Our company has grown from 62 employees to 130 in a year. When we were at 62 employees we were more than comfortable with paying the Healthcare premiums for both our employees and their familys. It is time to change. We are moving toward requiring the employees to make a 25% contribution for families (employee only premiums will still be covered). Can anyone offer any suggestions around communication of this message. How can I expect for employees to respond?

This question applies to the 2006 Plan Year.

My understanding is that the minimum funding requirements must be met with cash contributions and that contributions in excess of the minimum funding can be made with property other than money.

I could not locate where I had previously found that piece of information and wanted to get other views (and specific citations) in connection with my allegation.

I have a particular client that wants to make contributions to his plan in the form of promissary notes from third parties (i.e. not the client's own corporation) that are already in existance.

Any views on that?

Thanks.

Gary

Client has an Individual Retirement Annuity that pays him $12,000 annually. Client also has Individual Retirement Account invested in various mutual funds. Assume value of each IRA is $200,000. Can you aggregate the IRA annuity and the IRA account to determine total RMD for year? For instance, if the aggregate RMD is $20,000, can the annual distribution from the annuity be combined with $8,000 distribution from the IRA account to satisfy the $20,000?

I have an Owner who is age 52 in a new Cash Balance Plan and the NRA is 62. On what basis do you calculate the contribution credit for the 415 limit? Is it based on attained age or NRA?

For example:

If the 415 lump sum limit at age 52 is around $130,000 and the 415 lump sum limit at age 62 is around $230,000, what is the maximum contribution credit we can give our Owner in 2008.

If it is based on age 62, then our minimum required contribution is much higher than the maximum we can pay out, and if the plan ended we would be well overfunded.

If it is based on age 52, then our maximum this year is $130,000 and next year will be closer to $140,000. This will give us an increase contribution each year, which removes a smooth consistant minimum required contribution. Also I think it will give us a lower funding percentage. Of course in the future we could have them put in more than the minimum to smooth this out.

I have been debating a few of my colleagues for a little while on this topic and it has now come to the point where I need prove it. I have a client who has eligiblity requirements of 6 months of service. In a case like this (for any elapsed time eligiblity issue), my understanding is that employees can only be classified in the OEE group in their first year. In other words, it does not matter how many hours they work, the elapsed time is the only factor considered.

Let's use my client as an example: Calendar year plan. 6 months elapsed time. Monthly Entry. We will use the plan entry dates for purposes of determining the OEE group. Participant is hired 4/10/2006. (She is well above age 21 on her DOH.) She will be eligible for the plan on 11/01/2006. She will be in the OEE group for the 2006 test. She works 800 hours from 4/10/2006 -- 4/9/2007. Regardles of her hours, she will need to be in the statutory employees test (the regular-over 21/1) for the 2007 plan year.

This is the case beause the plan uses the elapsed time method for eligiblity and does not couht hours in any way.

My colleagues believe that because the participant does not work 1000+ hours in the anniversary year, they can be put in the OEE testing group for 2007. Then, based on the anniversary years, going forward, my colleagues believe that the participant can remain in the OEE group until they meet the 1000+ hour requirement.

Thanks in advance for any responses. A cite would be most apprecited.

I do some occasional benefits consulting for a LARGE, privately-held corporation. It sponsors a top-hat plan that covers around 85 individuals--the corporation has thousands of employees. The top-hat plan was set up by a financial advisor and I don't believe it was ever reviewed by an attorney or benefits consultant.

At the time the top-hat plan was installed (around 6 years ago), the FA told the company's decision-makers that because the corporation was privately-held, there was no reason to consider whether the top-hat plan should be registered with the SEC because the SEC rules only apply to publicly-traded corporations. As a result, no analysis was ever conducted to determine whether the top-hat plan was subject to the Securities Act of 1933 or, more importantly, whether any SEC rules exempted an otherwise required registration from registration, e.g., the private offering exemption.

I am concerned! Hopefully someone can tell me unnecessarily so. . .

I am not an SEC expert, but its always been my general understanding that the Securities Act of 1933 applies to the registration of any security regardless of whether the security is offered by a publicly-traded or privately-held entity and regardless of whether the "offering" was made on a recognized securities market or privately. Of course, if an exemption applies, then no registration is necessary. The exemption I am most familiar with is the "private offering exemption" contained in Section 4(2) of the Securities Act of 1933. I am also generally aware of Rule 506's "safe harbor" relating to the private offering exemption.

If I am wrong and the SEC rules don't apply to privately-held entities, GREAT!!! I'll revise my general understanding of the rules and happily move on. However, given that the Rule 506 safe harbor places a limit of 35 "investors" and the top-hat plan here covers a lot more than that, I am concerned that the private offering exemption may be in jeopardy.

If I am right and privately-held entities are subject to the Securities Act of 1933, does anyone know how the Rule 506 35 investor limit works? For example, if there are initially 34 participants, but later 5 more are added does the exemption cease to be applicable?

Thanks so much for any thoughts. . .

I have a DB plan with 15 participants that is up to date. Does obtaining an IRS approval eliminate an audit or simply make the audit easier? The owner is questioning the cost vs benefit. We need to decide before filing the PBGC request, right??

Retirement plan's asset/trust statements; what official regulations dictate that the statements must be in the name of the plan? I refer of course to an employer's retirement plan for his employees.

My understanding of this rule is that a coverage test can be utilized for the two plan years following the plan year of the test. This can only be utilized if there has not been a change that would adversely affect the coverage testing results previously calculated.

My questions are:

1) Is there any test that would indicate if a change in the population (other than running the actual coverage testing) would not allow a plan to rely on the preious coverage results?

