rocknrolls2

A good overview should suffice for my purposes. I could try to obtain more "country-specific" information as and when the need arises.

I have researched the webite of the IFEBP and found that there is a certificate program in Global Benefits Management which is being held this year in Chicago from May 1 - 5, 2006. I printed out the program brochure and it states that it covers different regions of the world on different days. Therefore, it does not appear to be limited to Canada.

I mean both benefits for employees of US companies who are assigned to locations in other countries and who are US nationals as well as benefits for high-level employees of subsidiaries of US companies operating in other countries who are not US nationals but who could be nationals of still another country whether or not the US company has a subsidiary operating in the country in which the high-level employee is a national.

I have been advised that I am to become the point person on international benefits. The problem is that while I know a little about the topic, I do not feel comfortable becoming "the expert" overnight. Can anyone tell me the name of a comprehensive reference work or a seminar I can attend so I can become substantially more knowledgeable about this area? H-E-L-P!!!!!!!

Company X maintains a defined benefit plan and a 401(k) plan for its employees and for the employees of a number of subsidiaries. Two other subsidiaries, Y and Z, (which are both subs of X) maintain their own plans and do not participate in X's plans. Company H is the parent organization and is merely a holding company with no employees. Section 10.06 permits the parent of a parent-sub controlled group to elect to file all of the plans under the remedial amendment period cycle determined by the last digit of the parent's EIN. Can X, Y and Z treat X as the parent for this purpose and have X make this election?

Company X has a commissioned sales force to sell its products. Historically, Company X has maintained one self-funded medical plan with several options for all of its employees, which has been funded in part by a VEBA. In 2005, to induce greater productivity among its commissioned sales force, Company X has proposed to peg its subsidy of the commissioned employee's medical benefits upon reaching certain minimum sales goals based on the employee's level withint the Company. To comply with self-funded medical plan nondiscrimination testing, Company X has placed their medical benefits (other than prescription drugs) into an insured arrangement providing substantially similar coverages (other than state mandates) to that provided to salaried employees. In addition, Company X has establised a separate 125 plan for the commissioned employees. As a result of these changes, the Company's account limit for commissioned employees is limited to the incurred but not paid claims for prescription drugs and dental coverage. In order to have these changes respected, Company X is considering whether it needs to either (a) place its liability for incurred but not paid claims for prescription drug and dental benefits attributable to commissioned employees into a separate VEBA or (b) establish subaccounts under the existing VEBA for the saleried employees versus the commissioned employees. What are the pros and cons of each approach and which approach do you consider more likely to result in treatment as separate plans and/or funds?

Employer X maintains a qualified defined benefit plan and a qualified defined contribution plan. As part of the defined benefit plan, Employer X provides a voluntary deductible employee contributions ("VDEC") arrangement, under which up to $2,000 could be contributed on a tax-deductible basis between 1982 and 1986. In order to modernize the administrationv of the VDEC, Employer X proposes to transfer the VDEC from the defined benefit to the defined contribution plan. Are there any required filings or disclosures to the IRS, DOL or PBGC or participants with respect to the transfer of the VDEC from the defined benefit plan to the defined contribution plan?

Plan X is a 401(k) plan covering the employees of a large employer and many of its controlled group members. Plan X provides that forfeitures are used to reduce the amount of the employer's matching contributions. A routine internal audit discovers that forfeited matching contributions have been paid out of the plan to the contributing employer. What relief is available under the IRS correction programs?

MBozek, In general, I agree. However, reps and warranties are only as good as the financial stability of the entity giving them and often there could be problems arising after the statute of limitations. For anyone who has done due diligence, you often don't get all the info you ask for, you have a limited time in which to do it, even if you ask for additional information, the go-to person doesn't get back to you or doesn't supply all the relevant info, the deal gets closed and all you have to rely upon are the reps and warranties and an indemnification. Also doing a compliance audit is expensive and it is unlikely the other side will agree to it if you are only buying a small block of business.

