Jeff Kirtner

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About Jeff Kirtner

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  1. A tax exempt's employment agreement entered into years ago provides for a payment to an employee on August 31, 2017 if the employee is employed on that date. Thus the agreement is within the short term deferral rules under 457f proposed regs and 409A. The employee would like to be paid and taxed in 2018 rather than 2017. Under the STD rule, agreements can now be drafted to provide for vesting in one year and payment and tax by March 15th of the next year. But can an agreement providing for payment in 2017 be amended to move the payment date to early in 2018? Issues include: 1. If an agreement extending the payment date is entered into, does that agreement violate 457f or 409A (e.g., the subsequent deferral rules), assuming the extension still requires payment by March 15, 2018? 2. If no agreement extending the payment date is entered into, can payment be made in 2018 without violating 457f or 409A, on the theory that there is no deferral of compensation, even though payment in 2018 violates the terms of the agreement?
  2. A top hat plan credits participants with deferred comp each year until age 60. At age 60, participants vest, but further credits stop. Payout is on separation from service at any time after attaining age 60. Questions: Does the ADEA apply to top hat plans? If so, does this plan violate the ADEA? If so, does that have any consequence under 409A (e.g., does an ADEA violation cause a violation of 409A, if the plan otherwise complies with 409A)? Thanks for any help.
  3. Question: Can an employer reimburse an employee's Part C (Medicare Advantage) premiums under the rule in IRS Notice 2015-17 or otherwise? In IRS Notice 2015-17, the IRS allows an employer to reimburse an employee's Medicare Part B and D premiums under certain circumstances (i.e., the employer offers another group health plan, the actually enrolls in Medicare Part A and B/D instead, and the reimbursement is limited to reimbursement of Part B/D and Medigap premiums). By its terms, 2015-17 is limited to Part B/D, not Part C. Is there any guidance about reimbursing Part C premiums pre-tax? Is it clear that 2015-17 does, or does NOT, apply to Part C premiums? Any help would be much appreciated.
  4. Background: A davis bacon/prevailing wage employer has for some years mades contributions to an HRA/VEBA and has taken prevailing wage credit for those contributions. Along comes Notice 2013-54. With exeptions not relevant in my situation, 2013-54 requires HRAs to be integrated with an insurance plan to avoid ACA annual limit prohibitions. To be integrated, 2013-54 requires the HRA to give participants the option to permanently waive future reimbursements (essentially forfeiting their account) each year and on termination of employment. I have questions about how the waiver/forfeiture interacts with davis bacon and similar prevailing wage laws. Issue: Whether an employer can take prevailing wage credit for contributions it made to an HRA on behalf of an employee, if the employee voluntarily waives all future reimbursements (essentially voluntarily forfeiting those contributions)? Does anyone have thoughts or guidance on this? Are there other examples where an employer can take prevailing wage credit for waived/forfeited amounts?
  5. Section 1.409A-1(h)(4) contains a 409A "same desk rule" under which, in an asset sale, buyer and seller can agree that the asset sale does not result in a separation from service for participants in the NQDCP of seller. However, the regs say nothing about how to implement the same desk rule. Would the buyer adopt a plan that essentially mirrors the seller's plan (except for the definition of "employer," which would now refer to buyer rather than seller), with a transfer of assets, liabilities and participation to the buyer's mirror plan? Or would the employees remain participants in the seller's plan, with separation from service from buyer serving as the payment event from seller's plan. In that case, it's not clear how the seller's plan can authorize payment upon separation from service from an unrelated employer. In short, I'm not sure how to implement the 409A same desk rule, and any ideas would be appreciated.
  6. Employer contributes the same amount to the HSA account of all eligible employees. In addition, Employer pays the premium for the underlying HDHP for officers of the corporation only. Any discrimination problem under 105 or 223/4980E?
  7. How can the employer require payment of the full $2,000 on January 1, given that the statute and regs state that qualified beneficiaries must be given the option of paying COBRA premiums on a monthly basis? See ERISA 602(3)(B); Treas Reg 54.4980B-8, Q&A-3. There seems to be a disconnect between the annual amount being contributed on the first day of the plan year, and the requirement to allow monthly premiums. I like your answer, vebaguru, but am concerned without supporting authority.
  8. Employer has an HRA in which participants' HRA Accounts are credited with $2000 on the first day of each plan year. Suppose a participant terminates employment and elects COBRA. On the first day of the next plan year, is the Employer obligated to credit the account with $2,000, as it does all other participants? Is there a legal basis to argue that the employer instead is only obligated to credit the account each month with the monthly COBRA premium paid by the employee for coverage under the HRA (i.e., $166, which equals 1/12th of $2,000)?
