Facts:

A partnership maintains a 401(k) plan in which the partners have previously never contributed.

The partners now want to contribute deferrals periodically from their draws.

The plan provides for a per pay match with no true-up.

The plan accordingly defines compensation for matching contributions based upon pay periods.

The partners want to avoid implementing a true-up if possible.

Question:

How do I determine the match for the partners (what compensation is used)?

Is it just based off the draw? Technically, the partners could have earned income that is lower than the draw. Does that matter?

Thanks in advance for any help.

Health plan covers employee, employee's spouse, employee's children under 18, and employee's children 18-25 that "depend on you for more than 1/2 support." I have a situation in which the employee is divorced with a 20-year-old child in college, with "joint custody" of the child with her ex-spouse, but ex-spouse pays most of child's expenses. Under the divorce decree the employee is obligated to provide the child's health insurance.

Generally, how do health plans determine whether the support test is met in this type of situation. It would appear that the child may not be eligible because the ex-spouse, rather than the employee, provides more than 1/2 support. On the other hand, by the reasoning the child would not be eligible if the parents are still married, but the employee makes less than her spouse.

Any guidance or insight into this type of situation would be greatly appreciated.

I've been asked to review/comment on a multi-year proposal DB/PS/K and want to make sure rust hasn't totally corroded the brain.

DB&PS are permissively aggregated for testing, and a 2 YOS wait is used for both. Plans are top heavy.

Since K plan cannot have a wait more than 1 year, an NHCE is included in the illustration with a deferral only. He is indicated as excluded from the PS and DB and at such point would have 2 Years of Service.

So, I think a top heavy minimum is being overlooked due to the deferral. Agreed?

Second, I have it ingrained in my head that "an employee" must receive a gateway allocation if he/she benefits under the plan, unless he/she is separately tested as an otherwise excludable employee.

In this case the employee benefits because he gets a top heavy contribution. He cannot be excluded as an "otherwise excludable" under 1.410(b)-6(b)(3) because that rule is "(applied without regard to section 410(a)(1)(B)" which is the 2 YOS or age 26 stuff.

So, does in this fact pattern the receipt of a top heavy contribution generate a gateway requirement? Does that cause a need for inclusion in the a(4) test?

Thanks.

Employer gave out the 2009 Safe Harbor Notice (3% non-elective) in November 2008, however since then the financial situation of the company has changed and they want to change their mind and NOT go with the Safe Harbor in 2009. Can they issue a notice rescinding previous SH Notice, or issue a new "Maybe" notice in its place?? I do not find anything on this out there, but would think many of us have clients asking this question due to the economy.

What obligation does a plan have to restrict payment of benefits to a participant when the plan has been put on notice that a QDRO is forthcoming? One of our clients has a plan with a participant who is about to come into pay status, but the attorney for her ex called us and told us that he will be submitting a QDRO. Does the plan have any obligation to put a hold on her benefit until the QDRO is received? Could the plan face any liability for doing so?

The IRS has kind of described the calculations necessary for valuing death benefits - permitting the recognition at the BOY for funding target purposes of the death benefit.

Termination benefits would take the benefit payable at termination and determine a present value and multiply by the probability of withdrawal from the plan. The law refers to valuing benefits accrued or earned during the year. There is no reference to vesting. Should vesting be applied during the the valuation?

When a plan is in critical status, and the "normal" funding standards do not apply, what happens to the Funding Standard Account? If the plan is critical due to a projected funding deficiency, is the FSA maintained with the deficiency so that it has to work its way back to zero, and then build a credit balance? Or can the FSA re-start from zero when it reaches a year where contributions are sufficient to meet annual minimum funding requirements?

I'm interested in finding out more about Real Estate Roth IRAs. All the information I've been able to find so far has been on websites of companies that want to sell me something, so I'm a little leery of it.

The first question I have is, can you do a Roth Real Estate LLC IRA, or are they only traditional IRAs? If so, I have a Roth IRA that I'd be interested in converting to a Real Estate LLC IRA.

Can anyone direct me to informational resources on this?

Thanks

I just inherited a small plan, non-for profit Co, with EE only contribution. The plan was established 5 years ago and currently has 50 actively participants (out of 90 Employees) and roughly $200k of plan assets (again, all EE contributions). It is my understanding that it was never required for a small, non-erisa plans to file a 5500 (nothing was filed in the past), but with the new laws, will they have to complete the 5500 going forward? As far as I know, they dont have to, but the more I read about the new changes, the more confused I get.

For those of you who work in this area. Do you have a consultant you can refer me to who has experience in designing and funding 457(f) or alternative plans for non-profits?

Company pays executive different lump sum amounts for separation of service: (1) 2x salary upon separation, or (2) 2x salary plus pro rated bonus upon separation within 18 months of a CIC. The alternative time for payment upon separation of service appears to work because it's within two years of a CIC, and the form of payment is the same for both (lump sum). Does having a different amount violate 409A? Thanks in advance.

I dont believe we have done any plan terminations for PBGC covered plans yet. We are familiar with the process (notices, timing etc), but don't completely understand ERISA 4044.

ERISA 4044 deals with the allocation of assets upon plan termination. "Allocation priorities" seems to mean you do not have sufficient assets to pay all liabilities and therefore you allocate scarce assets based on certain priorities. We understand this for a non-covered plan, but a covered plan only has two options:

1 Standard termination - in this case assets must be sufficient to pay benefits and then why would you need allocation priorities?

