A small DB plan was frozen 3 years ago. The plan had provided 3% of pay per year of service. The company now wants to unfreeze the plan and simply restore the 3% pay for each year of service (including the years the plan was frozen). Is this considered a benefit increase to an HCE and therefore cannot be part of the cushion amount?

An employment law forum referred me here as my question involves the interaction between employer provided group health insurance and Medicare, and may also be impacted by changes either now in effect or coming into effect from implementation of PPACA.

The question originates from the HR department; they haven't had this issue previously and want to get it right. I don't want to rely on info from insurance broker and there's no internal ERISA/Medicare or tax expertise to ask.

Fact: Employer pays 100% of employee group health premium cost. (I know, this not a common employer practice these days.)

Query: Employee is eligible for Medicare (65+) and inquires if he voluntarily comes off employer group health plan and elects Medicare as primary insurance, is there anything preventing the employer from paying both his Part B Premiums and Supplemental Insurance in lieu of firm paid group health insurance? (Doing so would cost the employer less than the group plan.) Would this still be a tax free benefit or additional taxable income? Is there anything in ERISA, Medicare or tax law/rules (or state law, although I suspect Federal controls this issue) that addresses this? Impact, in any, of PPACA?

Your thoughts/comments are appreciated. (As I'm dealing with lawyers, any cites or websites with authoritative info would be helpful.)

We are slightly under 80% funding. A disabled employee (who is very ill and near death) did not apply for the disability pension under our DB plan within the one year period required. The plan requires eligiblity for SS disability as a criteria for elig for the disability pensio which is immediate no redcution. Social Security Admin had just determined his eligibility ; it took them more than a year.

This 1 year provision is indeed soemthing new to me. The Admin Committtee has recommended amending this out of the plan. However our actuary is saying that this is an increase in plan benefits since we are slightly under the 80% funding and we advised us to contribute the Present Value of his disability pension. I am also running by ERISA counsel who has not gotten back to me yet.

I wanted to get others opinions on this.

We are not increasing the disability benefit. Seems like a catch 22 that to be eligible for the disability pension you must be eligible for SS disability. Since this took the SS Administration over a year to determine this guy's eligiiblity , one would think this strange concept of applying within a year to get the disability pension be amended out withut compromise funding of the plan?

Any suggestion on how to maybe do this w/o triggering an increase in benefits?

Much thanks

Alexa

Is a HRA similar to a FSA? Where do I get a document? I am assuming that a Form 5500 has to be filed. Is that correct?

A small company (15 employees) has all union employees (all CBA). The CBA provised retirement benefits for all individuals through a larger, multi-ER plan. This includes the 2 owners, who are also in the union and participate in this union plan.

Can the owners still establish a separate retirement plan for themselves? If they craft the eligible class of employees to exclude all CBA employees, except for owners, that would work in the document. In fact, since they are owners and not really employees, we could probably leave it as simply excluding all CBA employees.

But would this work in reality? Since the rank and file can be statutorily excluded, can we play mix and match to bring make the 2 owners eligible and not have to worry that we are not bringing in any of the rank and file?

Thanks

Participant with low compensation makes a large salary deferral and is entitled to safe harbor match. The plan is also cross-tested, and the participant is entitled to a gateway contribution, but because of the large deferral, hits his 415 limit before all of the gateway contribution can be allocated.

For example:

Comp = $10,000

Deferral = $9,000

SH Match = $400

7.5% Gateway = $750

Only $600 of the gateway contribution can be allocated before hitting the 415 limit.

How do these requirements interact with each other?

My former employer terminated the 401k plan and sent me a check for the balance of my funds. The funds were sent from the 401k plan, to my former employer, and then they made a check out to me for my balance.

Will i be responsible for penalties/taxes on this? Kinda freaked out

this report is intended to pull the info for min distribution due by 12/31/2011 (or 4/1/2012)

under report writer you would run the report from 1/1/2010 - 12/31/2010

and select All Plans.

I ran it first thing in the morning before anyone else was on the system, took around 1/2 hour to pull the data from every plan. (A single report for each plan that has a possible min distrib)

It doesn't do DB, though it will pull cash balance, but I doubt the amounts it pulls would be correct. That is a side effect.

I have a few new takeovers, since its the first year on the system (2011) I ran the report on those plans from 1/1/2011 - 1/1/2011 just to pull the begin bal (which of course = the 12/31/2010) and that worked fine as well.

as with any report it's a use at own risk, though I did compare the results to what Relius would pull. this report doesn't pull people with 0 balance like Relius, etc. but otherwise it did pull the same people, so it appears to be working.

this report is actually a modifed version of the crystal report for 70 1/2, but it pulls more than the balance, it calculates the min distrib, so its sort of a combo between the crystal report and rthe standard report.

what I don't like about the min distrib report from Relius (the standard report from Processing/Plan Maintence) is

it will not necessaerily pull correct balances and I'm too lazy to go through each and every plan to run the following (per their instructions):

The Set Trade Date Fields process (Processing/Balance Update/Set Trade Date Fields) is one way to update the beginning balance trade date fields in the Acctbal table. This process can only be run on a plan basis. It cannot be run for a single employee, or for more than one plan/plan year at a time. To figure out which plan year you would need to run this process for, to get correct balances for a particular plan/distribution year, see other FAQs under "70½..." topic.

