We have a self funded health care plan. We currently have a 25k limit on specialty drugs. We understand that we can't have an annual limit of 25 k for drugs such as MS drugs but there is currently a REALLY expensive psoriasis drug out there. Can we have a 25k limit on a specialty drug which doesn't appear to be prescribed for "essential care ." Our drug benefit manager rep says yes but I believe his in-house attorney thinks no. Is it a "reasonable" interpretation of essential benefits (which as you all know has prescription drugs as a general category) to put a 25k limit on a prescription drug which treats a seemingly non essential benefit? AHHH Any help? Any other way to do some serious cost sharing for this drug?

Thanks

Does anyone have a read on PPACA Sec. 1332? It is essentially a provision that allows states, beginning in 2017, to apply for a waiver from the State Exchanges. It also suggests that states can apply for a waiver from the individual mandate. Of course, the Exchanges and the individual mandate are effective in 2014 and these provisions are effective in 2017, but does anyone have thoughts on this, specifically whether 1332 really does provide the states a way out of the individual mandate?

Thanks, in advance!

I have a client that offers Health Flexible Spending Accounts to their employees.

One employee elected to contribute $2,900 for 2010.

She was involved in an accident and was out of work from May through October.

She did not terminate employment nor did she have any sick or vacation time left.

As a result, she did not receive a paycheck for the months that she was out of work.

This meant that from January 1, 2010 to May 2010, she contributed a total of $1,115.

Due to the accident, she requested and received a total of $2,860.

She is now able to return to work in November, leaving about 8 weeks left in the year to continue contributing to her HFSA.

Does the employer have the right to increase her HFSA contributions each payroll so she may complete the funding of her $2,900 commitment.

Since she has only funded $1,115 so far this would mean that she owes $1,785 into her account to be paid within an 8 week period.

What are the rules and/or alternatives in the above situation?

Can the employer make her pay the amount due? Can they increase the HFSA deductions from her pay to collect the amount due by the end of the year?

Any guidance in this matter is very much appreciated.

If a participant must take an RMD, do we need the participant's authorization to process it? Or is just the Trustees' say-so okay?

Does it matter if the amount is more or less than the plan's involuntary cash-out threshold?

I'm currently working on setting up my first SIMPLE Cafeteria Plan. I'm not seeing anything about this, but is there any requirement or liability as a TPA for making sure that the employer, in fact, contributes the required amounts for employee benefits? Is calculating the amounts going to end up being a new TPA function.? I come from the retirement world and the employer could make errors in calculating the nonelective or match amounts (as they do in a safe harbor 401(k) plan) and I'm not seeing where there's any required reconciliation or consequence for errors. There could still be discrimination issues.

Also, there's no guidance on exactly how this works, but I'm assuming it could only work as a per payroll calculation. Are payroll companies ready for this? I don't think anyone really thought this through.

And the last thing...on the nonelective, the ER must contribute $$ for every eligible person even if they don't elect to have their salary reduced. Assuming no benefits are completely employer paid, that would mean the participant waived coverage. What then happens to those contributions? It is my understanding that the ER does not have to offer a "cash-out" option. Until there's further guidance do I just recommend only the matching option? If there is guidance and I'm just not seeing it, please direct me to it.

Having trouble getting the Service to let us do the right thing!

We filed a VCP application to correct a 401(a)(4) failure for a small MPPP maintained by a subsidiary of a much larger group, which tests on a 3-year cycle. Two years ago, when we filed, we had testing data for 2004-2006 and proposed to add participants for the 2005 and 2006 plan years. We froze the plan in 2008, but knew we would have the same problem for 2007 and 2008, so planned to keep the added participants in the plan and make contributions for those years as well.

Now the Service is telling us that the amendment to add the new participants must be limited to 2005 and 2006, unless we revise our filing to include later years. The problem is that the controlled group testing for 2007-2009 did not include our little plan, since it was frozen. To do the testing for this plan alone would cost more than the correction amount.

I don't think we can go ahead with the VCP for 2005 and 2006 and rely on self-correction for 2007 and 2008, since this is a demographic failure and the two-year period is up for 2007 anyway. Any thoughts about what to do?

Hey, he answered the question!!!

My favorite all time quote of his, was after Jack Morris pitched a no-hitter, and Sparky's comment was

"I never managed a no-hitter before"

(Thank heavens no one else was managing who might have blown it!)

But I bet the Sieve has better stories and memories.

I have a Cash Balance Plan that has different compensation credit for different employee groups.

There is no DC plan involved.

Is it correct that there is no gateway test to comply?

Thanks.

Facts:

Assume that 401k plan's annual fees paid by the plan assets are $10. $2.50 is the TPA's fee and $7.50 is the IQPA fee paid to the auditor. The plan document permits fees to be paid from plan assets and the plan fidcudiaries believe these are reasonable (amounts hypothetical) fees for the services rendered.

In reality the fees are of course larger but I don't want to state the fee amount in a public forum.

Assume that a new investment carrier can only handle paying one service provider from the assets. Assume that the investment provider will cut one check and one check only for fees (not negotiable). Assume that the plan sponsor wishes to stay w/ this investment carrier (eg I'm not looking for the suggestion of "find a carrier that can accoommodate you.").

