Hello,

I have a participant who has died and they had an outstanding loan balance. I need to know if the defaulted amount is now taxable to the beneficiary and if so does the 10% early w/d penalty apply because he is under 59.5? Thanks!

I have always taken a broad view of the regulatory mandate that all "participants" be provided with the SAR. To me, this means any individual with an account balance under the plan. The client is asking whether this includes former employees with deferred vested balances, laid off employees, etc. I am not aware of an exception to this. However, I don't believe that DC plans have to worry about providing the SAR to "beneficiaries" entitled to future benefits.

As always, your expertise and experience would be most appreciated. I have not found anything on point.

Has anyone heard of this program? I saw an ad in this month's HR magazine. It's a voluntary benefit where the employees can purchase personal computers, electronics, and appliances through a 12-month payroll deduction w/o interest or credit check. Since I've been thinking about replacing my home computer, I thought this would be a great program where I can make the payments directly through a payroll deduction. Thanks.

Plan covers several companies in a controlled group.

One of the companies has been hit by the economy.

Plan is currently on Cobel prototype. Deferral and Discretionary Match Only. (In process of EGTRRA restatement)

All the companies have been putting in the same match amount.

Company B wants to reduce or eliminate their match.

1. With the prototype doc can you have different employers having a different match. If no - VS or ID?

2. What testing is required besides the ACP? If they reduce Match to zero, I might have coverage issue, but is their anything else I need to worry about?

3. Could each of the companies have a different match?

Appreciate any input on what questions etc I might be missing.

Pat

Hopefully an easy question.

If you use an EOY valuation for 2008, can you automatically switch to a BOY for 2009? It's a one-person plan.

Thanks.

It was my understanding that in a fiscal year plan, the limits that apply for compensation and maximum annual addition are the limits for the calendar year in which the plan year began. A prospective client has a DC plan that has been using the limits for the calendar year in which the plan year ends. Is that permissible?

A participant in a self-insured group health plan has committed fraud against the plan by "doctor shopping" and filling multiple prescriptions for the same presciption pain meds at multiple pharmacies (and submitting claims for each).

The employer would like to amend the health plan to provide that a participant is terminated from the plan upon committing fraud against the plan.

The HIPAA portability regs seem to contemplate such a termination (as they provide that an individual is not an "eligible" individual for purposes of avoiding the pre-existing condition exclusion when obtaining individual insurance if the individual has been terminated from a prior plan for committing fraud against the plan).

My one concern is that the health plan will almost certainly disclose some PHI to the employer when the employee is terminated from the health plan. Where in HIPAA is such a disclosure of PHI permitted?

Many thanks!

Due to economic conditions there was a partial plan termination in 2008. At the time of the partial plan termination the affected participants were 100% vested. Some of the affected participants that were terminated are now rehired. Are the affected participants subject to the vesting schedule for employer contributions made after the terminated employees are rehired? That is, are the rehired employees 100% vested on the employer contributions made after the date of rehire or are they subject to the vesting schedule provided in the plan document?

The new notice suggests, "You may wish to consult with the Plan administrator . . . before taking a payment from the Plan."

By Plan admnistrator, do you think the notice had in mind the 19 year old or the 25 year old?

Hi,

I am trying to figure out how to fix this. The participant had a new baby. She returned to work in Jan 2009 and elected the max $5,000 towards dependent care benefits. Her husband did the same with his employer. They have just realized they made a mistake.

I don't have a change in status now, so the participant must continue withholding. My questions is, what amount does the employer report on W-2 box 10? Is it the amount withheld during the year or the amount reimbursed? The employee does not have enough expenses to have the full amount reimbursed.

Thanks for your help!

Going in circles on the tax forms. We've been having a little conversation. Suppose you have an unincorporated partnership. Let's make it easier - no common law employees. No partnership contribution to the Profit Sharing account. A partner has income, assuming all other income/expenses have been taken into account other than the deferral, of $100,000. Partner defers $15,000.

1. It appears that this deferral would be listed on Line 13 of the K-1. Yes or no?

2. Does this reduce the K-1 income to $85,000 as reported on the Schedule E which is used on Line 17 of the 1040, or does it remain at $100,000?

