Hi,

I want to make sure I understand the COBRA process from an employer's standpoint.

I know that an employee will be termintated at the end of this month. I have prepared a COBRA explanation and election package. I have noted that her health insurance coverage will cease on the day after her final date of employment. I have included what her total premium amount is (for employee and spouse as that is what she is currently under). I explain that due to the AARA regulation she will only be responsible for 35% of the premium amount for the first 9 months of the total 18 month period. Also, included are the forms for her to elect or waive coverage.

I will make sure that this is sent out so that she recived it no later than 14 days from her termination date. I will let her know that she has 60 days to elect coverage from the later of either this notification packet or her termination date.

I will then make sure the insurance providers are notified both of the termination date and if she elects COBRA. I think that's all that is required.

Now, I do have a question. The current health insurance plan the employee has is thru Anthem and includes Health and Vision combined in the total premium. Is she eligible then to maintain health and vision coverage or does COBRA only apply for solely health coverage? Also, Anthem has a life coverage, which is billed on a separate invoice so I do not think COBRA applies to that.

I thought COBRA would only include the Health insurance, but I spoke with my broker and he indicated that I need to give this employee the option of electing Health or Vision or both.... IS the correct?? I thought COBRA only provided for Health insurance so I would think I would just sent her the premium total for Health and exclude the vision. Does anyone know where I can find this specific information? I have read a lot on the DOL site, but nothing says what to do if Vision is included in the Health insurance plan...

Thanks for your help!!!!

I need to negotiate a matter between the Washington Office of IRS regarding my Plan. I am looking for someone with a lot of experience and a powerful name - I want the attorney to be mentioned on rankings, journals, and he/she needs a exceptional track record.

Please let me know who that person would be.

A solo 401(k) plan had some creative accounting within the plan. Can you determine if indeed it is a prohibited transaction?

facts....principal took money out of the plan to buy non-publicly traded securities as an investment within the plan. The stock certificates are titled in the name of the plan. (not so much an issue, I think) BUT, he purchased stock in the company (bank) that he works for as Vice President. The principal does not own any stock in the company (bank) himself. Is this ok?

An issue exists as to whether an affiliated service group exists involving a long-standing client that maintains a C-T P/S and 401k plan. A few years ago, the owner's 2 adult children started a new company in the same industry, but which pursues a different market segment. The new company maintains no plan and the two kids stopped working at "Dadco" and work exclusively at Kidco.

For a variety of reasons, it was decided not to seek a ruling as to ASG status. I have been running c-t calculations each year and determined that the tests passed whether an ASG existed or not.

Then, in 2008, the owner's son-in-law, who is married to the 51% shareholder of the new company and who works for both companies, suddenly made large 401k contributions. If an ASG exists, he is an HCE in Dadco and the ADP test is failed. If no ASG exists, he is a NHCE and the ADP is passed.

If the ASG status is not resolved by the end of 09, we risk disqualification no matter what action is taken. If we distribute out excess 401k to the son-in-law and it is ultimately found that no ASG exists, we have violated the 401k distribution rules. If we don't distribute and an ASG exists, we have failed ADP.

Is there any way to get a ruling before year end? Anyone have a contact number to the irs where I can discuss the problem with a human being and expidite the process? Any other thoughts?

A very small employer (3-5 employees) established a 401(k) about 3 years ago. No deferrals were ever made and no employer money was contributed. It seems like termination of the Plan would require the adoption of a very simple, non-technical termination amendment...something along the lines of "The Plan is hereby terminated effective ______, 2009". With no plan assets and no need for tax qualification why bother with the expense of adopting an EGTRRA restatement, PPA amendment etc... Does anyone feel differently?

Say the employer pays directly for an employee's individual health care policy. By Rev. Rul. 61-146, that employer direct payment is not included in the employee's compensation (under IRC Section 106(a) and Treas. Reg. Section 1.106-1). That same rule would apply if the health care policy premiums paid directly by the employer for the employee's coverage also included coverage, in the same policy, for the employee's spouse and/or dependents.

However, let's say that the employer not only pays premiums for the employee's individual health care policy, but also pays premiums for an individual policy for the employee's spouse (a separate policy from the one covering the employee). Is the employer-paid premium for the spouse's individual health care policy included or not included in the employee's gross income? (Seems to me it ought to be included.)

I have seen some examples of current proposals from our sales team that appear to be

db plans bulked up on life insurance in non-412i plans. I do not have an ax to

grind either way. I am confused and just trying to respond to the questions

that I am getting in. The examples don't make sense to me post-PPA, but I am

happy to be educated on how these would work.

Most recently they are coming from a firm that calls them

"benefit-focused-retirement plans." Is anyone familiar with this?

Two specific examples cited in a write-up:

1. A husband and wife with a first year corporate deduction of $750,000.

Reference to a $1,700,000 life insurance policy.

2. Two parnters taking $600,000 deductions for each of ten years with reference

to $2,000,000 life insurance policy.

Happy to hear an advocate of when this would work post-PPA world.

We are an under 50 employee company with a plan year of Oct. 1 to Sept. 30. We tried to get our helath insurer (same one for 9 years) to alter our plan year to a calendar year to allow us to consider an HDHP plan with an HSA. Our existing FSA 3d party administator thought this would not be a problem. But our insurer would not consider one 15-month period renewal. We then renewed for one year and asked about doing a renewal or new plan on January 1. Carrier sales rep told us that because we're 2-50, they are required to renew us at annual renewal and there is a limit (statutory, regulatory, other?) on how much they can increase us at annual renewal but that cap doesn't apply to offcycle plan changes/exceptions. Because they said we have high utilization, going to Jan. 1 would be prohibitively expensive and that they might actually not care if we went elsewhere.

