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I think we are in agreement. In this case, a change is not permitted because the regulations do not allow a change when there is a partially paid LOA. Therefore, consistency is completely irrelevant. However, shen a change is permitted by the regulations, consistency is a concern.

Not necessarily - health expenses could be covered by insurance - anyhow, that is not the issue, under the regs, the fact that her spouse is going on a partialy paid LOA precludes any change - whether the change is consistent is completely irrelevant, if one is to read the regs. literally. That is my point. Are they supposed to be read literally? You are not reading them literally if you are concerned with consistency.

Reduce her heal care FSA.

Has anyone encountered this question. The final regulations state that the commencement of an unpaid LOA is a change of status. This may be pushing the envelope, but what about an employee's spouse who goes to a partially paid medical LOA where the pay will be equal to 20% of the pre-LOA earnings. Equity dictates that this should be change in status, but the regulations rule. Any thoughts??

Thanks for your quick reply. In terms of electing to make catch-ups, this plan wants to send out a notice telling everyone who qualifies that they can defer an extra $1,000 - that is what I meant by electing to make catch ups. What I wanted to confirm is that the catch-up can be made during the plan year that began on 6/1/01 (pre-12/31/2001).

Please confirm if the following is correct. My understanding is that catch-ups are based on calendar year, not plan year. Therefore, Plan whose plan year ends 5/31/2002, may permit an employee who attains age 50 during plan year ending 5/31/02 to make catch-up contribution for plan year ending 5/31/02. Plan, of course, will have to be amended to allow this provision. Thanks.

Yes, I know that today is Christmas, but I still have end of year deadlines. My question concerns the requirements for a safe harbor nonelective contribution. There are several threads on this subject, but I am still confused. Employer wants to have a safe harbor 401(k) with a 3% non-elective contribution. Employer wants a 1,000 hour requirement with a last day of year requirement for receiving the 3% non-elective safe harbor contribution. My undertanding from 2000-3 is that is allowable, (the result was different is 98-52) but what about the participants who made deferrals during the year and quit before the end of the year or have less than 1,000 hours. Do their deferrals have to be tested under ADP?? I could be reading 2000-3 incorrectly. Any help is appreciated. Thanks.

Does anyone know what the 2002 limits are for transportation plans?

I am trying to find find copies of multi-employer plans on line. Any suggestions?

Plan defines average annual compensation as the average over 5 consecutive plan years..... The plan year was changed - now we have a short plan year. Do we annualize the compensation for that period/ignore the short plan year/use overlapping years (like vesting)???

EGTRRA changed the rules for determining when a plan is top-heavy. According to 2001-56, the new rules (definition of key employee, distributions, etc.) are analyzed on December 31, 2001 for a 2002 calendar year plan - the last day of the prior plan year. A new plan was adopted for 2001. Therefore, the determination date for the current plan year is also December 31, 2001 - the last day of the current plan year. It seems to me that you must apply 2 definitions and analyses to December 31, 2001 - one for the current year using the old rules and one for 2002, using the new rules. Has anyone heard anything to the contrary?

Has anyone ever been involved in a DOL prohibited transaction penalty proceeding pursuant to which the 502(i) excise tax has been imposed or waived? Thanks.

Does anyone have any thoughts on permissible exceptions (if any) to the requirement that a waiver be irrevocable under the 401(k) regs (perhaps for an extended period of time, say 10 years or so). I'm including the thread under this category instead of the 401(k) heading because the waiver that I am contemplating would be from an integrated profit sharing plan. I'm not sure that there are any exceptions, but if anyone can think of one, please give me your ideas.

Probably not. COBRA applies to an employer with 20 or more employees. However, look at your state law. There could be a similar conversion policy under state law that applies with fewer than 20 employees.

No, I do not know it off the top of my head and I do not have access to the California statutes at the moment. A few suggestions - 1. Call your labor lawyer, 2. Call the California labor commission, 3. Try to do a lexis search. Good luck!

Just a little note to RLL (whoever you are) for all of your ESOP advice. I have learned a tremendous amount from reading your replies. You are to be commended for your public service to the benefits community. Thank you.

The answer depends on state law. For example, earned vacation pay CANNOT be forfeited under California law. (aka the Suastez case) I do not know the result in the other 49 states.

It is generally ok to discriminate under your circumstances. However, check the contract for insurance that the employer signed with the agent to make sure that the employer did not agree to pay the same premium for all (it happens sometimes), and make sure that the plan is not really a medical expense reimbursement plan under 105.

Can a non-leveraged ESOP be subject to an option to sell shares to an unrelated third party in the future? The option could state that the price would be the fair market value at the time. Currently, the unrelated third party is not a party in interest or a disqualified person, but over time, may acquire an ownership interest to be considered one. Section 54.4975(B)(4) precludes a call with respect to shares acquired with an exempt loan. What if the ESOP is non-leveraged? I am uncomfortable with the concept, but other than general prohibitions, cannot locate anything specific. Any thoughts?

If the amendment terminating the plan 12/31/99 was correctly adopted, that is the date of the termination. All participants are fully vested as of that date. It is not too late to file a 5310 on the termination. The plan must be amended to comply with GUST.

Assume a transaction is determined to be a merger under 409 and pass through voting is required to ESOP participants. Must a complete prospectus be provided to each participant or is something less sufficient.

The second paragraph of the Section B of the Explanation to the proposed regulations states "...if an employer also provides a 401(k) plan...then to the extent the HCEs are electing contributions under that plan, the highest HCE allocation rate may be lower than it would otherwise be, which in turn would lower the minimum required allocation for NCEs under the plan..." Can someone give me a somple example of what this means? Thanks.

The IRS has issued several private letter rulings dealing with disclaimers and qualified plans. See for example GCM 39858. I know that many other PLRs on disclaimers have been issued. I don't have the cies availables. There is a discussion of disclaimers in Taxation of Distributions form Qualified Plans (Bennett) and Life and Death Planning for Retirement Benefits (Choate)>

I have a basic question regarding voting rights for non-publicly traded stock. Must voting rights be passed through for any of the listed transactions if voting rights do not have to be passed through under state law or are voting rights passed through only if non-ESOP shareholders would be able to vote on the listed transactions. Follow-up question - an offer is being made to purchase 20% of a privately traded company's stock - ESOP owns a portion of the company so buyer will buy 20% of ESOPs stock. There are allocated and unallocated shares in the ESOP. Trustee will determine whether to sell unallocated shares. Who makes the decision to sell the allocated shares. Thanks

Once again, thanks for your thoughts. In the end, I agree with you.