We provided a former employee a COBRA notice with wording along the lines of "you must complete and return this form by the due date shown, or you will lose your right to elect COBRA continuation coverage."

We have a copy of the mailed notice, and proof of mailing and delivery (USPS deliver confirmation).

We never received an election notice from the former employee, but did receive a check for 3-months of premium payments from the State Office of Health Services (state medicaid). The check itself makes no reference to the former employee's name , and was mailed to our company's old address and not discovered until much later. The only reference on the check connecting it to the employee beneficiary is his PPO plan ID # written in the "memo" section of the check. The former employee has provided no evidence of timely mailing of the election notice.

My question is whether the former employee should be reinstated for COBRA coverage or has he not properly elected COBRA coverage?

The check was received within the first 60 days of the Election Notice mailing, so it was delivered well within the the 60 days+45 days election+premium payment period.

Thank you!

http://www.irs.gov/pub/irs-tege/early_distributions.pdf

according to this link it does, just looking for confirmation if anyone has experience on this. Thanks.

We have one company with 5 divisions. 3 allocation groups for each division. Each division decides what their allocation rate will be.

The plan as a whole passes the general test.

Does each division have to pass the general test separately?

Coverage is not an issue.

Thank you.

Kate Smith

Suppose an employer terminated a DB plan several years ago. The plan was 100% funded, the 100% owner was not even close to the 415 limit and was paid a lump sum based on the low 417(e) rates at the time, which were less than 5.50%. The 415 lump sum limit was not exceeded at the time even though the 417(e) rate was under 5.5%.

The same employer sets up a new DB plan now and the 100% owner will again be accruing benefits. The offset of the 415 limit is the question. Since the 1st lump sum was based on rates below 5.5%, should the "extra" amount (the amount paid which exceeded the lump sum valued at 5.5%) be also considered as part of the offset of the new plan's 415 limit?

Also consider the converse: If the 417 rates were high so the lump sum paid was less than an amount calculated at 5.5%, can the participant get any "extra" accrual to make up for that in the new plan?

What if that DB plan terminated before the 5.5% rules were in effect?

What if the second plan is a cash balance plan?

This may help illustrate what I am asking: If an employer had 2 DB plans at the same time, and each plan accrues 50% of the 415 limit for the 100% owner, the maximum lump sum is still based on the 5.5% interest rates which override the lump sum that would otherwise be required based on the much lower 417(e) rates, right?

I am inclined to say that the rates at the time for the old plan were simply the rates at the time, so just offset the 415 limit in the new plan by the accrued benefit that was paid. Thus, if rates are higher or lower than 5.5% either time, a consistent result might be achieved?

Your thoughts?

US Residents can finally transfer their UK pensions to an IRS approved and compliant Qrops US Plan

A small employer, in seeking to facilitate health insurance coverage for some of its employees, found that pricing for individual health insurance contracts is more favorable than any group (or association-sponsored) contract. The amount that the employer is willing to pay toward some employees’ health coverage is enough to reimburse 100% of the premium under the insurance contract that each employee selected. This would not involve a § 125 election, because there is no choice to get cash wages or any other taxable benefit. Assume that those entitled to reimbursement, as a subset of the employer’s employees, would meet IRC §§ 105&106 nondiscrimination rules.

If the ONLY thing that an employer does is reimburse a substantiated health insurance premium [Revenue Ruling 61-46, 1961-2 C.B. 25] and the employer carefully avoids any ‘involvement’ regarding the individual insurance contracts, does such an employer “maintain” a group health plan?

If so, is that ‘plan’ governed by ERISA?

If there is an ERISA-governed plan, is it also governed by HIPAA?

(COBRA is a non-issue because there are only a few employees.)

Being able to arrange this so that it’s not a plan (while still getting ‘health’ treatment for Federal income and FICA taxes) really matters because the employer won’t do anything that requires it to administer a plan.

Have a situation and I'm not sure of the reasonableness of the results.

