We have a COBRA client and the carrier has a 4 tier rate: employee only, employee + child, employee + spouse, employee + family.

The employer is charging the employees different amounts for the premium based on whether or not the employee/or spouse uses tobacco.

They are pretaxing this premiums through their pop plan.

For example, employer pays 100% of employee only for non-smoker, and 85% of the employee only rate if the employee smokes.

What sort of discrimination testing would you have to do for that?

a calendar year 403(b) has a QNEC rescinded during 2009 plan year. i assume they will have to do full Form 5500.

My question is if they remain deferral only in 2010 and on, will they be exempt from 5500 filing?

A trust holds assets used to provide medical benefits under a self-funded mredical reimbursement plan of the Company, a 501©(3) organization. Trust has a determination letter from IRS classifying it as a 501©(3) organization as well. The trust holds the investments and receives contributions from the Company. How do I determine if Trust must file Form 5500 as well? I'm looking at 5500 instructions, but need some help with this. Many thanks.

We have received our renewal information for our self-funded health insurance plan.

We have a Section 125 Document. This document states it is effective Jan. 1, 2009. We also offer a flexible spending account (health & dependent care) and a dental plan. Our Flex & Dental Plans are both calendar year. Our Health Plan is 10/01 to 9/30. We would like to change our Health Plan to a Calendar Year so we can do Open Enrollment at one time for our benefits.

We are looking at a one time 15-month Plan Year (10/01/09 thru 12/31/2010) and then it would be run on a calendar year basis after that.

I don't believe we have to amend our Section 125 Plan because it only refers to the "Plan Year" with no specific mention of our current Healtn Insurance plan year. The Summary Plan Document has an Attachment A included which does have the beginning of the plan year (example: Health, 10/01) I believe we can just change this attachment with no problems.

Is there anything else I should be aware of before we change this?

Thanks for your help!

I'm pretty sure we have PEO issues here, but needs some confirmation. I dont think we have ASG or management group issues.

8 doctor PC group.

The docs have contracts with hospital and with national doctor group to perform physician services.

All staff of PC group provided by national doctor group and/or hospital.

Docs of PC own 0% of hospital and 0% of national doctor group.

Assume docs of PC bring in very tiny % of overall revenue of national doctor group in total.

Docs currently part of national doctor group plan ( i assume multiple employer plan but not 100% certain).

Docs want to have plan of their own just for 8 docs.

I dont think it'll fly since it would be hard to argue that the staff are not "employed" by the PC group since i'm sure the PC group is giving staff the direction on what they need to do on daily basis. I just cant see that we'd be able to exclude staff for purposes of 410b.

Agree?

ESOP Cost basis after S Election

What happens to the ESOP cost basis of shares owned after an S election?

As a C corporation the distributions reported on 1099-R showed an ordinary income amount for the cost basis amount and a capital gain on the appreciated value.

If the S election changes ESOP distributions to "cash only" distributions do the old long-term employees with much appreciation lose the capital gain treatment of their holdings? With the S election are they now required to categorize their distributions as ordinary income? Or do we still need to track the cost basis of their shares as an S corp owned ESOP?

Thank You in advance,

TW

Years ago when Congress was quiet and the PBGC was not suffering, the general session at the EA meeting dealt with professional ethics. I remember conjuring up a scenario but never took it anywhere.

Suppose you are representing client A who is purchasing client B. Client B has an underfunded DB plan and your task is to determine how much Client B should compensate A in the purchase transaction for A to assume the pension plan liabilities. You scratch your head and recall about 7-8 years ago you did a similar study for client C who was purchasing client D and would merge D's plan into C's plan. Both C and D were multi-zillion dollar companies. So, you review the old study and low and behold you determine that D had a subsidy that you had failed to value appropriately. Your recalculation showed that Client C should have gotten another $10 million.

Now, some more tantalizing facts: You are a small company and your E&O limit is $5. You don't haappen to have the other $5 million laying around so that full restitution would bankrupt you and your 4 children in private schools would be doomed to a public school education, plus even after selling your house, your wife would have to start doing her nails herself. Client C has shown record profits since purchasing client D. Client C has also referred you to a number of clients as they were highly satisfied with your efforts on the acquisition. You are stilll the actuary for client C and miraculously, C's AFTAP as of 1/1/2009 was 115%.

What would you do?

What happens to the ESOP cost basis of shares owned after an S election?

As a C corporation the distributions reported on 1099-R showed an ordinary income amount for the cost basis amount and a capital gain on the appreciated value.