2 Distress termination - in this case the PBGC takes over the plan and pays benefits up to the guaranteed level.

Any enlightenment would be greatly appreciated.

If I understand correctly, a self employed person can have an HSA, but can not deduct the contributions from taxes. Is that correct?

I am technically self employed even though I work for one client. I am a contractor and get a 1099, not a W-2. Is an HSA a good idea for me?

I understand (from IRS pub 503) that the educational level for qualifying care is kindergarten and below such as, for example, a nursery or pre-school.

However, what about private schools that don't have a system that distinguishes from kindergarten and above or kindergarten and below. How can we tell if it's qualifying care? Is there an age at which we will say, your child is in kindergarten, it is not qualifying care? Do we just fudge it?

Thanks for all your help so far.

The IRS Dec. 5 released proposed rules (REG-148326-05) on the calculation of amounts includible in income under tax code Section 409A and the additional taxes imposed by that section with respect to service providers participating in certain nonqualified DCPs.

Text of REG-148326-05 is available at http://www.federalregister.gov/OFRUpload/O...08-28894_PI.pdf.

I was just wondering what might happen in this scenario:

Person is 75 and is retired. Not finding retirement life satisfactory, she decides to get a part-time job. As fate would have it, her new employer is very generous in its eligibility for the retirement plan: immediate eligibility, monthly entry. So our restless retiree starts working on Feb 15 and enters the plan on March 1. Being fiscally responsible, she decides to take advantage of the plan's salary deferral feature. She contributes $200 a month to the 401(k) plan.

In October, her husband wins the lottery, and they move to the Bahamas so he can fulfill his lifelong dream of being a scuba instructor. She quits her job and sets up a shop selling overpriced beer to tourists next to her husband's scuba shop.

My question is: does she have a RMD for that year? I would think not, but you never know.

Here's the situation: I generally have high medical expenses, and my husband has relatively none. So, to get the best plan for each of us, I am going to sign up for the normal PPO plan through my employer, and he is going to sign up for the HSA / High Deductible PPO through his employer. He will get an employer contribution and make his own employee contributions.

I know that I can not have an FSA with my employer (which would make him ineligible to contribute to his HSA).

I know that normally an HSA account could be used to cover expenses for the account holder, spouse, or dependents. Is this still true (we could use funds from his HSA to cover my medical expenses) even if I am under a different PPO plan under my employer?

Any guidance would be helpful.

I have a self-insured medical practice client with 450 insured employees. 150 or so are physicians who are also owners/partners. They want to extend health & welfare benefits for non-married Domestic Partners (DPs) of the opposite or same sex, but only for the owners/partners. I have researched the DOL, ERISA, IRS and OHIO ORC and other than perhaps running afoul of non-discrimination rules under IRC Section 105(h), I cannot find any language anywhere else that would label this practice as discriminatory nor prevent them from adopting such a policy. My understanding, based on hours of research, is that they can in fact adopt such a policy and even if it were discriminatory in favor of the Highly Compensated Employees (HCEs), the only consequence is that the employer would be required to include the value of the benefits paid in the employee's gross taxable pay.

However, I'm not sure this is even a point worth making since under current IRS rules, the value of the benefits paid to a non-spouse or, non-married domestic partner are taxable anyway.

If anybody has any insight to this with legislative reference, I would greatly appreciate it!

Thanks!

Mark

The Corbel volume submitter with an Adoption Agreement has the option of "blank" hours in "blank" months starting with the employees date of hire...but then goes on to say that if the employee does not satisfy the initial period the requirements change to a year of service listed above. I would like it to stay at 500 hours in 6 months.

Does anyone know why I could not write into the "other" block "six months of service and 500 hours in a six months measuring period."?

I would appreciate others' thoughts on this scenario. Company has an existing self-insured group health plan. It now wishes to contract with a group that will establish an on-site nurse practioner clinic at the company in order to provide general medical services for minor illnesses and injuries for employees. The clinic will also serve to operate a wellness program conducting detailed health risk assessments and interventions, counseling, and education and other management of participants with various risk factors in an effort to reduce or better manage claims under the plan.

Question is how best to integrate and incorporate this new benefit into the plan? (Or maybe the bigger question is should this really be done as part of the existing plan versus being done as a separate plan.) The group which is contracting to set up and staff the clinic appears to intend (and has drafted their contract) so that the clinic (and all related activities) appear to be conducted as an additional benefit under the existing group health plan.

I assume one key reason for this is that they prefer to piggyback off of the existing plan's ERISA and HIPAA compliance efforts rather than viewing the clinic as a separate plan or program which might raise its own compliance issues. (I know there are exceptions from HIPAA and ERISA for certain on-site clinics but given the nature of activities to be performed here, I'm not sure this clinic would qualify for those exemptions even if set up as a plan or arrangement separate and apart from the group health plan. If it is part of the existing plan though, I assume all activities under it are generally subject to everything the group plan is subject to so full blown ERISA and HIPAA.)

Would appreciate any thoughts or words of wisdom from others that have set up similar clincs or programs. In particular, I would welcome thoughts on what sorts of changes to the plan's existing HIPAA Privacy procedures are likely required to ensure HIPAA Privacy compliance if the clinic is viewed as part of the existing group plan and the information flow is all arguably within the "plan" even though the clinic / nurse practioner is getting claims information from the insurance company providing administrative services to the plan.)