Automatic IRA Rollovers of Cash-Out Distributions.  By George M. Morrison.  Pursuant to legislation enacted in 2001, the DOL issued regulations requiring cash-out distributions of more than $1,000 to be automatically rolled-over to an IRA unless the participant elects otherwise.  Prior to this change, such amounts were routinely distributed in a taxable cash distribution.  This presents several challenges to plan sponsors and investment companies that must be dealt with prior to the March 28, 2005 effective date.

Supreme Court: ERISA Creditor Protection for Owner/Employees.  The U.S. Supreme Court has clearly stated that an owner participating in a plan in which his/her employees also participate is subject to ERISA's creditor-protection provisions.

Obligation to File Form 5500.  By: Colleen Wilson, Paralegal.  Many employers are unaware of their obligation to file a Form 5500 for health and welfare plans. Failure to timely file a return can result in significant penalties.

Penalties and Attorneys’ Fees for Not Timely Providing Requested Documents  In this case, an employer was penalized $35,000 and forced to pay $19,000 of attorneys' fees for failing to timely provide a participant requested plan documents.

Charging Expenses to Participants, Updated February, 2004.   The IRS and DOL have issued guidance permitting a plan sponsor to continue paying expenses on behalf of employed participants while charging terminated participants their fair share of plan expenses. 

Using Email for Participant Disclosures.  Employers can often use email to distribute SPDs, SMMs, participant statements, safe harbor notices and other required disclosures.

Keeping Matching Contributions 'True' - Many employers are unaware that making a matching allocation on a monthly basis can actually short some participants' allocation.

ERISA Creditor Protection for Owner/Employees:
Supreme Court to Decide.  Is an owner's account in a qualified plan exempt from creditors.  The Supreme Court will decide

GUST Document Updates.  Plans which were not updated to comply with GUST risk losing their tax-qualified status.  Sponsors should take steps to restore such tax-qualified status under the IRS' self-correction program..

404(c) Protection of Fiduciaries: DOL Viewpoint.  The DOL's brief filed in the Enron case sheds light on the requirements to qualify for protection under section 404(c).  You can also review the DOL's brief.

Joint New Comparability/Cash Balance Plans: Perfect Together.  Clients desiring new comparability type allocations in excess of the $40,000 defined contribution plan maximum should consider a cash balance pension plan.

SMALL BUSINESS RETIREMENT PLAN DESIGN: CONSIDER A CASH BALANCE PLAN.  Cash balance plans have increased in popularity.  In this article, George addresses some compliance and design issues sponsors should consider.

A One-Participant, 401(k) Plan? Advantages for One-Employee Business, Independent Contractors and other Self-Employed Individuals.

Compensation of Self-Employed Participants: Earned Income. Defining compensation for self-employed participants can be difficult.

Prison Time for 401(k) Misdeeds

Administrator’s Notes:  Develop Procedure for Distributing Balances at Termination

Changes to Non-Qualified Plans Under AJCA '04.  The American Jobs Creation Act of 2004 made significant changes to non-qualified plans.  The IRS has issued guidance and immediate attention by all companies sponsoring non-qualified plans is needed.  However, the IRS extended the date by which corrective amendments will be required.