Joe and Bill each sell 100 shares of stock to an ESOP and elect 1042 treatment. Both work for sponsor of ESOP after deal closes and neither is related to the other, nor a 25% shareholder. Can Joe recieve allocation of Bill's 1042 shares and vice versa? Does it matter if Joe and Bill sold their shares to ESOP in same transaction? How definitive is the guidance on this issue?

I have a client who we signed plan documents to set up a NEW Cross Tested Profit Sharing Plan on 12/31. Unfortunately, he already had a Profit Sharing Plan established. Can we fund the cross-tested plan using the cross-tested formulas and not make a contribution to the existing profit sharing plan? Can we merge the old plan into the new plan later this year?

Question: If I set up a Cross Tested Profit Sharing Plan with a 3% Top Heavy contribution to NHCEs,can I use the 3% contribution as the minimum contribution to satisfy the minimum profit sharing contribution for the Safe Harbor 401(k) Plan or do I need to do a separate 3% for the 401(k) plan? Could the HCE then contribution $10,000 (Salary $160,000)to the 401(k)?

Corp A (23 employees) and Corp B (8 employees) are members of a brother-sister controlled group operating under Corp A's profit sharing plan. The allocation formula is nonintegrated. Accrual requirements are 1000 hours and last day of service.

Management of A wants to make a comtibution for 1998 to employees of Corp A but not employees of Corp B. Rate group testing would apply, but have emplyees of B accrued a benefit under the pro rata allocation formula? Wouldn't the allocation formula need to be amended, and amended prior to !2/31/98? Thanks.

Does anyone have quick reference to the DOL's policy for locating and handling account balances of lost participants?

Can a 457 plan be rolled into any other type of plan such as IRA,DC,etc. Have a retired judge that is getting every answer under the sun from financial institutions and from the information I have read all that can be done is distribute or roll into another 457 plan. What are the options for this type of situation.

Thanks for your help

The IRS National Office has published a : IRS Revenue Procedure 99-13. Excerpt:

This revenue procedure provides a comprehensive system of correction programs and procedures for an employer that offers a plan that is intended to satisfy the requirements of section 403(B) of the Internal Revenue Code (the "Code"), but that has failed to satisfy those requirements because of Operational, Demographic, or Eligibility Failures. This system permits an employer to correct these failures, and thereby provide its employees with retirement benefits on a tax-favored basis. This revenue procedure modifies and amplifies the Employee Plans Compliance Resolution System (EPCRS), set forth in Rev. Proc. 98-22, 1998-12 I.R.B. 11, to include specific programs and procedures relating to 403(B) Plans. In addition, this revenue procedure replaces the program described in Rev. Proc. 95-24, 1995-1 C.B. 694, which established the Tax Sheltered Annuity Voluntary Correction (TVC) program, and which was extended by Rev. Proc. 96-50, 1996-2 C.B. 370. Except as otherwise indicated in this revenue procedure, the specific provisions of EPCRS apply to 403(B) Plans.

Here's a link: http://www.benefitslink.com/IRS/revproc99-13.shtml (click)

Employer establishes a 403(B) plan with a matching contribution. It appears that ERISA would apply in that there is now significant employer involvement in the Plan, and an SPD and form 5500 are required. If the employer amends the plan to eliminate the match, do the ERISA requirements go away? How do you inform the IRS that there are still plan assets, but a form 5500 is no longer required.

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jpb

Does anyone have a sample of a FMLA policy to be given to participants that they would be willing to fax or e-mail to me? Thanks.

I understand after HIPAA that cafeteria plans cannot include LTC insurance as a qualified benefit. However, are employers allowed to included LTC insurance on an after-tax basis in a cafeteria plan, as a type of taxable benefit, treated similarly to cash?

[This message has been edited by Cindyd (edited 01-21-99).]

The biggest risk they run is one of discrimination. However, these day limits are not always written in stone, even in fully insured plans. I have seen carriers extend coverage beyond the maximum day limits for such things as physical therapy and skilled nursing care, but it was based upon the medical merits of doing so, not out of preferential treatment of a certain employee. This is more, I think, a matter of Utilization Review guidelines, which may, if you check into it, allow for the bending of these rules if it makes medical sense.

If it is a matter of completely overriding the rules of the plan, you better make sure that it's done for everyone across the board, and keep in mind that if you pay for benefits outside the guidelines of the plan, it may not be counted by the reinsurer in calculating "stop loss" limits.

If a DB plan requires, as a condition of employment, that employees contribute 5% of pay, can this contribution be made on a pre-tax basis? It seems that this could perhaps fall under the "one-time irrevocable election" exception contained in the 401(k) regs.

Assuming the standard "return of contribution due to mistake in fact" language in a plan document, can the employer recover their contribution in the following situations?

1. The employer contributes an amount to a profit sharing plan in excess of 15% of payroll. (The employer made the contribution early in the year in anticipation of a certain level of payroll which didn't materialize.)

2. The employer contributes $X to a profit sharing plan early in the year. At the end of the year, the employer determines that they have no profit (so the $X wouldn't be deductible).

3. The employer sends a check to the trustee as payment for trustee fees. The trustee deposits into the pension plan. The employer does not want this to be included as a contribution to be deductible under Section 404 (let's assume they are in full funding). The employer would rather deduct these payments under Section 162 as has been done in the past (when the trustee did not deposit it into the pension plan).

4. In a small plan maintained by the business owner's corporation, the business owner personally (and of course erroniously) makes the contribution to the plan.

Let's also assume these are one-time events, and are clearly due to a slip-up.

So, what can we do?

Thanks

I just received this from CCH:

the IRS has issued a notice that allows plans to treat hardship distributions from 401(k) plans or 403(B) plans in the year 1999 as eligible rollover distributions. Previously under the IRS Restructing & Reform Act of 1998, hardship distributions were not to be considered eligible rollover distributions. However, according to the notice, a number of plan adminstrators expressed concern that they had inadequate time to change plan systems in order to comply with the December 31, 1998 cut-off date.

I'm confused b/c this conflicts with information that I received from ASPA. Could someone please clarify this for me as to what the law is and means?

thanks!!

ASPA has posted the results of the December 1998 exams on its website www.aspa.org.

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Can an employer legally restrict or impose a time constraint on employee salary reduction contributions or vested employer contribitions?

After separation from service, can a plan restrict a transfer or rollover to another company 401(k) or IRA if a request is not recieved within a stipulated time period?

[This message has been edited by jladuca (edited 01-21-99).]

We have an employee who is leaving and she has a son 22 who is physically and mentally disabled and covered by medicaid. She wants to continue coverage through COBRA when she leaves. Is her son also eligible to continue even though he is covered by Medicaid?

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With a small DB/MP combination, my plans provided that the MP contrib will be reduced, if necessary, to meet the 25% combination limit. How is the reduced contribution to the MP allocated? do all EEs in the MP share in the reduction or just those who are in both the DB and MP Plans? My MP formula is integrated. Thanks for help.

I am interested to know the most current survey information regarding the offering of benefits to temporary employees. What types of benefits are usually extended and if there are contribution requirements, is it higher than the regular employees.

What is required to change the plan year of a cafeteria plan? IRS Form 5308 only

mentions retirement plans.