We have a question about how to address a response to a 2nd level appeal that has been sent to us (the employer) for a self-insured health plan. The appeal package was prepared by an attorney on behalf of the subscriber who is appealing a denied claim for his dependent (age 17). Should the response be addressed to the member (the dependent) and sent to the attorney with a copy to the subscriber? Should the response be addressed and sent to the subscriber since he is the one appealing with a copy to the attorney? The initial claim denial through the health plan was addressed to the member (the dependent) but sent to the attorney.

Appreciate any advice.

Calendar year PBGC covered plan with a plan termination date of 12/31/07. The termination was submitted to the PBGC and IRS. The plan assets have not yet been distributed. Is a DOL funding notice required for 2008, and if so what do I do about the FTAP since there was no 2008 actuarial valuation required?

With a twist!

She lives in Puerto Rico - I gather the rules would be applied the same as if she lived in Arizona, is that true?

A company has been shutting down its operations for the last few months and never provided a safe harbor notice regarding the July 1, 2009 plan year because they intend to close their doors soon.

In a non-pension DC plan, a 401(k)/PS plan, the plan can be terminated without any required advance notice. However, for a safe harbor 401(k) plan to terminate mid-year, a 30-day advance notice is required.

What about a termination of a safe harbor 401(k) plan on the last day of its plan year, not mid-year, when no safe harbor notice was provided for the next plan year? Is a 30-day advance notice required to terminate? So far, I only see the 30-day notice reference with regards to mid-year terminations.

Plan year ends 6/30/09. Employee makes deferrals of 15,500 in late 2008 and 16,500 in early 2009. Therefore, he has not exceeded the 402g limit. Do we count 32,000 in deferrals in plan year ending 6/30/09 and show that he only has 17,000 remaining to reach his 415 limit for pye 6/30/09?

Treas. Reg. §1.401(k)-3(g)(1)(ii) says the following:

"The reduction or suspension of safe harbor matching contributions is effective no earlier than the later of 30 days after eligible employees are provided the notice described in paragraph (g)(2) of this section and the date the amendment is adopted;"

I read this to say that the effective date of the suspension of safe harbor match cannot be effective until the later of:

1) 30 days after the notice is provided or

2) the date the amendment is adopted

So if the employer wants to stop safe harbor match August 1, 2009 the notice needs to be provided by July 1, 2009 and the amendment must be signed on or before August 1, 2009.

I have seen commentary (including in Sal's ERISA Outline Book) that interprets the regulations to say that the effective date of the suspension of safe harbor match cannot be effective until the later of:

1) 30 days after the notice is provided or

2) 30 days after the amendment is adopted

I would interpret the regulation this way if it said "effective no earlier than the 30 days after the later of the date the eligible employees are provided the notice described in paragraph (g)(2) of this section and the date the amendment is adopted;"

What is your opinion? Does anyone know of commentary from the IRS which verifies how the regulation should be interpreted?

Thank you!

Laura

So how many actuaries do you get when you make a Wats Tower?

http://en.wikipedia.org/wiki/Watts_towers

In refusing to re-hear the appeal by the employee class in Hecker v Deere, the 7th Circuit addressed some of the DoL's concerns expressed in its amicus briefing. For context, this is one of the Schlicter employee class action suits against large employers alleging that 401k benefits have been depressed by improper revenue sharing and excessive fees. Unlike the other Schlicter situations where a limited number of investments for an investment menus had been set for employees to choose from, the Deere plan allowed employees to choose from 2600+ funds available through Fidelity--highlighting about 19 'for your consideration'. Judge Shabaz of the Wisconsin Western District dismissed in favor of Deere, finding that among the 2600+ there had to be some lower cost funds than the higher fees associated with some of the 19 highlighted investment choices. The 7th Circuit in February affirmed. The DoL has all along amicus briefed the case, and a re-hearing en banc was sought. To this request, the 7th Circuit denied re-hearing, en banc or otherwise, but explained in deference to DoL:

1-the Deere decision by the 7th Circuit was not a "definitive pronouncement on 'whether the safe harbor applies to the selection of investment options for a plan.'"

2-the DoL admitted the 7th Circuit's primary holding, i.e. that

3-the February decision of the 7th Circuit does not stand for the proposition that ERISA 404c shields a plan fiduciary from imprudently "selecting an overpriced portfolio of funds".

4-the 2600+ Fidelity funds at play in the Deere plan provided too much variety and too much variation in associated fees for allegations of imprudent selection of funds to stand.

The 7th Circuit muddied its February ruling a bit, but the essence remains.

