Alf

457(f)s can allow vesting on involuntary termination through the substantial risk of forfeiture rules in Code Section 83. I don't know about the characterization.

Isn't the ACP test the check on matching contributions (non-safeharbor)? If you pass, who cares. But . . does the 3% first year rule help you somehow on the ACP testing? If there is not a comparable rule, you will fail ACP, won't you?

Anyone have any ideas about correcting the differning elections with multiple plans problem? There is some type of consistency election requiremenet and I want to know if anyone has thought through correction of a violation.

I assume that the question relates to a plan sponsor/adminstrator's obligation to disclose information under 104(b)(4), rather than the participant's right to obtain the information independently, but clarification may be in order.

I want to know how you managed to get a copy of a DOL audit. At best, all I have ever seen is a short letter showing that the audit is complete. Was there a settlement or penalties?

Nobody does it in the spd in my experience.

I think you have other issues. The "may" language is impermissible employer discretion as to distribution timing in my book. On your original issue, sponsors will not longer be able to make involuntary distributions directly to participants. If you want to make involuntary distributions, they have to go in IRAs.

I thought that "the" DOL advisory opinion request that was filed and publicised a few years ago on the preemption issue referred to several, if not all of the state laws, but I do not have a link.

Can stock options that do not quaify for the special stock option rule in the 162(m) regulations (because they were issed at a discount or have performance vesting, for example) qualify as performance based compensation under the general rule as a practical matter. Do the shareholders just have to approve the stock option plan and not the individual agreements?

The plan doesn't have to be that specific because it would not have to be a rollover. Even in an asset deal, you could just spin-off or transfer the accounts of the affected participants. The loans are just notes and go with the assets.

Does anyone know where the rules for suspension of accural requirements to pass 410(b) testing are in the regs? I have seen them in pre-approved plans, but don't know the authority for them.

The excise tax should be based on the impermissible employer benefit. By keeping the cash, the employer saved from having to pay interest to a bank in a normal loan, so technically, the excise tax is based on the rate the employer pays on borrowings or its internal rate of return on assets. Take that rate and multiply it by the amount of the contributions only, not the make up earnings that the participants got credited with.

You want to fully vest all current employees? Sounds ok to me as long as you can pass 401(a)(4) testing. This assumes several things, such as you are not vesting because of a partial termination or discontinuance of contributions.

As clarification, the plan would only satisfy the ADP safe harbor and not the ACP safe harbor, correct?

Is a grant of stock subject to repurchase at cost if a certain employment period is not completed a sufficient forfeiture condition to qualify as restricted stock? The stock is nontransferable until the employment period is complete.

Also, don't be so sure that the match will turn out to be cheaper. Deferrals will probably shoot up when they are required to get the company's match.

Generally, that is correct, although I wouldn't label a QP trust as an asset. However, the problems come in determining HCEs, running coverage and nondiscrimination tests, and integrating benefits, to name a few, after an acquisition and it appears that the form of the deal (asset vs. stock) could have a substantive effect on these issues.

Don't all mutual funds (other than indexes) change their holdings frequently? It shouldn't matter if it is a lifestyle fund or a growth company fund. There shouldn't be a 403© issue as long as the holdings are periodically disclosed.

I am not sure why would a restricted stock plan require a purchase price in general, but need to know why a restricted stock provision would have a 100% of FMV purcahse price for shares of restricted stock. Wouldn't participants be better off just buying shares outright if they are going to pay 100% FMV?

Foreign national living in this country = resident alien, so the vast majority of plans would require their eligibility unless this category was specifically excluded and the plan passed 410 coverage testing without excluding this group.

Isn't the correct answer different from either of your listed options? I believe the ASG (5th entity and the management company) is tested as one employer and the controlled group (four related entities) is tested as one employer. The who is the employer Q&A column has answered this several times I believe though, so that should be a great resource.

Does the cafeteria plan allow third-party or individual insurance policy premiums to be run through? It is legal, but most cafeteria plans don't because of uncertainty on many fronts. My guess is that COBRA would be the same. Oops - I just re-read the question and it says flexplans. I don't think you can run any premiums through a flexible spending account if that is what you are referring to. Maybe someone else can confirm that COBRA premiums are prohibited too. My first paragraph refers to the basic premuim-only portion of a cafeteria plan, not a flexible spending account.

GREAT USERNAME! I worry about fiduciary issues if a per-capita fee is allocated on an account balance basis, rather than discrimination issues. I would think that the DOL's objection from the example you cite in 2003-3 won't apply because the higher account balances are going to be highly compensated. It would generaly be anti-discriminatory, but what basis is there for allocating the expenses based on account balances?

No. He can have his own plan, but the company is treated as a sponsor of the PEO's multiple employer plan, so testing would be the difficulty. The leased employees are still treated as employees of the company and the company is still treated as sponsor of that portion of the PEO's plan.

The document sounds fishy. I think you should give them the minumum just for the halibut.