We administer a PEO that has several co-employers that have gone out of business and terminted their plan. All of the employees have been paid out but they have left amounts in the forfeiture account. I have not come accross this as usually the co-employers that terminate set up a successor plan and we would just wire the forfeitures to that plan. Has anyone had this happen or have a cite or recommendation on how I should proceed? Any assistance would be awesome!

Due to a coding error on the part of a recordkeeper, all money types were permitted to be used for hardship withdrawals even though the plan documents called for hardships to come exclusively from pre-tax deferrals. At this point it is uncertain how many plans/participants may have been impacted by this error.

In many cases, the balances were sufficient to support the amounts distributed, so the correction is merely a coding change.

However, there were some instances when the amounts distributed exceeded the amount that was available for hardship distribution under the terms of the plan. Some of those are probably instances where the excess was withdrawn from the safe harbor matching source.

What options do we have to fix those errors?

I do not work with DB plans, although I have some knowledge of them (enough to pass the ASPPA DB test anyway). I just want to make sure I am reading this wording from Notice 2009-71 correctly:

A special rule applies in the case of an applicable defined benefit plan that meets certain interest credit requirements under § 411(b)(5)(B)(i). Such a plan is treated as meeting the minimum benefit requirement with respect to any plan year if, for the plan year, each participant receives a minimum pay credit to his or her hypothetical account. The minimum pay credit must be not less than the percentage of compensation applicable to the participant in accordance with the following table:

Participant’s Age as of Beginning of Plan Year

30 or less: 2%

Over 30 but less than 40: 4%

40 or over but less than 50: 6%

50 or over: 8%

This is talking about a cash balance plan, correct?

Thanks!

Laura

When the insurance carrier offers a mail-order pharmacy program, and the dispensing mail-order pharmacy is in another state, which state law applies -- the state where the mail order pharmacy is located (Texas) or the state where our insurance contract is written (Ohio)? Thanksl

I have an American client living in England that wants to do a direct rollover to a Traditional IRA from TIAA. She accumulated the funds while working as a teacher in the USA before she emigrated to the UK She is obviously no longer in service (since 1993) at that school. The funds are in the TIAA Traditional account. They have informed her that she CANNOT move her money to a new qualified account outside TIAA in one lump sum. They have told her that she can only move the money into one of their plans in 10 payments over 9 years (Transfer Payout Annuity). Anyone else have experience of this type of restriction? It seems counterintuitive to me. It is after all her money. Would appreciate any advice anyone can offer.

We have a current COBRA participant whose initial 18 months of coverage is up at the end of September 2009. She believes she's allowed 36 months of COBRA for: 1) disabled domestic partner (we have nothing on file from the SSA confirming this) and 2) sites a new law enacted in NYS on 7/1/09 stating that everyone is entitled to 36 months of COBRA coverage, no matter what (she gave us this website: http://www.ins.state.ny.us/cobra/cobra_prem.htm)

Does anyone have any further information about this new law?

The client needs to reduce its work force due to economic factors and has decided to offer certain employees the opportunity to retire early with certain incentives, all of which are incorporated in a written agreement. The program is completely voluntary, in accordance with federal guidelines.

Does this arrangement need to be expressed in a formal written "plan document," or is the written agreement suffcient? Because this is voluntary and a one-time event, I don't believe additional writings are necessary, but would like other opinions.

Thanks much.

The following question was posed to our firm, but we do not work with COBA plans very often.

I have a question for you about providing health insurance for my employees. We have been following the letter/intent of the law in providing health insurance for those employees who wish to be on our companies plan. Within the last few years I have hired an employee whom has maintained her COBRA plan but is considering joining our health plan. According to the employee, she is eligible to stay with her COBRA plan. She is also a likely candidate for knee replacement surgery in the near future. This, of course, would cause a significant increase in our premiums.

Is it possible for our firm to pay her COBRA health insurance premiums and keep her off our group plan? She is eager to do this as she does not want to provide a burden to our group plan. If we can do this, what is the best legal way to accomplish it?

Any input would be great on this topic as we normally do not deal with COBRA issues. Can an ER pay COBRA premiums on behalf of an employee? If an employee is eligible for an ER's group plan are they then ineligible for COBRA?

Thank you,

Nathan

Company A was part of a controlled group with Company B. Company A ee's were part of Company B's 401k plan.

Company A was purchased by Company C mid year. Comapny C currently holds a Simple IRA Plan. The total number of ee's from Co C and the acquired number of ee's from Co A will not exceed 100.

Since Co A no longer exists and are now ee's of Co C, doesnt Co A need to stop contributing to Co B's 401k plan? Zero common ownership between Co B and C.

Does Co C need to or required to immediately offer the Co C Simple plan to the former ee's of Co A or do they need to wait until the new plan year? Is there any holding period before Company C is required to offer any type plan to Company A ee's?

Thank you in advance for any help.

I live in AZ and I was currently in a flex plan with my employer and was laid off in July. The employer (corp in MN) did not have more than 20 employees last year so I am not eligble for COBRA for the remaining balance that is left in the flex account. How can I recop the balance that is left in my account?

