TCWalker

yeah, I've asked the question too. "No comment" from EBSA.

I think you want to look at DOL Reg. 2520.104-23: (b) (2) "Only one statement need be filed for each employer maintaining one or more of the plans described in paragraph (d) of this section." This assumes prior compliance with all the requirements of the Alternative Method. That said, the DFVC route is what, $750 ? Seems like low cost insurance to me.

I think we're talking about different uses of spinging trusts here: 1) where an empty rabbi trust exists but springs to life and is required to be "funded" upon a change of control by an existing Trust document, (but still informally funding) and 2) where the rabbi trust, after change of control, is both Funded and, somehow. no longer subject to the claims of creditors. (Harry O's post). Marko, I think you're asking about the first type. In your question scenario it may be the assets within this COLI arrangement are far insufficent to meet plan liabilities and what the springing trust requires is a contribution of assets by the employer follwoing a CoC sufficnet to meet all current liabilities under the plan. So, arguably, the springing trust idea may accomplish two things for the DCP participants in your example upon a CoC event; place the informal funding assets under the control of an institutional trustee and require the plan sponsor to immediately fund the trust with assets = DCP liabilities - informally speaking. [Vebaguru, the institutional trustee is signed-on long before the CoC takes place and is, in theory, waiting in the wings to make the demand on behalf of the rabbi trust for full (informal) funding when a CoC occurs.]

- The regs obviously, (link in post below), and referenced within Benefitslink at http://www.benefitslink.com/links/20030912-024159.shtml. - If you Google "split dollar final" I think you'll find a dozens of articles appearing at various sites of various qualities. - Matthew Weinberg has a specialized consulting practice in this area, you might find his point of view interesting, his site: http://www.theweinberggroup.com/wealth/spl...plit-dollar.htm Enjoy the reading.

I can think of a number of problems, one of which is how & where the deductions will ultimately be taken under 162(m), & the imposition of tax under 61(a) if it strategy actually worked, etc..... pax's suggestion to involve legal counsel, tax counsel is very sensible.

right on, but does "a contribution" suggests a permanence issue.

Forgive the off the top of my head answer, but I recall the "allowable deferral amount" is required to be determined asaf, and the transfer must be completed by March 15th, and the W-2 info is for the testing/deferral year (amended ?). I'm deferring to anyone who's done the research. [pun] ?

It's been argued that using the employer's EIN on line 2 is indicia that the Plan sponsor - Employer is performing as a Plan fiduciary. Just something to consider.

How does this real estate parcel generate a measurable return? Anyway, your client should engage counsel to look at the GCMs and Ltr Ruls pertaining to the imposition of tax to the participant under a economic benefit doctrine analysis. Your facts seem to suggest - a real estate asset identified by the employee will be acquired by the employer or trust under an agreement that contemplates an unconditional set aside and use for one employee's sole benefit.

Hey QDROphile, I wouldn't say the pre-Enron cases have been black or white either with respect to protecting Boards/plan sponsors from the application of ERISA's fiduciary standards on the theory they're pure 'settlors' and the only duty was to assure their fiduciary designation was reasonable. But I'll agree with you, historically consistent conclusions in the ENRON litigation might be too much to expect. Still, when that settlor also exercises occasional control and responsibility for matters pertaining to plan administration I think we're back to a functional test.

I worked with a CODA that was established in 1955. As said, the Plan provided an election for cash or deferral of year-end profit sharing bonus. The plan worked exceptionally well it's 200 participants in an environment where all employees qualified for year-end bonuses. ERISA, then 401(k), frustrated the purpose of the plan and non-d deferral testing issues argued for it to be converted to a garden variety salary reduction arrangement in the late '80s.

Ha, shame or sham, take your pick - have your read some of the opinions from the bench in the Enron case? Seems to me that court expresses the opinion if you exercise the power to appoint a fiduciary, you are a fiduciary. That doesn't leave many non-fiduciary stalls back at the ranch.

Yes, but - In some cases the employer, not to mention small employer-owners who entitled themselves as plan administrators, will be deemed to be a plan fiduciary under the functional definition and as such will have the duty to monitor those fiduciaries delegated the day to day plan responsibilities. The duty to monitor could be interpreted as requiring the employer-owner to know what is happening and make the appropriate inquiries to protect the plan (participants).