If the S election changes ESOP distributions to "cash only" distributions do the old long-term employees with much appreciation lose the capital gain treatment of their holdings? With the S election are they now required to categorize their distributions as ordinary income? Or do we still need to track the cost basis of their shares as an S corp owned ESOP?

Thank You in advance,

TW

We got a call from a client whose profit sharing plan has NRA of 60. They now want to increase it to age 65. Ignoring the fact that they want to do it because the owners are now 65 and they want to make everyone else wait for vesting (or maybe we can't ignore that?), is there anything inherently against anti-cutback rules on this? Pretty much everything we've found on the topic refers to "pension plans" (like 2007-69), so I'm not sure if that is meant to cover profit sharing plans as well. Thanks!

The plan sponsor of a DB plan wants to pay the mandatory federal and state withholding on distributions "as a 945 tax" (per the CPA) and then the corporation gets reimbursed from the trust. I assume that means that they just want to submit the pension distribution withholding along with their payroll taxes. Is that a problem? A prohibited transaction?

Two 401(k) plans, two employers in a controlled group. Neither plan is safe harbor.

The Big plan has deferrals and an annual discretionary match option. Calendar year plan. No match intended for 2008.

The Small plan has deferrals and a discretionary match. Plan year was 9/30, until 9/30/2008, when they had a short year ending 12/31/2008. They contributed a discretionary match for the 12/31/2008 year.

Small plan did not have enough NHCEs in the short plan year for the match portion of their plan to pass coverage, the ratio test result is about 45%. They have a NS PT that applies 410(b) failsafe language, but even after exhausting all of the listed steps, the plan does not have enough NHCEs to pass coverage for the match.

Big plan has a discretionary match option. They could decide to provide a match for 2008. Could the two plans be aggregated for coverage purposes for the match? One plan year is short, the other is 12 months, but they both end 12/31/2008.

A 401(k) plan has been filing Form 5500-EZ. The owner hired an employee who has become a participant in the middle of the plan year (7/1/09). Can he file Form 5500-EZ for 2009 since there was only one participant on 1/1/09 or will he have to file Form 5500 since the plan benefitted someone other than the owner in 2009?

With so much focus on failed banks lately, what happens to the benefit plans when a bank is taken over? I am assumiong without a plan sponsor, they would all be terminated, but who would handle the wrap-up & actual terminations of the plans? A 401(k) with no outstanding issues would be relatively easy to shut down, but what about a frozen DB plan with outstainding liabilities or a self-funded helath plan w/ COBRA participants? Anyone know how this would be handled or what has been done in the past?

The pension professional at our firm did not have the defined contribution plans amended for the final 415 regulations.

That professional is no longer with firm.

My understanding is that the 415 amendment should have been done by the due date of the tax return for the fiscal year beginning on or after 7/1/07.

So this indicates to me that many of our plans may not have amended their plans by the deadline.

My speculation is that the prior pension professional might have intended to amend for 415 at the time plans were restated for EGTRRA. DC plans need to be amended for EGTRRA by 4/30/2010 so it is conceivable to be timely for EGTRRA restatement but late for 415 amendment.

Am I missing something here?

What remediies are suggested?

Thanks.

Is the 2009 Form 5500 available yet?

For an off-calendar plan, what is the compensation to look at when identifying an officer who may/may not be "key".

Section 409(h)(3) states that the put option requirements do not apply in the case of a "plan established and maintained by a bank (as defined in section 581) which is prohibited by law from redeeming or purchasing its own securities."

What type of bank would be prohibited by law from redeeming or purchasing its own securities?

Thanks.

I know this may be a stupid question, but I've got "restatement brain"...

I have a 401(k) plan that wants to terminate. No participation, no money, etc. etc.

What notice do I give to the participants saying that they can no longer defer?

Thanks!

Does anyone have experience working with primerica as an investment advisor on a retirement plan? My impression of them has always been one of aggressive marketing tactics, usually to consumers with less than ideal credit. An arm of the company that works with plan sponsors on plan advisory services is unfamiliar to me. Thanks.

On June 26, 2009, Company B purchases the assets of Company A and hires its employees. Company A ceases operations soon after. Company A sponsored a Safe Harbor plan and did not deposit the SH nonelective contributions for 2009. Company B tells me that the purchase agreement removes them from all liabilities of Company A's plan and that no nonelective contributions will be made for 2009. The Trustee of Company A's plan now works for Company B.

What implications if any are there for the Trustee of Company A's plan? This seems to now be an orphan plan. Does the requirement for the SH nonelective now go away? I appreciate any insights into this matter.