Is the release from prison of an employee's child a change in status event permitting the employee to add the child to medical plan coverage mid-year?

I believe it is since, upon release, the child is losing coverage sponsored by a governmental entity (i.e., the medical care was provided by the prison authorities and presumably, but not definitively, the prison was government-run) but I wanted to see if anyone has had experience with this situation.

UPDATE: See this thread, which my memory failed to tell me that I participated in:

http://benefitslink.com/boards/index.php?showtopic=14493

Can I list my children as beneficiaries for my 457(B) plan and also include the term 'PER STIRPES" after each of their names so that if only one of them survives me, my other child's children will also be entitled their parent's portion of the benefit? I've asked our Plan Administrators and they don't know. Any guidance would be helpful. Mahalo.

Hello everyone

A quick question. A company is currently negotiating a collectively bargained agreement with a union. At the same time, they are instituting a new 401(k) plan, and wish to know if the exclusion under Code section 410(b)(3)(A) (allowing for collectively bargained employees to be excluded) will apply when the CBA is not finalized.

Has anyone come across this issue before? Any advice or guidance will be much appreciated. Thank you!

Hello everyone

A quick question. A company is currently negotiating a collectively bargained agreement with a union. At the same time, they are instituting a new 401(k) plan, and wish to know if the exclusion under Code section 410(b)(3)(A) (allowing for collectively bargained employees to be excluded) will apply when the CBA is not finalized.

Has anyone come across this issue before? Any advice or guidance will be much appreciated. Thank you!

I've got a one-person plan that holds real estate (and has for a while - let's assume that it got into the plan OK). The owner/participant needs to take an RMD, and his attorney wants to know if he can take a portion of the ownership as the RMD. I'd still issue a 1099-R, but there would be no cash moved (so the owner would have to come up with the taxes from his own pocket).

On the face of it, I said "PT". But then I thought it further out - what if the plan terminated? Would the entire distribution be a PT? If not, then there must be some kind of mechanism to get this out of the plan. Is this actually permissible? If not, what recourse does this sponsor have?

Thanks.

409A seems clear that a plan may specify only one time and form of payment for each payment event. Is there any exception to allow a service recipient to retain discretion as to the time and form of payment upon a service provider's death? For example, if a plan provides for installment payments to the service provider that commence upon retirement, but further states that upon the provider's death the remaining balance will be paid to the beneficiary either in continued installments or in a lump sum, at the sole discretion of the service provider.

If there is no exception permitting discretion in the event of death, it seems that Section VII.D of Notice 2010-6 would require the service recipient to 1) correct the plan provision to designate a single time and form of payment (in this case, installments?), and 2) furnish a statement to the IRS as well as any affected participant (and report any payments triggered by the pre-correction provision within a year of the correction). Does that sound accurate? Additionally, if a service provider under this plan has already died triggering the discretionary provision, does this complicate the service recipient's ability to correct the provision under Notice 2010-6? Must the beneficiary of the pre-correction payment report the entire amount as income under 409A(a)?

Thanks!

If an ESOP has been terminated, but distributions are not being made until receipt of a favorable determination letter from the IRS, must the plan continue to comply with the IRC 401(a)(9) rules for making Required Minimum Distributions in the meantime?

A trustee of a small 401(k) plan with pooled investments moved $100,000 from bank A to bank B. He himself had a personal account at bank B and $100,000 of plan money mistakenly went into his personal account. This was not caught until a year later.

They will transfer the funds back to the plan account with proper interest, file 5330 and pay the excise tax on the prohibited transaction.

Section 4975 indicates that the disqualified person who engaged in the prohibited transaction is responsible for the excise tax. However, the definition of disqualified person could also include the plan sponsor, fiduciary etc.

Should he personally pay the excise tax or should the plan sponsor?

Thanks.

Can a top hat plan participant change the dollar amount of his installment payments? I am not sure if they are being made monthly, quarterly or annual. Does it matter if the formula is life expectancy or a dollar amount or account balance based? The document does not have any language concerning this.

Thanks!

April 1996 my husband's ex-wife filed for a DRO before he even knew he was getting a divorce. The Plan had approved it 8/1996. His final divorce judgement was 1/1997 which then it was made a QDRO. The problem is that his lawyer did not discuss with him the DRO or what was included in it. What he thought the QDRO was a written section in the final judgement which was a calculation(denominator, numerator, years married) with regards to his pension. Not a thing was mentioned regarding survivor benefits or any other benefits in the final judgement. In the judgement it referred to QDRO with only the calculation of his pension. He was only married 9 years. He had specifically told the lawyer he did not want his ex-wife to have survivor benefits. The only signatures on the QDRO was his ex-wife's, her lawyer and his lawyer. We had the legal services of the company he worked(retired after 31 years) for look at both documents this month. We were told the QDRO does not "fit" with the final judgement for divorce and we could motion the court to amend the DRO. Unfortunately we can not use the free legal services provided by the company because it was a conflict of interest for them. My husband had not known about the any of the specifics of the QDRO and like I said he thought the calculation for his pension benefits in the final judgement was the QDRO. In the divorce judgement it was written that except for the QDRO mentioned above(which was the calculation of pension) that my husband had rights to any life insurance, supplements etc. Basically all other rights were his with regards to his retiree benefits. The only way he found out about the QDRO with regards to survivor benefits, alternate payee, etc. was because he called the retiree benefits to see what I would be receiving. We were in the process of gathering information for our Wills. Before he retired in 2006, he made me the surviving spouse/ beneficiary for all of his benefits. No one informed him at this time either that his ex-wife was the survivor for his pension. After he was told the QDRO was part of the final judgement and it was a separate written document, we obtained a certified copy of the QDRO and the Final Judgement. Is there anything we can do to get the QDRO amended and what are the chances the court would amend the QDRO? We know the time frame is a factor, yet he truly did not know there the QDRO specifics were a separate document. We also know that there is a 2 year time frame after the divorce for misrepresentation of his lawyer. Any advice, would be welcomed. I do not know if I explained it well enough so if you need more information please let me know. Thanks.