If you want a negative slant, here's the NYTimes article reprint on a labor site, March 2003 Purely anecdotic, naming a few companies & consultants. I haven't seen convincing evidence either way. http://www.cwalocal4250.org/news/binarydat...014,%202003.pdf

Agreed. And padmin when you say "owned" are you saying there is no debt financing involved with this rental property? If there is, then there may be a UBTI issue for the PSP as well. See IRC Secs. 512 & 514

You might post your message on a labor law or worker's rights board of a community forum like www.lawyers.com and get some advice from those versed in employment claims. This isn't the best place to research employment and labor issues. You can also find about making wage claims through you state's labor commission or labor standards division - it's where workers denied earned compensation might find some leverage. For California, that site is: http://www.dir.ca.gov/DLSE/dlse.html In preparation, I think the first question you're likely to get from anyone is, "What do you have in writing that supports your claims.", so you might think about that. Good luck to you!

You're correct, IRC 4975(e)(7) requires that an ESOPs be designed to invest primarily in employer stock. However, it does not subject the plan to an every day standard to be so invested, generally, it's judged over the lifetime of the plan, - a long term risk. Failing to invest primarily in employer securities for any material time period may subject the plan fiduciary to liability for losses incurred because the plan was not investing primarily in employer stock - a more short-term risk. I guess the question is whether this fiduciary knows what he/she is doing, why and for how long?

So you're not left hanging, I believe the transaction is reported on Form 1099-B, not 1099-R.

In addition to what we've discussed via e-mail, check-out the American Benefits Council site, under ISSUES, then Executive Compensation menu. There are some nice white papers, charts, legislative analysis etc. And, Clark Consulting maintains a web knowledge base you can access upon joining their mailing list. Good luck! http://www.americanbenefitscouncil.org/

Have you seen situations where a CoC accelerated distribution provision in the NQ plan has paid the benefit and triggered or added to the 4999 excise tax under 280G? Have you seen other nasty CoC provision consequences? I hear some companies haved paid the benefit, grossed up the executive for excise tax, take the limited deduction, and just move on...wow!

NESTEG also proposes the pension yield curve idea from the Bush Administration to replace the 30 year Treasury rate - (is there a pun in this sentence?). To quote ABC's Pres. James Klein: "If Congress messes up this opportunity to replace this outdated interest rate with a workable, understandable and fair measure, employer plan sponsors will have no choice but to freeze accruals of new benefits or leave the defined benefit system altogether. Moreover, a proposal that creates unwarranted volatility in interest rates and offers no advance warning of the direction in which these rates may move will do nothing to stem the decline in defined benefit plan sponsorship."

*******Check out ERISA Facts by Nick Ferrigno and FRank Bitzer--I seem to recall a case they cite on this issue where 60% of plan assets were in real estate and the plan was held to be diversified, though that is a single extreme example.******** The case is Metzler v Graham, 112 F 3d 207 (5th Cir 1997), and it was a defined contribution plan investing 63% of plan assets in one tract of land adjoining others in which the owner has in interest. There are the 7 factors or prudent diversification to look at that come from the conf rep and are reprinted in a few cases, including the one above. I wonder if your Doctor is willing to risk an audit and a demonstration that the diversification requirement of 404(a) is satisified...all things considered the long term economic cost of the investment could be alot greater than the purchase price.

I guess the missing info includes whether the insurance contract is held inside or outside the trust.

The much anticipated final regs. are out, with a 09.17.03 effective date and maintaining the 12.31.03 sunset transition date. Quoting the release: "The regulations provide tax rules that reflect the underlying economics of split-dollar life insurance arrangements,” stated Treasury Assistant Secretary for Tax Pam Olson. “Under these rules, companies cannot use split-dollar life insurance arrangements to provide tax-free compensation to their executives. By insuring that split-dollar arrangements are appropriately taxed, the regulations curb a backdoor form of executive compensation and promote greater transparency.” Link: http://www.ustreas.gov/press/releases/js726.htm

A little off subject, but from a practical viewpoint I've always been concerned these arrangements are just too problemactic for most employers & TPAs. Senior execs have difficultly understanding how the initial election and pour-in feature works, make errors in their initial elections or ask HR to do it for them or ask HR to "FIX IT" later/ the 401(k) - NQ TPA, (maybe the same firm - maybe not), has difficulties performing the allowable amount transfer correctly & timely / data driven corrections to 415 limitations and nonD test results after 2-1/2 months just seem to happen. Anyway, not for the timid. If anyone has experience with a tandem arrangement that followed the PLRs and was managed & communicated flawlessly by the service provider(s) I enjoy a post identifying the firm. Thanks.