Submit comments to any of these issues. I've included my own "answers" to date, based on reasonable speculation, but we are all learning.

1. Stand-alone dental and vision plans. Covered? They would seem to be, because they are ERISA plans subject to COBRA. Is this just a drafting error? It is inconsistent with the rule that participants may not downgrade coverage to stand-alone dental and vision plans.

2. Same-sex spouses and civil union partners. Covered? It seems pretty clear they do not have rights to elect separately. They are not COBRA benficiaries.

3. Subsidy available if same-sex spouse or civil union partner is the other member of the family unit? I don't think so. In fact, the employer who advances 65% of family premium may not get back all the money. The subsidy only applies to single life coverage cost in this circumstance.

4. What if the family unit includes a dependent child and a same sex spouse, and what if there is no incremental cost for the same sex spouse coverage (over family cost)? What if there is an incremental cost? This will be different than calculating imputed taxable income, which looks to the cost of single coverage. The employee should be entitled to 65% of the cost of a family plan which covers the "traditional" members of the family. If there is an incremental cost for the same sex spouse, that portion of the premium is not eligible for the 65% reimbursement.

5. What if non-dependent children are covered due to state law requirements which permit employees to cover children for a period of years after loss of dependent status? The same result as in No. 4. There is probably no subsidy for the incremental cost.

6. In a mini-COBRA state, where coverage is not due to federal COBRA, how does the employer get reimbursed? The statute reads as if the reimbursement goes to the insurer in non-federal COBRA situations. However, that must be a drafting error in cases where the employer pays the premium. Otherwise, it's impossible administration for employers who go above and below the 20 employee test for federal COBRA coverage.

Regards,

George Chimento

I am resending this as a new topic as there was no response to it when it was added to another thread.

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Plan year was changed from 05/01 - 04/30 to the calendar year with a short PY from 05/01 - 12/31 to align with plan sponsor's fiscal year change (no other devious reason).

The plan says (which is pretty much general language) that hours requirements will be proportinately reduced. So 1000 hours requirement for year of participation would reduce to 666.67 hours.

For anyone with more than 667 hours, is the S415 accrued $Max based on n+1 years of participation or n+0.667, where n is the accrued participation years at the start of the short year. It makes a big difference when n is on the low side, like 1!

Year of participation for S415 is the same as for the plan benefits.

I was wondering if anyone knows of any case, regulation, or advisory opinion that suggests that the mere act of calculating and paying benefits is not a fiduciary function.

Anyone have a good write-up on the stimulus bill as it affects 401ks? Just got a call from a client regarding the "penalty free withdrawal" provision that seems to have made its way into the bill.

Give-backs were used to correct failed ADP test for PYE 06/30/07. Our client now informs us that the "Gross Compensation" used on that year's census was miscalculated and was actually net after deducting cafeteria and deferrals. We have rerun calculations with correct gross compensation and the results are that 3 or 4 HCEs were refunded about $104 too much.

We are now almost 2 years past PYE. How is this corrected?

Husband and wife are each 100% owners of their own professional corporation. I am told that neither has any management responsibility for the other's company, they do not live in a community property state and do not have minor children. They claim this makes the controlled group rules not apply to their situation.

However, since both are physicians and could own the other's stock without violating any professional licensing or other legal requirements, I'm having a hard time agreeing with them. Am I overlooking something?

Is the Target Normal Cost prorated, especially for the Max, for short plan year?

I think not, because the TNC is the value of benefit accruing during the plan year, short or not!

I don't have the excuse that it is too late. Today my excuse is computers. Gosh!! I love them.

What is the equation to add up to the preliminary profit number for a sole proprietor?

Employee's contrib+Owner's contrib+owner's reduced comp+ 1/2 of SE income = preliminary profit

Is this right or am I missing something?

It is my understanding that an ER may make ineligible certain EE's from the company's QRP based on certain statatory limits relating to age (<21), length of service (<1yr), coverage under collective bargaining or foreign EE's when the company is located off-shore. The ER does not have to include these ineligible EE's in the plan's annual non-discrimination testing. In addition, the QRP document may exclude certain groups from plan participation, based on some job related criteria such as geographic location, hourly vs. salaried, job description, etc., but all of these EE's, excluded and non-excluded, are used in annual non-discrimination testing.

If my above assumptions are correct, may the ER also use these criteria in the FSA plan, whether day care, medical or adoption? Of course, the actual non-discrimination tests are entirely different...but I'm really more concerned here with who the FSA plan may consider ineligible, who may be excluded and who must be used in 'the denominator' in plan non-discrimination testing.

Thanks for any enlightenment :-)

BruceM

I have a one person DB plan that terminated during 2008. As of 1/1/2008, there was a minimum required contribution, which was not made prior to termination. The plan was underfunded and the participant waived benefits at termination.

