I am a participant in my employer’s Section 125 Plan and have been deferring the premiums for my family health insurance coverage through the plan. Our open enrollment period for health insurance and the 125 Plan is the month of July.

My daughter married recently and moved to her husband’s health insurance coverage effective September 1st. My spouse and I planned to change to single coverage through our employers since they both pay the single premium. (Both of our employers only offer a single or family plan.) His open enrollment period for health insurance coverage was the month of September with coverage taking effect October 1st. I have requested a change to single health insurance coverage through my employer. The Insurance provider has no problem making the change outside the open enrollment period since I am reducing rather than adding a covered individual.

The Section 125 Administrator states that I cannot make a change in my health insurance premium deferral until the next open enrollment period (next July and $4000 later). They state that my daughter’s marriage is a valid qualifying event. However, they further state that my husband was also covered on the plan so I would still need family coverage since there has been no change in marital status, etc. to trigger a qualifying event.

Is this correct?

Client has a DB plan under which an ex-employee who last worked for the client in 1981 did not begin receiving benefits at age 65. Now (five years later) he is applying for benefits and the plan did not provide for an increase in the employee's benefit after attaining age 65 (NRA). Is this okay or does the ex-employee's benefit need to be increased to take into account he is beginning to receive benefits at age 70?

What happens when a top hat plan participant is no longer eligible to participate in the top hat plan, ie. he is demoted? If you yank him from the plan and pay his account, wouldnt this run afoul of 409As prohibition on acceleration? But it would seem that based on ERISA/DOL requirements you'd have to pull him from the program.

Thoughts? Citations to authority is greatly appreciated.

What happens when a top hat plan participant is no longer eligible to participate in the top hat plan, ie. he is demoted? If you yank him from the plan and pay his account, wouldnt this run afoul of 409As prohibition on acceleration? But it would seem that based on ERISA/DOL requirements you'd have to pull him from the program.

Thoughts? Citations to authority is greatly appreciated.

When is the due date for the 4979 excise tax submitted on Form 5330? We extended our 401k plan until 10/15

thanks

I have a client who is able to file an EZ. However, he has not prepared any filings since the plan's inception, 2002. He rolled a very large amount into the plan in 2002 so he is not eligible for the waiver of the filing.

Since the IRS deals with the EZ, I am thinking that if I prepare all the delinquent filings and send them in to the IRS then the client is at their mercy and could potentially get hit with a very large penalty.

On the other hand, if I file a 5500 instead I can go in under the DFVCP and pay $1,500 up front and be done.

Does this make sense? Can I file a 5500 even though technically the client meets the criteria for the 5500ez? If I file a 5500, am I then obligated to keep filing 5500s, rather than switching to 5500EZ in later years?

A sole proprietor sponsors a defined benefit plan, and the sole proprietor dies prior to the end of the plan (calendar) year without contribution to the plan. In this situation, can the estate contribute to the plan on behalf of the sole proprietor?

Let’s say I a client with a funding shortfall, and a large credit balance. Their required contribution for 2007 was $0, but they told me (in writing) that they would be depositing $50,000 for 2007. So, I prepared the 2008 valuation and certified the AFTAP based on the client's written direction that they would deposit $50,000 for 2007.

Well surprisingly they did not actually make the deposit. However, because the plan was underfunded, they were forced to burn a large portion of their CB to reach the 60% AFTAP and the fact that they didn't make the $50,000 contribution only increased the amount of the forced burn. From a practical stand point the fact that they didn't deposit the $50K for the prior year had no impact on their required 2008 contribution either since I wasn't able to use the COB to offset the requirement. (Try to explain that one to the client. So the plan is more underfunded that you thought, but that doesn't mean I have to put more in?)

Since only the numbers used to determine the AFTAP changed (and not the actual percentage), do I need to re-certify the 60% or can I just say "I certified the 60%, it is still 60%, and how I got there is not relevant".

I have a client who never did ADP tests for 2005 or 2006. In 2006, they failed ADP Test. Their Plan Document calls for Prior Year Testing.

