In 2008, a 403(b) plan was terminated and all participants received a distribution. Can a former participant who now has a paid up annuity roll that to a 401(k)? In other words, is their paid up annuity still considered a 403(b) and eligible for rollover?

A participant wants a distribution of 1/3 of what his RMD would be for 2009 and not have any federal withholding. Under the new 'rules' for 2009 is this allowed? Or would it really be considered a normal in-service withdrawal because he did not take the entire RMD amount?

Is a sole proprietor's 401(k) plan benefits protected from the IRS and State tax liens? Can a distribution be forced?

It is my understanding that, pursuant to Notice 2009-82, a participant who received a "purported" 2009 RMD in 2009 may do an indirect rollover to an IRA or eligible employer plan of all or any portion of such distribution by the later of November 30, 2009 or the date 60 days following receipt of the distribution.

Assuming my understanding is correct, may such a rollover be made back into the plan from whence the distribution was made?

Do terminations for cause, such as failing drug tests or violating attendance policies with tardiness, add to layoffs when evaluating the number of terminations against the 20% limit for partial plan termination?

In section 404(b)(2)(A) it states, For purposes of this section, any plan providing for deferred benefits (other than compensation) shall be treated as a plan deferring the receipt of compensation. In the case of such a plan, the determination of when an amount is includible in gross income shall be made without regard to any provisions of this chapter excluding such benefits from gross income.

In section 404(b)(2)(B) it states, Subparagraph (A) shall not apply to any benefit provided through a welfare benefit fund (as defined in section 419(e)).

Don Levit

I have been hearing about companies that have two different health plans based on service. A new hire goes into one plan for the first year and on their anniversary they move into a more generous medical plan. Do any of you have clients or does your plan work this way? I was wondering what the pros/cons are for this type of plan structure?

Also, do you have any clients that have employees on a generous (aka media called "cadillac plan") but have dependents on a less generous plan? Is that even possible to have dependents on a plan with a higher deductible. If so, what would be the pros/cons?

Thank you

I work for the recordkeeper of an ESOP. We are not the trustee or custodian.

Some distributions were processed in 2009, and the plan sponsor instructed the custodian on the checks to be cut for the participants, along with the applicable tax withholding amounts.

The custodian issued the participant checks, and also issued two separate checks to the plan sponsor for the tax withholding amounts. These dollars obviously have to go to the IRS or U.S. Treasury.

Is there a form of some sort the plan sponsor needs to complete when submitting these tax withholding dollars? Also, to whom should these payments be made to, and where should they be mailed.

Thank you in advance!

I retired from a company (Ford Motor Company and Spun off --Visteon )(at Age 50) with a defined benefit plan. Most of my pension comes from my original employer and a smaller portion comes from its spun off company. As part of my early retirement plan the spun off company was to provide about $350 per month from the DB plan until age 55. At that point (as part of my early buyout plan) the plan was to increase my pension up to $750 per month and then at age 62 the plan was to pay out $1100 per month from the DB. All is going well as I turned 55 two years ago and the increase to $750 happened without a hitch. Earlier this year my spun off company filed for bankruptcy and my guess is that somewhere in the future they will turn over their DB plan to PBGC. Here is my question. Is there a provision in ther PBGC system to "increse" by benifit up to the $1100 in a few years or willl that promised early out benefit be lost and my "current" pension provision ($750)be the basis for my PBGC benifit

Plan provides that if you fail ADP, elective deferrals are returned and the related match is forfeited. Under PPA, we eliminate gap period income on the excess elective deferrals; how do we measure income on the forfeited match? Do we eliminate gap period income on the match as well? These are not matching contributions that fail ACP; this is the match on amounts that fail ADP.

Have a takeover plan. For some reason the plan excludes compensation in excess of $50,000. (Haven't figured out why yet.) The prior tpa used that definition when running the ADP test. I don't see that excluding wages in excess of $50,000 ever satisfies 414(s) & therefore the limitation couldn't be used in the ADP test. Am I missing something?

Thanks in advance for any guidance.

I noticed that our plan document provider's Post-EGTRRA "Good Faith" amendment (needed to be adopted by 12/31/09) seems to have the following options:

1. Just change the in-service distribution age to 62 or later but not the actual NRA for other purposes.

2. Change both the NRA definition and the in-service distribution age to 62 or later.

I'd like to make as few of changes as possible while still complying with final phased-NRA regs.

For the few plans with NRAs of say 55, that may lack supporting industry data for 55, would keeping the NRA at 55 but changing ONLY the in-service distribution age to 62 or later meet the IRS concerns (ie., they would only get a distribution at age 55 if they physically retired) ? Or are there other reasons I need to be concerned about changing the NRA to 62 for to be in compliance ? (you can assume I don't want the change for funding purposes)

Opinions ? Thoughts ? Thanks in advance.