Is there any way that the valuation date can be switched to the end of the year to allow for the waiver to be taken into consideration for the 2008 valuation? Would we need to apply for an approval for a change in funding method? Is it likely that this would be approved? The plan has always used a 1/1 valuation date. Can we automatically switch to any day of the plan year in 2008, or does it require approval?

Assuming we have to stay with the 1/1/2008 valuation date, can we use a 100% turnover assumption? Any other ideas?

Has anyone done a distribution where part of it was ROTH?

If they roll it over, (and presently have no where to roll it to)do they have to set up a traditional IRA and a Roth IRA?

Should the money be sent as two checks?

I remember that I am required to report basis to new IRA within a short time. Is there a specific IRS form for that?

What Am I missing?

I was on a conference call where they suggested that SPDs need to be updated to include language about the Subsidy. I re-read Title III - COBRA Premium Subsidy section and the only notices I can find reference to are the QB notices. Do we really have to update the SPD for this "short term" change to COBRA?

An existing Profit Sharing Plan is amended to a Safe Harbor 401(k) on 7/1/2008. Although the 401(k) deferrals start effective 7/1, the 3% Safe Harbor contribution is based on the full year compensation. A participant terminates employment on 2/28/2008. Is this participant eligible for the 3% Safe Harbor? The Plan defines eligibility for the Safe Harbor as "a Participant who is eligible to make Elective Deferrals under the Plan for any part of the Plan Year." Since the participant terminated prior to being able to make any Elective Deferrals, I'm thinking that the terminated participant may be excluded here. Any thoughts?

Thanks.

Employee dies in 2009, NQDC plan indicates his balance is to be paid to surviving spouse. Per 2009 IRS instructions, this now gets reported on a 1099-MISC. I think it goes in box 3 Other Income. Is the distribution subject to FICA, Medicare or SE (Self employment) tax?

Any assistance is appreciated.

a client makes a contribution in excess of its allocation formula but it is deductible and it is not in excess of 415. is there an excise tax if it is not allocated but left in a suspense account and applied to next years contribution?

I am middle aged and I have been able to achieve a good level of success in buying foreclosed properties over the years. Currently, I rent all the properties out to tenants, and maybe I will sell a few of the homes in a couple years when the market picks back up. But for now, I am most concerned about what would happen to these properties if I were to, heaven forbid, fall down with a heart attack, or get hit by a car.

I have three kids, and only one of them lives in California. So, I think I need to create some kind of living will and trust. My question is that if I create the living will and trust in California, will it govern my wishes in all other states? Will my kids be included?

My neighbor worked with James F. Sexton here in San Diego, has anyone heard of this Living Wills and Trust Attorney?

We have a New Comp/401(k) requiring Y/E employment for PS. ER making 3% SH contribution and PS of add'l 2% to EEs and max to owner. We have one person term'd in November, 2008 w/over 1,000 hrs and so he is eligible only for SH not for PS.

Because of this, the plan does not pass Minimum Allocation Gateway. Does this mean I have to give term'd EE an additional 2% even though he doesn't qualify for PS?

An HCE has elected lump sum payment under a plan that provides the pre-termination restrictions prescribed by 1.401(a)(4)-5(b). The plan funded ratio is 93% and the employer will not contribute to increase the percentage to 110%. The Plan also does not presently provide and will not be amended to provide for one of the alternatives (e.g., escrow arrangement) presented in IRS Rev. Rule 92-76.

(1) Is it correct that the life only payment is not elibigible to be rolled over to a Roth or Traditional IRA?

(2) If (1) is correct, is this payment subject to voluntary rather than mandatory FIT withholding?

(3) Presumbably, once the restriction is lifted, the balance may be rolled over? In such case, has the practice been to have the participant make the election to rollover at the annuity start date but then make an election at the time the restriction is lifted in regards to where monies should be invested?

The question is coming up about whether a "landscape architect" is a professional employer for purposes of exemption from PBGC coverage. Any thoughts? What, if anything, can we ask them to help clarify? We have been told that none of their employees "uses a shovel"....

Med

In determining a partial plan termination - do you count all eligible participants or just the participnats that are deferring and have a balance (terminated employees). I get confused in the rev ruling 2007-43 exactly what they mean by participating participants and the affected participants. Everyones determination of the wording is different.

Would I count up all the participants with a balance in the plan and then divide it by the participants that terminated within that year that had a balance (due to layoffs). Or do you count all eligible participants (deferring or not) and then divide it by the participants that terminated due to layoffs?

This could make a big difference when there is dual entry dates versus 401(k) - immediate eligibility, and profit sharing (1 year wait).

Thanks