J2D2

We have a leveraged ESOP in which the loan is still being repaid. I'm trying to determine whether the restriction in Code section 409(o)(1)(B) is permissive or mandatory. In other words, may the shares in a terminated participant's account that were acquired with the proceeds of an exempt loan be distributed before the loan has been repaid in full?

A basic question from someone having severe brain cramps. Discretionary profit sharing plan requires a participant to either complete 500 hours of service or be employed on last day of the plan year to receive an allocation. Employer now wants to increase hours of service requirement to 1,000. Assuming there are participants who have completed more than 500 hours at the time the amendment is adopted, can the employer make the increase to 1,000 hours effective retroactive to the first day of the plan year?

Client has provided copy of seminar materials that state that an employer cannot use Form 5305-SEP if it has ever maintained a defined benefit plan (even if it has been terminated). The current Form 5305-SEP instructions and Pub 560 state that an employer cannot use the Form if it currently maintains any 401(a) qualified plan. However, I have not been able to find any authority for the statement that maintaining a DBP in the past disqualifies the employer from using Form 5305-SEP. Am I missing something? Cites, please. Thanks for any help.

Client is being pursued by Medicare for liability under the Medicare Secondary Payer rules. We believe we have meritorious defenses to the claim. We also are considering whether we can present a statute of limitations defense because of Medicare's delay in asserting its claim, but I haven't been able to find any statute of limitations or similar provisions in the Medicare statutes. Has anyone looked at this issue? Any cites to statutes, regs, cases, etc. are most welcome. Thanks.

Employee goes on worker's comp. Only full-time employees are eligible for coverage under company's group health plan, so employee could have been dropped due to his reduced hours. However, company does not cut-off group health coverage, but continues to cover the employee on worker's comp just as if he were a "regular" employee. After 25 months, company discovers its error. Of course, company gave no COBRA notice when employee went out on worker's comp. Is the company still obligated to offer COBRA to this individual or can the company "credit" the 25 months of coverage it provided against the COBRA maximum coverage period? The regs (54.4980B-7, Q&A7) seem to allow the company to credit the alternative coverage. My concern is whether the failure to provide a COBRA notice is fatal to that position. Any thoughts?

Do any accounting types out there know what, if any, financial statement disclosure is required for potential withdrawal liability? For example, ABC company contributes to a multiemployer plan and anticipates that it will continue to do so for the foreseeable future. Must ABC show on its balance sheet, footnotes, etc. the withdrawal liability that it would incur if it were to withdraw? This non-accounting type appreciates any and all responses. Thanks.

Multiple employer 401(k) plan is adopted in 2000, but no action is taken to actually implement the plan. Early in 2002, the plan accepts a transfer of assets & liabilities from another (unrelated) multiple employer plan. Prior to this trustee-to-trustee transfer, the new plan had no assets and no participants. I seem to recall seeing something in the past to the effect that a plan was not considered to be in existence until it had assets/participants. Sorry for the sketchy details, but we're still gathering facts. Is the GUST remedial amendment period (RAP) for the new plan based on its date of adoption in 2000, resulting in a GUST RAP that ends 2/28/02? Seems the alternative would be that the RAP is based on the 2002 date when the plan accepted the transfer of assets & liabilities. Thanks for all responses.

As a general rule, IRS Form 5310-A must be filed at least 30 days prior to a plan merger. The filing requirement is waived for the merger of defined contribution plans that meets requirements specified in the 5310-A instructions. Does the waiver of the 5310-A filing requirement also mean that the merger could take place contemporaneously? For example, could an employer adopt merger resolutions on January 31, 2002 and make the merger effective the same day? I realize that there are GUST/EGTRRA update issues for both plans, but, for now, just want to focus on this (potential) timing issue. Thanks.