Since this plan had only a 3 month wait for eligibility, we used to Otherwise Excludable option to run the ADP test and this made the extent of the failure less severe. But, since no refunds were taken by 12/31/2007, we need to self correct. I have 2 questions:

1. Using the "One to One" Correction Method in Appendix B, the Rev Proc. says that "the plan may not be treated as two separate plans with one covering excludables…” . Does that mean that I must re run my test without the otherwise excludable option or may I keep the test the same, but share the resulting "One to One" employer contribution with ALL eligibles and not exclude otherwise excludables from sharing?

2. Can I make a QNEC as allowed in Appendix A, even if I used Prior Year Testing? If so, can I derive my QNEC percentage from my ADP Test that excluded "Otherwise Excludables" as long as I share the resulting QNEC contribution percentage with ALL eligibles?

Our company negotiated a cap on contributions for retiree medical insurance, for accrual liability purposes, what figure is used? the cap figure? (the part the company would pay?) or the cost of the policy itself?

I have a plan that is a Charter School from the New York State Board of Regents. They were told that they could not sponsor 457 plans. I researched and could not find anything prohibiting them from sponsoring a 457 plan. Does anyone know if they are prohibited and/or where I could find some information on this. Thanks.

A Company sponsors a Cafeteria Plan, with only health and dependant care reimbursement. Outside the Cafeteria Plan, the Employer provides Group Health Insurance with a $5.00/per pay co-pay for the employee and the employee can elect to cover spouse and dependants. The employee pays for any spouse or dependant coverage and this is deducted from pay (post tax).

My question is - can the employee be reimbursed, from the Cafeteria Plan, for the co-pay and dependant coverage?

A state legislative staffer has asked whether any state lets persons who are not employees or usual kinds of contractors participate in its 457 deferred compensation plan. The staffer specifically mentioned Medicaid providers (presumably physicians and other professionals who contract as individuals with the state Medicaid agency). I think that doing so might require an unusual interpretation of the law and regulations for 457 plans. But it doesn't seem out of the question, since such providers MAY be "independent contractors" under IRC subsection 457(e)(2). If anyone knows of a state that has tried this or any similar expansion of 457-plan eligibility, I would like to know about it. Thanks.

If a pension plan is charged an erroneous investment fee due to a billing error but the fee amount was caught and subsequently returned, is that a prohibited transaction under Section 4975©(1)(D)? Does the plan have to file a Form 5330 and the investment company responsible to pay the excise tax if applicable?

I always thought PEO was just a fancy name for a leasing company, but apparently there are significant difference between the 2 entities. Can someone describe briefly (or not so briefly) how they are different and how each operates?

Does anyone know what would happen to a profit sharing plan that only has profit sharing contributions (no deferrals or other contributions) that does not make profit sharing contributions for over three years? Does the IRS consider this to be a partial plan termination?

I have an EOY cash balance plan that we need to do an AFTAP certifcation by 9/30. My 12/31/07 valuation has determined the accrued benefit used for funding for 2007.

How would you do a 1/1/08 AFTAP? Lump sums in the cash balance plan are not subject to 417(e). A lump sum would be the hypothetical account balance. How does that come into play when determining the 1/1/08 Funding Target?

I have discovered what most of you may know: the Board's Search function is case sensitive. So, a word at the beginning of a sentience, if properly capitalized--or a word improperly capitalized--will not be found if the search is with a lower-case initial letter.

Does anyone know how to circumvent or disable this case sensitivity, or do we just conduct a search like this--employee* Employee* EMPLOYEE*--if we want to find all posts/topics containing the word employee or employees?

Thought this would have been discussed but I sure can't find anything.

New Company starts a plan in 2008.

I want to use Prior Year Testing and use the "Early Participation" rule and thereby exclude the otherwise excludibles but add back the HCE (owner).

I think the test becomes void as the HCE is tested against no one. Pass.

2009

Prior year testing, I am again looking at a null set of NHCEs so year 2, the only HCE (Owner) is tested against nothing (rather than 0). Pass again

2010

Safe Harbor as there are actually a lot of employees and now they are in the regular test.

Sound right?

Does anyone know why this RR was even issued?

What prompted it ?

What is it trying to resolve ?

Any links to any discussions or articles on the subject would be greatly appreciated.