Is this right about required renewal and the limit/cap on 2-50 groups? Would that be federal or state (Ohio)? Or is this a bunch of hooey??

Any input or direction would be much appreciated.

Tommy

Client has over funded plan (believe it or not) based on his high-3 compensation avg from the sponsoring entity (he's at his high-3 415 limit but far below the 415 dollar limit). He recently mentioned he has another entity he also owns 100% of (no employees now or previously) that he used to draw compensation from (apparently at higher level than the sponsoring entity of the DB plan) that is still an active corporation though little activity is going on there now.

Anyone see any problems with me amending the overfunded DB plan to count compensation from both entities for both the plan's def'n of compensation for benefit accruals and for IRC 415 purposes. In fact I believe th def'n of 415 comp is based upon a controlled group basis, and this certainly is, as he owns 100% of both entities.

This doesn't seem particularly aggressive to me but the stakes are high so I just want to make sure I'm not over looking anything.

Do you think it would be helpful to have the other entity sign a co-adoption agreement to co-sponsor the plan ?

Can anyone shed some light on the Lyondell bankruptcy and the the decision of the US bankruptcy judge that employees with deferrals in the DCP would "stand in line" behind secured and unsecured creditors. We are just entering DCP enrollment season and I need to be able to address this, aside from the usual disclaimers. For instance, on an anectodal basis I am not aware of a US bankruptcy judge violating the sanctity of a Rabbi Trust to reach in and claim employee deferrals.

Thanks to all.

Kathy

Have any of you seen any articles or recent studies showing the number of older working employees who will most likely leave their job (retire early) if the reform is passed? I have heard a lot of employees over the years saying that they are only working because they need insurance benefits and would leave their employer when they qualify for Medicare.

Thanks, I think it would be an interesting read....

There are mandatory contributory 401k's. Have you seen mandatory contributory medical plans where as a new employee you must participate and contribute unless you can prove other coverage? It would solve participation issues at some employers.

A business owner implements a DB plan.

Do we agree that he must obtain an EIN for his pension trust and then when he opens a pension account at say Schwab he should provide plan name and trust EIN?

Now let's say the owner merges with another company and the surviving company (not the original owner's company name) sponsors the plan and the plan is amended to be renamed.

Regarding that original Schwab retirement account: SHould the plan sponsor now have the name of the account re-titled to the new name of the plan and should they (or is it required) that a new trust ID number is applied for for the renamed plan? Or can they just keep the original trust ID #?

Thanks.

Is there any guidance on how 436 benefit restrictions interact with a terminating plan?

If the AFTAP is <60%, but the owner has the majority of the benefits and is willing to waive receipt of any benefit not able to be funded by the plan assets, can the lump sums be paid out?

I have a plan where someone who has irrevocably waived her participation in the plan (and all other plans provided by the Employer).

She has otherwise satisfied the eligibility and entry requirements for the plan.

Is she considered a participant for testing and 5500 purposes?

If so, why? It's not like she is temporarily declining to make a 401 deduction and may decide later to do so. She could not even if she wanted to...even if they terminate this plan and put in another a year from now.

Never having filed electronically before, we have questions on this just like anyone else. Does anyone know:

If you are using a "third party web-based system" - once you enter all the 5500 data and send the e-mail to the plan sponsor to invite them to a "signing ceremony" - is this something that must be done immediately, and will you need to be on the phone with them or something crazy like that? Or, will they then be able to do their thing and file at their leisure (within the deadlines, of course)?

I'm assuming the latter. But, thought I'd see if anyone has better information! Thanks.

This particular Cash balance Plan excludes non-owner HCEs, and has dual entry. Let's say an employee is an HCE and meets the eligibility requirements on 6/1/2009. Normally they would enter on 7/1/2009 (next entry date), however they are NOT an owner, so thus excluded from plan participation. However, they become an owner on 9/1/2009. Would they then become a participant on 9/1/2009, or would they become a participant on 1/1/2010? The plan document isnt specific on this situation, and it seems like it could go either way. Thoughts?

A client got busy and did not fund a solo MPP and 401(k) in 2001 thorough 2006. He did fund 2007, but was low due to a miscalculation. 2008 tax return is due next week.

Also, he can find no documents. Plans were first funded in 1996.

5500's were probably never filed since Plan has never had a total over $100,000. Obviously there was small contributions and some bad luck on investments.

For these questions we are just looking at cleaning things up the simplest way:

1. Would you recommend he put anything into the 401(k) to meet the ongoing contributions requirement?

2. When filing EPCRRS, would you do documents for TRA '86, GUST and EGTRRA?

3.Since he is the only hurt by the underfunding of the MPP, do you think we still need to go back and correct all of the underfunding?

The following link from the IRS indicates that S Corporation owned ESOPs are required to report the S corporation's income from the taxable year on Form 5500. See the section titled "FACTS".

Generally the only income within the trust is the stock value change and some interest income.

I'm uncertain as to how the S Corporation's pro rata share of income would be reflected on the Form 5500.

Does anyone have experience with this? If it's true what is the other side on the entry on the plan accounting?

http://www.unclefed.com/Tax-Bulls/2003/rr03-27.pdf

Thanks,

erisaauditor

We need to file a late form 5500 for a plan not subject to Title I of ERISA, and so the DFVCP is not available. We want to submit statements of reasonable cause with our filing, but we want to make sure it gets to the IRS. Has anyone ever dealt with this situation before, i.e., do we just file with the EBSA and hope the EBSA sends the reasonable cause statements over along with the form 5500?