I have an HMO (a group plan through my employer) for which I pay $500 a month (payroll deduction).

My wife's company is switching over plans and one option is a high deductible plan with HSA.

My birthday comes first in the year, so my kids and I have always been covered under my plan.

Can funds in my wife's HSA be used to cover expenses for me and my kids even though we are covered under my plan? e.g. the $500/month premium, co-payments, etc.

Thanks

Can a definition of compensation satisfy 414(s) if it excludes amounts earned by ineligible employees who are nonexcludable for purposes of 410(b)? For example, our plan does not cover employees in Division C. Because there are not many employees in this division, we can exclude them and still pass the minimum coverage requirements. When we go to perform the 401(a)(4) testing, can we exclude their compensation? I do not believe that we can because it wouldn't likely qualify as a valid 414(s) definition.

Does anyone disagree?

Participant in FSA had lasik surgery in September. They are paying the bill over 2 years. They also have to go back to the doctor for regular checkups every 2 months, I think.

Do they have to submit the entire bill for payment in 2011, or can they be reimbursed over 2 years?

Thank you.

I want to see the DOL apply pension oversight rules to auto repair shops. Imagine the fee disclosure when you are paying "x" per hour for labor, for a three hour job, but one job has parts that cost the dealer $125.00 - which they mark up 100% and add $250.00 to the labor, and the other three hour job has parts that cost $1,000, which they mark up 100% and add $2,000 to the labor.

Hi,

We have a Not-For Profit Organization which has a money purchase plan. It was discovered recently that 2 part time employees were missed and improperly excluded from the Plan. We are correcting and filing under VCP.

Regarding Form 5330 for the excise tax on the funding difficiencies, does this apply to not for profits? I have the instructions to the Form 5330 and the instructions do not mention that this does not apply to Not For Profits. I'm not sure if I'm missing something.

Thanks!

A plan that I am assigned to has a participant with no beneficiaries on file. There is currently a balance of $4 remaining. The daughter of the deceased participant has called in to ask how to distribute the money. As there are no beneficiaries, the money must rightfully go towards an estate however the daughter refuses to create an EIN number for a $4 balance.

Question:

If they will not create an EIN number, is there anything else that can be done to distribute this account? The plan also does not have the auto cashout process?

Took over a small DB plan that excluded two physicians by name and highly compensated nurse practitioners. For the past 5 years, they have only had 4 physicians who met the eligibility requirements. All were HCEs and Keys. The plan passed 401(a)(26) in past years as 2/4 = 50%, which is greater than 40%. They now also have 3 nurse practioners who met the eligibility requirements. All happen to be HCEs and are therefore excluded from the plan. Any problem with bringing in one nurse practioner through an 11g amendment to pass 401(a)(26) even if they would be an HCE and in an excluded class? Would it be possible to do this every year?

Thanks

A small safe harbor 401(k) plan timely distributes the 3% SHNEC notice on November 15, 2009 for the 2010 calendar plan year.

The employer filed the corporate tax return 3/15/2011 and did not fund or deduct SHNECs. In fact, they still have not been funded. He simply forgot, even though we told him to back in January.

My understanding is that SHNECs can be funded up to 12 months after the end of the plan year. So if they are are funded this week:

1. Do any earnings need to be calculated and funded for the late deposit?

2. Would the safe harbor contribution be deductible for 2011 or 2012? If 2011 he will need to amend the corporate tax return.

Thanks.

My wife and I were in the process of agreeing to a QDRO with her ex husband. We live in NY. Our attorney sent the QDRO back to his attorney who had initially drawn it up to make a correction in the calculations. Unbeknown to us , apparently her ex decided to have someone in Fla, finish up the QDRO as opposed to his attorney and submit it to the court in NY. The judge in Rochester, approved the QDRO and submitted it to the pension plan administrator.

My wife was made aware of this from the pension plan administrator. The question I have is that should have the judge approved the QDRO without giving us the opportunity to review it ? We have no idea as to what it says as we are trying to obtain a copy from the pension plan administrator. What recourse do we have with the judge if we find out it is incorrect after reviewing it ? Can her ex have someone out of state complete the QDRO for submission to the court ? Thank you

Law firm, two partners, each funding their own SEP to $49K every year. Two NHCE employees, both with more than 3 years of employment, never received SEP contributions. The are looking at a DB plan now and in asking my questions this came up. I've informed them that their SEPs have issues, they want to know the risk/consequences.

Obviously the deductions for prior years are at risk and they should correct this, but they've been around long enough to know the probability of IRS finding this is virtually nil.

What about the employees? Do they have a claim for benefits and earnings? SEP document obviously provides that employees are covered. Seems like SEPs would be included in the ERISA definition of an employer plan for benefits, even though the funds end up in IRAs, does ERISA apply or does something else give them a cause of action? Of course the SEPs may never have been established by the partnership, that's another issue.

Just wondering what folks out there think of the following idea ....