The 2008 990 asks some new questions related to tax-exempt entities including governance and policies of the organization such as "conflict of interest" and "whistleblower" policies. These questions do not seem particularly relevant to medical/health plans exempt under 501©(9) as opposed to a 501©(3) or other tax-exempt organization. How are these questions being answered for VEBA's like a medical/health plan in that Part VI and in schedule O? I'm inclined to just state "not applicable" on schedule O for many of the questions.

What is the prevalence of an automatic enrollment for new hires prior to match eligibility, such as auto-enrolled after 90 days of hire but the match eligibility doesn't begin until 6 mos or 1 year of service?

This thread is also on QDRO board but that board is very quiet.

I prepared a 2 page QDRO. It is essentially a basic word document that provides all the necessary information that s/b contained in a QDRO.

I was hired by the two spouses. That is, they agreed to use me.

My question is: Is t his sufficient? That is, does the QDRO have to be in some fancy legal format, like that of a lawsuit, or is this simple presentation allowed?

My understanding is that the draft QDRO, if agreed by the two divorcing spouses is then presented to a judge who approves the division of assets as a domestic relations order. Of course the plan administrator has to determine that it satisfies the rules to be a qualified DRO.

Then once that is all complete the two spouses sign off on the QDRO and it can be executed.

Is that a correct uunderstanding?

Thanks.

Has anyone heard anything from the IRS on whether the Section 125 regulations will be finalized this year? They were supposed to be issued in final form by mid-year, but it is getting late to issue final regs with a 1/1/2010 effective date. Thanks for any updates you can provide.

I prepared a 2 page QDRO. It is essentially a basic word document that provides all the necessary information that s/b contained in a QDRO.

I was hired by the two spouses. That is, they agreed to use me.

My question is: Is t his sufficient? That is, does the QDRO have to be in some fancy legal format, like that of a lawsuit, or is this simple presentation allowed?

My understanding is that the draft QDRO, if agreed by the two divorcing spouses is then presented to a judge who approves the division of assets as a domestic relations order. Of course the plan administrator has to determine that it satisfies the rules to be a qualified DRO.

Then once that is all complete the two spouses sign off on the QDRO and it can be executed.

Is that a correct uunderstanding?

Thanks.

I'm dealing with my first client to use HCTC through the TAA. My question is whether a participant can use the ARRA subsidy on dental and vision while enrolled in the HCTC program for health. I can't really think of a reason why not, but I'm having trouble finding ANY information on it. Can anyone offer any guidance? Thanks!

At the very end of 2008, we merged two small DB plans into the big receiving DB plan. This question has to do with how to complete the Schedule SSA of the receiving plan for 2008...when a participant has a deferred vested benefit in one of the transferee plans with a previously reported amount (monthly life annuity at nrd) and also has a deferred vested benefit in the receiving plan which has previously been reported. We know that on the 2008 Schedule SSA of the receiving plan, we'll use a Code "C" to show the participant was previously reported under another plan but will be receiving his/her benefits from the receiving plan instead. That also requires we show the previous sponsor's EIN and plan number.

A (the) question is whether we should also have a second entry for the participant on the 2008 Schedule SSA using a Code "B" with an entry in items (d),(e) and (f) of the Schedule SSA whereby we add the monthly life annuity amount at nrd from the transferring plan with the monthly life annuity amount from the receiving plan at nrd...as both plans express the benefit in the form of a life annuity (monthly) at nrd...and put that value in item (f). Unless I overlooked it, I don't see detailed guidance on this in the 2008 Form 5500 Instructions (Sch. SSA). While it seems the rational thing to do, I have some concern that the SSA will err by double counting the benefit and we have to deal with explaining that to a participant who seeks his/her benefit.

In the 2008 Schedule SSA Instructions, there is a section called "Revising Prior Report" that states "Use Schedule SSA to report revisions to pension information for a participant you reported on a previous Schedule SSA. This will ensure that SSA's records are correct. This is important since SSA provides Schedule SSA information that it has on file to participants when they file for Social Security Benefits. If this information is not up-to-date, the participant may contact the plan administrator to resolve the difference". Maybe this means we should do as noted in the second paragaph of this post.

I'd appreciate any thoughts/guidance...perhaps some of you have prior experience with a similar situation. Thanks.

A required minimum distribution was not timely distributed from a 401k plan for a plan participant. The plan sponsor filed VCP requesting a waiver of the excise tax for the participant. If IRS does not respond before the participant has to file his/her taxes, what should he/she do? From what I've read, it seems that if the sponsor files VCP and pays the filing fee, the excise tax is waived. Can anyone confirm this?

I was wondering if there was some sort of a survey as to what people are charging for the restatements.

Prototype vs non-prototype and DC vs DB.

I've held off doing the majority of my restatements as I do not want to under- or over-price myself out of the market.

Is there some sort of a range that people are charging?

One of my employees worked for a company with a SIMPLE plan. He is due the matching contribution for 2008. Is my understanding correct that the employer has until the corporate tax filing due date to make the contribution, including extensions? Is the last date then September 15, 2009?

The employee had asked for a copy of the plan's SPD and was told none exists. Is a plan document and/or SPD required for such plans?

Thanks