A senior management employee and his (her) employer entered into an agreement regarding retirement benefits. The provision covering retirement benefits was part of the overall agreement.

Would the retirement benefits portion of the agreement generally be covered under ERISA?

Any ideas on the following scenario would be greatly appreciated!

Company B is a wholly-owned subsidiary of Company A. A and B each maintain their own health and welfare plans. Company A has been selling off the businesses/assets of Company B over the past few months. Eventually, all of the busiensses/assets of Company B will be sold off and only a few employees will remain with Company B to wind down its affairs. All of the employees who went with the sold businesses will get coverage under their new employers' plans. So, my questions relate to those employees who are left winding down the business of Company B.

1. I believe the COBRA rules require that Company A provide COBRA coverage for the remaining employees once their coverage is terminated under Company B's plans (since their is still coverage under the "controlled group"). Is that correct?

2. If Company A is required to provide the COBRA coverage, must it provide only the plan options that were similar to what Company B offered its employees (e.g. PPO to PPO coverage) or must it give the former Company B employees the option to enroll in any of Company A's plan options (e.g. PPO, HMO, HRA, etc.)?

3. Any thoughts on how healthcare FSAs should be handled?

Thanks in advance for your comments!

Does the Annual Funding Notice replace the Summary Annual Report?

If yes, for a small plan, do we need to add the language required to waive the annual audit requirement (line 4k of the Schedule I)?

This should be simple and probably is but I can't seem to find anything that would allow for a change of election in the case where a dependent child starts school. Is this a qualifying change event?

An attorney drafted a new 401k profit sharing plan for a company to take effect in early 2009.

The company never used the plan and came to my firm to have us administer the plan.

The owner would have wanted plan to be a safe harbor match plan so they could make a maximum deferral.

SInce plan never used, no deferrals made yet, what is thought about amending plan to be effective say 8/1/09 as a mid year new safe harbor match plan with deferrals first beginning at that time?

I realize an ordinary on-going 401k plan cannot make a mid year conversion, but thought this has different applications.

Any thoughts?

Thank you.

What happens if employer and employee disagree regarding whether a particular expense was adequately substantiated to qualify for accountable plan treatment?

Client has $400k in an IRA and wants to invest it in real estate. The real estate in question costs $600k. If the IRA borrows $200k to buy the real, it will have UBTI.

Client has the $200k but is prohibited form lending it to IRA under the prohibited transaction rules.

Can client and IRA simply purchase the property together (or form an LLC to purchase the property)?

From what I have read, the AGI limit for Roth Conversions will be removed in 2010. I have two questions.

1.) Is it removed for 2010 alone or is the income limit removed indefinitely?

It appears that the resultant taxes can be paid by treating the 2010 conversion(s) as part of 2010's taxable income or by spreading the taxable income equally over 2011 & 2012 (ostensibly subjecting the conversion to higher tax rates following the expiration of the Bush tax cuts - assuming that a higher bracket is not breached by the converted amount if tax is paid in 2010).

My second question is: May I treat one 2010 conversion as taxable for 2010 and spread the taxes for another conversion over 2011 & 2012?

Thanks,

Michael

Not totally clear on the rules of how to submit a DFVC filing with multiple 5500s that have not been previously filed. If plan sponsor/administrator signs the form, can they send all forms back to tpa's office along with the penalty check and then tpa submits to DOL, even though tpa has no certification? I dont see why there would be a problem with this, but just never know. Im trying to understand what it means to represent a client to the DOL/IRS.

We have a plan that wants to discontinue the SHMAC the remainder of the year. They have put their notice and will make the SHMAC through the correct date. When we have to do ADP/ACP Testing for the year do the SHMAC count towards the ADP or ACP Test? They utilized the basic SHMAC formula.

Thanks for the help.

We have a PBGC covered plan that terminated in 2008 (received IRS and PBGC approval) and assets were distributed in December, 2008. I am preparing the final Form 5500 with Schedules.

Is the Annual Funding Notice required for 2008 since there are no participants as of December 31, 2008?

We have a 6/30 PYE MPPP whose NRA is (was) age 55 & 5 YOS. We just amended the plan's NRA to age 62 effective for the 6/30/2009 PYE. In order to receive an allocation of the employer contribution the participant must work at least 1,000 hours during the plan year or have attained NRA. We have two participants that had attained NRA (age 55 & 5 YOS) several years ago that consistently do not work 1,000 hours during the plan year, so in the past they've received an allocation. But for PYE 6/30/2009 since they have not attained age 62 would they not receive the allocation? Is this correct or do they receive the allocation anyway because it would be a cutback issue?

Any thoughts would be greatly appreciated.

Thanks!!