Kirk Maldonado

My recollection is that there is some ancient IRS guidance (Revenue Ruling?) that provides a safe harbor for the use of a 6% interest rate factor in a target benefit plan.

I know an attorney that had a client that once made a $200,000 contribution to a money purchase pension plan before the enactment of ERISA. The client made $800,000 that year and the plan's formula required a contribution of 25% of compensation.

I am in agreement with what was posted before. But isn't there an issue about the potential violation of the exclusive benefit rule? I believe that there may be an issue, even if the person being benefitted is the participant, if the benefit to him occurs in his individual capacity (rather than in his capacity as a plan participant).

qualified plan: Your last posting was as follows: If a plan requires such service, and an employee is hired January 1 and terminates May 1 with 500 hours of service, and the employee is reemployed the same year on December 1, can the plan operate to treat this employee upon rehire as having not met the plan's service requirements? I would think that this employee must enter the plan upon rehire, but can you confirm? Also, if a plan has an elapsed time service requirement of 6 months, what happens if an employee is hired January 1 and terminates May 1, and is then rehired on December 1 of the following year (so the service spanning rules do not apply). Upon rehire, does the employee have to complete 6 months of service to enter the plan, or does the employee only need to complete 1 month? My responses are as follows: First example. The way I interpret the 500 hours within six month rule is that the person must complete at least 500 hours within six months. However, the person isn't required to work for six months if he or she has completed 500 hours. This is analogous to the 1,000 hours of service within 12 months. I've never heard anybody take the position that you don't give somebody credit for a year of service (who has completed at least 1,000 hours of service) simply because they aren't employed on the last day of service. You could require both (as RCline does) for eligibility to participate, but I think it is confusing to use two different standards in the same plan for measuring service. The only reason why you could use both here is because the conditions are less than the statutory maximum. Second example. If the service spanning rules don't apply, then you don't need to give credit for the prior period of service.

I seem to recall that there was a revenue ruling involving a related (but not identical) issue a few years ago. That ruling might provide some guidance. Sorry, but I don't have the cite handy.

I disagree with that list. I think that "oral care" should be covered for someone with periodontal disease.

Both.

eafredel: I agree with, and am very familiar with, the points you raised. Especially the California vacation pay rules, having practiced in California for over 20 years. But those authorities do not support an absolute ban on the sale of accumulated vaation time that was posited by Matt J.

I think that you may have some potential issues regarding the ADA that deserve serious attention.

Matt J: What is your authority for the statement "If you are allowing employees to buy or sell PTO on a pre-tax basis, you cannot have the rollover feature. (constructive receipt) If you allow them to buy and sell on a post tax basis, you can still have the "rollover" feature of PTO."

COBRA premiums must be based on active workers' cost for all divisions, not just the division that employed the person on COBRA. Draper v. Baker Hughes, ED Cal 1995 LEXIS 10210.

It was in the CCH Federal Securities Law Reporter listing of no-action letters. Chances are good that it was very old, because most of the no-action letters on these types of investments are between 5 and 25 years old.

I seem to recall reading an SEC No-Action letter that described a bank that had such an arrangement.

Hi RLL: Thanks for your input. As I indicated above, I liked the result, but I wasn't aware of any specific authority. You confirmed that you get to that result by reasoning, rather than by a specific statutory or regulatory authority. I really like Denver. California has it great points, but so does Colorado. They are both equally enjoyable places to live, but for very different reasons.

What is the authority that says that the person is only taxed on the fair market value of the stock when it is distributed, if that amount is less than the basis in the stock? While that result certainly has a logical appeal, it seems to fly in the face of the rules regarding the tax treatment of NUA.

California has a similar law. I seem to recall that there were discussions of it here on BenefitsLink message boards.

To amplify QDROphile's remarks about finding a qualified lawyer, the vast majority of securities lawyers don't understand the rules regarding registering the interests and the stock to be purchased under a Section 401(k) plan, and most ERISA attorneys don't understand anything at all about securities laws. Try to find somebody that understands both areas, so that they will have been through this process many times before.

Watch out for UBTI problems.

Aren't those employees entitled to elect COBRA?

It seems like the reversion might violate ERISA also.

I agree that you are not absolutely required to ever get a new determination letter. However, I think that if there is a fundamental change to the plan, such as a complete restatement of the plan document by a new service provider, the prudent thing to do is to get a new determination letter. The cost isn't that much and the protection is worth it. On the other hand, if the change is inconsequential, you need not get one. For the cases that fall in between, it is a judgment call.

mariecummiskey: What is your rationale for excluding them?

ESOPs cannot use prototype documents.

Give discounts on health insurance (or other financial incentives) for people that actually lower their blood pressure, cholesterol level. Some people who have disabilities are unable to achieve that.

Make sure that the wellness program is properly structured. It could easily run afoul of the Americans with Disabilities Act if not designed right.