I have a client who makes health care contributions on behalf of its employees to the City of San Francisco under the City's health care ordinance. The contributions are allocated by the City for each employee to either Healthy San Francisco or a medical reimbursement account, depending on the employee's eligibility for Healthy San Francisco. The contributions for the fourth quarter 2012 are not due until January of 2013 (and the employer won't have sufficient data to determine the contribution until early January).

I am trying to determine whether the employer must include these contributions as part of the new W-2 PPACA reporting requirement. Also, if these contributions are reportable, are the 4th quarter contributions reported on the 2012 W-2 since the employer will not actually pay the contributions until January 2013 (and will not have calculated the contribution amount until January 2013)?

My initial thought is that these contributions would have to be included under Q&A 13 of Notice 2012-9 since the definition of GHP includes a plan of (or contributions made by) an employer for the purpose of providing health care. However, there is an exemption under Notice 2012-9 for coverage under a health reimbursement account (which may eliminate any need to require reporting for employees in the medical reimbursement account option). Also, all the IRS examples address the cost of coverage for each period during the calendar year (and there are no references to when the premium or amount was actually paid).

Has anyone dealt with these issues? Thanks

An employer wants to pay ee portion of employer sponsored insurance premiums for one month. Can this be considered to be a non elective employer contribution and therefore not taxable income?

I've got a client with a C Corp ESOP that is struggling. The Plan holds Preferred Stock and very little cash. Any sizeable distributions over the last couple of years have involved the participants Putting the stock back to the Company for a 5-year note.

Printed on the back of the stock certificate is that the price per share will be the most recently audited fully diluted book value at the prior November 30.

The certified appraised value is just over $8 but the book value is negative. The client thinks that participants Putting the stock to the Company at this point get nothing because the book value is negative.

That can't be right can it?

When a foreign employer sponsors a 401(k) plan for U.S. based employees, what address and EIN are used when completing the "Employer" or "Sponsor" sections of the necessary paperwork (i.e. adoption agreement, custodial agreement, disclosure statement, SPD, W-9, etc.)? The foreign headquarters address? Or the U.S. branch address and EIN?

A plan accepted a rolled over loan note from an unrelated plan. The participant wants to take another loan. Do you take into consideration the rolled over loan note when determining the maximum loan amount the participant can take?

IRC 72(p)(2) says ... (A) GENERAL RULE. --Paragraph (1) shall not apply to any loan to the extent that such loan "(when added to the outstanding balance of all other loans from such plan" whether made on, before, or after August 13, 1982), does not exceed the lesser of –

If you take "from such plan" literally, you could make a case I doesn't since the original loan was modeled in a different employer's plan.

Has anyone had any experince with this? Do you have any cites?

Thanks.

Is a multiple employer 401k plan eligible to maintain a pre approved plan doc? Or are they required to maintain an individually drafted document? The document provider is asking our client to complete a Form 8717 and Form 5300 to request a determination letter. Is this necessary or can we adopt a pre approved plan? The current doc is individually drafted and has been for many years. If we can avoid it then we should. There are no provisions in the current doc that a pre approved plan would not allow. It is just the multiple employer issue (not an open mep, these are two related employers).

Thanks

CPC, ERPA

I saw no problem in telling the employer that they could force direct rollovers for their active employees from the terminating profit sharing plan to the company's 401(k) plan, until I realized that the PS plan has several distribution options, including annuities. Now I'm not so sure. Are they safe to force the rollover if the 401(k) plan offers the same annuity options? If the 401(k) doesn't have the same annuity options, I would assume that they can only offer the direct rollover as an option, but not force it.

Participant recently completed a QDRO, 50/50 split, with an effective valuation date of 12/30/2011. The QDRO transfer transaction was processed and traded normally on 5/2/2012 with earnings from valuation date onward. No issues there. Participant's RBD is 4/1/2013. Participant is in the process of initiating his first year of RMDs and is requesting that the effective date and amount of the QDRO be applied to his 2012 RMD. Essentially he is stating that because the QDRO dictates that 50% of his balance was not his starting 12/30/2011, even though money did not move into separate accounts until months later (5/2/12), that his 2012 RMD should use 50% of his 12/31/2011 closing balance to determine his RMD amount for 2012.

Please confirm:

Option 1: $312,214.02 / 27.4 = $11,394.67 (participant satisfies 100% of 2012 RMD)

Option 2: $156,107.01 / 27.4 = $5,697.34 (50% prior year end balance due to QDRO effective date)

What should the RMD be?

I have 4 plans merging into 1. All 12/31 PYEs. All memebers of the controlled group for all of 2012.

Plan A & B merge effective 10/1/12. We believe plan A is going to be considered the surviving plan. Plan B was a safe harbor plan.

Plan C merges in effective 10/2/12. Plan C is also safe harbor.

Plan D will merge in effective 12/31/12.

Surviving Plan A is not a safe harbor plan.

Quesetion:

Are Plans B & C considered Safe Harbor from 1/1-merged date? Or since it was a short plan year, do they lose SH status?

An employee just confessed to our client that he has been using someone else’s last name and SSN. The client has contacted an attorney (not an ERISA attorney), who advised that the participant’s 401(k) account balance should be forfeited since he was employed under false means. We don’t feel that this is necessarily the correct resolution. The participant has a $26,000+ vested account balance and an outstanding loan (if that makes any difference).