The facts of my example assumed plan to plan transfers or elective transfers. In your replies, you are referring to rollovers. I am aware of the regulations and that they allow you to disgorge the tainted plan's assets with earnings within a reasonable time of discovering the problems with the transferor plan. In light of EGTRRA, these rules need to be expanded to cover rollovers from 403(B)s and governmental 457(B)s. But back to the crux of my question, what protection, if any, does the recipient of a plan to plan transfer or an elective transfer have? To me, this area shoudl be the focus of reform!

COLI would involve the purchase of whole, universal life or variable life policies by the employer as owner and beneficiary on the lives of either all the participants of the ESOP (at the time the policies are obtained) or the key employees of the employer. Death benefits could either be applied to pay repurchase liability or reinvested in the policy. If there are no death benefits available when the employer has repurchase liability, the employer could either borrow against the cash value of the policies or make withdrawals of the cash value to pay the repurchase liability. I am assuming you would know how repurchase liability arises. I hope this helps.

Protection of Plan Receiving Assets from Other Plan in Merger or Spin-off Assume that Company A, a Fortune 500 Company, is in the process of making a number of acquisitions. Company A maintains Plan X, a 401 (k) plan. What are people doing in each of the following situations to protect the qualification of Plan X: (a) Company A buys Company B and merges its Plan Y into Plan X; (B) Company A buys the assets of a trade or business of Company C, another Fortune 500 Company, where the trade or business employs 75 employees; © Company A transfers 30 employees of Company A's subsidiary, A-1, and wants to transfer their account balances under Company A-1's plan, Plan Z, into Plan X. Company A-1 has taken a number of aggressive positions on a number of issues involving Plan Z; and (d) assume the same facts as in example ©, except that Company A-1's CEO is transferred to Company A and only her account balance under Plan Z is spun off into Plan X.

Protection of Plan Receiving Assets from Other Plan in Merger or Spin-off Assume that Company A, a Fortune 500 Company, is in the process of making a number of acquisitions. Company A maintains Plan X, a 401 (k) plan. What are people doing in each of the following situations to protect the qualification of Plan X: (a) Company A buys Company B and merges its Plan Y into Plan X; (B) Company A buys the assets of a trade or business of Company C, another Fortune 500 Company, where the trade or business employs 75 employees; © Company A transfers 30 employees of Company A's subsidiary, A-1, and wants to transfer their account balances under Company A-1's plan, Plan Z, into Plan X. Company A-1 has taken a number of aggressive positions on a number of issues involving Plan Z; and (d) assume the same facts as in example ©, except that Company A-1's CEO is transferred to Company A and only her account balance under Plan Z is spun off into Plan X.

Ms. XEC receives $1,000 per year in consulting fees and has an IRA with $3 million in assets. In 2002, Ms. XEC establishes Plan M, a profit sharing plan. Ms. XEC then rolls over $2 million from the IRA into Plan M and makes a contribution of $180 to Plan M. She then wants to purchase life insurance on her life. Under the incidental benefit rule applicable to life insurance under a qualifeid plan, is Ms. XEC able to pay premiums of (a) $500,000 + or (B) $45?

Employer X is privately held and sponsors ESOP M. If Employer X purchases COLI to fund its repurchase liability, (a) is the inside buildup on the COLI and/or (B) any death benefits on the COLI, subject to the alternative minimum tax?

I would agree with the others that the compensation is not reduced by the elective deferrals. However, to the extent of any "employer" contributions, the self-employed definition of earned income requires that the earned income be determined after the deduction for employer contributions. Thus you would look at Schedule C net income minus the one-half of SECA tax deduction times 20%.

In reply to Pax, I would agree with your interpretation. In fact the Code as amended specifically exempts catch-up contributions from 415. Thus, it would be possible for a participant in 2002 to have a total allocation of $41,000 (the $40,000 in annual additions) plus the $1,000 catch-up for age 50 and over. In reply to Disco Stu, I would disagree. The IRS Regulations at Section 1.401(a)(17)-1(B) clearly provide that the compensation limit is used to determine plan allocations. Since elective deferrals are allocations, I fail to understand how you could say that 401(a)(17) restricts deferrals, unless the method I described in a previous post is used.