I have a husband (dentist) and wife (bookkeeper) who both work in the business. They have three employees. Wife doesn't take much salary (of course enough to max deferrals), so passing the AB % test is VERY tough. We can't restructure into component plans with only 3 NHCE's as we can't cover 70% in each component plan. Therefore, I need my rate groups to cover 70% so I can avoid that test. One of the NHCE's is much older than the two owners. The second is close to their age. So, I am not getting a great bang for my buck with cross-testing unless:

1) They hire a young, part-time employee which opens up better options with cross-testing and restructuring (but involves hiring someone); or

2) The couple has two minor children who clean the office and also are in promotional brochures, ads in the paper, etc. I could eliminate all age and service requirements, exclude HCE's from the safe harbor nonelective contribution, and also exclude keys from top-heavy. Now I have 4 HCE's, 2 of which are deferring nothing and receiving nothing. This helps my rate group testing by giving me a divisor of 4 instead of 2.

Too aggressive??? Anything I am missing??? Anyone had any audit experience with option (2)??? I'm a tax accountant too, and I've had my share of arguments with the IRS about kids on the payroll, but we have pretty good proof that they are working with the brochures, etc.

Thanks.

James

a small FROZEN MPP plan that will ultimately be terminated in the next few years, wants to amend to allow for In Service Distributions. I do not know of any obstacles that would prevent this. Assuming the plan sponsor provided a summary of material modifications and resolved to allow for In Service this would be ok, yes?

I am sure this has been posted before but please bear with me:

Individual is covered by his employer's 401K plan where he defers the $22,000 maximum in 2011 ( over age 50 ) and also gets a sizeable profit sharing contribution ( $30,000 ). THis is a company that he does not own. These are within his 415 limits and this plan is monitored by a TPA carefully.

He also has a side business unrelated to the above where he has a solo 401K plan for himself only and earns about $100,000. I don't believe he can contribute to the elective deferral portion of his solo K plan. But I do believe he can contribute the full 25% profir sharing to his solo K plan.

Is this correct ?

THanks

I need some opinions on this please!

I have a plan that wants to refuse coverage for spouses of active employees who have coverage available "elsewhere." What if the "elsewhere" is Medicare coverage? I am aware of the Medicare rules that say you cannot drop an employee, spouse, or dependent from your plan just because they are eligible for Medicare. However, I came across another provision that says you have to provide Medicare-eligible individuals with coverage under the same terms and conditions as non-Medicare eligible individuals. If the spousal carve-out rule applies to all individuals, and not just Medicare-eligible individuals, does the MSP rule still apply?

Participant in FSA has prescription from doctor to take a pilates class to treat arthritis.

Is this eligible?

Thank you.

I have a potential client who has not filed a Form 5500 for their 401k plan since 2004. They appear to be over the 100 mark each year (133 at end of 2004). I have 2 questions:

1) Can they use the DFVCP for 2005-2010 Forms 5500

2) Since all years appear to be "large" plans, does an audit have to been done for each year and an auditors opinion attached to each Form 5500.

my understanding is that a db plan that is not a "one participant plan" must meet bonding requirements and the amount of bond is generally 10% of plan assets.

what are the consequences if a plan is audited and does not have a bond in place?

not sure if it is plan disqualification? fine? other?

this is under assumption that the plan has not sufferred any damages.

thanks

looking at erisa 412 i didn't observe anything concrete.

Section 415(b) limits the benefits that a defined benefit plan may pay to any participant. The limitations are defined in terms of a life annuity beginning at any age between 62 and 65. When benefits are paid in a different form, the limitation must be converted to that form using prescribed actuarial assumptions. PPA provided that the mortality assumptions used in IRC §415(b) calculations would be based on the Commissioners’ standard table for determining reserves under group annuity contracts (IRC §807(d)(5)(A)). WRERA substitutes the table used for converting benefit accruals to lump sums under IRC §417(e). This change is mandatory beginning in 2009 and may be adopted voluntarily before then.

Does this apply to multiemployers ---- i.e., do small employers who contribute into a multiemployer plan have to follow the amended interest rates and mortality tables?

Can a plan with a discretionary match discriminate against a certain group of HCEs? My client may want to provide a match to all participants, including HCEs, except for their owners. Is that possible? This client is using a Protoype Preapproved Document.

We are a tpa that does true daily val recordkeeping and we have a plan that has switched custodians and 1 of their investments cannot be moved to the new custodian. We are going to replace the fund in the plan with a new fund at the new custodian, per the instruction of the Investment Committee. However the old fund has a redemption fee (1% for 6 months). There are about 7 people effected by this redemption fee. If we were to sell the fund today and incur the redemption fee (total for all 7 participants only comes to about $125) would either the plan sponsor or the Investment Advisor be able to reimburse the participants the fee amount to make them whole without having to count it as a contribution? The other option is to keep the old investment at the old custodian until June 2012 to get past the 6 months, then sell and and move the money to the new custodian and invest in the new fund. My concern about doing this is 1) what if someone decides to sell out of that fund and take the hit on the redemption fee? I don't have any other money at the old custodian so I cannot make their transfer in a timely fashion because I have to move money to the new custodian in the middle of the transfer 2) it is more time consuming and costly to administer the plan at 2 custodians (much more costly than $125) for 6 months.

I'm looking for a way to make this work and am not sure I'm going to come up with one. Any thoughts?