Does anyone know how to treat ER paid Health Insurance premiums for a self funded plan who allocates a liability on their payroll records for the ER portion of the Health Isurance premiums, but does not actually contribute this allocated amount to the self funded plan? They are just tracking the ER cost as a liability on the payroll reports. The question at hand is whether or not these allocated ER premiums should get taken into account when running the Key Employee Concentration Test when they are NOT actually paid; or should the EE portion of the premiums be the only item included in the Key Employee Concentration Test?

My understanding is the ER is just tracking these costs on their payroll. The only amounts being funded into the Self Funded Health Insurance plan are the various EE premiums being paid.

Thanks -

Nathan

Where a rehab plan has been adopted but an employer has not yet adopted a CBA consistent with the contribution and benefit schedules in such plan, I understand that the contribution schedule cannot be "forced" on the employer until after the existing CBA expires (details omitted). Until the employer adopts the plan, however, a statutory surcharge applies which provides an incentive (among others) to adopt it sooner.

Can the impose the benefit schedule under the rehab plan before the employer adopts it? I do not think so but if that's not right, I would appreciate your letting me know.

Thanks

Lets assume you have a one participant defined benefit plan sponsored by a sole proprietor. The plan's normal form of benefit is a 100% J&S annuity. Note that a single lump sum is one of the plan's optional forms of benefit. The actuarial valuation for the year prior to the enactment of the PPA funding rules was prepared on the basis the participant would receive a 100% J&S annuity from the plan which had the effect of increasing the funding obligation.

Is it reasonable to continue to fund for the 100% J&S annuity under the new PPA funding rules if the participant at this time indicates his intent is to indeed take a 100% J&S annuity from the plan? Therefore, we would fund for the annuity and use 0% as the probability of the lump sum. Is this approach too aggresive or can it be deemed unreasonable by the IRS upon audit?

Hello board,

We have a 401-K plan managed by Pentec and Southwest bank in Odessa. We only receive a statement once a year and are in the dark the rest of the time on our balance and loss/gains. This worries us because we are taking a monthly distribution and need to know the balance once in awhile to manage our future plans. Is it normal to get one statement per year? It seems odd to me. Thanks, Wes

I have a divorce and QDRO from AZ (where we lived). The retirement income comes from NV PERS. They have no process in place for domesticating an order from another state apparently. I was told several different versions. I have already paid a lot of money to have this done correctly. All I need is a judge to sign off on it in NV. I sent money with cover sheet to open case and now am told must provide QDRO form for judge to sign ...then why did I pay a lot of money in AZ to have this done by an attorney. Can anyone help????

A sole proprietor financial consultant has a 401k plan. She just became a 'statutory employee' for an investment company for which she is a sales agent. The investment company also has a 401k plan, and matches dollar for dollar. She expects about $10,000 in sales commissions for November and December 2009. The plan there allows for her to defer 100%, and so she would like to put all $10,000 into that 401k plan and get the match.

She would like to put $12,000 into her own 401k plan for 2009 as well--she's over age 50.

Can she put the catch-up $5,500 into her own 401k plan after just putting $6,500 of regular 401k deferrals into that 401k plan?

The language in her 401k plan does say one way or the other.

My firm has a safe harbor 401k plan with a fiscal plan year ending June 30. The 401k plan limits elective deferrals to 25% of earned income. A couple of owners put in $16,500 in early January. The year has been a disaster for their business and they only took payroll for the year equal to $50,000 each for the plan year, July 1, 2008-June 30, 2009. Twenty-five percent (25%) of $50,000 is $12,500.

Can we just treat the extra $4,000 that each put in last January as having occurred in July 2009, or do we have to actually force the extra $4,000 out only to have the two owners then put in right back in, before 2009 ends?

If a 457(f) plan calls for immediate vesting, does that/can that mean that there is now not a substantial risk of forfeiture and therefore can be taxable to the participant?

Thanks

Suppose you have a traditional DB sponsored by medical corporation A. Corporation A is owned equally by 3 separate corporations. Each of these corporations employ one physician. They are a related employer group so each of the physician corporations will adopt the plan as a participating employer.

I believe that each participating employer is only responsible for funding contributions for its employees. Could the contribution be allocated on PVAB's? Or would this be treated like a partnership where the contribution must be allocated on ownership interest only? Or would any reasonable method consistently applied be acceptable?

Thanks much.

As I sat thru various sessions at the ASPPA Conference, it occurred to me that the PPA funding rules are fundamentally sound. i.e. min contrib is based on the value of current year's accrual, plus amortization of any existing shortfall.

But things went awry in the details, and we're left with a stunningly confusing and unworkable system. I get the sense that the IRS and other govt officials are as confused and frustrated as many of us are.

I'm thinking we should take a proactive approach, and draft a comprehensive proposal to simplify the system. Just a few ideas off the top....

- Trash the Effective Interest Rate concept, and substitute the middle segment rate.

- Trash the adjustment of COB/PFB for actual investment earnings, and use the middle segment rate.

- Trash the concept of 1/2 lump sums for 60%-80% AFTAP. Switch to no LS's if < x%, and full LS's if > x%.

- Simplify or trash the Annual Funding Notice, which gives a ridiculous amount of useless info to the participants.

- Trash the concept of deemed AFTAPs on 4/1 and 10/1 each year, and the associated notices to participants.

etc. etc.