Client has existing profit sharing plan, integrated with Social Security.

Established Cash Balance plan for 2011; Group A gets 28% of Comp hypothetical allocation, Group B gets 7.5% hypothetical allocation. Plan actuarial equivalence is 5% pre-retirement interest only, post-retirement 2011 415/417 Mortality Table @ 5.50% per annum. Interest crediting rate is 5.00% per annum.

Accrued benefit for testing purposes is derived from actuarial equivalence; that number is what it is. If an employee say left at end of first year, they would get hypothetical balance of 7.5% of salary.

When I run the General Test however, I'm stuck with using standard mortality and interest (7.5-8.5) assumptions for testing. Our software is effectively saying that the gateway contribution is something less than 7.5% for the year (significantly less as get younger); from a common sense standpoint, the participant is being credited with a fixed percentage of salary and would be paid as such; not sure as to the logic of stating for gateway that this 7.5% is worth less. What am I missing?

Plan is currently @ 57% and key employee has a pending qdro. Will the alternate payee benefit be added back to the key employee for top heavy purposes?

PS allocation conditions = none for actives, 500 hours for terms. Am I correct that we can amend the plan for 2012 (calendar year plan) as long as no one has worked 500 hours yet? We're going to change the allocation methods and the allocation conditions.

My argument is that if you have not yet worked 500 hours, there is still a last day rule that applies to you if you terminated. So it is essentially the same as having a last day rule for everyone.

(assume no retirees).

Service bonus policy for non-top hat group provides that company will pay an employee a cash bonus in or immediately following the end of the employee’s final year of employment provided that:

1) The employee has worked for the employer at least 10 years at the time of termination.

2) The employee has received satisfactory performance reviews in the year of termination and in the two years prior (or in the three years prior for an employee who terminates prior to receiving a performance review for the year in question).

3) Termination or resignation is for reasons other than unsatisfactory performance or violation of any company policy or standard of conduct.

4) The employee executes a general release of liability in favor of the company. Timing of payment will comply with Notice 2010-80 and in no event will be made after March 15 of year following year of termination (employer follows calendar year).

Benefits are forfeited in event employee refuses to sign release.

The Company reserves the right to modify or eliminate the service bonus policy at any time, for any reason, without notice.

The amount of the service bonus is completely within the Company’s discretion but generally will take into account the employee’s length of service and final base compensation.

Question - does fact that bonus formula is based on past service meant that a deferral election is required upon initial eligibility, e.g., completion of 10 years of service with satisfactory performance reviews? Or does true eligibility not arise until the reason for termination is clear and it is not for unsatisfactory performance, violation of policy? And does fact that termination must meet certain criteria preserve SROF until that time?

Any comments are appreciated.

A not-for-profit has been operating a SEP plan for many years. The director left a couple of years ago, but continued to receive W-2 compensation under a salary continuation agreement. Should SEP contributions have continued based on her continued salary?

If a participant is on an authorized non-military leave of absence from her employer, Q&A-9 of Treasury Regulation Section 1.72(p)-1 provides that her participant loan repayments may be suspended for up to one year.

What if the participant's loan repayments were in arrears prior to the commencement of the leave of absence? Q&A-10 of Treasury Regulation Section 1.72(p)-1 permits a plan administrator to allow for a cure period ending not later than the last day of the calendar quarter following the calendar quarter in which the required installment payment was due.

Does the suspension permitted under Q&A-9 apply in this scenario, which would actually result in the cure period being extended by up to one year? Or is the suspension permitted under Q&A-9 applicable only where the loan was otherwise current when the leave commenced?

Here is a strange one...

Employer Matching Contributions. Employer Matching Contributions on behalf of a Participant shall be made at a rate of $1.00 for each $1.00 of Eligible Elective Deferral Contributions made by that Participant during the Plan Year, as determined under 5.4-1.

