I have a client who offers health insurance to certain employees working over 20 hours per week. One employee who does not work over 20 hours a week would like to "buy" into this health insurance by having her premiums deducted directly from her paychecks pre-tax. Essentially, her paycheck would be reduced to almost $0 b/c most of her paycheck would go towards the insurance premium and she would be relieved of most of her tax liability. Does this pose a problem? Is it tax avoidance? Would it really be a fringe benefit considering it constitutes most of her salary? Any guidance would be appreciated. Thanks!

I have a client who offers health insurance to certain employees working over 20 hours per week. One employee who does not work over 20 hours a week would like to "buy" into this health insurance by having her premiums deducted directly from her paychecks pre-tax. Essentially, her paycheck would be reduced to almost $0 b/c most of her paycheck would go towards the insurance premium and she would be relieved of most of her tax liability. Does this pose a problem? Is it tax avoidance? Would it really be a fringe benefit considering it constitutes most of her salary? Any guidance would be appreciated. Thanks!

Can I convert our 403(a) annuity plan to a 401(a) plan by liquidating the annuity contract and depositing the proceeds in a 501(a) trust? I would prefer to do this without obtaining participant elections or rollovers. The 403(a) plan contains only nonelective employer contributions and has been administered in accordance with the profit sharing plan requirements applicable under 404(a)(2). Are there any particular issues or traps I need to aware of under the Code or ERISA?

We have a cafeteria plan with a company that split into 2 companies, the original company is ok with documents, etc...and their banking account for the cafeteria plan; the 2nd company is no longer part of a controled group, but rather on their own, so I am in the process of creating new documents for this new plan starting May 1st (short plan year 1st year); my question is can the first company transfer the employees money they have in their account to the new plan account and does the new company employees have to sign a new enrollment form for May 1st start date?

How do you correct a failing ACP test when the plan year was 5+ years ago? I tried looking for a previous message but am unable to locate anything.

In valuations using the 100% LS option, I've been calculating the FT as follows:

A) PVAB at NRA using the plan rates of 5.5% pre/post and GAR 94 post ret only

B) PVAB at NRA using 430 rates and Applicable Mortality Table for the valuaton year

(i.e. if NRA is 5 years from val date, PVAB at NRA is calculated using the second segment rate for 15 years and 3rd segment rate thereafter)

Greater of A or B is then discounted to the valuation date using the appropriate interest rate (1st segment rate from the above example)

Now, throw in that the LS in A or B has to be limited to the 415 max LS. Now, I have the min {415 max LS at NRA, max (A,B)}, which is then discounted as above.

Seems right so far and I've matched the results from running ProVal with these calculations.

Now, however, I'm not matching the Proval results and I wonder if it is just coincidence that I did before (i.e the 415 Max LS I was calculating was higher than A and B above), if I have something set up in ProVal incorrectly or if I'm just doing it wrong in my spreadsheet.

Here is my confusion:

For a small plan we can use 5.5% and the Applicable Mortality Table to get the Max 415 LS, right?

Now for calculating the PVAB at NRA, I have been using the AB (which is the lesser of the AB by plan formula or 415 max LO annuity) * the annuity factor at NRA. This is the number I have compared to the 415 Max LS which is calculated by the Max 415 LO annuity * Min (5.5%/Applicable mortality factor, Plan rates factor). Now, I'm wondering if the LS I should be calculating in A and B above using the plan AB withOUT limiting it ot the 415 max LO annuity.

They way I've been doing it seems to be using the 415 limits twice.

I think part of the reason 2008 matched fine is because the mortality table used for 415 max LS = plan mortality. Probably, the 2009 checks I have done did not get to the 415 limits and any error wouldn't have shown up, yet.