Any thoughts?

.. Scott

Consider a partnership with 3 owners. No other employees.

Is there any way to set up a SEP covering just one of the owners?

My experience with SEPs is limited, but I'm under the impression that a SEP must cover all employees who have been with the company for a few years. Is there some sort of custom SEP plan that allows for the exclusion of certain HCEs?

Thx,

Scott

How long are plans typically taking to provide estimates of withdrawal liability?

I could probably get some data and apply the plan's allocation methodology and arrive at a ballpark number, but does anyone know if it's possible to get an informal, off the record range from the plan (by phone), before a formal estimate is provided?

The trustee of a plan died. The plan is terminating. The mother of the trustee has taken over as trustee.

There was no beneficiary form on file. The distribution for the trustee will be made out to his estate.

The investment company is holding up the distributions because they want his mother and father to sign the forms since they are co-representatives on the estate. Does the investment company need both signatures or is just one of them o.k. to do the distributions? The distribuiton for the Trustee is not being made out to an individual - but to his estate.

Is it possible for an employer (with 13 employees) to set up a self-insured MRP for a single non-HCE?

Is it correct that the failure of such a plan to pass 105(h) discrimination testing would be that benefits provided to HCEs under the plan would be taxable? But if no HCEs benefit under the plan, is this a problem? Would the NHCE/participant be able to exclude benefits under the plan from income?

An employee elected to defer $25 per paycheck in mid-2006. His deferrals were never taken from salary; plan has been Safe Harbor (basic match formula) for the whole time. He terminated employment earlier this year. He never noticed the deferrals were not taken, and called recently for a distribution, only to find he didn't have an account balance.

So, I believe the correction is to have the employer contribute the full match that was missed (+/- gains/losses) and 50% of the missed deferrals as a QNEC (+/- gains/losses).

My question is to the time period which should be looked at. Can we assume that the employEE should have noticed this mistake when filing his 2006 taxes? Or do these corrections need to be made from the date he signed up for deferrals through his termination date?

The examples I've read only seem to refer to a single plan year, in which the examples seem to assume that the error was noticed after the year ended, as opposed to after the employment ended (3 years later).

Thanks in advance.

Does anyone have any best practices for 401(k) recordkeeping shops or benchmarking information? Mostly pertaining to 401(k) websites and call centers.

Thanks!

The IRS Final 436 regs. warn in effect that the IRS is unhappy with plan sponsors who in the IRS eyes are failing to obtain certifications to deny distribution of lump sum benefits. They cite referance to 1.411(d)-4, Q&A-6(b) which basically says funding is within the control of the employer so this may not be used to deny 411(d)(6) protected benefits.

I would take this to mean that the restrictions on HCEs a la 404(a)(4) are permitted so long as the plan specifies the criteria. Of course, with all the dilly dalling which now allows at-will changing of interest rates and asset valuation methods, the employer may elect to make changes or not elect to make changes that would alter the plan's funded % to above or below 110%, or above or below 80% for that matter.

The issue is PPA is pretty clear about 436 restrictions and the IRS is attempting to work around it. This will be interesting because to my knowledge there is no legal requirement that an actuarial valuation (say of a calendar year plan) must be performed before October 1 so that it's feasible that the AFTAP cannot be certified by October 1 because the work hasn't been completed. This could arise unintentionally say if the actuary of record has departed before completing the actuarial valuation and/or issuing the certification and is not replaced by October 1.

A hospital discounts by 20% the employee share of bills for hospital services if the employee is covered under the hospital's self-funded health benefits plan. The discount also applies to the employee's spouse and dependent children if they are covered under the plan. The discount is applied by the hospital's billing office at the back end, not at the front end. For example, assume $1000 in covered services. A claim for $1000 is submitted to the health plan, which pays $800. The employee share, as shown on the EOB, is $200. The hospital's billing office then applies a 20% discount and bills the employee for $160 rather than $200.

Is the hospital and/or its health plan running afoul of the Medicare secondary payer rules? If hospital plan's EOBs are submitted to Medicare to pay secondary, it seems to me that we have a problem as the EOB overstates the portion of the claim that the employee is paying. Can anyone direct me to any MSP regulation or other guidance that prohibits (or permits) this practice?

Any thoughts about other legal issues the hospital should be concerned about. Thanks.

If a plan reduces it's cash out threshhold to $1,000 does that mean spousal consent is needed on distributions over $1,000 or does it remain at the $5,000 mark (assume the QJSA is the normal form of benefit)?

Does anyone out there an EAP provider (or work with one)? Are you gearing up to provide the enhanced schedule C information to your clients? Alternatively, do you have an EAP provider? Are you requesting Schedule A or Schedule C information?

I have been talking to an EAP client who is trying to determine its obligations to provide information to its clients for 5500 reporting. The services the EAP provides are probably subject to ERISA (due to providing some counseling services) but the client is not an insurance company (thus no Schedule A). Most, if not all, of the client's clients pay for the EAP services out of general assets and no plan assets are typically used (thus, no Schedule C).

I suppose it is possible that a client could adopt a very unusual plan design that would result in plan assets being used to pay for the EAP services, but I think that possibility is probably remote. Consequently, I think the EAP provider's obligations to provide information are probably pretty low. Any thoughts on this?