Are you able to file a 5500SF for a 412(e) plan? Usually you dont fill out a schedule I - so what would you do with that information on the

5500SF? Where would you but the premiums paid? There is only 3 participants in the plan.

They have both insurance contracts and annuities. Thanks for your input

I have a client who has a 12-17 to 12-16 plan year.

For the 2008 plan year, they have a contribution of 440k and are saying there is no way that they can make it.

They want to terminate the plan as soon as possible.

They are pbgc covered. 2 hces and 1 nhces.

We are past the deadline to apply for a MRC waiver....

is there anyway for them to get rid of the 2008 contribution?

Any suggestions?

This is an ERISA H&W plan.

Participant had coverage with medical insurer #1. She had cancer and insurer #1 would not cover some particular treatments she wanted/needed. She went to HR and HR said she could disenroll with insurer #1 and go with insurer #2 under their package of insurance providers, because #2 provides such cancer treatments. This was one a month before open enrollment and the HR person wrote on #2 insurer's enrollment forms, "loss of coverage" as the special enrollment event.

Well, the participant received the treatment. First she had $200K of treatment and insurer #2 paid the claim. Insurer #2 then sent out its audit person to make sure she was legitimately enrolled, whereupon it was determined that she was enrolled against their policies. She also received $1M more worth of treatment which #2 insurer has not paid the claim yet. Insurer #2 is now going after the plan sponsor for the $200K and presumably the $1M, because the plan sponsor allowed in a participant that had no right to enroll.

My questions:

1. Are these claims for money/legal damages which are impermissible under ERISA? Are Great West and Sereboff applicable even though these are not those facts?

2. Did the participant have special enrollment rights in a sort of "constructive" loss of coverage? The following regs. do mention losing coverage due to one being part of a similarly situated class - could that be a similar class of cancer victims? In other words, could the #1 insurer have been discriminating based on a health factor, which gave the participant special enrollment rights? See regs. below.

Thanks everyone. Any input would be really appreciated. Have a nice day.

Labor Reg. § 2590.701-6(a):

(3) Conditions for special enrollment—

(i) Loss of eligibility for coverage.

Loss of eligibility for coverage under this paragraph (a)(3)(i) includes (but is not limited to)—

(E) A situation in which a plan no longer offers any benefits to the class of similarly situated individuals (as described in § 2590.702(d)) that includes the individual.

Labor Reg. § 2590.702(d):

[ERISA § 702(d) is the section where a group health plan, or health insurance issuer, cannot use genetic information for underwriting and coverage purposes]

(d) Similarly situated individuals.

…if individuals have a choice of two or more benefit packages, individuals choosing one benefit package may be treated as one or more groups of similarly situated individuals distinct from individuals choosing another benefit package.

However, a classification based on any health factor is not a bona fide employment-based classification, unless the requirements of paragraph (g) of this section are satisfied (permitting favorable treatment of individuals with adverse health factors).

(3) Discrimination directed at individuals. Notwithstanding paragraphs (d)(1) and (2) of this section, if the creation or modification of an employment or coverage classification is directed at individual participants or beneficiaries based on any health factor of the participants or beneficiaries, the classification is not permitted under this paragraph (d), unless it is permitted under paragraph (g) of this section (permitting favorable treatment of individuals with adverse health factors). Thus, if an employer modified an employment-based classification to single out, based on a health factor, individual participants and beneficiaries and deny them health coverage, the new classification would not be permitted under this section.

My dad was a CPA who specialized in tax work before he retired and continued to do a little tax work until he died this year at age 86. It is hard to believe that he screwed up the handling of my mother's traditional IRA when she died in 2007 at age 79. As surviving spouse and sole beneficiary he had the option of rolling her IRA into his own, or setting up an inherited IRA with himself as beneficiary. He chose the inherited IRA/beneficiary option. However, in 2008 and 2010 he made RMDs from that account calculated as if he were owner not beneficiary. I (as one of his beneficiaries) would like the maximum stretch and would like to have his inherited account treated as if he were owner rather than beneficiary.