We are changing our mandatory cash out threshold to 5k and instituting a rollover IRA (per safe harbor). Notice 2005-5 states that we wont fail the notice requirements if our notice is sent back via US mail. However, FAB 2004-02 (which as you probably know deals with termianted DC plans) - talks about how to find missing participants. Does anyone have any thoughts / insights on what the common industry practice is? Are plans just sending out notices to missing participants prior to setting up mandatory rollover IRAs or are they going through the hoops of FAB 2004-02 (certified mail, forwarding service etc). I think we would be "safe" with just sending out via mail and would save a lot of time this way but don't wait to go against industry standards.

thanks

Hello all,

The participant previously elected to take distributions utilizing an installment payment method. It was discovered that during 2007, one of these installments was not made. What would need to be done to correct this? Do you just make the required payment? Should earnings be caclculated? Do we need to use EPCRS?

I'm familiar with how to correct a missed deferral, but have not run in to this issue before, and I can't seem to find any info on how to correct it.

Any help would be appreciated.

Thanks!

Hello Everybody,

I have an interesting situation. A participant made his deferral contribution for plan year 2008 twice. We had not discovered it until AFTER his money was distributed out of the plan and into an IRA.

This deferral amount plus earnings (or, in the case of this year with negative earnings, we net the two), is now taxable. He distributed out in November of 2008, so my calculation of earnings goes from when the money was deposited in to when it was distributed (1/24 - 11/18).

My question is, once it moved to the IRA, do we need to do anything to correct it there? It is not pretax money. Do we need to inform the broker? Do they need to recatagorize it?

Thank you for your help!

We recently pulled all of our welfare benefit programs together under one document, however, the plans still exist separately. Do we need to file separate 5500's for each or could all be filed under one 5500 form?

A Company decided to stop the Safe Harbor Match Contribution effective

5/1/2009 (proper notice was given), but mistakenly submitted contributions for the 5/1/09 and 5/8/09 payrolls that include the Employer Safe Harbor Contribution.

What is the correct way to handle getting the Employer Safe Harbor contributions out of the participants accounts?

Can it go back to the Employer or does it have to stay in the Plan in a Forfeiture account?

The company wants the money returned to them, and not left in the Plan as a Forfeiture.

Does NY state have mandatory state withholding on a lump sum from a qualified DB plan, and if so, how much?

If a DC plan has transferred MP assets (thereby requiring annuity form of distribution), if a participant requests an annuity is there a requirement in this case for the annuity contract to be held by the plan? I guess I am unclear of the logistics of this type of distribution form. If the contract is held by the participant, then aren't we just really doing a "rollover" to the annuity provider who then provides an annuity contract to the participant? If so, what is the point of saying that the plan must provide for an annuity option?

Thanks!

Can someone confirm if a distribution under $200.00 from a 401(k) plan would be taxable income? I know that the 20% Federal Withholding is not required to be withheld from total distributions of less than $200.00.

Thank you!

I am looking for any information on options available to 501©3 regarding benefit plans especially 403b plans. We are an oversight organization with only two employees and one is contracted through a religious order therefore is not considered an employee. I have spent two years speaking with brokers with regard to options for plans - the employer does not have contributing funds and so it will be only funded by employee deductions. Both Vanguard and Fidelity require employer contributions. Any options?

For the statutory change in method required by PPA - are you checking Yes on this question? If so, does anyone know of a sample attachment I could look at? Seems silly to have to check Yes on this and submit an attachment when they know everyone had to change the funding method!

husband and wife are setting up a plan. They will be the only participants. By my calculations they would need to earn $260000 between them to max out. They are both over 50. Do you agree?

annual comp: 260000 total

2009 deferral: 16500 each

2009 profit sharing: 65000 (32500 each)

2009 catch up: 5500

Anyone have any sample amendments to allow for an "in-service" distribution from a pension plan at age 62?

Where is this going (what can employers do to encourage HRAs legally)?

Former EE is on COBRA and subsequently designated an AEI due to involuntary termination of employment. They pay the 35% of premium for 1 month but do NOT submit their AEI form certifying they meet the 5 eligibility statements. Now they are terminated for nonpayment of premium and we have been unsuccessful in reaching them.

Is the employer obligated to "hunt down" the AEI form from someone who has paid their 35% and is otherwise eligible due to involuntary termination?

If we cannot reach this person, and we are obligated to ensure receipt of the AEI form, should we charge them 100% of the premium, apply their 35% payment to that amount and adjust their termination date?