On the DOL website, the sample Election form for the premium reduction contains 5 questions. According to the form, to qualify a person must answer "yes" to all questions - including the Medicare ineligibility. An employee involuntarily retired, is currently and was previously Medicare eligible, and has elected dental and vision COBRA. Is this former employee eligible for a subsidy of their COBRA?

Example

Contrib made 3/1/09 for the 2008 plan year of 10,000 (effective rate for 2008 was 5%). To calculate the PFB at 12/31/2009 for the 2009 plan year (end of year val date) would I take the 12/31/2008 PFB (which is zero) increase at the 2009 investment return and then add in the 10,000 discounted to 12/31/2008 at 5% (9,919), then subtract the MRC at 12/31/2008, which was 8,000, to get (1,919) then increase this at the 2009 effective rate (let's say it is 5.5%) to 12/31/2009, to get 2,025?

Does this seem like the correct process?

Are companies offering these combinations?

Is future guidance expected?

Does the 1/2 qualify for rollover treatment?

How are you handling this for restricted plans?

If an IRA "blows up" under Code Section 408(e), the IRA owner is not liable for the 4975 excise tax. A strict reading of 4975 suggests (to me) that other disqualified persons who participated in the pt remain jointly and severally liable for the excise tax. On the other hand, if the IRA blows up under 408(e), it ceases to be treated as an IRA as of Jan. 1 of the year of the pt, so how could there be a 4975 liability if the account is not considered to be an IRA? Is anyone aware of any IRS authority on the issue of whether other disq. persons remain exposed to the 4975 excise tax?

Would anyone allow a claim for insurance on a hearing aid? Of course, we reimburse for the hearing aid itself. Thanks.

Our large government client recently discovered that excess deferrals were made to its 457(b) plan by a substantial number of employees during years prior to 2006. Our client would like to distribute the excess deferrals ASAP. As the excess deferrals are taxable in the year of deferral, how can the distributions be coded on a 2008 or 2009 1099-R, the only 1099-Rs available on the IRS' website? There are no codes for distributions taxable in years prior to 2006. Thank you for any suggestions.

just over a year ago, I foolishly allowed myself to be manipulated into a roth. since that time I have retired early ( age 52) from chrysler corp. there is approx: $3400 in account I need to access these funds and feel that I should not pay a penalty $100 fee plus 10 percent. need help.

Has anyone thought about how to complete line 23 of the Schedule SB if you are funding for a lump sum? Line 23 allows you to choose "Prescribed-combined", "Prescribed-seperate", or "subsitute" and "substitue mortality tables must be applied in accordance with the terms of the IRS ruling letter."

The instructions for line 23 state that "Mortality tables described in Code Section 430(h)(3), ERISA section 303(h)(3), and section 1.430(h)(3) ... must be used to determine the funding target..."

However, 430(h)(4) or 1.430(d)-1(f)(4)(iii)(B) state that if you are funding for a single sum, "the current applicable mortality table under 417(e)(3) ...is substituted for the mortality table under section 430(h)(3)"

So, if I am funding for a lump sum, and using the 417(e) mortality it doesn't seem that I have any possible options since the 417(e) mortality is not one of the prescribed tables under 430(h) or 1.430(h)(3).

Any ideas?

Participant goes from regular to temp status. Plan does not allow temps to participate, but she is allowed to stay in Plan. Contributions stop, but should loan payments stop as well? Does no longer fulfilling the requirements for being a participant also require her loan payments to stop?

If a broker-dealer sponsors a qualified plan that covers employees of the broker-dealer, can they serve as their own broker of record for the plan?

The plan is self-directed. The broker of record for the plan does not actually execute any of the trades as the TPA firm uses a trading platform to do all of the trading. In a typical arrangement the broker of record for the plan would receive a piece of the 12b-1 fees, commissions, etc.

Does this qualify for one of the PT exemptions if no commissions, trailers, etc. are paid to the brokerage firm?

Laura

Client wants to adopt procedures for handling unpaid leaves of absence for future 401k loans that will avoid some of the administrative issues they’ve had in the past. They propose adopting procedures giving employees returning from unpaid LOAs the choice of (1) re-amortizing the loan to ensure full repayment by the original end-date of the loan (thus increasing the amount of each payment via payroll deduction) or (2) resuming payment in the same amount as prior to the leave, with a balloon repayment of the unpaid balance at the end of the loan term. In my experience, nearly all employees would elect choice #2. This appears to be permissible under Reg. sec. 1.72(p)-1, Q/A9. However, I haven’t heard of plans incorporating #2 into their procedures and wonder if I am missing something. (What about the fact that the employer knows most employees will not make the balloon payment at the end, resulting in an automatic deemed distribution? Does that somehow taint the loan from the end of the LOA?) Does anyone have experience with this approach?

