What 409A practice guides are out there and what are you using/finding helpful?

I am looking for a secondary source in this practice area.

Thanks.

New York has adopted a law requiring insurers to permit children of policyholders the ability to continue coverage under the group health plan of the policyholder through age 29. The law has a number of nuances and inconsistencies but I am stumped by one of them:

The law provides that eligible children may elect the continuation option "during the annual 30-day open enrollment period described in the group health insurance policy or contract."

What does that mean? I have found no discussion of this.

Most employers' open enrollment periods are shorter than 30 days. Does that mean that employers must have a longer period for dependents to enroll? Wouldn't that be preempted by ERISA? Do New York insurance contracts require a 30-day open enrollment period?

Any help would be appreciated.

Company C maintains 401(k) plan X for its employees. Under Plan X, C makes matching contributions on a payroll-by-payroll basis. Plan X provides matching contribuitions on any combination of before-tax 401(k), Roth 401(k) and after-tax contributions provided that contributions in excess of a specified percentage are not matched. When participants' before-tax and Roth 401(k) contributions reach the 402(g) limit, the participant is treated as having elected to contribute an equal percentage of after-tax contributions for the remainder of the year so that matching contributions can continue to be allocated to his/her account. C is considering making an amendment to X which eliminates this automatic after-tax contribution rule and instead permits matching contributions to be paid after the participant's elective deferrals reach the 402(g) limit. If X is amended in such a way, would this feature be subject to benefits, rights and features nondiscrimination testing? I also recall that the coverage regulations provide that if a plan imposes a last day of the plan year requirement as a condition to eligibility to share in an employer contribution, that the employees who fail to meet the requirement would have to be included in the test as nonexcludable employees.

What if X instead were amended to provide a true-up match by comparing employee contributions as a percentage of compensation?

Another question I have come across. Does the AARA premium reduction apply to Medical, Vision, and Dental? Or, does that reduction apply toward medical insurance premiums only?

Thanks!

Has anyone had the experience in the past few days of being added to the "friends" list of a board subscriber who definitely is NOT a friend? This came completely out of the blue and it bothers me that people may view my profile and think that I have any connection at all to this particular poster.

A 401(k) plan allows Rollovers in before meeting eligibility (limited participant) as well as after someone is a Participant. My question is: In a 401(K) Plan, once someone has met eligibility (therefore, they have "moved" from being an Employee to being a participant) is it permissible to allow Rollover Contributions to be withdrawan at any time (without a distributible event)?

Tagdata has said no but I saw it in a document on a tranferring in client.

If the Plan Document is ambiguous as to whether a 401k contribution is deducted from the bonus check, can the company not deduct the contribution from the bonus check? The Plan Document just states the employee may contribute up to a certain % of all applicable compensation. Compensation refers to all W-2 wages. Does that include the bonus? Is there a violation if the 401k deduction has not been made from the bonus checks. If so, how could this be corrected?

Hi,

Is it 404© compliant to contain opinionated information such as classification of a mutual fund manager on the election form?

Here's an example:

Janus Orion (JORNX) is classified as "Aggressive Growth". What are the limits that "aggressive growth" can be construed as information that might influence a participant's investment decisions?

FWIW, if any of your clients jumped on the yield curve after the IRS released the 9/25 newsletter, don't forget that you can use the alternative method for PBGC premiums as well. This can dramatically reduce their premiums.

However, you need to do this before the due date of the comprehensive filing date, or you have missed your chance. If your client has already paid their premium, as long as they amend their filing before 10/15, they can still take advantage of the alternative method.

402(e)(4)(D)(ii) explains that for Net Unrealized Appreciation purposes certain plans "maintained by the employer" are aggregated together to determine whether participant has taken a lump sum distribution.

What is the definition of employer here? Would it include all control group members?

The definition in 414(b) does not list 402 as a section to which it applies.

Any help is appreciated.

Ahoy, gang:

I propose the following policy re the use of biographical (advertising) text in signature lines (the stuff at the end of a posted message):

Your signature line may contain your name, the name of your firm and contact information (e.g., a web address, an email address, a street address, a phone number). No other text concerning your services is permitted (because this generally would constitute a commercial advertisement, which is not permitted on the message boards in the text of messages). Use of such text after being notified by an administrator is grounds for suspension of posting privileges.

A participant's former spouse has obtained a court order directing the employer's 401(k) plan to pay a specific sum of money, the vast majority of which will be applied toward attorney's fees for the parties and a small portion of which would be applied to the former spouse for rent, security and moving expenses. While the very small portion of the amount of money could be considered to relate to alimony, can the order qualify if a vast majority of the money is applied toward attorney's fees?

I am a participant in a governmental 457(b). May I, at age 59 1/2 rollover my 457(b) into an IRA while still employed by the city?

If so, can you point me to the guidance that indicates this?

Thanks

In preparation to revise our employee handbook a questions has been raised regarding the offering of employer-provided health insurance.

We want to say,

"Full time employees are those who work no less than 40 hours per week. Full time employees are eligible for employer-provided Health insurance, which currently pays 75% of the premium costs for employees and 50% of the premium costs for dependents. -- Part time employees are those who work less than 40 hours per week. Part time employees are nopt eligible for employer-paid health insurance."

So, both FT and PT employees can enroll in our health insr. plan... but, only those who work at least 40 hrs. per week are eligible for employer-paid premium portions. This should be legal, right? We are discriminating not on the eligibility of health insr. enrollment, but instead on the eligibility of employer-paid portions.

Thanks.

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.)