Kirk Maldonado

Damien: Does the engagement letter between the client and the TPA provide any useful information on this point?

What do the regulations say?

The plan trustee should get its own counsel, who should be a competent ERISA attorney.

You might want to look at the Section 457 regulations.

I don't think that employees have a right to keep money that they weren't entitled to receive in the first place; so that reallocation should be permissible.

Alan: What did you think of DOC MAN?

What does the plan say?

In a self-funded plan, there are no insurance premiums (charged to participants). As a practical matter, the COBRA costs must be actuarially determined.

Larry M: You posit a very good argument as to why self-funding is currently more attractive. While I agree with you, it does not respond to my question My question is why do federal mandates make self-funding less attractive.

Why do they believe that the federal mandates make self-funding less attractive?

Why do people believe that the federal mandates would make fully-insured plans more attractive than self-funded plans?

I have reviewed the product and I think that it is very aggressive. I certainly would not recommend to any client that the arrangement will qualify for favorable income tax treatment. My view is that anybody who is endorsing that product to their clients is taking on a lot of risk.

Eread: Good point. I think that too many persons (myself included) on this bulletin board tend to use acrnonyms that are not meaningful to all readers.

Christine: If I remember right (which is always a risky proposition), you are recalling a statement in a newsletter that was mentioned in Benefits Buzz about a week or two ago.

RLL: You raised some very valid points.

What does the plan say?

Would your approach be consistent with the FMLA?

RLL: Would clarify why you think that the use of cash and non-cash proceeds as security for the loan may be a problem"? Treasury Regulation Section 54.4975-7(B)(5) permits the "earnings attributable to such collateral" to be used as recourse for the loan. Couldn't you argue that the "cash and non-cash proceeds" from the sale of the stock acquired by the ESOP would be "earnings atrtributable to such collateral?" My question presumes, of course, that the stock held by the ESOP is sold to a third party, so that (logically) the lender's security interest carries over (from the stock) to the proceeds from the sale of the stock.

A good discussion of the applicable rules is found in BNA Tax Management Portfolio # 372.

I don't think it is a 411(d)(6) issue. I think it is a 414(l) issue.

How do you have forfeitures in a terminating plan? Isn't everybody supposed to become fully vested upon the termination of the plan?

What does the plan say?

Trying to incorporate all of the features of a defined benefit plan and a defined contribution plan into a single document would be challenging, to say the least. However, combining a money purchase pension plan and a profit sharing plan does not share the same level of complexity.

You'll really need luck if the plan is self-funded (rather than being funded through an insurance policy)!

Wow! I can't believe Kip agrees with me either! I think his analogy to adding a new benefit part way through the year brings the issue clearly into focus.