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.

May a profit sharing plan use forfeitures to pay administrative expenses? Rev. Rul. 84-156 addressed this issue in the context of a money purchase plan. Is this all the guidance that exists? Any thoughts? Thanks. Ed

I am looking for a study/article, etc. that analyses the invesment performance for plan participant in a daily valuation environment vs. a non-daily valuation inviroment.

It is my guess (at this point) that the cost of the daily valuation option + the effects of market timing on the part of plan participants results in lower rates of return but have nothing to back up my hunch.

Please help!

It is my understanding that transit and employee parking expenses quality for Section 125 flexible spending accounts. Do you need to set up a new Section 125 account (vs use Dependent Care or Healthcare Expenses?). Can anyone point me towards the regulations on this issue?

DC plan using balance forward valuation wants to amend so that terminated participant gets balance as of quarterly valuation date FOLLOWING termination rather than quarterly valuation date PRECEDING termination. Purpose is to prevent terminee from sticking other participants with losses occurring between preceding quarterly valuation date and termination date. Plan says that distribution will be made as sonn as administratively practical after termination.

The change in the valuation date appears ok under 1.411(d)-4 Q&A-1(d)(8). The change will, however, necessarily result in a longer period of time between termination and distribution which appears to violate 1.411(d)-4 Q&A-2(B)(2)(ix). Is this right or is proposed amendment ok with respect to current employees because they don't "accrue"

the "benefit" of an earlier distribution until they terminate?

I am in the middle of a complex project to link payroll systems of multiple employers to multiple insurance carriers. The idea is to update one database and have it automatically update payroll of those employers and insurance carrier information for billing. Know of any high tech companies with experience in this area?

I work for a company that publishes law books. It is a small company and the owners are attorneys. I am considered a part-time employee as I work 30 hours a week, more if my children are home from school. I have been with the company for 14 months. I had to fight for my health benefits even though Florida law states that an employee that works over 25 hours a week is considered full time and entitled to the benefit. Here is my problem...am I also entitled to holiday pay? They require that we work all of the week of the holiday and the week after (not day before and day after). I worked this past Saturday so that I would not be short 2 days pay for the Thanksgiving holiday. Company policy states you must work a 40 hour week to be eligible for holiday pay. Is this legal when Fl states a full time employee is anyone with over 25 hours a week? Also, the same applys to vacation pay. Am I eligible through Fl law for vacation pay? The owners seem to know every way around the laws, they provide just what they have to, we get no retirement benefits at all. Any help would be appreciated.

Sherree Bennie

I have some questions on the "special enrollment" rules for health plans under HIPAA. [ERISA 701(f); IRC 9801(f)]

1. How are employers dealing with the rule that employees/dependents have a right to special enrollment only if, when they declined enrollment, they stated in writing that they were declining because they had other coverage?

2. How are employers dealing with the related rule that the above condition can only be imposed if the plan provides that such a written statement is required, and only if the employee was notified of that requirement at the time coverage was declined?

-- Are plans even using the "had other coverage" limitation in Rule #1 at all?

-- What language do plans use, if they apply Rule #1 and have people "decline in writing"?

-- Do employers just put the "had other coverage" language in the enrollment forms?

-- What language is used by plans to meet Rule #2 and describe the "decline in writing" requirement?

-- What procedures are used by employers to ensure that employees are properly "notified" of Rule #2?

AND -- How do you deal with persons who declined initial enrollment before HIPAA was enacted (and therefore before the plan would ever have met the requirement in Rule #2, and before any employee would have been notified of the requirement)? Is it just not possible to use Rule #1 and deny special enrollment to such persons?

As 1/1/99 approaches, there is more and more discussion (and interest) concerning safe harbor 401(k) Plans. Do you think it's a good idea?

My preliminary thoughts on it:

Pro - It eliminates cost and aggravation of 401(k)/(m) testing. It allows employees at the lowere end of the HCE pay scale ($80k - $100k) to defer more.

Con - It eliminates an incentive for sponsors to adequately communicate and explain the Plan to its NHCE group. The only requirement will be the annual notice to employees.

I have a question regarding payroll deduction plans. This is a non qualified, after-tax deduction. The "Plan" consists of a small life insurance policy and a selection from three accumulation accounts. One of them is a mutual fund.

My question is, when the employer deducts the payroll how soon must he deposit the monies to the accounts? Must it be transfered that same day or can it be mailed 3 to 5 weeks later. If it is going to the mutual fund then this is a securities transaction.

Thank you for your assistance.

Miguel Gutierrez