How the TPA proposes to handle the situation:

TPA proposes to set up a "trust account" so-to-speak to house the check from the carrier. This account is in the FEIN# of the TPA (eg when I say "trust" account I don't mean the 401k plan trust). TPA will then forward $7.50 auditor's portion of the check to the auditor. TPA acts only as a paying agent. TPA will then transfer the TPA's portion to the TPA's general checking account as "fees earned" (kind of like how a lawyer handles IOLTA account).

However due to the limitation of the carrier that they will only cut one check, the Schedule A produced by the carrier will reflect that 100% of the payment went to the TPA.

The TPA will prepare the Form 5500 for the client to give to the auditor for the audit. The TPA will present Schedule A showing BOTH service providers and the amount each actually ends up w/. If Sch C reporting is necessary the same position will be taken on Sch C.

The TPA will keep a paper trail of the transaction and will never put the auditor's funds into the TPA's general checking account.

Question:

Does anyone out there do this and is it common practice? Are there any pitfalls to the TPA of doing this? Are there any problems w/ the TPA's proposed method of handling the transactions as outlined above (especially "re configuring" Sch A data as presented by the carrier)?

*****

Thank you for any assistance!

Can a loan be paid back with non-cash assets? It is publicly traded stock so value is not the issue, just the concept.

The loan policy does not specify "repaid in cash payments".

We sent several 5500-EZs out to Ogden before the 10/15/2010 deadline. We usually include a cover letter to the form (to identify client, date, etc.).

Last couple of days just started receiving the cover letters on some clients back from Ogden with a date stamp as to when received (after the 15th, but forms definitely mailed prior to that date).

Anyone else getting something back from the IRS (shades of the old days when they sent back the 5558s).

IRC section 219(d)(1) does not allow for deductions to traditional IRA's once an individual is 70 1/2. (There is an exception for Roths SEPs & SIMPLEs.) Does 219(d)(1) apply to 401k's, or any other code section or regulation have a similar disallowance for 401k's? If not, and in the absence of any 401k plan provision, can a 71 year old 401k participant continue to contribute to the plan?

Does anyone know if an S corp shareholder or LLC member pays his part of the premium with after tax dollars, can this still be deductbed back off on the 1040?

Or, does it have to be on the Schedule C or K 1 to do this?

In order to pass the new 105h tests for fully insured plans, the owners can no longer have the company pay a larger percentage of the premiums for themselves. This was never an issue in Section 125 plans, as they cannot participate in those plans. But for the underlying insurance now, what happens?

Thanks.

If the lump sum in a Cash Balance Plan is set to be the vested hypothetical account balance, then why does the Funding Target, which I understand to be the present value of accrued benefits, for each participant not equal their vested hypothetical account balanace as of the valuation date?

Court ordered. Qualifying expense? I'm guessing no because usually these things should come via a doctor's prescription/note. But will a court order or court agreement in lieu of punishment suffice?

Situation. Client elects to do a rollover out of his 401(k) plan into an IRA. After the transaction has been completed (and the money is in the IRA), it is determined that the rollover should never have been allowed. The funds are being requested back from the IRA custodian.

Question

What consequences are there to the client on any earnings (or losses) that occured while the money was in the IRA (and before it was sent back to the 401k plan)? If the rollover wasn't valid in the first place, it seems to me the same amount should be redeposited back into the 401k plan as came out. ie....if the rollover is invalid, doesn't seem proper the client should be able to benefit from any postive investment experience that occured in the IRA. Similarily, but on the other end of things, what if they took a loss and the gross rollover amount is not still available to move back to the 401K plan?

ASPPA submitted a comment letter to the IRS in August of 2008, requesting that the safe harbor definition of compensation provided in Treas. Reg. Section 1.414(s)-1© be modified to include definitions that exclude all post-severance compensation (including "regular" compensation, such as base pay). Q&A 7 of the 2010 JCEB conference with the IRS indicates that the IRS representative declined to comment on the assertion that "safe harbor compensation" used in safe harbor 401(k) plans must include post-severance amounts (which arguably suggests the IRS is still considering ASPPA's proposal). Does anyone have any additional insight into how the IRS is handling this issue, such as in the context of determination letter filings?

Thanks.

Can the plan sponsor of an MEP plan get paid on the assets in the plan, (to cover "marketing expenses" to market the MEP to its potential employers who might want to adopt the plan?)

I am working with an MEP plan where the plan sponsor is being offered a trail of ongoing revenue stream by the custodian. The justification is that the plan sponsor is going out to market the meetings with its member firms on a quarterly basis, and that the plan sponsor "drives to these meetings to help the advisor market the plan, and often buys lunch". So the custodian has the plan sponsor set up to get a percentage of assets annually paid out automatically (not from direct plan assets but like as some kind of finders fee from the custodian?)

We are also being told that "this happens all the time" and that this custodian has "tons of MEPs and this is very common"

I dont know, it is just hitting us strangely.....is this "normal"?

Got a plan with just one HCE. Plan is a 6/30 year end. For the Plan Year 6/30/2010, the ADP test is failing. The HCE will be age 50 in December 2010. He did not defer more than 16,500 in the first 6 months of 2010 (but of course he could have!).

Can he have his deferrals reclassed as catch-up contribtions? I believe the answer should be yes, but please confirm!