5.4-1 Eligible Elective Deferral Contributions. Only Elective Deferral Contributions for the Plan Year of less than or equal to the first four percent (4%) of a Participant’s Compensation that remain in the Plan through the Anniversary Date (the “Matchable Contributions”) shall be eligible to be matched by Employer Matching Contributions. Catch-up Contributions are not eligible for Employer Matching Contributions under any circumstances.

Basically, if I am still employed and took an in-sevice withdrawal, the company is not matching my pretax contributions.

Would you considered this an allocation requriement? Therefore would not be included in the ACP test and counted as not benefiting under 410b.

Our firm does DC plans exclusively at the moment.

We are considering finding an actuary to back office DB plans, particularly cash balance or db/dc combo plans.

I'm wondering if anyone here does this and has any thoughts or experiences? I know a lot of TPA firms do it.

Just to be clear, I am not sending anything to India. If we do it, we'll look for a US-based actuary, preferably someone local.

I think I am overthinking again, but?? The client uses the Corbel VS docuemnt. In 2000, the eligibility was 21, 1 yos, and dual entry. This is a calendar year Plan. The eligiblity switched to 18, 6 months, and quarterly entry in 2009.

John Doe was hired 6/21/2000 and terminated 3/18/2001. He had 1,000 hours in that time span and was over 21. He did not enter the Plan, since he was not there on 7/1/2001. He was rehired 5/20/2011. He did not work from 3/19/2001 - 5/19/2011 for the client. Was he a Participant on his rehire date, 5/20/2011? I believe so, but do not want to miss anything with the rules of parity.

I'm looking for opinions on whether the following situation violates the 133 1/3% accrual rules of 411(b)(1):

Final average pay plan has been around for awhile, providing 1.75% of FAP5 for each year of service. Plan amended 1/1/2010 to reduce future accruals (1.75% for each year of service up to 1/1/2010 plus 1% for each year of service after 1/1/2010 (proper 204(h) notice given)). Plan now wants to restore 1.75% piece effective for service after 1/1/2012 (i.e. amend the plan to provide 1.75% for each year of service up to 1/1/2010 plus 1% for each year of service after 1/1/2010 and before 1/1/2012 plus 1.75% for each year of service after 1/1/2012).

Since the formula is constant for all future years, I believe the 133 1/3% accrual rule of 411(b)(1) is satisfied, but looking for other opinions. Thanks in advance.

Every plan termination we've done, the trustee is the last person to receive their distribution. This has never been a problem in the past, but we have a plan that is terminating and the trustee wants to rollover his account to an IRA and wants know if there is a cite that states that the trustee's assets are to be distributed last.

I explained that it would be like a captain jumping ship and leaving the crew to fend for themselves, but that wasn't a good enough explanation for him.

Is this just some companies policies, or is it written somewhere? I can't find anything on it.

Thanks so much.

I have a participant that is purchasing a lot (the loan documentation states that it is a "lot loan") and has requested a 401(k) hardship distribution for this. The lot happens to have two trailers (mobile homes) on it. One will be removed, and the other will become their principal residence. Is this a eligible reason for a 401(k) hardship distribution?

ok - very small plan with cross tested formula; last day rule & 1000 hours for allocation.

There are 7 employees total; 3 HCEs and 4 NHCEs. (One of the HCEs is young and always gums up the non discrim testing.)

One of the NHCEs termed and one retired.

I have to add one of those back in for coverage testing to pass anyway, the retiree was the last out so first back in per plan provisions to fix coverage.

Is there anything that prevents me from adding back in both the retiree and the term for allocation?

The termed NHCE is much younger and would help the EBARs for cross testing thereby allowing less to the NHCEs overall.

thoughts?

I have a participant who rented out his principal residence while he was in Alabama (I believe for tornado relief). He's now living temporarily in an apartment and plans to move back into his home in a couple of months. He's received a foreclosure notice on his home. Can he make a claim on his home if he is not currently living there but plans to move back in a couple of months?