans. Plan 1 benefits only the employees of Division A. Division B is excluded by class. Eligibility for this Plan is age 21/1 year of service and the entry dates are 01/01 and 07/01. Plan 2 benefits only the employees of Division C. There is no age/service requirement and the entry dates are 01/01 and 07/01. The plans are combined for purposes of 410 (B).

With the following data, can I assume I pass the ratio percentage test on a combined basis?

Plan 1:

Total Employees 1183

Total Excludable 1091

NHCE's Benefiting 71

NHCE's Not Benefiting 163

Total Nonexcludable NHCE 234

HCE'S Benefiting 21

HCE's Not Benefiting 0

Total Nonexcludable NHCE 21

Plan 2:

Total Employees 453

Total Excludable 149

NHCE's Benefiting 304

NHCE's Not Benefiting 0

No HCE's in this Plan

Since the two plans have different eligibility requirements, I'm not sure which employees are excludable when testing on a combined basis.

Thanks.

Do any companies offer this type of benefit?

We've had inquiries about it from employees but believe it is probably uncommon.

I don't know about the 1 in 4 not having coverage, but I do agree wholeheartedly that mandate increase premiums. How can they not? Usually the mandates are for high-dollar coverage (if they weren't expensive, they'd be in plans already). Also, many carriers have left states with certain mandates (Kentucky and Washington are two I know of personally), so the competition is reduced which drives up premiums even more. I know mandates are supposed to help, but KY's was such a fiasco they had a special session of the legislature to try to fix the fix. Without mandates, small companies could provide basic coverage at reasonable rates. Isn't some coverage better than none?

The IRS has released final regulations under section 3121(v)(2)

of the Internal Revenue Code that provide guidance as to when

amounts deferred under or paid from a nonqualified deferred

compensation plan are taken into account as wages for purposes

of the employment taxes imposed by the Federal Insurance

Contributions Act (FICA). Section 3121(v)(2), relating to

treatment of certain nonqualified deferred compensation, was

added to the Code by section 324 of the Social Security

Amendments of 1983.

The final regs are quite similar to the proposed regs, but

appear to reflect many helpful tweaks that had been suggested by

employers and practitioners in comments to the proposed version.

The final regs are online at http://www.benefitslink.com/taxregs/31.3121v2.shtml (click)

If a calendar year plan was top heavy for 1997, but the employer did not make the required contribution, can this defect qualify as signficant under APRSC thus allowing the employer until 12/31/99 to make the contribution?

Should the employer also make an additional contribution to cover lost earnings? If it doesn't, what must the employer do?

My supervisor has asked be to do some research regarding the number of Human Resource staff employees needed to administer benefits at companies similar to ours. We are trying to provide justification for hiring an additional person. I would like to find a survey that may indicate typical averages. For example - Company with 1000 employees typical requires 2-3 employee benefits staff members, etc. Any suggestions?

------------------

kdavis@atlanticmarine.com

Unfortunately my brain is frozen on an issue. Applies to self-funded ERISA plans. 1) Can a plan have different age limitation for dependent children based on hourly vs salary basis? (ie, no extension for full time students, over the age of 19, for hourly ee's; salaried ee's full time students covered up to age 23).

Thanks!

I have a client that would like to amend their MP Plan to a Safe Harbor 401(k) for 1999. I believe this can be done if the plan is amended by 4-1-99 and the safe harbor notice is given by 3-1-99. Of course the MP would have to funded through the amendment date and the document would have to cover the MP distribution and J&S rules. I would greatly appreciate other opinions.

In a non-qualified deferred compensation plan, when is FICA tax payable on employee deferrals?

For example, in our plan, we allow key ees to defer their annual bonus (paid in March). If an ee elects to defer their bonus in its entirety, are they required to pay the FICA on the bonus immediately? or can they elect to pay the FICA at a later time, say out of some future earnings that year?

[This message has been edited by BLee (edited 01-28-99).]