IRC401

There is no requirement to get a determination letter to establish that a plan is qualified under IRC 401(a).

There are state laws regulating trust companies. The company needs to find some competent legal adivsors if it wants trust company status.

You list three insurance companies and an annuity company. Have you considered talking to a mutual fund family??? Why not look at mutual funds and then put together the investments that you want (or are you determined to pay insurance company overhead) ??

1. I have never seen a plan in which "404©" was an option. It is always imposed. In such cases the distinction between a 404© closing fee and a distribution fee is a matter of semanitcs. In addition, if the fee isn't disclosed up front, there is an issue whether the plan sponsor blew the 404© protections for not disclosing all of the fees. 2. A plan may not need to offer distributions upon termination of employment, but if it does so, a participant has a right to a distribution. If imposing a distirbution fee is a prohibited transaction it shouldn't matter whether the distribution is at age 30 or 65. 3. Last year the DoL raised the distribution fee issue in an audit of a former client of mine. Because I changed jobs, I may never find out what happens(ed).

Yes, you can have two (or more) plans with one document.

It is not true, but the plan document needs to have provisions dealing with what happens to the money between the date of deposit and the date of allocation to participant accounts.

I agree with Kirk. Do not make payments out of a corporate account. I have vague memories of a PLR dealing with a situation in which an employer terminated a plan, transferred the plan assets to a corporate checking account, and paid the participants out of the corporate aco****. The IRS disqualified the plan.

I thought that Morningstar was willing to be a fiduciary (per agreement with the plan sponsor, not the participants).

A plan sponsor should be able to make a good faith plan amendment based on a common sense reading of the Rev. Rul. without trying to deal with unpublished comments by Jim Holland. I seem to recall that several years ago he raised a definitely determinable issue with regard to QNECs and was ridiculed for it. Holland spent the period between 1994 and 2000 nitpicking over the GATT transistion rules. I assume that this is his new nitpick.

1. Notice 2000-3 is a notice, not a law or regulation. It is a safe harbor notice for implementing safe harbor contributions. The IRS has not stated anywhere that it is the exclusive way to utilize the statutory safe harbors. 2. Where has the IRS stated that failure to follow a safe harbor notice could lead to plan disqualification (as opposed to not being able to avoid ADP testing)? 3. Nothing in the law or regs that I am aware of prevents an employer from amending his plan prospectively. The "Wickersham view" may be an nice anal-retentive conservative position, but I am not aware of any authority to support it. Is anyone else? The employer should be able to amend the plan prospectively to drop out of the safe harbor. PS: If anyone decides to drop out of the safeharbor, you need to check how the plan document deals with failed safe harbor contributions.

I recommend putting a warning in the SPD that there will (or at least may) be loan fees.

If the shareholder uses shares to pay off a loan, I assume that he would be treated for his individual tax purposes as if he sold the stock. Has anyone looked at that issue? Does he still want to do it? What will the trustee do with the stock? Is he able to sell it? If yes, why doesn't the shareholder sell it and use the proceeds to pay the loan? If the trustee isn't planning on selling the stock, has he looked at the UBTI rules?

I once had a bank client that charged its standard trust fees for acting as trustee of its own plan. The DoL made them refund the fees. [No, I didn't advise them to charge the fees in the first place.]

The trustees may invest the profit-sharing money in the privately held stock. Keep in mind that the decision to purchase the stock is a fiduciary decision subject to all of the fiduciary prudence standards. Lack of liquidity is one factor that should affect the decision. [The fact that in a post-Enron world juries may not be sympathetic if the stock tanks is another factor that I would think about.] The trustees should also think about administrative issues, such how they will value the stock and how they will cash out departing employees. If the company is using a third party administrator, they should discuss the operational issues with them. The DoL will probably expect the plan to get an appraisal of the stock each year. If anyone wants to invest 401(k) money, talk to a securities lawyer.

I thought that a plan had to be maintained by a governmental entity in order to be a governamental plan. You described a plan maintained by a union, not by a government. If the issue is important enough, couldn't they apply for an advisory opinion?

If the CA mandated payroll practice is not part of an ERISA plan, can we assume that any medical information that the employee provides is not subject to the HIPAA privacy rules?

In addition, consider plan liquidity issues. If a senior employee leaves will there be enough other assets to cash him out without the remaining assets being too heavily invested in real estate. Because of the liquidity issues and the cash burden of maintaining the investment (such as property taxes), think very carefully before investing (and keep in mind that if the plan makes a killing in real estate, the profits are come out of the plan taxed at ordinary income rates.

Was the last deposit of the money purchase contribution made during the plan year or after the end of the plan year? If it was made during the plan year, the employer made a nondeductible contribution (and owes an excise tax). If it was made after the end of the plan year, treat the excess as part of the contribution for the year of deposit.

Does the professional serivces organization have any relationship to the not for profit? For example is the professional services organization run by MDs who provide services to a hospital? Is the professional services organization truly independent, or do the HCEs "own" it by virute of their positions with the not for profit? (Is the ownership arrangement a straw man situation?) I am wondering how someone who is an HCE of a not for profit also has time to run a professional services organization. If he is supposed to be working full time for the not for profit, but isn't there are issues. If revenue that should be going to the not for profit is being diverted to the professional services organization, there are issues. If the professional services organziation is derving revenue from the not for profit, there are issues. If the professional services organization dervies its revenues from activities unrelated to the not for profit, and the HCE is doing what he is supposed to be doing for the not for profit and has time to run a business on the side, everything should be OK, but my instincts tell me to look for tax issues.

I am missing something here. Who is the beneficiary of the policy? Did the particpant elect to purchase it? Who makes investment decisions for the account? If the administrator makes the decision to use assets in the participant's account to pay premiums on the policy, why wouldn't that be a fiduciary investment decision? Why would the participant elect not to receive emplyer contributions? My instinct is that there is more here than you have disclosed.

See 1.411(d)-4 A-1(d)(3).

Is anyone aware of a reason why a plan sponsor may not eliminate a social security supplement (that is not a QSUPP) even for employees who need only to resign in order to receive the supplement and for participants already in pay status? Please ignore HR and labor law issues. Thank you. PS: I am not referring to an "early retirement benefit" or a "retirement-type subsidy".

Any chance that the private company forms an affiliated service group with the tax-exempt entity? Are there any leased employee issues ???

Make certain that the plan document permiots what you want to do. You might need a special amendment.

Book the transaction as if the money were actually deposited on 12/31. If cash had been deposited on 12/31, it would have been allocated to the participants' accounts as cash and then used to purchase shares from the suspense account in 2002. Therefore, as of 12/31 the participants accounts' held cash.