I don't really do a whole a lot with H&W plans, but have been asked to look at one briefly.

Company offers short term diability insurance to employees. Completely voluntary; paid with after-tax dollars via payroll deduction. Is this a welfare plan subject to ERISA? Trying to determine whether 5500's should have been filed. Well over 100 participants.

Thanks in advance for any guidance.

We recently acquired a target benefit plan. Upon review of the plan document and through discussions I've had with the client, my understanding is that benefits stop accruing at the age of 66. The way that the formula is written, a participant would receive their final contribution at age 65.

I am not familiar with target benefit plans and would like to resolve any issues now, while the client is transitioning to our system. Does this allocation formula sound right?

Thank you!

Is there any scenario under which the contributions made under 401(k), 401(m) and employer QNECS can be aggregated for coverage testing (contrary to 1.410(b)-7©)?

Division 1/ Plan A has 401k and 401m contributions.

Division 2/ Plan B has 401k, 401m and QNEC.

Division 3/ Plan C offers only a QNEC.

Thanks for your help.

The QACA rules provide that a plan must use the Section 414(s) definition of compensation for automatic contributions. May a plan that has a QACA use a different definition of compensation for participants who already made affirmative elections? In other words, does the 414(s) requirement also apply to affirmative elections?

ESOP loan was fully repaid in July 2007, with the company repurchasing all unreleased shares. Eligibility section was amended to freeze future participation at that time.

Three participants were terminated in 2007 prior to the participation freeze. They were re-hired in 2008. Should they:

a. follow the re-hire rules in the plan doc (no breaks in service, so re-enter plan with all service intact), or

b. be considered non-participants since participation is now frozen.

A participant in a DB plan has been significantly overpaid. The participant is contacted and offers to pay back the amount of the overpayment, but requests to do so over a period of time spanning multiple years. Any thoughts on whether this is a permissible return of overpayment or whether it would instead be a prohibited extension of credit under Code Section 4975©(1)(B)?

(By the way, the reduction of future benefits is not a feasible solution, because the actuarial value of all future payments is less than the overpayment.)

Can an employer elect to pay for the health insurance of employees who elect an early retirement package for a set period of time, essentially deferring the start of COBRA?

Question #5 of the DOL's "FAQs About The 2009 Form 5500 Schedule C" says the following:

Q5: Are the requirements to report indirect compensation on Schedule C different for participant-selected investments through “open brokerage” windows?

“Open brokerage windows” in self-directed 401(k) plans allow plan participants to invest in a wide range of funds, stocks, bonds and other investments offered through a designated broker for the brokerage window. Although the requirement to report indirect compensation applies to participant-selected investments from a range of investment alternatives under the plan, in the absence of any other guidance, Schedule C reporting can be limited to direct and indirect compensation received by the designated broker(s) and other brokerage window providers, transaction fees in connection with the purchase, sales, or exchanges made through the brokerage window, and any other plan-related fees. This limitation on reporting for Schedule C purposes does not relieve fiduciaries from obligations to prudently select and monitor designated brokers or other brokerage window providers in a brokerage window option under the plan.

I'm probably missing something obvious, but exactly what is it that the open brokerage accounts are being exempted from reporting?

If a plan violates 409A and a participant incurs 409A penalties, and then the employer reimburses the penalties, the reimbursement would be taxable income to the participant. Would the reimbursement also be subject to 409A penalties? I thought the answer was yes, but I can find no support for that conclusion.

Anyone have any experience with welfare plans that go back and forth across the 100 participant threshold? Do you get letters from IRS or DOL in the "under 100" years when you don't file a 5500?

My employer, who is the owner of the company, just terminated an employee. Our policy states he should lose his health plan effective August 1st. He wants to keep him on the plan until October 1st. Are there any issues with him doing that?

It appears that 430 (old 412) does not apply to a nonelecting church plan. I think it follows that the benefit restrictions, Code Section 436, would also not apply. Agree? Disagree?

The SH 40k plan provides that the sh contribution only goes to participants who have met the statutory minimum age/service requirements (1 year/age 21). The plan is amended 7/1 (12/31 PYE) to remove this provision and now SH 3% nonelective has no such restriction. If a participant terminated 5/1 before the effective date of the amendment does the restriction continue to apply to them or is it all based on the plan provisions at 12/31 when the 3% is allocated?

An ER decides upon the retirement in 2009 of a long-term, staff EE to give her $50,000 (in addition to what she has in the company's 401k plan). The $50,000 was paid $12,500 on her last day as an EE, and then three like payments will come due, one each on the first three anniversaries of her last day as an employee. No separate funding is created to pay this; it will simply be paid from the ER's general assets.

The first $12,500 looks to be reportable on her 2009 Form W-2, whether considered a bonus, severance pay, or non-qualified deferred compensation. This is true as to it being FICA and FUTA income as well as taxable income.

My questions revolve around how the ER should properly report the subsequent payments, each to be made in a year in which she will not be an EE and not otherwise receive a Form W-2?

This $50,000 is FICA and FUTA income when there is no longer any substantial risk of forfeiture. Does the lack of separate funding to pay the 2010-2012 payments delay those payments as FICA/FUTA income until when and as paid? If so, to report those out year payments, is a Form W-2 proper?

At page 19 of the 2009 Instructions, it provides that non-qualified deferred compensation should be reported on Form W-2 if to an EE, Form 1099-MISC if to a non-EE, and Form 1099-R if to a beneficiary. Severance pay is to be reported on Form W-2.

For 2010, 2011 and 2012 out years, this person will not be an EE per se (albeit she will be a former EE). However, given the choice between just EE, non-EE, and beneficiary--former EE not being one of the choices--I'm thinking that the appropriate category is non-EE and thus a Form 1099-MISC.

Thanks in advance for your input.

A union collectively bargained for an employer contribution on behalf of it 70 ee's employed at Company A.

Multiple questions:

1) Can the union sponsor the plan for that collectively bargained contribution? basically Company A does not want to deal with the plan and part of the agreement was that they were to fund the plan, not sponsor or admin.

2) Can the plan be a SEP? even though it is 70 ee's the ER contirbution is not much.

Which sources dictate this?

The applicable period for determining whether a partial termination has taken place is generally the plan year, but it can be expanded if the RIFs that span that greater period are related to the same corporate event. If a business has been faced with economic hardship for a 3-year period and made numerous RIFs during that period, would that be enough to link all those RIFs together for purposes of determining whether the 20% threshold has been exceeded?

I have a client that is retiring at the age of 74. She has a cash balance plan that is saying that they need to calculate the RMD prior to distribution and then the RMD can not be rolled to her IRA. This part I get. My question is, does the Worker, Retiree and Employer Recovery Act of 2008 that was signed into law in late December relieve the employer from this calculation? All RMD's from defined contribution plans are not required but I can not find anywhere if this pertained to cash balance plan rollovers.

Please direct me to where I can find the answer.

Randy Green

We have a new plan (no previous 5500) as of 1/1/08 and the total eligible participants as of 1/1/08 is 116. Does the 80-120 exception apply to file as a small plan or does it only apply for a plan to continue a previous years filing status?

If a dc plan offers a QJSA if married and a life annuity if unmarried, is the plan automatically subject to the QJSA rules?

If a dc plan provides as the normal form of benefit a 50% survivor annuity, is it subject to the QJSA rules such that it also has to provide a QOSA (ie, a 75% survivor annuity)?

I understand that the plan could be amended to eliminate annuities entirely.

Thanks in advance for any comments.