In last years open enrollment I kept the Healthcare TaxSaver account I had already and added a Dependent Care TaxSaver account. I thought the DCA was for medical reimbursement for my domestic partner. We dont have nor have we ever had children. I realized my mistake in Aug 09 after my partner had surgery. I called and was told I had to write a letter to my employer. I did so and my request was denied. I wrote another letter of appeal. I have an open case but am trying to get together as much information as I can together for when I get the letter saying the appeal was denied. I have read 125 and 129 and cant find much in the way of how I can get the funds moved from the dependent care account to the health account. That is all I really want. I will send in for reimbursement for these funds as I have before. Is there anywhere I can go to find more info to send my employer. This is the best site I have found so far.

Thanks

I have a plan that contains a SH Match using the basic formula with no other employer contributions. They are asking if they can exclude HCEs from receiving the 2009 SH Match. They did provide the SH notice to all employees and did not indicate that HCEs would be excluded. They have had a rough year financially speaking and are looking for ways to reduce the amount of match owed.

I understand that in some cases HCEs can be excluded but wondered if they could be in this situation considering that notice was given to all employees. In addition if there was some way they could get away with excluding HCEs would additional testing be required as a result. Obviously the ACP test won't be an issue if no HCEs receive a match but what about the top heavy test? In this situation there are several HCEs who are not Key employees so would some sort of Top Heavy Minimum be required? The plan is Top Heavy for the 2009 plan year which is the year they would like to exclude HCEs from receiving a match. Any insight into this issue is greatly appreciated.

Thanks!

I haven't seen any guidance suggesting that cash balances plans are not covered by 436. Anyone disagree with that conclusion and, if so, have any supporting authority?

An employer wants to amend his current loan program to say that the only funds available for a loan are elective deferrals. In some cases, that will severely limit the amount a participant can take. I can picture a scenario where, according to the usual loan calculations, a participant could borrow $20,000, but only has $10,000 in elective deferrals. If there are other vested assets, is the employer required to make them available for a loan, too? I understand that an employer can specify the order of assets that will be loaned first, making the elective deferrals the first source of funds. But saying that all vested assets aren't available seems like half a loan program.

We are a community human services agency that offers a 403(b) plan to our employees for their voluntary salary deferrals. As part of our operation we have a sheltered workshop that has about 60 adults with disabilities who work five hours per day, five days per week. They earn paychecks and we issue W2's and have to cover them with Workers Comp insurance. They are paid on a sub-minimum basis that is regulated by DOL rules. The question I have is whether the Universal Availability requirements mean that they too must be included in any effective communication about the plan? They don't really fit any of the specific exclusion categories (they work more thatn 1,000 hours per year and are not students etc). It is extremely unlikely that any would choose to want to participate and that they would not be contributing $200 or more into the plan per year so they could be kept out from participating. But I would not want to have to include them in any communication about the availability of the plan if it can be avoided. Most are not competent and have guardians and so forth and they would be confused over why we are approaching them in the first place.

Any thoughts on this?

I am a Treasurer of a small 501©(3) non-profit corporation. We have one employee who works part-time and is paying for his own health insurance. Even though as an organization, we cannot afford to pay for it, I want to help him find more appropriate coverage individually. The insurance he has is his former employer’s plan; he did COBRA for a while, then when it expired he continued the policy as an individual. He had a really bad car accident a couple of years ago, and he is afraid the pre-existing conditions clause will prevent him from shopping around. I am not aware of any other conditions he has and am really not in a position to ask considering I am kind of his boss.

His policy covers a lot but is expensive. He wants a cheaper one and is OK if the new one will cover less and/or have higher co-pays. I encouraged him to talk to his current company (Aetna) to see if they can offer him another policy with no exclusions for pre-existing conditions stemming from that accident. I also suggested that he research what’s available on https://www.ehealthinsurance.com/ and call a couple of providers he likes. Finally, I suggested to try a health insurance broker through http://www.nahu.org/.

Can you guys suggest anything else that may work in his situation? Is he really completely immobile with his health insurance because of that accident?

I appreciate the answers.

Inasmuch as the MHPAEA specifically defines "mental health benefits" as "mental health services" (42 USC sec. 300gg-5(e)(4)), does anyone know if there is any rule, regulation, decision, opinion, or anything else from the government that states whether presciption drugs for mental health purposes are included?[

Anyone have a good web-site that summarizes all of the state's withholding rules, particulalry those with mandatory wtihholding?