I am a key employee in a small business that has great potential. We are publicly traded on the OTCBB. My boss has promised an ESOP for a long time now. He has asked for the input of all the key employees, but does not want us to collaborate on our input. I have no knowledge of standard ESOP models, and need to get some information so I can negotiate a favorable ESOP. I have looked in book stores to no avail. Does anyone have any suggestions as to where to find good info on ESOPs, or have advise or experiences to share with me? Thanks, the Spanish Prisoner (It's a good movie, check it out).

We have a participant who exceeded the 402(g) limit for 1997 and 1998. The vendor has told us that the correct manner to correct the problem is to issue corrected W-2s. Everything our payroll department reads indicates that the vendor should refund the excess contribution (and interest) and issue a 1099-R. (Note: today is 2/2/99 so they'll be late) Has anyone ever dealt with a problem like this and are there sources on the net that can help us? The vendor's general counsel is pushing the W-2 solution, citing Treasury Regs that we can't locate.

I have been unable to determine if 1) an employer can have a SEP and a money purchase plan at the same time, and 2) how the SEP contribution affects the deductibility of the money purchase plan contribution.

The study guide for the Fall 1997 ASPA C2-DC review course states that "a deduction for a contribution to a SEP reduces the amount of deduction otherwise available for contributions to a qualified defined contribution plan", and reference code section 404(h)(2). 404(h)(2) discusses the effect on a stock bonus and a profit sharing trust of a contribution to a SEP plan, but not a money purchase plan. Since the code section does not specifically reference the effect upon money purchase plans, I am hesitant to think that it applies to this type of plan. Any thoughts or experience with this issue?

I have read a number of older posts that indicate that in order for the employer to receive credit for prevailing wage contributions to a plan, those contributions must be fully vested. It is my understanding that this is generally true for a defined benefit or money purchase pension plan. However, according to a knowledgeable DOL person I spoke with a couple of years ago, it is NOT necessary to fully vest profit sharing contributions in order to receive full credit for such under Davis Bacon. The DOL Field Operations Handbook says that compliance with ERISA vesting requirements is all that is necessary. See 15f13(e). It also provides that while profit sharing contributions are not ordinarily creditable toward the employer's prevailing wage obligation this can be remedied by quarterly contributions to a plan or to an escrow account. Does anyone have the bottom line right answer to this issue?

Company A sells Company B, a wholly-owned subsidiary, to Company C. Company A sponsors a 401(k) plan, under which Company B was a participating employer prior to the sale.

Code Section 401(k)(10)(A)(iii) allows for a distribution of elective deferrals in the event of a disposition of a subsidiary, provided certain conditions are satisfied. However, Company A's plan does not specifically provide for such a distribution. Must Company A's plan be amended to provide for the distribution, or can the distribution be made without amending the plan?

Company A wants to clear out the accounts of the employees of Company B. Company A would like to avoid amending the plan because the plan is a prototype document, and such an amendment would cause it to become an individually-designed plan.

I have a client who used his account under a DC plan to purchase a substantial share of the stock of a start-up company several years ago. The client then left the old company to run the start-up and has built it into a successful company. The old company is terminating its plan and the client wants to know whether he should roll the stock over into an IRA or into his DC plan in the start-up. Assuming the stock will appreciate over the next few years, can we take advantage of the net unrealized appreciation rule of IRC 402(e) to avoid future appreciation? Should we consider a transfer to an IRA and then a Roth coversion?

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Now that governmental 457 plans must set up a trust for the exclusive benefit of its participants and beneficiaries, are they allowed to distribute benefits to alternate payees via a domestic relations order? Am I reading too much in to the exclusive benefit requirement? A gov't 457 plan is not subject to ERISA and is not qualified so the QDRO exception does not seem to apply here.

I have been told by our FSA administrator that when on maternity leave, an employee is no longer considered an active employee, and therefore, not eligible to continue her Dependent Care FSA. However, maternity leave (time before delivery and until doctor's release back to work) is considered disability. When an employee is out on disability, why would that disqualify them from participation? I can understand once the employee is released back to work, and she chooses not to return and FMLA kicks in, that during that time period she would not be eligible. Appreciate any help.

may a participant deduct on their personal tax return the interest they are paying on a loan they are repaying into a pooled account if the source of the loan is from 401k moneys. i know that er moneys loaned and paid to a pooled account are deductible but not sure if there was a distinction if it was from 401k moneys.

I heard that a recent court decision has ruled that the 60 day COBRA election period begins on the date the qualified beneficiary receives the notice. Does anyone know if this is true?

Also, I heard that all health plan beneficiaries must be notified of their COBRA rights individually. Does this mean that we need to send a COBRA package to everyone in the family that had coverage at the time of the qualifying event?

Thanks for your help!

On line 26b of 5500, filer must identify the type of opinion the plan uses (qualified, qualified / disclaimer...). However, the instructions and 5500 Preparers Manual do not really explain what the different types are. Does anyone have a good explanation of the differences between them?

Any comments, insight on the proposal released this am by the Clinton Administration regarding making S corp ESOPs subject to UBIT?

Is there an easy wat to find out which states require their governmental plans to comply with ERISA? Is there a list of governmental plans that must comply with ERISA?

A company sponsors a profit sharing 401(k) plan covering both union and non-union employees. Several of the company's employees (including HCE/key employees) are members of the union and participate in a union-sponsored defined benefit plan, to which the company contributes. Under the 401(k) plan, the union employees may contribute their own money, but are not eligible for any employer contributions.

1. For 415 limit purposes, is the union plan treated as separate, or as another plan of the same employer (requiring a test of the combined benefits)?

2. When calculating the 404 deduction limits for the 401(k) plan, which compensations are included (i.e., do you include union employees' compensation?), and is the limit 15% based only on the 401(k) plan, or 25% (using combined contributions to the 401(k) and union plan)?

Does anyone know of a vendor who offers a discount package for employee benefits, ie. Discounts on movie tickets, wrapping paper, amusement parks, gyms or fitness centers, tires, etc. We are planning to put together a brochure with discounts that employees can access as a fringe benefit, especially during the summer vacation and holiday times. I know there are several for auto and home insurance, but we are looking fo FUN things.

501©(3) hospital located in remote area purchase gas and stores in tanks. It allows employees to purchase gas at cost + 10% because alternative sources of gas in the area are scarce and close early. The hospital does not make a profit on the sales because the related expenses easily exceed the gross margin.

The price to the employees is sometimes a little higher and sometimes a little lower than "market". Can any discount be excluded as a working condition fringe, de minimis benefit or otherwise?

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Under 401k (10), a terminated 401k cannot be distributed if the "employer"

establishes or maintains a "successor plan." In a stock deal, Co A acquires Co

B. Just before acquisition, Co B terminates its 401k by board resolution and then, soon after its acquisition by Co. A, Co. B adopts Co. A 401k plan. Would this be a "successor plan"? Note that at time Co. B terminated its original 401k plan, it was not part of a controlled group which included Co. A.

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"