A multiemployer employer welfare plan maintains a "Value Bank" that members can use to pay for dental claims, prescription co-pays, etc. There have been several fraudulent claims sent in by members trying to get "their money." The reimbursements are, of course, funded by the agreed upon employer contributions to the plan, but the members do not actually have any "money" in an "account." If they don't have valid claims, they don't get any money.

The trustees would like to amend the plan to impose a penalty upon anyone they find sending in fraudulent claims. A possible penalty would be loss of all funds credited to their Value Bank "account."

Does anyone see any problems with this? Does this need to be collectively bargained?

An employer has 2 "old" 403(b) plans. Both plans have around 60 participants with account balances but no new contributions have been made into the plan for years. I believe it was frozen to not allow new participants/deposits about 5+ years ago.

The same employer sponsors a new 403(b) plan with different investments. I believe all employees are eligible to participate in this new plan.

Can the employer terminate the two old plans and allow the participants to either (1) roll their balances into the new plan (2) take their account as a cash distribution, or (3) leave their account where it is but turn it into an IRA.

Alternatively, can the ER merge these 2 old plans into the new plan, moving all the old money into the new plan without participant consent?

Thanks

I had health insurance through my father that was recently terminated as I reached the age of 26. I understand that someone is eligible for Special Enrollment because of this - my question is - who is eligible?

The reason I ask this is because the COBRA payment is too high for me - I would like to change it to a different plan. Can I use this special enrollment privilege to change the benefit level - or is this only something that my father can do for his plan? I have not yet elected to receive COBRA if this matters.

Thanks for your help.

An employer has an existing deferred compensation plan with no provisions for employee elective deferrals. The plan has payouts that start upon separation from service, and the payment schedule complies with 409A. The employer now wishes to add an aggregate cap to the amounts paid out under the plan that would limit the amount of the payout to any individual if there are multiple payees. The cap would comply with the 409A regulations if this were a de novo plan.

Would the addition of the cap constitute a service recipient election that would trigger the 1/5 rule? And would the application of this rule require that payouts could now start no earlier than 5 years after the date when they would have started under the original plan?

This would be a deal-breaker here because it would require the employer to delay payouts for at least 5 years after separation from service. This seems like a harsh and unintended result for adding a provision that would have been clearly permissible in a de novo plan. I am cautiously pessimistic, however, that the answer might be yes.

Any thoughts would be greatly appreciated.

I always have calculated the employer match by dividing the employee's 401k contributions for the period by the employee's pay for the period to two decimals. I'm not sure why I have been doing it that way, but I would appreciate comments.

When reporting DIA's in brokerage accounts, do we have to look at individual stocks or just mutual funds?

I just printed the 404a disclosure including glossary from Great West and it is 42 pages! By using the ASPPA Glossary, I can reduce it all the way down to 36 pages!

I expect some clients are not going to be pleased when I tell them to make copies and distribute to all of their employees. Some will probably ask "What happens if I don't do this?"

What are you all going to tell them?

Does the Nebraska extension of coverage under a health plan for dependents up to age 30 apply to self-funded plans? I haven't been able to find any materials that clairfy this. Thanks.

If an employee becomes eligible for two governmental 401(a) plans at the same time may the sponsor permit him or her to make a one-time irrevocable election under both plans and still comply with the requirement under 1.401(k)-1(a)(3)(v) that the election be "made no later than the employee's first becoming eligible under the plan or any other plan or arrangement of the employer"?

I have researched and cannot find authority or guidance on this issue.

Thanks.

For 401k plans that use a platform such as John Hancock, I'm curious whether most TPAs are preparing the annual notice - due by Aug 30 - for their clients to distribute? Or will you rely totally on the investment company to provide it? Or are you letting the plan sponsor deal with it based on communications from the investment company? Just curious.

I have a holding co that has been sponsoring a retirement plan and the 5500 is filed using their EIN #. Are there any issues with the holding company sponsoring the plan?

My question is as follows: we prepared a Form 5500 for an ESOP. The ESOP stock is publicly traded. On Schedule R, Part I, line 1, we included the total distributions that were paid in stock. However, the instructions say to enter the total value of all distributions during the year in any form other than cash, annuity contracts issued by an insurance company, distribution of life insurance contracts, plan loan offset amounts, or publicly traded securities. Because the ESOP stock is publicly traded, we should have put zero on Schedule R, Part I, line 1.