2) Has anyone had a problem utilizing this rule? For example, has anyone been audited and required to provide a coverage test because the auditor thought the pop. change would adversely affect the coverage issue?

3) In two above, did the new coverage test fail? If so, what was the remedy? Was it the standard options? Was there any penalty?

4) Does anyone have a reference where I can read more about this topic?

Thanks in advance for the responses.

We're updating some of our plans for the final § 415 regs. A few of the multiemployer DB plans have definitions of compensation for § 415 purposes. I'm guessing that these definitions are left over from before § 415(b)(11) removed the compensation-based version of the annual limit for multiemployer (and governmental) DB plans. Is there any reason not to simply delete the compensation definitions at this point? Thanks.

I was talking to a CPA that asked if I had ever seen a "life settlement" strategy used in a pension plan. I'm actually unfamiliar with that technique with life insurance, but as I understand it, after a policy has passed it's contestability period, the owner of the policy has the ability to sell the policy to someone else. The owner receives a larger than expected amount for selling the policy, and the third party collects on the death benefit at the insured's demise.

Does anyone have any idea how this works or would work or would be forbidden in a defined benefit plan?

Thanks!

Do we need to amend documents to provide for these? The IRS Q&A references offering the option on terminated plans "without regard to plan terms". Does that imply that plan terms must provide for the option otherwise?

Nevermind, I found it.

The San Francisco Health Care Security Ordinance provides several options to employers to make up the difference between pre-existing health benefit subsidies, and the requirements of the new law, including use of a HSA, or employer reimbursement of health care expenses.

The question has arisen, is it sufficient for employer to make the "catch-up" amount available as a health FSA budget, which the employee may or may not use or forfeit, or must the employer actually reimburse medical expenses incurred by the employee, to satisfy the "catch-up" requirement?

I.e., is "money on the table" enough or must it actually be in the employees' pockets at the end of the day.

Company A bought Company G. Each has a 401(k) plan and G's plan is merging into A's plan. Under A's plan, employer matching contributions are available for withdrawal by employees prior to age 59 1/2 only to the extent that such contributions were either in the plan for at least 24 months or the employee had participated in the plan for at least 60 months. If such an employee obtains a withdrawal, his/her employer matching contributions are suspended for 6 months after the withdrawal. Prior to attaining age 59 1/2, an employee in Company G's plan may not obtain any in-service withdrawals of employer matching contributions. On or after attaining age 59 1/2, an employee in Company A's plan may obtain an in-service withdrawal of employer matching contributions under the same conditions as applied prior to attaining age 59 1/2, including being subject to a 6-month suspension period following the withdrawal. Under G's plan, an employee who has attained age 59 1/2 may obtain an in-service withdrawal of employer matching contributions without restriction and without being subject to a suspension period.

I know that the anti-cutback rules generally apply to optional forms of distribution under merged plans. However, I am also aware that the employer has the right to eliminate optional forms of distribution by amendment if the participant has a right to elect an otherwise available single sum distribution. As applied to in-service withdrawals, that refers to an optional form of distribution in an amount elected by an actively employed participants subject to the satisfaction of certain plan designated conditions. Thus, it would appear that A cannot amend out the G withdrawal availability conditions. Applying these rules, are the following options available to A:

(1) Amend the plan to provide that participants with employer match transferred from G's plan are subject to the same distribution restrictions that applied under G's plan;

(2) Amend the plan to retain the post-59 1/2 withdrawal availability provisions regarding the G plan matching contributions while subjecting the pre-59 1/2 withdrawals of G plan matching contributions to the more generous A plan availability conditions.

Employee and husband divorce. Husband drops children (residing with employee) from coverage under his plan during open enrollment (end of '07). Employee doesn't find out children had no coverage until now (i.e., May '08). Assuming cafeteria plan permits all election changes that are in accordance with the Code, can employee cover her dependent children mid-year under her plan under the "Change in Coverage under Other Plan" exception to the irrevocability rule? If so, can it be done retroactively? (I doubt it.)

Second, assuming the answer to the first question is "no" and the employee obtains a QMCSO directing the plan to add the dependents mid-year, can the QMCSO properly require the dependents to be added retroactively?

Any help is appreciated.

Please tell me if I am missing something that should be obvious.

The DOL's proposed regulations would amend the regulations under the service-provider exemption under Section 408(b)(2) of ERISA to add new fee disclosure conditions to the availability of the exemption. There is an identical exemption from the Section 4975 excise tax in Section 4975(d)(2), and the existing regulations under 4975(d)(2) are identical to the existing regulations under Section 408(b)(2) of ERISA. However, the Treasury has not proposed any amendment to the regulations under Section 4975(d)(2).

Question: Assuming the fee disclosure regs are finalized, why would an employer and/or service-provider be subject to excise taxes under Section 4975 if it complies with the existing regulations under Section 4975 but not with the regulations under 408(b)(2)?

We're amending our prototype for the 415 regs. I know we need to send a copy of the amendment to our clients, but does it need to be copy of the EXECUTED amendment? Or can it simply indicate "/s/Austin Powers" to indicate that the original is on file in our office?

Can anyone provide any guidance with respect to converting a multiemployer money purchase plan to a 401(k) plan? Are there specific rules as to what this type of conversion requires? Will the funds presently in the employee's account be treated the same as funds contributed after the conversion?

Is anyone aware of a website, other than Freerisa.com, that will show copies of a plan's prior year 5500 filings?

Thank you.

Would you agree that if a participant has a choice to defer to a 401(k) plan or a nonqualified plan, this choice violates the contingent benefit rule of Code Section 401(k)(4)(A)?