I have a client that has not funded their PYE 12/31/08 Profit Sharing, do I need to put their plan on extension or can I file now. Their corporate return is on extension so my thought is that we can go ahead and file the 5500 today without putting on extension.

How do you handle this situation?

Hypo: For 2009, a self-insured medical plan fails (i.e., will fail) the 70% eligibility test and the 70%/80% eligibility tests under the Code Section 105(h) nondiscrimination tests. The plan fails the nondiscriminatory classification eligibility test if only participants in the plan are counted (the conservative approach) and passes the test if all eligible employees are counted (the favorable approach).

I understand that there is some uncertainty as to which employees should be included in the test and guidance from the IRS would be helpful but are there any thoughts as to what should the plan do now?

If the plan chooses to rely on the more favorable approach and does nothing, what will be the consequence in the unlikely event that the IRS discovers this in a plan audit and takes the position that the more conservative approach is the correct one?

If the plan is "fixed" in 2009, the HCIs will pay taxes on their pro-rata portion of the excess reimbursements. Presumably, that will also be the effect if the issue arises in an audit. Are there additional penalties for failing to correct a discriminatory plan?

The plan passes the subjective benefits test.

Any thoughts would be extremely helpful.

A participant in a church plan has an outstanding loan. He's a 70 year-old retired minister, who would like to have the loan distributed to him, rather than pay it off. Can he offset this deemed distribution from his eligible Manse amount and essentially make it non-taxable? I can think of no reason he can't but couldn't find anything that said definately yes. Thanks.

I've always maintained that once an employer contribution is made to a plan, it should stay there, whether that means reallocating monies to other participants' accounts, or increasing contributions to others within a self-directed environment, or allocating contributions that an employer really didn't want to make in a pooled environment.

I know that the payroll companies that have jumped into this market with both feet have no qualms about "refunding" money that wasn't really meant to be in an account, be it PS, match, or whatever, and I guess I am just curious if that's become some kind of norm while I missed a memo or whatever. I have a couple of plans where that would really be a lot easier, and I'm ready to tell them that's too bad, but thought I'd check.

Hi, I'm a new member and first time poster. I have a situation where I am trying to confirm whether or not an independent contractor is part of an ASG.

I have two doctors each with their own professional corporations (PCs). The PCs are the two members (50/50) of an LLC, and the LLC performs medical services. Each doctor is the sole employee of his PC. I am pretty sure the two PCs and the LLC constitute an ASG. The doctors want to associate with another doctor who also has his own PC but will be an independent contractor (I/C) with the LLC. Neither the new doctor nor the new doctor's PC will have any ownership of the LLC. The new doctor will not be a manager or officer of the LLC but the new doctor will perform most if not all of his medical service through the LLC. The new doctor wants to be an I/C because he maintains a separate defined benefit plan that he is max funding. The LLC has employees - nurses, nurse practitioners, physicians assistants.

Question: Is the new doctor's PC part of an affiliated service group with the LLC or the other PCs?

I know that 415 limits don't apply to 457(b) plans (not that they would be relevant, since the 457 limits are lower), but for purposes of calculating the annual addition limit for the same employer's 401(a) plan, do you count contributions to the 457(b) plan? In other words, are these contributions "annual additions" for purposes of 415?

Hi. We have an employee that is working two positions within the organization, but for two different sister corporations under the same corporate parent. The parent is the paymaster. On a weekly basis, the employee is working 18 hours in one position and 20 hours in the other. So she is part-time for both. However, her hours collectively are full-time.

Can anyone direct me to regulations or guidance on how to handle health & welfare plan eligibility for this situation? Status is part-time, but total hours is full-time. Does she receive full-time benefits or part-time benefits?

According to the Plan Document, a participant will become 100% vested upon Plan Termination or upon discontinued contributions to the Plan.

The company plans to terminate the Plan in 2010, but the Plan is not making any further contributions for 2009.

When do the participants become 100% vested? When the official Plan Termination paperwork is signed or when the contributions stop?

Also, Who becomes 100% Vested? Only employee who are active at the date of Plan Termination, or all participants with account balances, even those who are termintaed and not employed by the company?

does this apply to participants in 401(k) accounts? are participant level accounts considered covered accounts that fall within the law?

With major changes, moving everyone's cheese, what are some ways to present the benefits in a positive way rather than focusing on the obvious uncomfortable changes to the employees plans. Is there a way to spin the negatives into positives? We may be shifting additional 10% to 15% of the cost to employees through premiums and deductible/OOP and some minor copayment increases.

Our plan year is coming up and we are adopting the changes into the plan to reflect what we believe to treat the mental health and substance abuse equally as other benefits under the plan. My stomach turned with removing the current mental and substance abuse limits and wonder if there is anyway to provide this benefit with less risk to the plan?

The idea of having inpatient mental health with no limits leaves a self funded plan with a lot of exposure to future long term claims. We thought about removing both completely from the plan (assuming that you have to have mental health/substance abuse together and not one or the other?). What are you doing for your clients or your employer to protect the plan from a dependent who going through substance abuse rehab over and over (In patient treatment) and over again.

