I've just started working for a company that is allowing employees to add and delete dependents on the health plan for reasons I find unusual. For example, if an employee's spouse has open enrollment at their workplace and decides that their plan has become very expensive, my company's employee wants to add their spouse at a non-open enrollment time to save on household expenses. Is that acceptable? Legal? I know that there are legal reasons (change in family status or qualifying events) for making a change, but I need to know if the arbitrary reasons people want to add or drop coverage for themselves or a dependent are governed by the employer, the government or by the insurance carrier.

I understand that a participant can elect a direct roll over of his account balance, including outstanding loan notes, to another eligible plan. Has anyone encountered any traps for the unwary in where loans are rolled over to a different plan?

Any good advice on top vendors, credibility, etc. for software (esp. for stock option plans)?

a former employee would like to have his pension reviewed, but the employee terminated over 10 years ago. My understanding is that an employer must maintain records for six years, thus that being the period of time for the statute of limitations. Any comments as to if it makes sense to review this pension and what is likelihood of employer making a correction?

In "What's New" on Benefitslink, an 11/16/98 Pension & Benefits Week article, "Analyzing Notice 98-52" was hyperlinked. Has anyone else read this article? Under Section G of the article, the authors state that

"The pre-plan year amendment rule, requiring an advance commitment to the safe harbors, may be driven in part by the advance notice requirement. However, it can be argued that the pre-plan year amendment rule is more restrictive than necessary or desirable, as it ... would appear to entirely prevent an employer from amending its plan to discontinue safe harbor matching contributions during a plan year, at least unless the 401(k) arrangement was also frozen or the plan was terminated".

While I see that an amendment/election to USE the safe harbor must be made before the beginning of the applicable plan year, I DON'T see anything telling me that I can't opt OUT of it during the year. I admit that I would still have to fund whatever contributions were accrued before adoption of the amendment opting out. Am I missing something?

[This message has been edited by mberk (edited 12-01-98).]

Ran across language in a public 457 plan that absolves the trustee (plan sponsor) of all possible transgressions involving investments, employees, assets and possibly the kidnapping of the Lindbergh baby. This appeared to be an attempt to also qualify the plan for Jan. 1, 1999 "exclusive benefit rules".

Could we have input from our learned members of the legal profession as to the efficacy of this type of language under common and state trust laws for fiduciaries?

Law firm with 2 partners wants to set up a cross tested plan with 1 classification group for each partner, so that one partner can get a larger contribution (incomes are equal) with all other EEs in the 3rd classification group. Partners are the only HCEs. Would this work or are we in a problem area where the IRS might say this is a 401(k) Plan?

The way I am reading Reg 1.401(k)-1(d)(2)(iii) and/or (iv) is that a safe-harbor plan participant can have a $1,000,000 CD and still not be excluded from applying for and receiving a hardship withdrawal. It appears to me that only the facts and circumstances plan participants are required to satisify the need from other sources that are reasonably available outside the plan. Can that be true? Thanks in advance.

Can a non-profit org. convert a MPP to a 403(B) plan? If so or if not, can you please cite a reference? Thanks!

May a government educational institution's 403(B) plan spill its contibution in execess of the 415 limits into an excess benefit plan? Although 403(B) has provisions that allow one to conclude that a 403(B) plan can be a governmental plan, usually a 403(B) plan is treated as the plan of the participant for section 415 limits (no aggregation with other plan of the government sponsor).

If a 403(B) plan can feed an excess plan, does the answer change if the governmental employer also has a 401(a) plan that is not hitting the 415 limit for the participant that is hitting the limit under the 403(B) plan?

The participant is hitting the 415 limit under the 403(B) plan because of a one-time irrevocable election. Does this run afoul of the 415(m)(3)(B) proscription on elections to defer income?

An underfunded plan feezes benefits but will not terminate for several years. They would like to fund up to 110% of CL so that HCE's can take lump sums without restriction. How can this be done on a deductible basis without unrealistic assumptions? The deductible limit can bring you up to 100% of CL but how do you ever get to 110% of CL without terminating the plan?

I have a client company who sponsors a SEP and a new 10% Standardized MPPP. The SEP came first, and the company uses Form 5305-SEP, which according to the instructions on Form 5305 it can no longer do. We assume that a prototype must be used instead. Attempts to locate one have been futile. The SEP assets are invested at Schwab, who apparently tells sponsors to use Form 5305.

Am I missing something here? What are our alternatives? If there are any SEP experts out there, I thank you in advance.

Does anyone know what the penalty is for failure to file a form 1099-R on time??

A Company maintains a profit sharing plan. Employer stock represents approximately 5% of the Plan's assets in the trust. Assets are held as a general investment and are not individually allocated to participant accounts. Should the bank as trustee vote this stock in connection with proxies to comply with ERISA fiduciary requirements? Any thoughts? Thanks. Ed

Is there any specific time period in which an employer has to contact a former employee about the status of his/her 401K plan? It has been over 90 days since I was terminated and have not been contacted by my former company as to what I'm going to do with my 401K money.

DB Plan provides that employees who have at least ten YOS and who qualify for LTD will continue to accrue benefits under the plan until NRA or their earlier commencement, as long as they continue to qualify for LTD (i.e., they remain totally and permanently disabled). Joe Smith was employed at Plant X; Joe qualified for LTD three years ago and is currently collecting LTD benefits. Plant X is about to be closed and all its employees terminated. Assume that if employed, Joe would have been terminated (i.e., no possibility of a position at another plant, etc.)

(1) Can the DB plan cease giving Joe accrual credit, on the theory that Joe is no longer on LTD "leave" -- instead, he's been terminated?

(2) If we are not comfortable that the Plan language supports this position, would an amendment freezing Joe's accrual constitute a cutback prohibited by 411(d)(6)?

Organizations A and B are each separate, unrelated church-affiliated health organizations (different religions); their respective plans have been recognized and acknowledged by the various agencies to be church plans (and the qualified plans are non-electing). A and B get together to form a joint venture to offer certain health-related services. The plan is to have all the Venture employees participate in A's plans. Question: Is the fact that the Venture is a joint venture of two church plan sponsors sufficient, in and of itself, to assure A that having Venture employees in, e.g., its qualified plans will not cause them to lose their church plan status? Is this so clear that nothing would be gained be seeking a letter ruling?

It is clear that a plan sponsor has a fiduciary liability to select and monitorinvestment advisers. What is the typical cost for this service?

1. Initial selection of funds?

2. On going monitoring?

We are a small business in Colorado with approximately 25 employees. Our current policy for vacation involves a monthly accrual commencing upon date of hire. Vacation can then be used after three months. Any unused vacation upon anniversary date is lost. We do not compensate the employee for unused time. As I stated earlier we are a small business and do not have a human resources employee. I know there are better policies out there and I am looking at making a few suggestions for the new year. However I want to make sure that our current plan is not violationg any state or federal labor laws. Thanks in advance for any help.

Does anyone have any thoughts (or even better, IRS input!) as to whether "negative elections" under a 401(k) plan could be implemented, say effective as of the first day of the next plan year, for current employees who have not elected to defer as well as for newly hired employees?

I am inclined to say no, because those employees have, in effect, already made a “negative election” not to participate. The IRS guidance, of course, only discusses “negative elections” for new employees.