The employee was enrolled in the employer's HDHP and made contributions to his HSA for himself and children through March 09. As of 4/1/09 his wife met the eligibility requirements to participate in her employer's family Non-HDHP. The husband dropped his coverage with his employer and went to her plan. I know that a change in insurance does not warrant a change in the FSA Medical account, but what about the FSA Limited Medical. That account was created as a means to allow employees to keep their HSA eligibility, but what happens when they do not need to worry about their eligibility anymore? Can the cafe plan documents be written to allow such changes? Has anyone found any informal or formal comments from the IRS on such a change? Any help is much appreciated.

thanks!

This is new area for us:

it appears to us a church plan is not exempt from erisa;but just title I of Erisa.

Is this correct?

Does this mean no 5500 is done?

Is actuarial valuation done?

Is there any 401a4 and 410b testing?

Stan

We have a client who purchased an annuity contract as part of his 401(a) plan in 2006 and signed off that a qualified plan was in place beginning that year. In 2009, it has been determined that the client's accountant never actually had him adopt a plan. So for a couple of years he has been funding a plan and taking deductions accordingly, but with no plan document in place. Does anyone know if there any way to remedy this situation through any of the correction programs? Any help would be appreciated. Thanks.

I have a plan sponsor (with many, many loans) changing the frequency of payroll from weekly to bi-weekly. I'm trying to determine if I should be reamortizing all of these loans. From a technical perspective, I lean towards yes. The loan note and amortization schedule no longer apply. Also, what would an auditor say if looking at the loans? I'm just having trouble doing all of this work for a probable repayment change of pennies each payroll period.

As a secondary idea, what do you think of doing a generic plan sponsor initiated amendment to the note and amortization schedule? It would basically say that the payment schedule changed and that payments would be twice the payment listed on the original note (ignoring the minute payment difference). Each participant with a loan could sign the form. That way both parties agree to the change of terms without having to customize a form for each loan.

Anyone have any experience with this issue?

Thanks!

The regulations under 401(a)(4) state that a component plan is deemed to pass the ABPT if the plan of which it is a part satisfies the ABPT. I have a plan that satisfies the ABPT on a cross-tested basis. If I can restructure the plan into component plans and somehow satisfy the general test on a contributions basis for each of the component plans, am I all set? Satisfying the ABPT on a cross-tested basis doesn't throw me into a gateway contribution requirement, does it?

I am seeing some insurance companies offering groups a step rate increase based on previous claims experience. For instance, if a fully insured plan for Company A is given a 19% increase, the carrier is offering to only increase 8% the first 6 months of the plan year (the plan year is also the COBRA determination period), they will review claims after the first 6 months and at that time determine how much (if any) of the remaining 19% to pass on (could be an additional 11%). My research has confirmed that the COBRA rates can only be increased to QBs one time during 12 month determination period so we advised client of that (we administer their COBRA). Insurance carrier came back and offered to send client 12 month Final Underwriting Approval Form that shows the 19% increase as the amount the client is charging employees off of and to be used to calculate the COBRA rates.

If the carrier is only requiring the client to pay the rates with the 8% increase for the first 6 months, can the COBRA rates be determined based on the 19% rate increase per the Underwriting Form?

Earlier this year, Seller's 401(k) plan was terminated prior to the closing of a stock deal. Seller incorrectly calculated the match made on final elective deferrals b/c it failed to pro-rate the comp limit for the short year. Consequently, a handful of participants each got several thousand dollars too much match. Most of these accounts have been rolled over -- some to Buyer's plan. EPCRS says Seller should send a letter to participants letting them know the extra match was not an eligible rollover distribution. Questions are as follows:

(1) To whom should participants be instructed to send the money? Seller's terminated plan has no need/use for it -- the trust is in the process of being zeroed out. Has there been a mistake in fact here such that participants could be instructed to send the money back to Seller (which is now a sub of Buyer)?

(2) Buyer's plan now holds some of the extra match in rollover accounts. Does Buyer have the authority to unilaterally reverse these amounts out of these accounts (like Seller could have if the $ were still in Seller's plan)? If so, what should Buyer do with the money? Put it in an unallocated account in its own plan and use it to pay expenses and reduce contributions? Send it to Seller (now its sub) under the mistake-in-fact theory above?

A calendar year plan with over 100 participants (last year, this year, every year) failed to make its 2009 quarterly contribution due 4/15/2009. It did not correct by 5/15/2009. On June 22, plan sponsor indicated they didn't make the quarterly contribution but not for financial reasons.

Instructions to PBGC Form 10 states "A reportable event must be filed within 30 days after a plan administrator or contributing sponsor knows or has reason to know that a reportable event has occurred." The instructions indicate the PBGC may assess penalities of up to $1,100/day.

Question: Is PBGC Form 10 due (a) May 15 (b) June 14 or © July 22 ?

Has anyone experience in dealing with the PBGC regarding similar circumstances? My inclination is to have the plan sponsor make the contribution post haste so that this can be include in the Form 10 filing.

I received no responses in March but the issue has resurfaced so i will inquire again. Any response would be appreciated. Thanks.

The Form 990 includes a section where Officers, Directors, Trustees, Key EEs and HCEs need to be listed disclosing compensation amounts. One of the items includes "The annual increase in actuarial value of a qualified defined benefit plan, whether or not funded or vested". Has anyone seen this and does anyone know what actually needs to be reported?? Thanks.

I have a very small 501C3 ( not a church or religious ) that had an employee contribution only 403B plan in the past with a few different insurance and fund companies. THere are only 6 participants. They stopped all contributions in the Fall of 2008 with concern over the new rules.