We’ve looked through all of the previous posts on this, most of which have to do with illegal aliens, and all of which are over 8 years old. There seems to be one camp that says the participant doesn’t get anything in the plan because of the fraudulent behavior in becoming employed. Others say that this has no real impact on the retirement plan because the individual worked for the compensation regardless of the SSN that it was under. Any new insight on this?

If a former participant has a small (under $200) balance, can the sponsor send them a check for the balance? This is after several requests to fill out distribution forms have been ignored.

In addition to the initial participant-level fee disclosure, a disclosure must be made "annually thereafter". That is defined to mean at least once every 12 month period without regard to whether the plan operates on a calendar or fiscal year basis.

Does this mean that the annual disclosure must be made within 12 months of the initial disclosure or just once every calendar year or something else? If it doesn't mean that the annual dislosure must be made within 12 months of the initial disclosure then you can go almost 2 years between disclosures. For example, if a plan makes it's annual disclosure on January 1, 2013 then it wouldn't have to make another annual disclosure until December 31, 2014.

How is everyone interpreting this?

A participant has a historical frozen 401(k), and a current 403(b) to which she is making contributions. She takes a hardship distribution from the frozen 401(k) (only loans, hardships and 59.5s are allowed out of this plan for actives). Is she now suspended from making contributions to the current 403(b)?

In Revenue Procedure 2012-35, the IRS is no longer forwarding letters from plan administrators to missing participants.

What are other plans doing with missing partipants? Thanks.

For those of you who deal with Partnerships and LLCs (taxed as partnerships) do you advise that each partner must be in the same allocation group and receive the same allocation percentage? If they do not do you believe that a cash or deferred arrangement (CODA) now exists?

Has anyone seen any recent DOL enforcement actions related to missing Form 5500s. In this case, plan sponsor failed to file 5500s for several welfare plans. No 5500s have ever been filed for these plans so they are not on anybody's radar--i.e., this is not a situation where the IRS might send a notice asking why the 2010 5500 was missed and client could then move through DFVC to address both DOL and IRS concerns. I know there could always be a random audit by the DOL that might discover the missing Form 5500s which would then preclude the use of the DFVC program. My specific questions are (1) has anybody seen such audits by the DOL, particularly in recent years and/or seen the DOL hit these issues in audits primarily investigating other areas? and (2) if somebody has seen such audits, what sort of fines does the DOL typically impose.

We have not seen any DOL action in this area in a very long time so would appreciate hearing from anybody with recent experience. The company plans to go through DFVC but question is how quickly they need to do that. They only have records for the most recent years and are trying to determine how far back the filings need to go. They believe they have the records that will permit them to determine number of participants (and likely an estimate of premiums) but it will require some digging through files in storage.

At some point the cost of continued digging for exact numbers doesn't seem all that worthwhile but the risk of enforcement concerns also doesn't seem to merit simply winging it and throwing together 5500s with estimates for years that may or may not have had more than 100 participants. Thanks.

What are others doing in the situation where you have a client who would like to amend their plan to add or remove a feature that will change the fees the participants pay? I know a participant change notice should be disclosed. The issue is timing. If the disclosure of the change has to be provided 30 days before the participant could be affected, but the employer wants to, for example, add loans to the plan immediately, are you postponing the effective date of when loans can be effective? Are you just telling participants they will be charged in 30 days? Is anyone doing anything else?

Took over a plan that failed ADP in 2010, but did not make refunds. Plan was also top-heavy, but the required minimum contributions were not made. They will correct the ADP by issuing refunds and making a QNEC contribution of the same amount. Can that QNEC be used to reduce top heavy minuimums for 2010 also?

Thanks in advance for any guidance.

Possible takeover DB client that has apparently heard some comments that some other companies they have some affiliation with might cause the plan some problems and have requested that we determine if an ASG exists (my words) before taking it over. We'll do our best but doesn't the IRS still have an option to rule on an Affiliated Service Group ? is it available just via Form 5300 for the initial qualification of a DB plan (or any plan) ? or as a separate stand-alone ASG ruling (maybe just a private letter ruling).

I thought I remember seeing or hearing that the IRS will no long rule on ASGs ? but may I heard wrong or maybe it's just as a separate private letter ruling they won't but will for an initial qualification ?

Anyone remember ? Thanks.

I am in a position to make a charitable donation. The charity has spoken to me about my IRA (self-directed) loaning the charity money who, in turn, will purchase a life insurance policy on my life with some or all of the death benefit proceeds going to the charity.

IF this is legal, it makes sense to me in my situation. Some of my questions are:

1) Does the charity have to pay my plan on-going interest?

2) Can the charity provide a balloon interest payment upon receipt of death benefits?

3) Can my IRA receive a portion of the death benefit (e.g., 2 million dollar death benefit....can my IRA upon my death receive, as an example, $700,000 with the remaining $1.3 million going to the charity?

4) Is this legal? It appears that it is, but my CPA is not familiar with this type of arrangement.

Ideally, I would like to do this AND have an agreement in place that my IRA would receive the initial premium (to fund the policy that is being loaned) back and a certain amount of the death benefit as an investment return. But can the charity do this OR do they HAVE to pay me interest during the period of time the loan is in force?

I am sure that I am missing a bunch of questions, but some general guidance is appreciated. If legal, this is something that I would seriously like to consider as it still provides a benefit back to my heirs but provides a real benefit back to the charity.

Thank you all so much. Also, I am assuming that if this CAN be done from an IRA, it could also be done from a 401K (I am self-employed)?

John