Kirk Maldonado

jaemmons: Are you saying that a participant could not renegotiate a loan for a longer repayment period?

Same for the seller.

Many service providers charge a hefty sum to do those computations.

The more interesting question is whether the person can make contributions to a section 125 or 401(k) plan based on those post-termination payments.

I think that the case is American Family Mutual Ins. Co. v. U.S., DC W Wis. 12/3/92, 16 EBC 1332, 815 F.Supp. 1206.

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I want to echo the admonition of RLL that you get separate counsel (who is well-versed in ESOP matters) and an independent fiduciary. That is the first and most important thing you can do.

You can always get a much shorter version (in terms of total pages) by printing the version that is in the Federal Register. There are less pages because there are three columns per page. There is a link to the current edition of the Federal Register on BenefitsBlog. There may be one here on BenefitsLink, but I haven't noticed it.

Hire a competent ERISA attorney.

MGB: While the IRS response is hardly a model of clarity, I think that they are saying that the limit has to be in the plan document; not in the SPD.

WDIK: The concept is that the SPD is a summary of the Plan; not the plan document itself. If the definitions are contained in the SPD, then the SPD is the plan document. I wish that somebody could explain to me how a document can be a summary of itself.

Kip: You don't just disagree with me; you disagree with the DOL and ERISA. Here is the relevant portion of the regulation: The summary plan description shall be written in a manner calculated to be understood by the average plan participant and shall be sufficiently comprehensive to apprise the plan' participants and beneficiaries of their rights and obligations under the plan. In fulfilling these requirements, the plan administrator shall exercise considered judgment and discretion by taking into account such factors as the level of comprehension and education of typical participants in the plan and the complexity of the terms of the plan. Consideration of these factors will usually require the limitation or elimination of technical jargon and of long, complex sentences, the use of clarifying examples and illustrations, the use of clear cross references and a table of contents. Labor Reg. Section 2520.102-2(a)

Am I missing something? I thought that the "summary plan description" was supposed to be a summary of the plan document. If the plan document refers to the summary plan description for its definitions, it seems like somebody has things reversed.

Pardon my ignorance, but what are "Enhanced Appreciation Securities?"

Back in the recesses of my mind is a recollection that a loan that is treated as a new prohibited transaction each year, which significantly increases the amount of the prohibited transaction tax.

Have you considered trying to treat the situation as a multiple employer plan? (I don't know that it works; I'm just throwing it out as an idea to consisder.)

Yes, I think you did misread the regulations. They do not mandate that the vesting an eligiblility conditions be the same.

Archimage: Do you have a cite for the regulation that states "a multiple employer plan has to have the same eligibility and vesting requirements for each participating employer?"

rcline46: I wish I could take credit for the new DOL positions, but those changes (which I view of seismic proportions) require powers far in excess of any that I possess.

Has any one else encountered the IRS taking the position that forfeitures of matching contributions cannot be reallocated as (fully vested) QNECs? The IRS agent is saying that the contributions must be fully vested when they were initially contributed to the plan, citing 1.401(k)-1(g)(13)(iii), which states as follows: Thus, the matching and nonelective contributions must satisfy the vesting requirements of paragraph © of this section and be subject to the distribution requirements of paragraph (d) of this section when they are contributed to the plan. I believe that the vesting requirement only need be satisfied at the first time the funds are treated as QNECs; not when they were originally contributed as matching contributions.

RLL: What is your opinion about situations where the ESOP does not gain control, but the selling shareholder wants to get a control premium because it is anticipated that the ESOP will gain control in some future transactions? Typically, the parties would commit to entering into those transactions in the future, as justification for the "surcharge." My view is that this is a pretty aggressive technique, because there is no ironclad guarantee that the future transactions will actually be consummated. Furthermore, I feel uncomfortable with the ESOP paying a premium for the right to effect a transaction in the future.

I'm personally glad that people are now finally putting time and money into addressing some of the important problems facing our society, such as the huge impact caused by mice incurrring cancer.

Katherine: What is your authority for the proposition that "Plan A is generally considered to have a short plan year ending on the LEGAL date of merger, not the date of transfer of the assets."

Mary Kay: That is a very common misunderstanding, attributable to the use of very unfortunate wording in Section 401(k). Because the employee is not taxed on his or her Section 401(k) contributions; those amounts are treated as (and labeled) employer contributions. Thus, the provision that you cited merely states that the employee deferrals cannot be distributed prior to age 59-1/2; it does not operate to be a limitation upon when matching and profit sharing contributions can be distributed.