With the recession really taking hold of my current employer plans and requiring us to cut back on benefits offered to the employees, we are thinking about adding a buy (no selling) vacation policy for the employees.

Where in the world do I start with developing one of these type of programs? What are the risks to the employer and employee?

I think it will look something like all employees can buy up to one week of vacation. The vacation bought time would than be pretax(?) and the entire week would be available (not accrued like our normal vacation time) the first day of January. When the employee takes it, I would imagine that it becomes a taxable benefit and that pay check the employee would be taxed? At the end of the year, could this be some kind of "use it or loose it benefit" If they loose it, than does the employee pay taxes on it if it was never distributed to the employee? I would assume this week would be used first before any normal vacation time. Is it still ok for them to have a rollover in place for days that are company paid. It sound very complicated. Does it become a section 125 plan or subject to 5500 & SPD? As complicated as it may sound on the record keeping side, at least we could provide a benefit, that hopefully would not be a lot of additional cost to the employer and still add some work/life balance for employees. I guess this does leave some exposure that if an employee leaves in Feb, would we have to pay out that vacation time? One last question, is this subject to discrimination testing? Could we excluded section 16 officers or maybe a group of employees at a different location that work shifts (like one week on and one week off). Is this worth the administrative work?

Thanks!

I wanted to find out if any of you have adopted a cutting or splitting RX tablet program for employees?

A little background: The idea behind this program is that an employee gets a 15 day supply of 40mg and they split it in half to have a 20mg tablet for 30 days (the member doctor is basically prescribing the 20mg strengh for 30 days). This I believe saves the employer money and in some cases if this program is adopted by the PBM, than the member has a set list of drugs they can split (example a time release drug would not be listed because it may not be safe) and the employee pays only 1/2 of their normal copayment. We are looking at some brochures and are thinking about adding it to our current RX benefits. Please let me know how you think this should be marketed to the employees and how to enourage them to participate (for drugs that can safely be split). Thanks!

My mother-in-law passed away and my father-in-law is now entitled to her 401k. The company she worked for closed up shop and filed for bankruptcy in 2001. The money supposedly is frozen and everyone he talks to tells him to contact someone else. He has talked to Putnam ( Putnam told him in 2004 the dissolved company wanted nothing more to do with the assets and in turn turned them over to the IRS), he has also talked to the U.S. department of labor, the state department of labor, the state department of banking among others. He just keeps getting the run around. He does not know where to turn. Has anyone else had this type of problem? The money is out there but he cannot have access to any of it. Thank you,

My client funds employer benefits in a pooled account. 401(k) contributions are deposited to individually directed accounts with quarterly statements. I have been providing an Annual Statement with vesting, and a quarterly notice of multiple statements and PPA quarterly notice.

My question is, under PPA, how often am I required to value the pooled account? Currently, I have been valuing it annually.

Would someone kindly explain what the last item (no facility closing event/.........) in bold means? This is the waiver section for Form 10 for an active participant reduction.

What does this mean for an employer that is not in manufacturing and operates in one location? What about the same in several locations (a service employer). What about a manufacturing company with two locations?

Thanks for any help. I don't get this.

Reporting Waivers - Reporting of this event is waived if:

Small plan: The plan has fewer than 100 participants at the beginning of either the current or the previous plan year; or

Funding-based waivers: For the event year:

- No variable rate premium (see Part IV.B);

- Less than $1 million in unfunded vested benefits (see Part IV.C); or

- No facility closing event/80% funded: The plan is at least 80% funded for vested benefits (see Part IV.D) and the active participant reduction would not be reportable if only those participant reductions resulting from cessation of operations at one or more facilities were taken into account.

The May-June 2003 ASPA Journal contained an article pertaining to Davis-Bacon plans that stated "Davis-Bacon amounts can offset any other allocation that may be provided under the plan provided they are not restricted by the annualization rules." An example involving a 10% money purchase plan is provided. This example is also cited by the ERISA Outline Book. However, I can find no authority or reference source that provides for this. Please help.

My client was just asked by their CPA to obtain an engagement letter as the TPA for the plan. The client was also told this is a "requirement".

I have been in business for over 25 years and have used an engagement letter once in that time. I have found that most clients will not sign.

My engagement is getting my fee up front. If there is a requirement to do a retainer/engagement letter, who is requiring??

Can I, as the Enrolled Actuary, choose to keep the prefunding balance at $0, simply by entering $0 in line 11d of the Schedule SB? Thus avoiding the need for a sponsor election.

I'm trying to determine whether the failure to make a distribution is eligible for correction under 2008-113. I'm looking at Section V.D(2)(a) in particular, which allows a correction of "an amount that should not have been deferred compensation under the plan" that is "otherwise treated as defered compensation under the plan and such excess amount otherwise would have been paid to the servive provider during the service provider's taxable year in which the excess amount was...otherwise treated as defered comepnsaiton under the plan".

It appears that this Section was drafted for deferrals that exceeded the participant's deferral election. It does not specifically reference amounts that should have been distributed. However, an amount that should have been distributed under the plan but wasn't certainly "should not have been deferred compensation under the plan" for the remainder of that tax year. In addition, the amount was "otherwise treated as deferred compensation under the plan." Am I reaching too far on this interpretation?