chris

No, there are a small number of employees other than the participant in question. He is the sole shareholder of the employer.

Participant wants to designate kids from a prior marriage as beneficiaries of his account in a MPPP, however, spouse most likely will not consent. A suggested alternative is to freeze the MPPP and set up a SEP-IRA. Since SEP-IRA's are not subject to the survivor annuity rules, the participant could designate his kids without needing spouse's consent. Clearly, there are marked differences (eg, vesting, etc...) b/t a SEP-IRA arrangement and the MPPP..... Suggestions??

I had someone suggest to me that a non-amender could amend and restate currently and be OK as long as the 3 year statute of limitations goes by without the IRS auditing or picking up on it..... I know the filing of the Scedule P of the 5500 starts the statute running with respect to the trust arrangement of the plan, but does that apply to the qualified status of the underlying plan document as well? Didn't necessarily sit quite right...... Any comments on this?

Thanks for the post, Katherine. You're correct as to there being a myriad of issues and considerations....

Client has 401(k) plan. Client going to acquire/merge with other company. Other company also has a 401(k). I don't know the in's and out's of the transaction, but only received a copy of the other company's most recent 5500 for review. I'm assuming the other company is not going to terminate it and have the e/ee's roll over or take their money. Thus, any heads up on issues which need to be addressed in the context of a merger??? Thanks.

What is required in the way of reporting re a life insurance policy held in the plan? Thanks for your help.

And that will apply to all participants across the board, assuming I've got no one who has died, retired or become disabled prior to the amendment taking effect? If a participant has met either of those requirements (death, retired, disabled) for an allocation prior to the amendment, then they can't be cut back. If unsure given the number of participants that may be involved, I would think the amendment could be drafted to keep any such participants from being cut-back. For example, amend the cont. formula to 0%, except for participants, if any, who have died, retired, become disabled prior to the effective date of the amendment. ?? Thanks.

Plan year end is 6/30. E/er wil clearly fund the PYE 6/30/02. Issue re freeze concerns PYE 6/30/03.

Employer considering freezing its MPPP. There is a last day of the plan year employment requirement regarding a participant being entitled to an allocation. There is no "500 hour " rule, however, there is an exception to the employment requirement for those participants who die, retire or become disabled. Currently, no participants meet that exception. Can an amendment be made to freeze the plan, ie. amend allocation formula to 0% of comp., such that no contribution will be made for the plan year, or must the e/er carve out for potential participants who meet the death, retirement, disability exception prior to pye?

Participant (doctor) in PSP of medical practice elected to direct the investment of his account with a broker other than the broker handling the general fund. Now, she's unhappy with her broker and wants the broker handling the general fund to also handle her directed investment account. General fund broker has said he won't touch it since the account does not meet their in-house threshold for directed investment accounts. Doctor now wants to cease directing the investment of her account and get back into the the general fund. I would assume the plan document would not have any prohibition against the doc coming back into the general fund, but from the admin/record-keeping side wouldn't it be prudent to switch gears at or close to plan year end? Any thoughts on this? Thanks...

So a small employer may have discrimination testing issues where most of the principals are somewhat older and the majority of the staff are younger individuals?

I guess the amendment of the allocation formula to 0% of compensation in and of itself would suffice since no disparity can take place where there is no contribution. The amendment would replace the allocation language incl. disparity with 0% of compensation. Given the last day of the plan year employment requirement (the plans have a 6/30 year end) assuming the MPPP is amended shortly after 7/1, then no participants will "benefit" under the MPPP for the plan year beginning 7/1/02. So obvious I missed it.....

Current MPPP is integrated with Social Security. E/er also has a PSP. E/er considering terminating the MPPP within the next year (e/er does not want to terminate and distribute assets now given the market fluctuations). Also, both plans are to be amended for GUST shortly. As e/er is considering eventually terminating the MPPP, e/er wants to amend the PSP to add integration with Soc. Sec. It would seem that if e/er froze the MPPP (allocation formula to 0% of compensation...) the e/er should be able to amend the PSP to add integration with Soc. Sec.. I have yet to research it but this would not seem to run afoul of the "only one plan providing for disparity" rule. Any suggestions??? Thanks.

