Can anyone direct me to some good literature regarding IRS requirements of medical reimbursement plans, as they relate to the following issues ?

1. Can a C-corp establish a 105 Med Reimb plan if the C-corp has only ONE employee, who happens to be the 100% sole shareholder ?

2. Where can I find proof that a 105 Med Reimb plan cannot exist until there is first a written plan document, even if the only participant is the sole-employee shareholder ?

3. Is it impossible for a C-corp, that has only ONE employee who happens to be the sole-shareholder, to ever be able to pass the eligibility & non-discrimination requiremenrts of IRC 105 (due to the fact that he is the only employee) ?

4. Is there a specific list of things that MUST be addressed in a 105 Med Reim plan document. ?

Thanks

I have a union-DB plan (not multiemployer) that is going to freeze it's plan and there will be replacement 401(k) plan that offers a 3% non-elective contribution as well as a 100% match of the first 3% of comp.

The employer has determined that there are certain older participants, however, that will not have enough time before retirement to benefit under the new 401(k) plan to make it worthwhile to them. The employer had a third party run numbers and use reasonable assumptions and came up with about 25 participants who will be offered the right to make a 1-time election to continue to accrued benefits under the union-DB plan. Only 1 of those 25 participants are HCEs.

Further, after the analysis, the employer and the two locals that represent these participants, agreed upon this arrangement.

I think there should be an MOA to reflect this.

Are there any anti-cutback or discrimination issues with this? I would appreciate any input on this, including the citation to any authority you have. Thanks so much.

My company currently has a profit sharing plan of around 100 participants with an investment advisor for the investments and a TPA for the administration. We are looking to swithch TPAs and are not married to the investment advisor so we want to consider all options. We have spoken to other TPAs just to change that part of it and to a life insurance company that offers an annuity for the investments and they also provide the administration services. I know there are pros and cons to using an annuity so we want to look at all options. Any other reocommendations?

good grief. according to the numbers I have based on the CPI index (The July value was 219.964) the 415 limit will be 49,000 next year. that's quite a jump. of course, I guess the CPI could drop in Aug and Sept, but... you can complain about gas prices and stuff, but it sure is going to increase the limits.

This has to do with a cash balance plan, but I think the general question relates more to the average benefits test itself, and I think the question would be right up Tom Poje's alley, so I'm posting here...

Scenario:

Employer sponsors a cash balance plan and a 401(k) plan. Both plans pass coverage on their own. The 401(k) has an integrated allocation and passes on it's own.

I would like to test the Cash Balance plan separately for non-discrim. I'm not passing rate group testing, so I must use the average benefits test. The average benefits test is a 2 step process. First I have to pass the non-discriminatory classification test, and then if that passes I go to the average benefits % test.

My question:

For purposes of the nondiscriminatory classification test, do I set up my rate groups only using the cash balance benefits (since my rate group testing is only based on the cash balance plan)? or do I need to consider the profit sharing component as well because this is part of the average benefits test?

Thank you for your comments.

Hello -

Does anyone have a copy of an Administrative Policy that they can share with me? I was instructed that I need one for our retirement plan.

Thanks.

attached is the new and improved version of EPCRS (Self Correction) - Rev Proc 2008-50

They never put the page numbers on the index, so I went through and added those. (just to make clear, the page numbers are only the first 6 pages of the entire rev proc)

page 35 is the correction for 415 limit violations. these were formally in the 415 regs and were 'eliminated' from the regs, so to speak.

hey, its only 179 pages.

I know that Code Section 125 specifically excludes benefits provided under Code Section 132 (e.g., qualified transportation plans). Does anyone have any insight or thoughts on WHY Congress decided to not permit transportation benefits to be offered as part of a cafeteria plan?

Plan changes providers. Old provider hits outgoing plan with a market value adjustment under its contract with the employer. Different employees are hit differently, depending on their account balance in the investment with respect to which the adjustment is made. The Employer, feeling guilty, decides it wants to replace the $40K market value adjustment, allocating the appropriate amount to each participant suffering a loss. How do you do this?

