Kirk Maldonado

In this job market, complaining about things without justification is not a good idea. That's a great way to be one of the first persons that is laid off.

If they don't want to contribute that much, they opt out. If they are too lazy to opt out, they don't have a good reason to complain. Where's the problem?

I concur completely with QDROPhile.

It's been a long time since I looked at the rules, but my recollection is that the COBRA bankruptcy rules only apply to retiree health coverage. If somebody knows differently, please correct me.

Have you checked IRS Publication 502?

Appleby: IMHO, if MPPPs are not dead, they are at least comatose. Kirk

TAG: Full vesting is not required upon the merger of two defined contribution plans, provided the requirements of Section 414(l) are satisfied. Q&A-16 & 18, TIR 1408, October 30, 1975.

My recollection is that this issue usually comes up when the employer wants to self-fund the benefits. I seem to recall that the standards for self-funding are quite rigorous. However, it was many, many years since this came up, so the rules may have changed or my memory may have faded (or both).

The DOL standards for purposes of determining if the CPA is independent for Form 5500 purposes is found here: http://www.dol.gov/dol/allcfr/PWBA/Title_2...FR2509.75-9.htm

I think that there could be serious consequences to the plan if it allows participants to stop making loan repayments simply because of financial hardship. This could result in loans being treated as taxable distributions and/or the loans being prohibited transactions. Think of it this way, if the employee had borrowed the money from a bank, could the employee go to the bank and say "I'm having financial trouble, so I've decided that I'm just not going to repay your loan." Could the employee apply for a hardship distribution to get the funds to pay off the loan?

Because others are digressing, I feel OK about divulging the fact that I had a client one time with about 500 participants with over 150 loans in default. (That's got to be some kind of record!) (That happened before I began representing them. Needless to say, I told them that they needed to clean up their act before they get audited.)

IMHO, if you file a single Form 5500, you have to aggregate all participants. If you don't want to go over 100 participants, file separate Form 5500s.

Something tells me he isn't referring to a qualified transportation fringe benefit.

Katherine: Has the IRS bought off on your approach?

What if all of the retirees had been highly compensated employees while they were working? I'm not saying you definitely have a problem; I'm just saying that it is foolish to put your head in the sand and say that there is no possible problem. You need to examine the facts before you conclude that there is no problem. Making a pronouncement that there is no problem without investigating the facts is a great way of getting into trouble.

papogi: So you think it would be permissible to charge a monthly premium of $100 for non-highly compensated employees, but a premium of $1 per month for highly compensated employees?

I think that you need to make this point very clear to the participants. If you do, I don't know why anybody would elect to contribute. If you don't, I think that you would have potential liability.

Have you verified that there wouldn't be a problem under IRC Section 105?

I've seen studies that show that employee education (on the tax benefits of savings) is far more effective in increasing participation than a match.

Before the company makes that participant a loan, it better look at the new legislation that Bush just signed (precluding loans to executives under certain legislation).

Cafeteria plan adopted on retroactive basis was invalid. American Family Mutual Ins. Co. v. U.S., DC W Wis. 12/3/92, 16 EBC 1332, 815 F.Supp. 1206.

If that's what Harry said, I think he's wrong. You can't have both reportable income and an obligation to repay. You have to have one or the other.

Technically, you have a violation if the plan's limit is exceeded.

You have a very good memory. I wrote the proposed regulations under Section 414(m). However, those regulations were not the ones that were withdrawn. On the other hand, they haven't been finalized yet, either.

I think this is right, but you better check: 57 Fed. Reg. 25587 (April 27, 1993).