My client is purchasing the stock of a company that is owned by a conglomerate. Under the purchase agreement, my client agrees to provide the employees with equivalent retirement benefits for the next year. My client is not assuming the plans that currently cover these employees. If it sets up a new plan that will cover just the employees in the acquired company, can the new plan rely on the 1 year transition rule of Code section 410(B)(6)©? It does not appear so, because the regulations under that section seem to require that the "plan" which is relying on the transitional rule be in existance before the transaction, which it is not. If anyone knows of guidance on this issue, please let me know, or has reached a different conclusion, please let me know.

Can I amend a DB plan definition of Actuarial Equivalent (for purposes of lump sum calcs only) by using the LESSER of:

the old 417(3) basis, or

the new 417(e) bais, such that the latter becomes the only definition when the transition period expires?

I am a participant in a DBP as a result of a company with an existing plan purchasing the stock of my former employer. All employees were immediate participants in the plan, with our original hire dates.

Since that time I have left the Company (over a year ago.) I have requested a statement of benefits, and haven't yet received anything. Other employees who were part of the same acquisition were told they would not get statements this year.

Does that sound right? I'm concerned that I get something official from the Plan before I'm gone for too long. What legal rights does the company have under a defined benefit plan for annual notices to employees?

I suppose if all else fails, I could ask for a copy of the 5500 filing and related attachments, but does that show MY name and benefit?

Thanks... Peg

I would be interested in thoughts/comments on what software is being used - or does everybody just tinker with it on a spreadsheet!?

Company A was merged with company B. Company A's lump sum benefits were reduced because company B used Gatt rates and company A used PBGC rates. Weren't the employees dismissed after the merger entitled to lump sum under PBGC. Where can we find legal interpretation concerning this?

has anyone ever seen a qualified plan set up for a franchisor and franchisees such as mcdonlalds or burger king? any pitflalls in having the franchisor sponsor such a plan for the franchisees?

From reading the regulations in 401(a)(4), it appears that loans are a benefit, right, or feature that must be offered on a nondiscriminatory basis. The regulations seem to say that nondiscrimination is proved only if loans are currently available and effectively available. If my understanding is correct (and it may very well not be), you could write your plan to allow loans only to active employees, but then you would have to prove nondiscrimination which amounts to a ratio percentage test in which all terminated particpants would be treated as not benefiting. Is this correct or am I misguided? Thanks in advance for your help!

At a recent conference a speaker explained that the speaker explained that the match limit could only be calculated on the compensation in which the employee deferred, not the annual compensation. Our current research all says annual compensation but does not define it. How do you calculate the match limits?

What's everybody think about the possibility that 415(e) isn't going to go away after all, despite its scheduled repeal? (1999, or is it 2000?)

I'm supposing that with the budget surplus we won't see anybody step forward and try to get in the way of the effective date of the repeal.

I hear people say that a pension consultant just can't make a go of it without taking commissions or other fees from investment providers.

What's the skinny on this? Are any fee-for-service providers thriving, especially in the small-plan market?

My doctor has just declared me disabled and I am in need of financial help. I have gone to the social security and they tell me it will take 5 months before getting approved. I have gone to the TEC and they are of no help. I have a job to go back to but my doctor will not allow me to return for at least 6-8 months. Until then I need finacial help to pay for my bills and food and house. Does anyone know where I can go or who to contact. Any information will do.

A profit sharing plan has been amended for termination. The plan did not distribute some terminated employees accounts prior to the effective date of termination. Are these participants now 100% vested? or can they still be distributed and the forfeitures reallocated? All were under the $3,500 limit. The plan document has a cash-out option. The employer just did not cash them out after termination.

I joined an institution that had a qualified plan where shares of stock were granted to plan participants on a yearly basis. I requested a rollover into the plan which was granted, but was later rescinded as "the dollars that I was requesting to rolled over into the plan would bump others who had waited throughout the plan year."

I was offered a verbal option which ultimately I took as I thought I had no other option. One year later the company was sold and the stock sold for considerable more. I believe that the trustees of the plan acted irresponsibly and believe that I have a right to the stock as I had and originally directed the rollover.

Please advise.

For a company that has a 401k plan (with 401m company matches and after tax contributions) and a money purchase plan, which of the following "account balances" are included in top heavy testing? Are there any options?

1. Employee pre-tax deferrals (plus investment earnings

2. Company matches (plus investment earnings)

3. Employee after tax contributions (plus investment earnings)

4. Employee Rollovers (from a qualified plan of an unrelated company to this 401k)

5. Defaulted loans

Of course, the money purchase account balances are included.

Thanks

I am working with two clients with a similar problem. They both have a 401(k) Plan with a loan provision. They have both made isolated errors in that they neglected to take loan repayments for a couple of participants. The periods of nonpayment vary from 2 months to almost one year.

Counsel for one sponsor has said it is not necessary to default the loans as long as they can get the participant caught up on repayments within a five year period (measured from the original loan date).

Counsel for the other sponsor says failure to make repayments is a default - regardless of how or why it happened.

I would really appreciate anyone else's thoughts or comments on this issue.

I am looking for guidance on how to do a Qnec....all comments are appreciated!

Can someone clarify the date on which to stop counting interest in the example below. Thanks.

Example: A takes a loan from a 401(k) plan on 1/1/96 and begins making weekly payments, but then stops on 8/1/96. A's grace period is over on 12/31/96 at which time his outstanding balance is $5000, but the administrator takes no action. On 8/1/98, administrator decides to issue a Form 1099 for the "deemed distribution". Should administrator issue a Form 1099 for the $5000 [amount which was in default on 12/31/97]OR should administrator accrue and add the amount interest from 12/31/97 to the date administrator issues the Form 1099?

If you think the answer is $5000, would your From 1099what year would it be [1998 or 1996].

All thoughts appreciated!

We recently took over a 457 plan that appears to be ineligible. While reviewing the records, I noticed that as distributions were made over the last few years the client has been reporting the distribution via the employees W2 versus a 1099R. They has requested we continue this practice. We are now looking at terminating the entire plan and distributing the assets because it appears the plan is ineligible (rank and file employees are the only ones in this nonprofit plan). Are we asking for problems as a 3rd party TPA not requiring 1099Rs be issued?

Any assistance would be appreciated.

Thanks

Looking for the following:

1. Any good resources to obtain information about adding an employer match an existing 401k plan -- pros, cons, costs, common features, things to watch out for.

2. Same as above but need specifics about employer match in the form of company stock.

3. Does anyone have any experience with an employer match with company stock if the company is still private? High probability that the company will go public eventually, but no one knows when. Can this be done?

Thanks for your help.

Kathy

Has anyone seen guidance (or heard IRS folks opine) about the multiple use test after SBJPA? I'm particularly curious on how to do the multiple use test if, for some reason, an employer wants to use current year testing for his ADC and prior year testing for his ACP.