  9. A physician group (a C corporation) wants to establish a health reimbursement arrangement (HRA). Like many other physician groups, the group initially pays expenses incurred by physicians, but then allocates the expenses directly to the physician who incurred the expense, and reduces that physician's compensation by the amount of expenses incurred by the physician. Thus, for example, if a physician incurs CME expenses of $3,000, the group pays the $3,000, but the physician's compensation is later reduced by $3,000. The group would like to apply the same method to an HRA they want to establish. Under the HRA, each employee would receive monthly credits of, say, $500, to an HRA Account, subject to a maximum balance of $4,000. The HRA would reimburse the physician from the physician's HRA Account for receipts turned in by the physician, but the group would then reduce the physician's compensation by the amount of reimbursements received by the physician under the HRA. Would such a plan violate the rules applicable to HRAs? Is the arrangement a cafeteria plan, even though there are no elections?
  10. A participant severed employment some years before attaining the NRA of 65. The 401k plan requires lump sum distribution of all accounts at NRA if the accounts haven't been distributed earlier. Participant is now 71 but no distribution has been made. There has now been an additional failure to make an RMD. The issue is how to correct the failures. It is clear the participant needs to receive a distribution of the entire account, some of which will be an RMD. But I have the following questions: (a) is participant entitled to any deemed earnings on the account balance as it was at 65 (when it should have been distributed to him); (b) assuming the value of the account is less now than it was at 65, is the employer required to make up the difference (if relevant, at all times the participant self-directed investment of the participant's accounts); and © given that this was one participant out of many, any reason not to consider the operational failure "insignficant" and thus correctable years later through SCP?
  11. Plan has already been amended for GUST and has received a determination letter. The Plan needs to change the ADP/ACP testing for 2002 (from prior to current). If the plan had not already been amended, the GUST RAP would have extended through 9/30/03. Issue: If the amendment is done today, is the amendment timely? i.e., does the GUST RAP end on 9/30/03 even though the plan has already been amended for GUST and a determination on the GUST-amended plan has already been issued? Or does amending the plan for GUST and/or submitting or receiving a determination letter end the GUST RAP as of such date? Any guidance (and cites to IRS rules) is greatly appreciated.
  12. A particular participant (an NHCE) is experiencing a financial hardship. The 401(k) plan does not allow hardship distributions. Can the employer amend the plan to allow only this single participant to receive a hardship distribution?
  13. When you make QNECs, all non-elective contributions (including the QNECs), and the non-elective contributions excluding the QNECs, must each pass 401(a)(4) separately. I see no similar rule applying to QMACs, and do not find any rule requiring the ACP to be passed before shifting is allowed. Do you have a cite? Anyone else?
  14. Plan uses prior year testing. Plan is passing ADP but failing ACP. Plan can pass ACP if it shifts some HCE matching contributions satisfying the definition of QMACs (i.e., 100% vested, subject to distribution restrictions), to the ADP test. Normally, the shift of QMACs is made to correct ADP problems, but here the shift would be used to fix ACP problems. Is that a problem? Is it a problem shifting only HCE QMACs? The regs (specifically 1.401(k)-1(b)(5)), appear to allow shifting HCE QMACs into the ADP test for any reason, without needing to pass any nondiscrimination requirements. I would appreciate any insights you can give me on shifting HCE QMACs to the ADP to correct ACP problems.
  15. In light of Field Assistance Bulletin 2003-3, Plan Sponsor would like to charge applicable plan expenses to severed, vested participants who leave their money in the plan, but pay all other plan expenses itself. For administrative convenience, Plan Sponsor would like to pay plan expenses as follows: (a) Plan Sponsor would pay all plan expenses throughout the year; (b) at year end, accounts of severed, vested participants would be charged a pro-rata share of expenses; © the plan would reimburse the Plan Sponsor for the amount in (b) by writing a check to the Plan Sponsor. I am concerned about step ©, and specifically concerned that it is a prohibited transaction for which no exemption exists. For example, one could characterize the Plan Sponsor's advance payment of expenses as a loan to the Plan. Furthermore, while there is a prohibited transaction exemption for reimbursement of direct expenses incurred by a fiduciary in providing services to the plan, in the situation outlined above the Plan Sponsor is not providing services, it's just paying plan expenses, so I'm not sure the exemption applies. Does anyone have authority indicating whether the above method of paying plan expenses is or is not acceptable?