Where can I find the ERISA code online? All I seem to find are bits and pieces of it. Is it all in one place anywhere?

I am having a hard time finding out whether my husband would qualify for the ARRA COBRA subsidy.

He is a member of the American Federation of Musicians (AFM). Like SAG, AFM bases its member eligibility for health benefits based on earnings from the previous year.

My husband did a small piece of discrete work (a project that was completed [nobody was fired, nobody quit, the work was just completed]) in 2007. This 2007 work qualified him for health benefits through AFM, his union, for 2008. In 2008, my husband didn't have any AFM work and thus did not qualify for health benefits for 2009. The union health plan thusly COBRAd him starting 1/1/09. He elected COBRA and has been paying his premiums.

We get in the mail a notice saying he may qualify for the ARRA subsidy. I spoke to the union plan administrator and was told he would not qualify since his employment was not terminated in the late 2008 / early 2009 window. While that is true, it struck me as strange since the plan is the union's and eligibility is determined by being earned-eligible for a past period. It would seem to me that involuntary termination from the health plan due to a failure to meet the earnings requirement and thus being COBRAd would be the critical event.

I was debating having my husband send the form in and claim that the union was his employer and that the involuntary termination from the health plan was the actionable event and thus date of importance.

I can see the union's point of view in that they didn't pay my husband's wages (they required a contribution from the 2007 employer to qualify my husband for eligibility) and thus aren't responsible to subsidize my husband's health premiums. Still, it seems strange in that nobody who is a member of this type of union (health plan eligibilty based upon previous year's earnings) would ever qualify for the ARRA subsidy.

Maybe that's how it's supposed to be. I don't know. In any event, the amount of money at stake is substantial to us so if anyone could shed some light on this, I would be grateful.

Mary

Normally a lot of plans will specify this limit (loan<50% of vested balance) in the plan document, but not this one.

Is the 50% rule a general one? If so, where can I find the official reference?

Thanks!

Per plan document, loan is considered in default at the end of calendar quarter following the calender quarter when the payment is due.

One participant failed to make any repayment from June to September (more than 3 months) and was considered as in default by the system.

However this person restarted repayments in September but by 12/31/08 his outstanding balance is still larger than the balance per amortization schedule, and the variance is lager than 3 months' of payments.

The system still has this as loan (indicated "default".) Should this loan still be reported as a loan or a deemed distribution (tax needs to be withheld)?

Any input would be appreciated - Thanks!

In a Top Heavy Cash Balance Plan, does the minimum benefit for a non-key employee have to be:

1. a contribution credit equal to the amount needed, with projection, to fund an annuity of 2% AMC at NRD, or

2. a contribution credit of 3% (or 5%) of compensation?

Here's the scenario:

Company is on a per-pay period compensation computation period; safe harbor match is funded on a per-payroll basis. Currently there is no true-up provision.

One partner decided to defer 100% of the first few paychecks to max out 2009 contributions early, so their match calculation was for the respective payrolls.

Example:

1/15 payroll - Comp: $11,000; deferral amount: $11,000; Safe harbor match: $440

1/30 payroll - Comp: $11,000; deferral amount: $11,000; Safe harbor match: $440

So as of 1/30, the participant has maxed-out ($22,000) and received a total match of $880. Because their is no true-up, this person is not entitled to any additional match.

So, if we amend the plan mid-year to allow a true-up, can we look at the annual numbers, or are we stuck looking at in on the micro-level of truing up each pay period?

In short, would the plan run into any issues getting this partner the full $9800 match (4% * 245,000) or is he stuck with the $880 (assuming we amend to allow annual true-ups)?

Is anyone aware of a place I can find a good timeline for an old-fashioned spin-off termination?

let’s say an employer lends money to employees so that they can pay moving expenses. When they work with the employer for a certain amount of time the forgive the loan. The employer reflects the cancellation of indebtedness on the employee’s w-2. the plan excludes fringe/moving expenses from compensation. Do you think the cancellation of indebtedness is a fringe benefit? In my view it is not reimbursement of a moving expense because of the fact that it was a loan originally.

Participant directs that deferrals be used to purchase Fund A. In error, the deferrals are used to purchase Fund B. When the error is discovered, it is corrected.

If the error results in a loss to the participant, the partipant is made whole. So far, so good. But, if the error results in a gain, the gain is taken from the plan and used to offset the amounts that have been used to make other participants whole in prior error situations.

If the gain is not directed from the plan to a fiduciary, I guess there's not a problem--although it just doesn't seem right to me. I think the $$ should stay in the plan and be allocated to participants on some kind of proportional basis.

Is the procedure described (gains taken from the plan) appropriate? Would it make a difference if the funds were directed to a plan fiduciary?