Now I am considering low cost options for them to start a new "plan ".

Oppenheimer and Metlife both have a Non Erisa Plan Document for use. THey also suggest that the employer really does not need a TPA as their enrollment and distribution forms and procedures will comply with the new rules.

Your thoughts and recommendations would be appreciated.

Employer 1 is selling assets to (newly created) Employer 2. Employer 1 and Employer 2 are unrelated.

Certain employees will terminate employment with Employer 1 and become employees of Employer 2 performing the same tasks for Employer 2 that they performed for Employer 1.

Employer 1's plan provides for a distribution upon "termination of employment." It does not appear to have adopted the "severance from employment" standard.

Employer 2 will adopt its own 401(k) plan.

My questions are:

1. Does the same desk rule continue to apply to plans that do not adopt "severance from employment" as a distribution option?

2. If the answer to #1 is yes, does the rule set forth in Rev Rul 2000-27 (which states that the same desk rule does not apply when the former employer sells less than 85% of its assets) still apply?

We have a new plan effective 3/1/2008. This will be the first 5500 filed. 12/31/2008 the participant count was 216, but since it is a new plan there were no participants on the first day. Correct? There is an audit being doing, but should we be filing a Schedule I or H. Relius 5500 software keeps giving me an error when I try to file an I. I just assumed since the company is doing an audit, it would require the more detailed schedule.

Thanks

Employer SH matches every payroll using the correct formula. However, many employees have huge swings in compensation from payroll to payroll, as they are also paid commissions. Therefore, the deferrals of participants that defer a constant dollar amount are sometimes under 3%, between 3 and 5% or over 5%.

Consequently, at the end of the plan year the total SH match (that is correct on a payroll basis) will many times be out of range on an annual deferral percentage basis.

Does the employer have to make the additional match contributions or withdrawals after the plan year end in order to satisfy SH formula on an annual basis?

Thx

At what age do you have to withdraw ROTH funds, or can you keep on trading tax-free in the ROTH after becoming 75 years old and older ?

Am I missing anything in the following?

DC plan (ESOP) previously allowed employee after-tax contributions to individual accounts with tax-deferred earnings. These accounts are part of the ESOP assets, but they are not invested in any securities of the plan sponsor.

Participant contributed $8,000 (after-tax) in 1986. No after-tax contributions since then.

When participant receives distribution of the account (now worth say, $22,000), participant can take the original $8,000 in cash tax free and roll over the earnings ($14,000) to an IRA (or take the earnings in cash and pay tax on that amount).

Because the after-tax portion was contributed before 1987, it can be taken out separately, and the pro rata recovery rules (distributon = some contribution plus some earnings) for distributions of after-tax contributions made after 1986 do not apply to the $8,000.

And it doesn't hurt that there would be no RMD for 2009.

Participant would like to do this, and I would like to be sure we aren't missing something.

All comments are appreciated. Thanks.

A physician defers the maximum into a hospital 403(b) Plan, and then makes a contribution to his own separate PSP to the maximum Section 415 limitation (without considering the 403(b) plan deferral). Permissible?

Sole proprietor filed tax return and made profit sharing contribution based on net sch c income. Later the accountant finds a mistake and income was 50k or so lower. The return is amended. The amended income would significantly reduce allowable contribution.

The deduction for the contribution must get reduced in the amended filing, correct?

If the contribution was made after the end of the plan year, there is no penalty for over contributing, at least as far as that particular year, correct?

What penalties would apply and or corrections can be made if the contribution was made during the year being corrected?

It is my understanding that, under current Hardship rules, a plan's Safe Harbor source cannot be used. Does anyone know a specific cite or reference spelling out this rule?

I have a plan that currently has a NRA of 54 1/2. At this time they may wish to amend it. Forgetting for the moment that this NRA may be unreasonable and Notice 2007-69, let's say that the client amends it to NRA of 62. My recollection is that the NRA is a protected benefit. Is this correct?

Additionally, the plan is currently a new comparability plan. I was using age 54 1/2 to process the EBARs. With the NRA change, what do I use to calc the EBARs. I would guess age 65. The reasoning for this is because age 54 1/2 and age 62 are not uniform as the NRA is a protected benefit. Therefore, when the NRA is not uniform, Age 65 is to be used.

Am I on the right track or way off track. Any comments and cites are greatly appreciated.

We are looking for some information for comparison for our PTO program.

1. How much PTO do your employees receive? Up to 5 years, our employees get 25 days (accrued per biweekly payroll period), and 30 days from 5 to 10 years. Holidays are included in the PTO time (six mandatory holidays per year: New Year, Memorial Day, July 4, Labor Day, Thanksgiving, and Christmas), so if you have these separated, please indicate how many paid holidays you have.

2. Our policy is that after seven unexcused absences in a rolling 12-month period, the employee is "written up" (i.e., receives a written warning) for attendance. An unexcused absence is any absence that is not requested and approved in advance. So, for example, if an employee calls in sick, that is an unexcused absence. Some employees want these not to be an unexcused absence if they get a doctors note. Or, have other exceptions that would reclassify an absence from unexcused to excused. My sense is that seven unexcused absences in a rolling 12-month period is more than generous and therefore our "anything not requested and approved" standard is very good. It is simple to administer and is not subject to "Well,-if-you-retroactively-approved-her-absence,-you-should-retroactively-approve-my-absence" discussions (arguments) with employees.

Thanks for your help!