Should we amend the 5500, Schedule R?

Thank you

I have a small organization (not proessional service) - just 2 owners (husband and wife each own 50%) and 1 participant. The plan is PBGC covered. The only participant who is not an owner terminates in 2010 and is due a benefit. He is finally paid out in February, 2012. Technically the plan is no longer a PBGC insured plan effective march 1, 2012. For a portion of 2012 the plan is PBGC covered so do you think I can still get the 25% of pay maximum PSP for 2012? I know I can't for 2013. (presume DB cost is far over the 25%.)

Followup question - the company is incorporated and I am pretty sure that each spouse own's 50%. But if one spouse own's 100% and the other only owe's through attribution - then the plan remains PBGC insured? I might talk to them about changing the ownership in that case.

thank you.

Someone in my office said the current rules say that the SAR must be distributed before the 5500 is e-filed by the sponsor.

Is that true?

If so, what regs changed?

Controlled group exists between Company A and B

Company A now wants to purchase Company B.

Company A owned by Mr. X, Mr. Y, and Mr. Z.

Company B also owned equally X, Y and Z.

Can Company A, as part of the buy out, offer a non-qualified deferred compensation plan to Mr. X only, and not to Y and Z?

Thanks for any replies

A local affiliate of a national union sponsors a VEBA (they have received a 501©(9) letter) through which they offer health and welfare benefits, such as payment of insurance premiums, and reimbursement of medical expenses. The VEBA is funded entirely by employer contributions. When participants have a certain amount of funds in their account in the VEBA, they are then allowed to make elections through a cafeteria plan to either contribute additional funds to a vacation/sick account, their VEBA account, and/or a 401(k) plan. For example, if the threshold is $3,500, and a participant has $4,000 in her account, the additional $500 may be allocated by the participant into any combination of the participant’s VEBA account, a vacation/sick bank, and/or the 401(k) plan. Balances in the VEBA are rolled over from year to year and have not been cashed out. Can the VEBA and cafeteria plan work together as is without requiring VEBA (health & welfare) balances to be subject to the use-it-or-lose-it cafeteria plan rules?

I have a question that was posed to me by one of my tax partners. I have not seen it done, but wondering if anyone else has.

He has a client with a great deal of farmland in his IRA's and it is now RMD time. He is wondering if we can do one of two things:

1) Distribute farmland to the IRA owner and since the owner will not own a controlling interest in the land, subject the appraised value to a 15+/-% discount to reduce the amount of land necessary to be distributed; or

2) Establish a LLC to hold the land within the IRA and distribute LLC units from the IRA using 15+/-% discounts in valuing the LLC units.

My initial reaction is that I wouldn't touch it with a 10 foot pole without going in for an IRS letter ruling, but just wondering what others think.

Thanks.

James

A trustee of a pension plan is receiving pension benefits from the same plan. The same individual is also a trustee of a welfare plan in which he is a retired participant. He receives reasonable compensation from both plans for his attendance at trustee meetings. Is this permissible per ERISA 408©(2)?

Does anyone know of an Excel spreadsheet capable of cash balance and new comparability illustrations as well as testing in one spreadsheet?

I found one a few months ago but the calculations for the cash balance portion referred to empty cells, so it is unusable

Anyone know of a home grown spreadsheet for sale?

A) Selecting a QDIA as the default investment, such as a Target Retirement Fund or a Balanced Fund, but NOT distributing the QDIA notice (as might be the scenario with a client not so diligent about passing out important notices).

B) Defaulting to a money market in anticipation that the QDIA rules are more or less impossible for most small employers to comply with. I note that the QDIA rules are not mandatory rules. I also note that Great West does a fantastic job at addressing QDIA.

My own personal answer is that A) is worse than B). My saying is "If you're going to put someone on a roller coaster you better tell them that they're going on the roller coaster." I'm reminded of a sign at Disney World posted at the entrance to it's scariest rides. The sign says, in the form of a headline to a longer notice, "This is a ver scary ride." I think that is Disney's version of a QDIA notice.

I just feel like one day someone is going to lose a lot of money and suddnely realize that they didn't like the way they were defaulted. And if the sponsor didn't provide all those notices (each year, mind you) then I can't see how the sponsor avoids liability.