This report is hardcoded to take 12/31/2011 - DOB, so it is designed for 2011 only

Is there a Participant Statement requirement for those Participants who are entered as a Code D on a 2009 8955 – SSA Form?

Has anyone seen any quidance on which participants are required to be reported on the Form 8955-SSA for 403(b) plans? Should I report

A) 2008 and later terminations

B) 2005 and later terminations

C) All terminated participants with vested balances, as they have not been reported yet?

Thanks for any responses.

A client has passed away and had an account balance in a qualified defined contribution plan and IRA. He named his daughter as beneficiary of both, a Canadian non-resident alien. Can she elect to rollover the dc plan benefit to a US Rollover IRA and can she establish a US Inherited IRA for the IRA? If so, free of any income tax? Thanks.

A few Private Letter Rulings seem to indirectly address the treatment of nonqualified plans in community property states (benefits are divided 50% between spouses and community property laws apply because ERISA does not govern nonqualified plans). But I have not found any ruling or case law that directly supports this. 1. Is my assumption correct, and 2. Has anyone come across on point case law/guidance on this?

A few Private Letter Rulings seem to indirectly address the treatment of nonqualified plans in community property states (benefits are divided 50% between spouses and community property laws apply and not ERISA). But I have not found any ruling or case law that directly supports this. Can anyone assist?

A one participant plan started a ps and mpp plan in the mid 80's. Our company (a TPA) was engaged to prepare the documents for the plans. This is years before I took over the company. Administration (5500 EZ) was handled by his CPA. Recently his plans were audited by the IRS. He has not been making contrbutions to the MPP plan in years and his CPA failed to terminate that plan when it was no longer necessary to have two plans. So I believe the trigger to the audit was that he was filing EZ's on his MPP and reporting "0" contributions for several years. Anyway, upon review the IRS slapped him with a $25K penalty for failure to restate his plans. Ultimately they were able to negotiate that down to $4k penalty for each plan plus his CPA is charging him $1500. He is wanting my company to pay for the penalties. I nicely told him I am sorry, but I can not do that. Our files were shredded a couple of years ago and the only correspondence he has from our office is dated December 1986 when the plans were set up. I explained that ultimately he is the plan sponsor and is responsible for maintaining the tax qualified status of his plans. His CPA worked on the plan annually and did the admin and that he should approach him for relief. I have worked for my company since 1994, took over it after the death of the president in 2000 and have never done any work for this man. My employee has worked for us since 1989 and she does not recall ever doing work on the plan either. We clearly were brought in to provide document services only. Generally in the past when we only provide document services and its time for restatement, we would send out a letter to clients advising them of this and to make certain that they wanted us to still provide this service. However, with no files, I can not prove that was ever done. Personally, I don't think anything will happen, but if should I get a call from his attorney, I would just forward it to a local ERISA attorney I know.

Any thoughts on this matter?

Do we think that anyone will use the new statutory exemption [ERISA § 408(b)(14) and 408(g)] for an eligible investment advice arrangement?

The Labor department says that the 2006 Act provision “did not invalidate or otherwise affect prior guidance of the Department relating to investment advice[,] and that such guidance continues to represent the views of the Department.”

Either the “new” exemption or the “old law” uses the same two ideas to manage a conflict: leveling compensation, or using a person independent of the conflict to make the advice.

The key difference seems to be that the statutory exemption requires an independent audit and some extra conditions not in the earlier guidance.

For a business that wants to render investment advice to participants, isn’t following the “prior guidance” good enough?

Why would a business prefer the statutory exemption?

C Corp is owned by 2 people. These 2 people receive W-2 wages and also 1099 wages as independent contractors.

Can they use the 1099 wages from C Corp to fund a SEP established under the S Corp (which is owned and operated by 1 of the 2 people)? Would it be permissible for just the 1 common owner to both the C & S corp?

A participant has a loan set up with quarterly repayments. They would like to pay off the outstanding balance as of 12/1/2011. The prior repayment was made on 9/30/2011, and the next is due 12/31/2011. My thinking was that a daily interest calculation needs to be done to calculate the payoff amount at a date other than a date that shows on the amortization schedule - to calculate the additional interest accrued from 10/1 to 12/1. But others I speak to seem to think this is not required, and that the payoff balance at any date from 10/1 to 12/31 is the amount that shows up on the amortization schedule as the outstanding balance after the 9/30 payment was made.

Most vendors with a daily platform (ING, Hancock, Hartford, etc.) calculate interest on loans daily. It wouldnt make sense just because this loan is through a vendor without a daily platform, that the interest is calculated differenty.

Is there any guidance on this issue? Must it be done one way or the other?

I received my ERPA designation on 10-8-2010, with expiration date of 9-30-2013.

Is the 9-30-2013 date the date by which I need to submit my CPE credits?

Thanks.

Just want to see if I'm missing something here. An employer with an EIN ending in "5" has a custom DB. To me, that means either he had to restate by 1/31/11, or complete an 8905 by 1/31/11, and then restate into a prototype or VS by 4/30/2012.

Am I missing something? Thanks.

This seems pretty straightforward to me, but I would feel better getting confirmation from others in the industry. A plan has been getting income as a result of a Revenue Sharing Agreement with their TPA. They have set up a separate account to receive the income and have used the account to pay administrative expenses. However, the assets now exceed the amount of the expenses, so I'm thinking they should simply allocate whatever's left over to plan participants, probably on a per capita basis. They should probably do that at the end of every year. Sound reasonable?