Similarly, can e/er contribute different amounts toward health ins. premium for different e/ee's? For example, premium attributable to 60 yr. old e/ee is 1,000/mo. and for 30 yr. old e/ee it is 150/mo. Can e/er tell 60 yr. old e/ee e/er will contribute 12,000/annual premium and tell the 30 yr. old e/ee that e/er will contribute 1,800/annual premium going forward? It would seem this would not work for a number of reasons.... discrimination issues, etc...? Bottom line is that e/er is looking for a way to contain health ins. costs going forward, including having e/ee's pay portion of premium.....

How can you cap an employer's cost for health ins. premium within a cafeteria plan? Is it just a matter of the the plan doc stating that e/er will pay $x toward premium for health insurance and e/ee can defer portion of pay for the balance assuming e/ee chooses the health ins. as an option?..... That way e/er, going forward, is only obligated for the $x amount...and any subsequent premium increase is on the e/ee??????

Thanks for the link.

Tom, Would that or something comparable be available on-line? Thanks, Chris

I know there's an ad section on Benefitslink regarding retirement plan administration services and I know the message boards are not for the purpose of advertising; however, I am looking for a retirement plan administration firm in NC and the only NC advertiser in the ad section has had its advertisement cancelled. Otherwise, I would not be posting this. I have a client with a plain vanilla profit sharing plan and a target benefit plan with some problems that are being cleaned up. Current TPA proposes to drop services within the next week. Again I apologize for the nature of the post. Any suggestions? Thanks for any help.

We had a plan get selected for audit 2 years ago. Doc's professional corporation was dissolved 15 years ago and all participants but the doc were paid out. Plan had invested in NationsBank real estate stuff that went south. Instead of tying up participants' balances for time period to wait out the bankruptcy, other partcipants got paid cash and doc took the hit by waiting on the speculative real estate interests. IRS said what you read above re no qualified plan if no sponsor and the agent threatened disqualification back to date of dissolution. Our response was that under state law officers of prof. corp. have authority to wind up the corp's affairs even though prof. corp. dissolved. 5500's had been filed every year. All amendments had been done. IRS then said you can't have an "employer" if you don't have "employees" and only an "employer" can maintain a qualified plan. Told him to take a look at 69-157 re "employer" must have "employees" argument. End result was that remaining assets were rolled over to an IRA and we filed a final 5500. Agent signed off on it, but only after telling us how close the plan was to being disqualified??? Why not make whatever amendments as are necessary per whatever state law argument re winding up, distribute the assets to the doc and wife, file the final 5500 and forego the request for a determination letter???

Thanks for the reply. The initial issue I saw was that there was no detrimental reliance, and even if there were,........ The only place 100% vesting was reflected was on the annual benefit statements.

Does a participant have any chance at holding plan liable where benefit statements have reflected 100% vesting even though participant's vesting % is less? Vesting is 5 yr/ 20% year. Participant was employed only 2 years, but after termination of employment annual statements showed 100% vested. Participant requested distribution and got about 40% of the $$ shown on the benefit statements. Any recent cases? Will "detrimental reliance" be the issue? Participant basically only received less than what the statements led him to believe he had. Fund manager has said it was an error and they're sorry for the confusion.????

Participant received 2 years of statements which reflected participant as 100% vested. participant requested a distribution relying on the fact that the statements showed the vested percentage as 100%. Company cut a check for vesting % based on participant's years of service, 40%. Any recent cases, misrepresentation, etc... where participants have been successful in pursuing such a situation?

The document does not speak to allocations when the plan is frozen, it only povides that forfetures are used to reduce the employer's contribution. The allocation formula is based on x% of compensation. As to amending to add a method of allocation, what are the general types of methods available?

MPPP was frozen in 1998. Forfeitures have occurred in 2001 plan year and TPA wants to know how to allocate them since contribution formula was amended at freeze to 0% of compensation. ??? Plan doc provides for forfeitures to reduce employer contributions. Possible to amend doc to provide for forfeitures to be used as additional contributions? Even if possible, how do you deal with the 0% of compensation issue? In both cases, reduce vs. additional still yields unallocated forfeitures....

I have a law firm with 14 HCE's and 25 NHCE's considering a cafeteria plan. Any names/contact information for TPA firms in eastern North Carolina that set up and administer cafeteria plans. Thanks for your help.