I have reviewed the regs, and see in section 1.408-8 A.5(b) the statement: "a surviving spouse eligible to make the election [to treat the deceased spouse's IRA as his own] is deemed to have made the election if, at any time, either of the following occurs . . . (1) Any amount in the IRA that would be required to be distributed to the surviving spouse as beneficiary under section 401(a)(9)(B) is not distributed within the time period required under section 401(a)(9)(B)"

I read this to mean that by not making the proper beneficiary RMD in 2008, he is deemed to have elected to treat the IRA as his own. I have made this point to a guy in the Scottrade compliance dept, who believes that that rule does not apply where, as here, my father affirmatively elected to set up the inherited IRA as a beneficiary acct (it is titled "Scottrade, Inc. Custodian FBO [dad] Inherited IRA Bene of [mom] IRA"). Before making a more formal request to Scottrade, I am looking for additional authority to support my position.

A plan sponsor has a 401k plan. Note the plan does not have a profit sharing provision. Makes no sense to me.

The company only has two employees. Mother and daughter.

I received data from client where they state that a contribution for one participant (over age 50) received a plan contribution of $25,000 for 2009.

My assessment is that since 2009 is past we cannot amend the plan to provide a profit sharing feature for 2009. The restated plan effective 1/1/2010 does include a profit sharing feature.

Therefore, the participant can defer 22k 401k, but the additional amount cannot be a profit sharing contribution?

Is that correct? Am I overlooking somoething?

Thanks.

Some small plan clients just provide year-end asset values and dates of contribution and not brokerage statements. They report if they have non qualified investments (and its details), but otherwise they just report asset values.

Of course the 5500 and Sch B can be prepared with this limited info; just no real accounting done.

Is it required for the TPA preparing the return to have the brokerage statements on hand?

Thanks.

A practitioner is negotiating the closing of an IRS audit. The IRS describes the settlement range as based on the taxes that could be imposed if the plan is treated as not qualified. The IRS requests that the taxpayer's representative submit a worksheet showing those taxes.

Because the plan's only investment is rights under a group annuity contract, the representative intends to show the plan's investment income as zero for every year, taking the position that the annuity contract still gets the tax treatment of an annuity contract.

In your experience, do IRS people commonly accept or question such a position (in the context of Audit CAP)?

Has anyone dealt with the situation where a DB plan former participant is/has turned age 70-1/2 and needs to begin to receive an RMD, is not responsive to attempts to contact him by the Plan Administrator, and his/her marriage status is unknown? They are trying to avoid having to modify the annuity form after it has begun (i.e., initially provide a single life annuity, but find out a participant is married and then have to switch to a J&S; or vice-versa).

Should the Plan assume the participant is unmarried (even if records may say otherwise), provide a single-life annuity, then switch to a J&S if they find out the participant is married (kind of like deeming the modification to be on account of the participant's marriage under the 401(a)(9) regs).

Do the opposite?

Also thinking about providing a long-term period-certain, which could then be changed to an annuity under the regs, but what if the plan doesnt allow this?

Thanks.

Having a brain cramp, need help on how to handle past service grants in a new plan for testing purposes.

Looking at a proposal. New plan, two owners with 4 years of past service each, none for employees.

Simplified example of design:

Owners accrue 2% of pay x YOS = 8% of pay at end of Plan Year 1.

Employees accrue $100 per month per YOS = $100 at end of Plan Year 1. Assume this works out to 2.1% of pay.

1. It seems to me that this must be general tested because the formulas are not uniform, right?

2. If so, how is the past service handled for testing purposes in year 1?. Do I have a NAR of 2% for the owners, or a NAR of 8%?

Currently the plan document allocates PS salary proportionate. Eligibliity requirements are 21 and 1 year of service. Once eligibile, there are no conditions on getting the allocation. The client has come to us (at the end of May) and requested a change to the document to allocate PS class allocated by participant. They want the change for 2010. Do I have an issue with changing the PS allocation mid-year?

Thanks for any guidance you can provide.

While cleaning up and reviewing old benefit files, we ran across a Domestic Relations Order (signed and filed with the courts) which appears to have been never completed. There is no indication that we ever accepted or rejected it. The DRO is clearly NOT Qualified. It simply appears that the final steps of the QDRO procedures were not completed.