Further clarifying a point I intended for JEP, Code Section 414(v) and the proposed regs allow catch-up contributions to ignore many qualification requirements, such as 415. 401(a)(17) is not enumerated in the list of qualification requirements that can be ignored. Thus unless the plan were redesigned to permit participants to make deferrals at a lower percentage throughout the year (e.g., a participant earning $300,000 makes deferrals at the rate of 4% of pay up to the 402(g) limit), those eligible participants who had earned more than $200,000 before catch-up contributions were introduced would be out of luck.

We have had a similar situation. According to Rev. Proc. 2001-17, the general principles for correction generally require the appropriate reporting and withholding to be done. There are two exceptions to this general rule: (1) if the plan year is a closed year, it can be argued that no reporting would be required. (2) If there are excess contributions of any type and they are districuted pursuant to the correction program, then reporting and withholding is done as of the year of distribution. Since loans should generally be reported in the year of default, the correct answer should be that they should be reported then. This may mean that participants have to file amended returns and report the default. If the person is active and a couple payments were missed but then the repayments were resumed, an argument could be made that the repayments related back to the oldest payment due, thus avoiding potential default.

QDROphile, I raised the point in the past and was told it was a systems limitations. They have poetic license, this should today be called systemic license. JEP, While your point is well taken, I did not see anything in the EGTRRA language or the proposed reg language permitting people to get around 401(a)(17).

Let's assume that an employer has a high plan-imposed limit on how much highly compensated employees can make as elective deferrals. Also assume that the plan almost never fails the ADP test. The plan has historically stopped ALL contributions once the participant's compensation exceeds the 401(a)(17) limit (i.e., $200,000 for 2002). Most top execs max out on the 401(a)(17) limit by mid-March when a bonus is paid. The question is: if the plan introduces catch-up contributions mid-year, can an exec who has contributed the maximum $11,000 elective deferral and reached the $200,000 limit on compensation before the catch-up contribution is introduced to the plan, be permitted to contribute the $1,000 catch-up contribution shortly after it is introduced under the plan?

moe, If the plan covers only self-employed participants because there are no common law employees, the plan is exempt from ERISA, as a plan without employees. See 29 CFR Section 2510.3-3(B). In that situation, the DOL limit does not apply. However, the IRS has construed the exclusive benefit rule to include fiduciary responsibility. Therefore, while the DOL deadline would not apply, it would be preferable to remit the contributions ASAP to avoid imposition of the exclusive benefit rule by the IRS.

Let's take a look at the flip side: Company B's 401(k) plan has 100 % vesting. Company A's 401(k) plan has a graded vesting schedule. If employees from Company A transfer to Company B and some are either not vested or not fully vested, can their vested portion, if any, be transferred to Company B and the rest subject to forfeiture? Does it make any difference if Company B and Company A are in the same controlled group?

Assume that Company A, a Fortune 500 Company, is in the process of making a number of acquisitions. Company A maintains Plan X, a 401 (k) plan. What are people doing in each of the following situations to protect the qualification of Plan X: (a) Company A buys Company B and merges its Plan Y into Plan X; (B) Company A buys the assets of a trade or business of Company C, another Fortune 500 Company, where the trade or business employs 75 employees; © Company A transfers 30 employees of Company A's subsidiary, A-1, and wants to transfer their account balances under Company A-1's plan, Plan Z, into Plan X. Company A-1 has taken a number of aggressive positions on a number of issues involving Plan Z; and (d) assume the same facts as in example ©, except that Company A-1's CEO is transferred to Company A and only her account balance under Plan Z is spun off into Plan X.

My understanding is that 401(k)(10) was repealed for all but distributions on account of a termination of the plan. Thus, the severance from employment relief should also be available in the case of sales of the stock of a subsidiary.