Scuba 401

what is going to happen to all of us lawyers?

does this affect pure profit sharing plans? the last question seems to indicate it does not but it is a bit confusing.

I agree that the state would never know there was a loan and that is probobly why there is no authority on this issue absent the FL DOR Tech Advice. There is actually a provision in the statute that requires the stamps prior to recording of the note but of course that really is not relevant here. essentially, the stamps are a condition precedent to enforcing a note under florida law. however, since you never would need to enforce the note because it is secured by the participants account balance i dont see that as an issue. the answer to your question on the criminal provisions is that "whoevever makes, signs or accepets, or causes to be made, signed, issued etc. etc. any instrument without the full amount of the tax is guilty of a misdemeanor.

the florida statute says there shall be a tax on notes, etc. made, delivered or assigned in florida. thus, they are really applicable to the note, not necessarily one party. i feel that the preemption clause would apply. simply b/c the state of FL does not think their statute is preempted is certainly not dispositive of the issue. this would not be the first time a state or state court thought it could enforce a statute or order over the provisions of ERISA.

the responses in this thread lead you to believe that this is well settled method of handling loans in florida. from discussions with other attorneys in florida i dont get the feeling that the issue is as clear as this thread would lead you to believe. does anyone else have any opinions on this or can anyone discuss how they handle loans in florida?

a client walked into my office with a standardized plan that has not been amended since it was adopted back in 1888. it has been administered properly and all 5500's files. if we restate the plan for 2000, does the statute of limitations begin to run and if he decides not to go to CAP, does he escape potential sanction at some point?

WIth regard to Profit Sharing Plans and 401(k)'s, can a hardhsip provision be eliminated by amendment? The way I read the Regs they can, but I want to confirm before doing anything.

are you actually saying that if the employee terminates (bona fide) and returns to work prior to completing a request for a distribution, he is still entitled to the distribution even though he is an currently an active participant with an account balance? is there a cite for that?

Essentially what happened in this situation is that the person never filled out the distribution forms during the time they were not employed. Since the Plan is silent with regard to this issue, I was hoping to find a code section or a Reg that addressed this issue.

Is a participant eligible for a distribution if they terminate and resume employment within 6 months? The Plan allows for distributions to terminated participants however, this plan was in blackout status because it was being moved to a new service provider and the distribution forms were never furnished to the participant.

A participant terminated but due to the moving of the plan fron one service provider to another, was not able to complete distribution paperwork. He is now employed again with the Employer (after a few months). The participant would like to get a distribution believing he is entitled because he had a separation of service. The plan does provide for distributions when there has been a separation. Should we let him have one?

I have a client who is asking whether the "substantially equal" repayment requirement, means exactly equal and to what extent the Regs. allow these payments to not be the same. Is anyone aware of how this has been interpreted in the past?

A client of mine wants to know whether the "substantially level" repayment requirement in IRC section 72(p) means exactly equal. My thinking is that it means payments must be very close to the same but I am wondering if anyone knows how "substantially level" has been interpreted by the IRS.

Why would you want to keep the plan together if they are no longer part of the same control group? You will have much greater flexibility if you run them as two or three separate plans.

If the broker does in fact have discretionary authority than he is definately a fiduciary. (are you certain he has discretionary authroity? usually brokers do not!) If he is a fiduciary than there may be alot of problems with this situation. first, a fiduciary is only permitted to receive commissions and 12(B)(1)'s if they are fully disclosed and offset against his investment advisory or trustee fee. Otherwise, it is a prohibited transaction for a fiduciary to receive 12(B)(1)'s (soft dollars) Look at the Frost DOL opinion. It is right on point.

Just a side note. I do not believe a "broker" or Registered Representative is even considered a Fiduciary to the Plan. Look at the AETNA DOL letter and the ERISA Regs 2510.3-21(d)(2). Merely recommending securities for the Plan to purchase does not make one a fiduciary. One of the key determining factors which would make this a prohibited transaction is wheter or not the Broker has discretionary authority. If not then I think it is OK.

Can anyone clarrify Rev. Proc. 2000-20 regarding extension of the remdial amendment period? Do Plan sponsors have 12 months from the date the GUST opinion letter is issued to the prototype sponsor? For the big ones like Corbel, when will that be?

We have stock that is an investment election and stock that is employer matching and profit sharing. Do the 404© rules apply to the profit sharing and the match also or just to the deferral money?

Larry, Are you saying that because the plan is a participant directed 401(k), the participants must be given the opportunity to vote the proxies. Our Plan document (the PPD prototype) says that the trustee is "authorized and empowered to ....have the rights of an individual owner (vote proxies) in accordance with the written direction of the "Named Fiduciary" (except to the extent the plan asset is subject to the control and management of a properly appointed Investment Manager or subject participant direction of investment. Does this mean that the Participants should vote or we, as investment manager, should vote for them?

When employer stock is offered as an investment choice in a 401(k) plan, what is the procedure for voting the proxies. Does the investment manager/fiduciary vote them on behalf of the participants or does he distribute them to the actual participants and let them vote?

I would also contact a TPA in Coral Gables, FL by the name of Ingham Group 305 662-5557. They offer a cross fund platform (multiple fund platform) and the ability to access and do trades on the internet. Also excellent consulting. Ask for Craig Bonney

Does anyone know the rules regarding proxy voting when employer stock is an investment election in a 401(k)? I know this is the ESOP board but thought maybe someone would know. Is the investment manager or fiduciary required to vote the proxies on behalf of the participants or does he have to distribute them to the participants so they can vote them?

I do not think that book is accurate unless there is confusion between what is a loan and what might be a hardship. However, if the loan is for the "purchase of a principal residence, the five year repayment period is not applicable.

it seems the new craze is companies that hold themselves out as investment advisors to participants. the plan sponsor hires the firm to essentially hand hold participants so that they do not have to do so. these firms become ERISA fiduciaries and presumably minimize the liability of the plan sponsor. one example is 401kcafe.com what do you think of these companies? i am sceptical. [This message has been edited by scuba 401 (edited 01-05-2000).]

what do you think about giving it to the participant in the enrollment materials. thus, they have it when they make the investment at some point in the future. have you have met the requirement of the reg.