Fortunately, the Participant is still an employee and the benefit is not in "pay status" yet. We are confident the divorce was finalized.

Has anyone ever ran across this? Would you contact the employee and ask for any paperwork related to this? The year of divorce was 1996.

With respect to the diversification notice required by ERISA Section 101(m) (required to be distributed 30 days before a participant first acquires the rights described in IRC Section 401(a)(35)), does that requirement apply to a 401(k) plan that has just now been amended to add a company stock option (publicly traded), and that will freely allow participants to divest of the stock from the start (as described in the recently-issued IRS regulation)? If so, is it a recurring disclosure requirement, that must be given to every new participant 30 days before the date he or she begins to participate? Is it enough that similar diversification language is contained in the plan's benefit statement (under ERISA Section 105(a)(1)(A)(i)), to which participants have continuous access via a secure website (as described in DOL FAB 2006-03)?

Thanks.

being newer to the 457 world , is it possible in a 457b to have only employer contributions and if so can they be formula driven. If not possible do you then have to use a 457f plan?

Is a small plan holding an asset which is a DFE ineligible to file form 5500 SF because of that?

I think the answer is the sponsor is eligible to file SF, provided the DFE (and every other plan asset) has a readily determinable fair market value and the other non-asset conditions are met.

I went to http://www.regulations.gov/search/Regs/home.html#home, selected "Rules" and pasted "29 CFR 2520.103-1©(2)(ii)©" from EBSA's instructions into the keyword textbox and it immediately served up this Federal Register document! The reg is pretty clear (please see page 20 of the PDF).

EBSA_2007_0045_0001_1_.pdf

I have a cafeteria plan that is terminating.

The plan has been exempt from filing Form 5500 since it has less than 100 participants and does not maintain a Trust for the plan assets.

Since they have not had to file in several years, is a final Form 5500 required to be filed?

Just a quick comment before further analysis:

One of my beliefs to date is that a 412i plan can be funded where 50% of total premium is for annuity contract and 50% of total premium is for life insurance, thus not violating the exceeding 50% of total costs requirement of 74-307.

Is that one approach that is satisfactory?

Cost of life insurance. 412i plan is for the two owners (husband and wife) and only employees of company. Is it always required that a cost of life insurance protection be reported as taxable income per nitice 2002-8 currently or are there situations where cost of insurance is not required or reported as income to participant?

Thanks.

3% NESH for all eligible employees.

Non-Safe Harbor Allocation for Profit Sharring

2% Profit Sharing for all others

10% for HCEs.

They want the 3%NESH to also count towards the 5% minimum gateway.

Is this allowed?

There are multiple s corporations with one shareholder owning over 60% of each. They are trying to form a single parent S corp. to use as the vehicle to form an ESOP and own control of all corporations. Can 1 ESOP be formed at the parent company level and have it cover employees of the 60% subs? I would think this would be permissible - if it turns out to not be a controlled group, it would be treated as a multiple employer plan and subject to the rules under 413?

Any insight would be greatly appreciated.

Hello:

I have a client asking if they can assess an administrative fee only to terminated employees with account balances, but not applying any type of fee to active participants.

I can see that the DOL, in FAB 2003-3, establishes some guidelines but if my reading is correct, it appears to me that they really intended that an administrative fee that is assessed to everyone, can be passed through to terminated participants, but paid by the employer for actives, without a problem.

I do not read the FAB as saying you can assess a fee to terminated participants, but not assess it to active participants (though they may be paid by others), but maybe someone can correct me if I am reading this too conservatively.

Thank you,

Andmik

A participant terminated in 2009 with an outstanding loan balance.

They took a distributuion in 2009, less the outstanding loan amount. The loan was defaulted. A 1099 R was issued for the distribution and for the loan default

My question is where to report the default of the outstanding loan amount of the Schedule H.

Is it reported on line e(1) Benefit payment to participants or is is reported on line g Certain deemed distribribtions of participant loans?

Thank you for any help