Kirk Maldonado

I seem to recall that if you are a self-employed person, your retirement plan only has a limited exemption under California's bankruptcy provisions. I think that the exemption is limited to the amount necessary to support the person.

Fredman: You may be wacko (I don't know one way or the other), but your position on this issue isn't. I concur in your view.

IRC401: Why do you say that the options have little or no value under the BS (pun intended) valuation methodology?

You don't get a loss at the time of the distribution (unless the securities are worthless); you only get a loss deduction at the time you sell the securities.

Just to add a bit of clarifcation to Jon's comment. Trading on material non-public information is illegal, regardless of whether the malefactor is the CEO or a janitor. However, many companies impose "blackout periods" during which employees are forbidden from trading in company stock, even if they do not know of any material non-public information. Those companies typically restrict the application of these "blackout periods" to senior executives.

Mbozek: 1. If the participant won't cash the check, how have you "paid" it to the participant? All you've done is mail a check. Remember that the participant here does not need to request a distribution; the amount of the account balance is under the threshold for involuntary distributions. 2. The plan could be amended to state that paying it all to the IRS is the equivalent of paying to the participant, because it all inures to the participant's benefit. 3. Where does it say that you can't withhold more than 20%? I've had several situations where participants have voluntarily elected to withhold 100%. Stated in a different fashion, I think that the 20% is a minimum, not a maximum.

I know that the IRS does not like this approach, but what about paying it all into the IRS as withholding? That approach is often used when you can't locate a participant in a terminating plan, particularly an orphan plan.

Your posting has inspired the creative side of me. Maybe we should work on coming up with other acronyms to encourage employees contributing to Section 401(k) plans. My contribution (pun intended) to his cause is DOPE, which stands for: DOn't Procrastinate Enrolling. Anybody else have any other suggestions?

Air Transport Assoc. of America v. City and County of San Francisco, ND Cal 1998, 992 F. Supp. 1149 dealth with mandated coverage for domestic partners. The court held that the law was preempted by ERISA.

I disagree with Archimage somewhat. If the person has already completed 500 hours of service before the amendment is adopted, you can't condition that person's right to get an allocation upon his or her completing 1,000 hours. This point is made clear in the Section 411(d)(6) regulations.

Mike Preston: Thanks for the clarification.

Kathleen: I was referring to the fact that, if the employer does make contributions on behalf of an employee, it must make it on behalf of all employees. Here is a quote to that effect from the opinion: Notably, if in a tax year the employer makes a contribution to any participating employee's pension account, the employer must do so for all participating employees in amounts of the same percentage relative to each employee's compensation.

For those of us who don't have the CCH Pension Plan Guide, this thread is inscrutable. I take offense at that because I eschew obfuscation.

I disagree with Kathleen Meagher. Garratt did not involve a discretionary contribution. Because of its nature, the SEP was required to cover everybody, including the plaintiff in that case. In fact, the court expressly held that the amount of the contribution was no discretionary.

I concur in mbozek's clarification of my prior posting.

The case that I mentioned in my earlier post held that there was no Section 510 violation. The case is Garatt v. Walker, 10th Cir. 1997 LEXIS 19291.

I think that people are getting confused because they think that if you are a fiduciary, then your fiduciary responsibilities extends to everything that could go wrong. A person is a fiduciary with respect to certain functions, not every conceivable function that could arise under the plan. Also, I concur in Jon's remarks.

KJohnson: I agree with that case, as you summarized it, provided that the plan always contained the suspension of benefits language. However, I don't think that you could adopt those rules and first impose them on somebody when they are rehired. Stated in a differernt fashion, I agree with Carol Gold.

Getting a determination letter with respect to the termination of the plan is always a good idea.

I don't think that they are qualifying employer securities for purposes of the prohibited transaction rules, but would be treated as employer securities for purposes of the NUA rules.

The exemption from the registration requirements in the 1933 Act generally does not apply to multiple employer plans. This problem arises whether or not the accounts in the plan are self-directed.

I seem to recall that there was a court case involving an employer that reduced an employee's salary by the amount of the contribution on the employee's behalf to a Simplified Employee Pension. The court upheld the action of the employer.

You might want to look at DOL Advisory Opinion 76-32 (January 13, 1976).

There are also some court decisions to that effect. See Commonwealth Edison Company v. Vega, 7th Cir. 1999.

It seems to me that there is an issue as to whether ERISA preempts state escheat laws.