Christine Roberts

The buyer in an asset sale is contemplating adopting a 401(k) plan maintained by the seller. The buyer will inherit all of the seller's employees (plan participants) in the transaction. The plan is a prototype sponsored by a payroll processing company and has only been in existence 3 years. Presuming that there were procedural errors during one or more of those years, what is the extent of the buyer's liability for the prior plan sponsor's errors? Other than correcting the procedural error and paying any applicable penalties and interest, would the buyer still have exposure if it did not take a tax deduction for the year in which the error took place? Are there any ramifications for the seller, if the seller still exists? Does it make a difference if the seller does not exist after the asset sale?

Is it possible to acquire a grandfathered SARSEP through the purchase of the business that sponsored it? Does it matter if the purchase is of stock, assets, or just purchase of a professional practice? Does acquisition of the SARSEP have to be express in order for it to survive the acquisition?

A check representing a monthly payment on a note owned by a qualified plan is mis-deposited in the community property checking account of the individual whose professional corporation sponsors the plan, and his former spouse (who is an alternate payee under a QDRO). Is there any problem with simply disgorging the money and writing a new check to the plan from the community account? Would failure to disgorge (i.e., participant writes a separate check to the plan from another account) be a prohibited transaction?

What are people doing about updating cafeteria plan documents under the final regulations issued in March, 2000? Or are people waiting until the proposed regulations from March, 2000 are also in final form?? ------------------

The old 5500s asked you to confirm whether, for a terminated plan, a determination letter had been requested. "No" answers to this question were always viewed as an audit trigger. I cannot find this question on the new form, or the retirement plan schedules. Am I missing something? ------------------

If a money purchase pension plan freezes accruals (and complies with 204(h) notice at that time) is it necessary to provide a second 204(h) notice upon subsequent termination of the MPPPlan?? ------------------

In Rev. Rul. 2000-27 the IRS has essentially exempted, from the same desk rule under 401(k)(10), transactions involving the transfer of less than 85 percent of the assets of a trade or business - it has said that it will respect applications of the same desk rule to transfers of less than 85% of assets occurring prior to Sept. 1, 2000, it also stated that it will allow application of Rev. Rul. 2000-27 to past transactions that fall within its paramaters. Question - if the asset selling organization asserts the same desk rule in a transaction that is now eligible for non-same desk rule treatment under 2000-27, contary to the wishes of former employees, is it a violation of the former employees' ERISA Sec. 510 rights to continue to prohibit distribution or even rollover of their plan accounts to a new employers' plan?? ------------------

Is there such a thing as a top hat severance plan? Specifically, a severance plan that does not meet all three elements of the exemption from ERISA pension plan status under DOL Reg. Section 2510.3-2(B) BUT which is limited to a select group of highly compensated or management employees? ------------------

Is there anything preventing a private non-profit entity from being named as trustee under a 401(k) plan? ------------------

The idea behind the question is that an irrevocable designation is needed to get the surviving spouse to name, as beneficiaries, someone she may not want to name voluntarily, such as children from the participant spouse's prior marriage.

A spouse who is the beneficiary of her spouse's IRA elects to treat the IRA as her own upon the spouse's death. If the spouse names the children of the decedent's prior marriage as irrevocable beneficiaries of the IRA, is this a taxable transfer? If it were a qualified plan, I believe the anti-alienation provisions would prevent a completed gift but I am not sure what the rule is in the IRA context. ------------------

For purposes of determining the top hat group, is it possible to look only at one branch or division of an employer (for instance, a separate branch doing business under a DBA) for purposes of determining the top hat group, or must all employees of the employer be considered? For instance if the employer wants to set up a plan for the manager of a branch that is just a DBA, can the manager comprise his own top hat group or must all of the employer's employees be considered? Any comments would be appreciated ------------------

Both cites (to Rev. Rul. 90-29 and Circular E) were helpful, but not completely consistent - the Rev. Rul. treats the donated time as the recipient's wages for purposes of income and employment tax witholding, while Circular E treats specifies withholding should apply to the donating third party if it is not an agent of the employer - an agent is one that bears no insurance risk and is reimbursed on a cost plus fee basis for the payment of sick pay. I can't think this was meant to apply to other employees under a leave sharing plan, but I also can't think that it was intended that the donating employees bear withholding tax obligations for the donated time. Any comments? ------------------

Is regular 401(a) and 410(B) nondiscrimination testing required for a discretionary employer contribution to a 403(B) plan, based on years of service, where there is only one HCE in the plan (albeit one who would receive the service based benefit)? My understanding is that no discrimination issues are raised if only NHCEs are eligible for the service based benefit. ------------------

Does anyone have any information about the tax treatment of unused vacation or sick time that is donated from one employee to another? ------------------

Does anyone have any information about the tax treatment of unused vacation or sick time that is donated from one employee to another? ------------------

Did you ever locate fileable forms for 1999?? If so I would like to know your source. thanks. ------------------

Have there been any predictions, official or otherwise, as to whether the DOL, rather than the IRS, will issue late filing notices and administer their resolution? In my experience the IRS has been fairly lenient in forgiving minor delays or failures to file but it is my understanding that the DOL is not so forgiving (even participation in their late filing amnesty program costs $$$$). ------------------

We are doing one QDRO so that W can get a portion of H's profit sharing plan account - the bigger concern is documenting wife's separation from service from H's company so that she can move her assets from the plan. ------------------

Seeking comments/insights from those who have drafted QDROs in this situation - esp. in the family owned business setting where the wife must separate from service in order to roll her own account out of the plan. ------------------

Must a flex plan allow an employee who is on a leave of absence to enroll in a health FSA, and must the plan pay benefits prior to receiving any contributions to the plan from the employee? The FMLA/125 rules require that someone on FMLA leave be allowed to continue participating if already enrolled, but do not, to my recollection, address the new enrollment issue. ------------------

Any advice out there on how to comply with truth in lending disclosure requirements after a participant's return from a leave of absence has resulted in reconfiguration of his or her loan repayments? ------------------

Is this rule out the window now, with the disappearance of the Form 5500 C/R? As I recall it was not a creature of statute (or regulation) simply a provision in the Form 5500 C/R Instructions. ------------------

So if a school district wants to give a departing principal severance pay (e.g. 2 years salary, paid over three years)and the arrangement was not in existence on December 22, 1999, is not broad based, etc., and otherwise does not meet the requirements of Announcement 2000-1, is it essentially a Sec. 457(f) arrangement such that he must include the entire amount in his gross compensation in the year he terminates employment?? ------------------

It is a non-profit entity. ------------------