3. When completing the 1040, is the deferral listed on Line 28? Yes or no? (This will depend upon the answer to #2 above, since you obviously wouldn't deduct it twice)

Any other thoughts/observations?

Thanks!

Our client just informed us that they own 100% stock of another company back in 2007. This group will be adopting the current Plan. However they have a Plan and eligibility is less than the current Plan. I know they have to be tested for 2009, do I need to use the lesser requirement for 410b and ADP testing? Moving forward these employees will have to wait 1 yr (based on the current Plan Doc) Can we do a one time entry for the acquired group or do we have to let both companies in the Plan?

The valuation date was changed from 12/31/2008 to 1/1/2008. The Schedule C income for 2008 was very low compared to prior years so I need to use some of the carryover balance (COB) to offset minimum required contribution (and apply towards late quarterly contributions due to high COB)

Does the plan sponsor have until the filing of the 2008 Schedule SB to make this election? I believe I have until the filing of the Schedule SB to use some of the COB to offset the Minimum Required Contribution but didn't know if it was different due to the late quarterly contributions.

Say each quarterly contribution installment is $5,000, the EIR is 6%, the plan has over $200,000 in COB as of 1/1/2008. Would I do the following:

-first installment due 4/15/08: use $4,916 of COB as of 1/1/08 since $4,916 x 1.06^(3/5.12) = $5,000

-second installment due 7/15/08: use $4,844 of COB as of 1/1/08 since $4,844 x 1.06^(6/5.12) = $5,000

and so on?

A small dentist office who has a flexible spending account would like to terminate the plan effective immediately. Her thought is to refund any money in the plan to the participants. Is there any issue with terminating the plan prior to year end and is any formal notice/disclosure required to be sent to the participants or IRS? Any guidance would be appreciated.

This is an interesting situation:

A doctor group operating under entity X owns 100% ownership of entity Y, which includes less compensated staff members (set up this way in order to offer differing benefit packages between the highly compensated doctors of X vs. less-compensated staff of Y. Makes sense.

So, X is selling Y to a hospital in an asset purchase agreement. After the purchase, Y will essentially be out of business- it will no longer exist. Of course, X will.

My question: Since Y will not be a surviving entity, but X will, does Cobra apply (just in case Y employees decide they do not want to work for the hospital so they quit?) That is, would X be responsible to offer Cobra after the purchase even though entity Y will no longer be in existance?

I have looked everywhere for some insight into this situation, but cannot find answers. Any insight or suggestions are greatly appreciated!

THANKS!

As it's audit season again, the issue has again arose regarding the footnote regarding assets representing 5% or more of current assets. For years, we have used the asset figure as of the beginning of the year; now, there are those who feel it should be as of the end of the year. There is nothing in the audit guide or Form 5500 instructions as to whether or not to use BOY or EOY assets to determine the 5% level.

Opinions? Or, if there is a thread to previous conversations on this topic, it would appreciated. Thanks much!

Does the beneficiary of a life insurance policy held in a 401(k) plan have to be the plan? Can the participant name an individual on the life insurance beneficiary form?

Section 415 regulations require a plan to include as compensation any payments made by the later of 2 ½ months after severance from employment or the end of the limitation year that includes the date of severance from employment if such payment would have been paid to the employee prior to a severance from employment if the employee had continued employment with the employer and are regular compensation for services during the employee’s regular working hours, compensation for services outside the employee’s regular working hours (such as overtime or shift differential), commissions, bonuses, or other similar payments.

If our plan excludes bonuses, commissions, shift premiums, allowances, fringe benefits and all other types of remuneration from regular compensation, do we have to include it if it fits within the 415 language above? I’m having a difficult time reconciling the two.

An employer that maintains a one-participant retirement plan will file its Form 5500EZ reports for calendar plan years 2008 (on extension), 2007 (a slight amendment of a timely filed report), and 2006 (seeking delinquent-filer relief). For the 2007 and 2006 reports, is it okay to use the current forms? These will be handwritten, not electronic.

Does an 11(g) amendment need all the same disclosures as ordinary amendments (such as a summary of material modifications)?