Sec. 7702B©(2)(A) (Treatment of qualified long-term care insurance), defines the term "chronically ill individual" to mean any individual who has been certified by a licensed health care practitioner as—

(i) being unable to perform (without substantial assistance from another individual) at least 2 activities of daily living for a period of at least 90 days due to a loss of functional capacity. The activities of daily living (ADL) include: Eating, Toileting, Transferring, Bathing, Dressing, and Continence.

First issue: I believe this clause has been interpreted to mean that the incapacitating conditions "are expected to" last at least 90 days, although I have not found anything authoritative on the interpretation. The condition must be certified by a physician. The interpretation makes sense because it weeds out those conditions which are merely temporary and not the purpose of a long-term care policy. Also, since the deductible (called the "elimination period") is stated in terms of 30 days, so it does not make sense to define the disabling condition as retroactive 90 days.

Second issue: what if the disabling condition is permanent but the patient is not expected to live more than 90 days? Can the doctor certify the patient is expected to be disabled under the ADL conditions for 90 days if the doctor knows the condition is totally disabling but the patient is unlikely to live more than 60 days, and the treatment plan is hospice. The Policy benefits include a hospice facilty benefit.

I saw that the final regs on the Summary of Benefits and Coverages rejected the proposal that the document be printed in color. The agencies were concerned that color printing would impose unnecessary costs on plans and, therefore, allowed them to be printed in black & white.

So what about the cost of making double sized prints? The regs and the sub-regulatory guidance are silent. Allowing the SBC to be printed single sided would avoid the same avoidance of unnecessary costs as was noted for color printing.

The only rationale I've seen for any mention of double sided pages involves the content size. The statute mentions a 4 page SBC, which the agencies interpret to be a limitation on content. This is how we get an 8 page SBC form.

What's a small plan with limited resources to do? My feeling is to run the SBC in-house in black and white on 8 single sided pages.

Any other views on this?

Happy Thanksgiving, everyone.

One of the many things for which I am thankful is the great group of people who post on BenefitsLink message boards. You rock!

I had a prospective client ask if excluding everyone but HCE's from a 403b plan would automatically subject the plan to Title I of ERISA (the NHCE's are covered by the 401(k) Plan).

I'm assuming the answer is no, it does not subject them to Title I, because a 403b plan can have lots of exclusions (students, people w/ < 20 hours, etc). Simply allowing only eligible people to participate should not effect coverage.

Has this been addressed anywhere? To be honest, limiting eligiblity to people who work "less than 20 hours a week" would clearly involve more discretion than the completely objective HCE test.

Will Crystal Reports XI open a report created with the Relius Crystal 17?

Was wondering if anyone else is having trouble renewing their PTIN online.

Apparently I do not have my correct password, however I am certain I am using the correct email address and "Secret Phrase".

I've tried a number of times to have the password sent to my email address, however I do not receive the reset password.

I've tried to request my user ID to be sent, and even tried to change my email address, and I still do not receive any emails from the IRS.

I've checked spam folders and junk folders and even lowered the spam filters...still nothing.

The assistance number seems to only refer you back to the online solutions.

Has anyone else had a similar issue, or does anyone know of a number to call where you can speak with an actual person?

Appreciate your help.

Does the IRS require 401(k) participants to take a loan before they can take a hardship withdrawal or is this a plan-specific rule?

My client contact informed me that there SPD states that "The Plan Administrator may require that you take a Plan Loan instead where this is financially feasible." My client contact thinks that language is rather vague and not sure how financially feasible is determined. Please advise.

Also, if the participant does not have any money available for a loan or does not have enough to meet the minimum requirement for a loan issuance, can the client allow the participant to take a hardship withdrawal?

A plan sponsor has adopted a pre-approved Prototype DB Document. Are they on a 5 year cycle or 6 year cycle?

Assuming that a 401(k) plan uses the "safe harbor" method of determining immediate and heavy financial need (and thus requires the participant to obtain a participant loan prior to applying for a hardship withdrawal), does IRS Announcement 2012-44 permits plan sponsors to make Hurricane Sandy Hardship Withdrawals without the participant first applying for a participant loan?

In other words, does the relief in Announcement 2012-44 that a plan sponsor may cease to follow "procedural requirements for plan loans and distributions" mean that Hurricane Sandy Hardship Withdrawals can be processed even though the participant has not obtained a participant loan first?

I administer an ESOP that states that distributions will be made in the form of company stock in the case of Participants who die, retire or become disabled, subject to the requirement that the stock be sold to the company or back to the Plan at FMV. The Sponsor's articles of incorporation restrict the ownership of shares to current employees and the Trust, and the Sponsor also converted from C-Corp to S-Corp about two years ago. To date, participants who have terminated due to retirement or disabilty, as well as spouse beneficiaries have been paid by check directly from the Sponsor - such check representing the distribution of shares and the immediate repurchase of those shares by the company. These participants/beneficiaries may then roll to IRAs.

However, I now have a non-spouse beneficiary who would like to roll to an inherited IRA. This must be done through a direct rollover/Trustee to Trustee transfer. If the same procedure is used, and a proceeds check is issued from the Sponsor to the beneficiary IRA, does this satisfy the Trustee to Trustee transfer rule? Should the Plan receive a put agreement from the IRA Custodian to substantiate the transaction?

Thoughts, anyone?