When is a multi-employer, collectively bargained, health and welfare fund required to comply with the requirement to cover dependents up to age 26? I know for most plans, it is the first plan year beginning after September 23, 2010. However, there is a provision in PPACA that appears to extend the effective date to the date of termination of the last collective bargaining agreement. There is also a question of whether or not that provision even applies to self-funded plans.

What are others thinking?

I am trying to find a citation for the following proposition:

"A qualified plan may not be merged with a 403(b) plan because qualified plan assets may not be commingled with a 403(b) or any other nonqualified plan."

Any help would be appreciated.

I thought I read the answer to this somewhere, but now cannot find it. If the plan administrator and the plan sponsor are one in the same, do we need to electronically sign both lines with the IREG credentials?

Employee passed away while actively employed. Employee had named Sister as Primary Beneficiary and Nephew as Contingent. Plan allows for Pre-Retirement Survivor Annuity to be paid immediately, with guaranteed payments for 10 years.

We began paying a monthly Pre-Retirement Survivor Annuity to the Sister. Now the Sister has passed away prior to 10 years of guaranteed payments.

Do the remaining payments go to Employees' Contingent (nephew) or to the Beneficiary of Sister (who is NOT the nephew)?

Our Plan Document does not address this situation. It only addresses what happens if there is no Beneficiary form on file.

If you have a discounted stock option with a vesting schedule, is there 409A income on unvested options?

Any idea what you are supposed ot do when you file under VCP for an old ADP failure and some HCEs received too much from the original tests. The rules are pretty clear if you need to do an additional refund but I can't find anything on the excess.

We currently have a FY for our 401k plan. I am confused by our record keeper using 'crossover" deferrals to help up pass the ACP?ADP and 402G testing? Would a calendar year help prevent this? I'm relative new to the 401k world.

This is, I think, a fairly newby question. I am not 100% sure what is relevant, so I'm going to be overinclusive in my description. I apologize for both problems in advance.

Company A (a service business with around $3M in revenue) is being acquired by Company B, a new S corporation, via asset sale. As part of the sale, either a new retirement type plan will be established (looking at a KSOP) and existing employees allowed to roll their existing 401k into the KSOP or the existing 401k plan will be transferred (to the extent possible) to Company B (and thereafter the 401k plan converted to a KSOP). Company B intends to honor all accrued vacation, seniority, etc. according to the policies of Company A. The 401k plan of Company A currently does a safe harbor match, I believe, and does not invest in the securities of Company A.

The new owner is investigating alternatives to provide long term incentives for the various employees. The new owner also has an existing IRA outside of the company which he might consider rolling into the KSOP to the extent to which he could then use it to buy stock or lend monies to the corporation. The new owner is aware that all participants in the KSOP (basically all employees) have to be given the same opportunity -- and does not regard that as a real issue of concern.

My confusion starts when I look at the rules for who can hold stock in an S corporation. It is my understanding that generally a 401k plan is not allowed to hold stock in an S corporation. So, in order to invest roll over monies into the company via a rollover of an existing IRA into a 401k, the usual requirement is that the new corporation must be a C corporation. This leads to my first questions:

1. Can the rolled over monies from the new owner's old IRA be used to purchase stock from the S corporation, provided the KSOP is set up correctly?

2. I guess another way to say the same thing is can the KSOP be used by the new owner to sell the stock to himself in the KSOP structure?

3. Can the rolled over monies from the new owner's old IRA be used to purchase bonds from/provide debt financing to the S corporation?

4. Does the answer to #3 change if the funds are then loaned by the S corporation to the ESOP to purchase company stock from the new owner?

5. Can the rolled over monies from the new owner's old IRA be used as a loan directly to the ESOP portion of the KSOP plan?

6. To whom and on what basis can the ESOP stock be allocated?

7. Do any of these answers change to the extent the new owner retains at least 50% interest in the S corporation outside the KSOP structure?

1-5 I believe should be fairly simple for someone unlike myself who knows what they are doing in this arena. 6 & 7 look more complex to me.

Quick disclaimer -- I'm looking for a broad strokes approach as to what is possible. I fully recognize that implementing any of the above may turn out to be a stone cold !$@# and not practicable for a company of this size and magnitude. Any response in this thread is strictly intended as a basis for talking with professionals (accountants/attorneys) who specialize in this area.

Thanks you in advance for any replies.

I've done a lot of reading on the internet about who can/can't open an individual 401K/Single-K/Solo-K and can't quite determine if the following is possible. An individual and spouse are the sole owners of a C- Corp. It the owner and owner's spouse are NOT employees (no W-2), but for the first year took income as 1099 contractors, can they open a Single-K or Individual 401K and contribute?

Thank you.

Our administration system provides present value factors to determine lump sum benefits at various ages based interest rates and the mortality table input. The factors are calculated for AE and 417(e).

A friend who works at a plan admin firm recently sent us a copy of the questions asked on a PBGC post-termination audit. One of the questions asked for the interest rates, mortality table and age methodology used in determining lump sum distributions (age last, age nearest or interpolation).

We will be terminating a 30 participant DB as a standard termination. If a participant is 47.765 years old at the date of distribution, must we interpolate between the factors at age 47 and 48? How about just using age nearest to the nearest month? Or what about age last birthday?

The document is silent on the age methodology issue.

Thanks for any input.

I have been approached by a PEO to take over our employees. We are a non-governmental not for profit and have a 457(b) deferred comp plan. Our employees would become employees of the PEO and wages would be reported under the EIN of the PEO. I have not been able to find any definitive answer about what impact the new relationship would have on the 457(b) future contributions, and/or the account itself. Does anyone have experience in this?

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%?