I think the employer $$ will be a non-elective contribution, requiring a Plan amendment in order to permit the allocation in a manner that would replace the individual account losses (rather than being allocated according to the comp-to-comp PS allocation formula)--watching out, of course, for discrimination issues in the allocation. Or, is this just an investment return (rather than an e'er contribution), allocated directly to those suffering a loss and thus not needing a plan amendment? (Bonusing is a possibility, but the employer would rather keep the $$ in the plan.) Any thoughts?

First assumption is that EOY valuations will be OK (in some geological time period).

The effective interest rate is the singular rate which produces the same funding target as the segmented rates. Therefore, it can not be determined without performing the valuation. This interest rate is used to adjust the contributions to the valuation date. This means that EOY valuations must determine the effective interest rate prior to completing the valuation because the adjusted prepaid contributions have to be subtracted from the assets.

Is that correct??

Calendar year plan has following characteristics for 2008.

2007 contribution without regard to FSA CB was $0 so no quarterly contribution due.

FT = 2,000,000

TNC=100,000

Assets=2,400,000

FS COB=900,000

Client wishes to avoid making any contribution for 2008 and in the great hereafter.

If client elects to burn 600,000, then for 2008, we have FT - (Assets - FSCOB) + TNC = 0. Further, there will be no quarterly contribution requirement in 2009 and most likely, no contribution after burning or using credit balances in 2009.

Alternatively, client could choose not to burn credit balance. This will effectively set up 7 year amortization of CB which client can then offset using the FSCOB. There would, however, be a quarterly contribution requirement for 2009 and it might be $0 or FSCOB could be used to offset.

Appart from the apparent administrative advantages of the first approach, is any advantage to the client perceived selecting one approach over the other?

I have a client that would like to establish a multiple employer plan as follows. My client leases staff to professional corporations and pays the leased staff via a W-2; they enter into a leasing agreement with the recipient corporation. As a marketing tool (in addition to providing staff and payroll), my client would like to offer a retirement plan service in which there is a "base" safe harbor plan document that may be adopted by the employer; however, the employer also has the flexibility to change the contribution from a safe harbor to something else suited to them. my job is to determine whether this is allowed under the IRC and ERISA. I have been unable to find anything directly on point. Any suggestions or insight would be greatly appreciated!!!!

is anyone aware of a good resource to determine the issues associated with the establishment of a 401k plan for ex-pats. A client would like to provide a retirement arrangement for us citizens working abroad?

Thanks

Can an EACA have a traditional Safe Harbor match rather than a QACA?

This was in the May 2008 IRS Q&A from the ABA:

12. § 401©(2) – Self Employed Individuals Earned Income Treas. Reg. § 1.415©-2(b) defines compensation for self-employed persons as earned income under § 401©(2) of the Code, plus amounts deferred at the election of the employee under § 401(k) of the Code. Earned income under § 401©(2) of the Code includes a reduction for 50% of SECA liability. When is SECA liability determined?

Proposed Response: The SECA liability should be determined after the 401(k) contributions have been deducted from the person’s income. The 401(k) contributions are then added back to arrive at 415 compensation.

IRS Response: The Service representative agrees with the proposed response.

Is anyone calculating the 50% deduction for SE Taxes on comp NET of 401(k)?

Anyone have a report that breaks down balances in an investment model by participant?

Could someone provide a checklist to change the FSA plan year. We'd like to change it from January to July.

Can a religious employer elect ERISA coverage for one plan without subjecting other plans to ERISA? For example, an employer wants to make a 410(d) election (in light of the Catholic Charities case) for its welfare plans, but wants its pension plans to remain church plans. Would the 410(d) election for the welfare plans cause a problem for the pension plans? I think not, but want to make sure.

I have a 401(k) plan and 3 of the participants have life insurance polices in the plan. Do I report the premiums in Part II, 5 a & b or in Part III, 9a? I always reported them in Part II, but we recently took over some new plans and the prior RK reported them in Part III and in part II, 5 a. Would just like to verify how to report them. Thanks

We want to terminate a 403(b) plan that has an existing plan document. The final regs allow for a termination and distribution prior to 1/1/09 as long as all contracts have been updated in conformance with the final regulations. The contract provider has updated the contracts. My question is whether the plan document must be brought into compliance with the final regulations or may we simply adopt a termination amendment.