Kirk Maldonado

You should also look at SEC Release 33-6281.

Try PLR 8836003, PLR 9442021, and PLR 200241046.

I think that people need to read the Defense of Marriage Act.

Hire an experienced ESOP attorney.

mbozek: I'm pretty sure that there is something to that effect in the tax shelter rules that have come out recently.

MBozek: Let's take an example. Assume that the employer makes $100,000 of Section 401(k) contributions to the plan for the first three months of the year. Those amounts cannot be deducted in the prior year, even though they would fit all of the criteria in your posting. The reason that I cited the decision in Albertsons is because your prior postings make it seem like the only thing that counts is when the contribution is made. For the contribution to be deductible in the prior year, it has to be attributable to the prior year, which is exactly the issue in Albertsons.

mbozek: I think your statement is a bit overbroad. If the contributions were made for the current year, you can't deduct them in the prior year. Lucky Stores Inc. v. Comm'r, 107 T.C. No. 1 (1996) and American Stores Co. v. Comm'r, 108 TC No. 12 (1997). Of course, if it was not clear for which year the contributions were made, then your approach might work. In my experience, often it isn't clear the year to which the contributions relate.

TBob: You point is still valid, though. I think that there is a lot of risk with the employees of the plan feeling too free and comfortable with the plan assets. Many problems arise because people treat plan assets like they were their own checking account, rather than being subject to a mind-numbing variety of rules.

KJohnson: I've not researched the issue, but my guess is that if the alternate payee's benefit would exceed $5,000, you can't force an immediate distribution. As a practical matter, I've only seen two QDROs in DC plans where there wasn't an immediate distibution, so I think that the odds of an alternate payee asking for a loan is pretty slim.

Belgarath: I disagree. One actuary could send another actuary a card. But what are the odds of that happening?

FundedK: That is funny, I read the same language and get exactly the opposite conclusion that you reach. His language says that if a former participant is a party in interest, you have to give them a loan. I see absolutely nothing in his language that supports your position that you can deny loans to all former employees, including former emlpoyees who are parties in interest. In fact, his language says the exact opposite; that you must make loans available to them.

Breach of fiduciary duty?

I've had clients that use a 30 day threshold (for reinstating prior service credit upon rehire).

You might want to look at Advisory Opinion 2004-01A to see if it is helpful.

FundeK: Do you see any problem with that limitation under the DOL regs regarding loans?

No.

See Rev. Rul. 80-360, 1980-2 C.B. 142, 1980-52 I.R.B. 12.

How about February 29th?

RLL: In Announcement 94-101, the IRS seems to take a broader view of when an appraisal is required that you posited in your posting. Here is the relevant language: A valuation of employer securities by an independent appraiser is required with respect to any activities carried on by the plan. * * * Plan activities requiring valuations also include * * * the allocation of assets to participants' accounts. Thus, under the position of the IRS, it would appear that a reallocation of forfeitures would require an appraisal. What are your thoughts on this point?

You might want to look at PLRs 9135059, 200237026, and 9219038.

Thanks Blinky.

Harry O: I agree with your reasoning. But I have another question for you. Do you think that it would work in your scenario if the same conditions had been imposed upon the grant rather than the exercise of the stock option?

Alf: Why do you believe that performance vesting would not be acceptable under Section 162(m)?

Benmark: Please clarify if you are talking about (1) insurance premium payments, (2) contributions to flexible spending accounts, or (3) both.

Blinky: For the benefit of us non-actuaries, could you explain why you said "The deduction to bring the plan to fully funded status could easily be less than the UCL." That result doesn't seem intuitive to me, but I'm not an actuary, so my knowledge on these matters is pretty limited, to say the very least.