Kirk Maldonado

I had a different experience. I got a favorable determination letter (with no objection from the IRS) many years ago on a plan that required 2,000 hours of service. Of course, you always run the risk that the plan could be discriminatory in operation, but that shouldn't stop you from getting a determination letter.

A bit of clarification. PJK's discussion only relates to federal securities laws. You also need to check the securities laws of each state in which the securities are to be sold. For example, some states regulate the issuance of options, while others regulate only the issuance of stock upon the exercise of the option.

Carol: I'm pretty certain that both California and New York have laws precluding wage assignments without the written consent of the employee. Now whether those laws apply to governmental entities within those jurisdictions is a question I can't answer.

There are probably 100 court decisions on point.

I think that the rumor that insurance companies charging an additional 2% is just another "urban myth."

That does not say that you can't do it; it just says that you get taxed if you do it. This is very different than, for example, lthe prohibited transaction rules.

Have you tried the FASB website?

Dawn: Aren't union plans mandatorily disaggregated? If that is right (which I'm not sure of), wouldn't that preclude them from being voluntarily aggregated?

Probably your biggest hurdles will be federal and state securities laws issues. You better hire competent securities counsel.

Read Tax Management Portfolio #362, Securities Laws Aspects of Employee Benefit Plans.

I thought that was the job of the Department of Labor. I think that act on (what they believe to be) the best interests of participants.

I seem to recall that there were some threads on Davis-Bacon plans in the past. You might want to search them. (Unfortunately, there isn't a lot written on these types of plans.)

I believe that they are called Davis-Bacon plans.

I think that the re-insurer can rely on what is in the plan document. They aren't lawyers, so that they can't be held to the standard of care that they should have known that the language was deficient. Generally, insurance companies aren't sympathetic defendants. But I think that they would win here.

It seems to me that a lot of the people so opposed to investments in employer stock have a serious conflict of interest. That is, they either sell investments or investment advice. Both of which are inconsistent with investments in employer stock. I'm not arguing that participants should invest in employer stock; I'm just opposed to the condescending idea that we know what is best for you, and we are going to force those ideas upon you. I'm sure that there are a number of Microsoft employees that are glad that they invested in employer stock. Of course, other employers' stock prices have not done as well. But the bottom line is that the participant should be entitled to make the decision.

IRC 401 is correct about the ancient Revenue Ruling. However, I seem to recall that if the participant has been in the plan for at least for five years, then all amounts can be distributed, even amounts that have been in the plan for less than two years.

PJK: Are you advocating the position that because some people might overinvest in employer stock, it shouldn't be allowed as an option, or are you merely objectively mentioning those articles (without taking a position)?

ERISA Section 209.

I see no policy justification for excluding employer stock as an optional investment. If employees are concerned that they may feel pressured to invest in employer stock, the fiduciaries of the plan should undertake adequate procedures to protect the confidentiality of the manner in which participant account balances are invested. I would be remiss, though, if I did not point that that there are securities laws (both federal and state) of allowing participants to elect to invest in employer stock. Too often, these securites laws issues are completely missed.

What is your specific concern?

My recollection is that the Section 411(d)(6)regulations would require that persons who have already completed 501 hours get an allocation.

Do the HIPAA regulations provide any guidance? Is there any guidance under he general ERISA record retention rules?

You should read the HIPAA regulations. They provide guidance on how to deal with situations like this.

Tom Poje: 1. Is that because ESOPs cannot use permitted disparity? 2. Could you provide us with a citation on that point?

I agree with Tom Jenkins. As a self-funded plan, state laws such as COB are preempted. Thus, the only thing you (should) have to look at should be the plan's provisions. Unfortunately, there have been some court cases involving COB disputes among two self-funded plans where the courts have tried to develop a federal common law of COB. You should also check out those cases. (I don't have the cites handy.)