Is anyone familiar with a new regulation that states that claims for FSA reimbursement must be received by March 31st, rather than being postmarked by March 31st?

We just took over a plan from a large insurance/investment company. The client was allowed to "fund" the profit sharing by March 15th, however, their former recordkeeper did not allocate the amounts into participants accounts for at least 3-4 months. The profit sharing contribution would sit in an un-allocated account not earning anything as well.

We have always provided our clients with a participant allocation prior to funding so we find this highly unusual and question if even legal. Am looking for a reference to dispute this and take it to the client. Thanks.

Linda Michals

A plan froze benefits for owners only at 12/31/06. The curtailment was reported under FAS 88 on the sponsor's 12/31/06 financials.

Benefits are frozen for non-owners at 12/31/07 in connection with the termination of the plan. The curtailment gain is less than 1% of the PBO. Given the small amount of the gain, can I disregard it as immaterial for purposes of FAS 88? Does FAS 88 even apply any more, since FAS 158 pushes all gains and losses into AOCI?

Say an employee of a French company transfers to a US company that is part of the same controlled group, and begins to participate in the US company's 401(k) plan (based on US earned income).

To determine whether that employee is an HCE, you need to look at compensation earned in the prior year. I don't see any basis for concluding that compensation paid in Euros (or whatever local currency) earned while working in France for the foreign company the year before can be excluded in determining whether the person is an HCE in the current year -- the 415 regulations would appear to include it in 415 compensation. If that is true, is there any guidance or common practice on how to convert foreign earnings into US currency for this purpose?

Thanks

I know age 50 catch ups are excluded from the definition of annual addition, but are the special 3,000 a year catch-up amounts excluded from the defintion of annual addition for 415 puposes?

I have plenty of cases/authority that state that contributions can be returned under ERISA 403©(2)/1103©(2) for mistake of fact or because it cannot be deductible under 404.

I am looking for cases/authority where the Plan was sued (or the IRS brought an action against the Plan) for failure to make contributions, and the Plan asserted 403©(2) as an affirmative defense -- claiming they did not have to make the contributions because to do so, would have been a mistake of fact, or that the contributions would not have been deductible under 404 anyway.

Thanks.

On what forms and on what lines does the Sole Proprietor use to deduct his/her Salary Deferral, Employer Contribution for himself/herself, and Employer Contribution for employees? I assume that deferrals by employees are a payroll expense. Thanks!

Hypothetical:

Self-insured dental plan does not condition receipt of a benefit upon obtaining approval in advance of any procedures. The plan's claims procedure only provides for resolution of post-service claims. I am in extreme pain and need a root canal and call my plan to see if it is covered. The plan tells me "No pre-certification is required. We can't tell you if it will be covered until afterwards." (I know that most times the plan will tell me but remember this is a hypothetical.)

Does the plan violate ERISA Section 503 because it has not established proper claims procedures? The few things I have read have conclusorily stated that an urgent care claim is only such when the plan requires pre-certification (i.e. it is also a pre-service claim) and that seems to be a reasonable conclusion. But to me ERISA 503 is unclear. To make a long story short, it applies to pre-service claims and to post-service claims (2560.503-1(e)). Post service claims are any claim that is not a pre-service claim (2560-503(m)(3)). So what is a claim involving urgent care?

What am I missing?

I've finished the latest round of amendments in a complex plan and as we're finishing up the conversation, it's mentioned that the plan covers some collectively bargained employees. (I hadn't known from the Plan doc itself as they're just not excluded.) It's my understanding that these employees are a small number compared with the non-CBA employees. My brain hurts and my billable budget with them is running low. What issues should I be thinking about? Any thoughts?

A DC/profit sharing plan (non-Money Purchase Plan) contains a fixed contribution formula (I know that's odd) equal to 10% of participants' aggregate pay. The contribution is allocated under a points formula.

For 2006, the employer contributed only 9% of participants' aggregate pay. For 2007, the employer didn't contribute anything--instead, it gave each participant a cash bonus equal to 10% of their pay. Had the 10% of participants' aggregate pay been contributed to the plan for 2007, then some would have received more and some less than they received as a bonus.

Is there an easy VCP option available for this client? If not, what are the options?

I guess the DOL's recent FAB 2008-1 provides some guidance for fiduciaries.

As Medicaid is administered by State governments and not Federal, is this referred to by HIPAA as the "State Health Plan?"

The reason for asking is that our state program (Maine), although it is considered creditable coverage for PEC purposes, is not presently issuing certificates of creditable coverage, as I believe it is compelled to do by HIPAA. (Is it compelled to do so?)

This has begun to cause problems for some clients with large claims dollars, as upon the claims audit, they have not been able to provide proof of prior coverage if Medicaid was their prior insurance.

Any thoughts?

At one point in time under PPA changes, the rollover of death benefit for nonspouse beneficiary was optional for a plan sponsor to adopt.

Then IRS changed it to be mandatory.

Does anyone have a cite either way , optional or mandatory?

thanks

A participant in our 401k plan terminated in 2000 and took distribution of his 401k balance in 7/2007. He was 0% vested in match. He was rehired in late 2007.

401k Plan has standard 5-year break-in-service language with buyback option.

Would he have to pay back his 401k balance to get the match forfeiture restored?

Near the end of 1.401(a)(4)-9©(3)(ii), it states:

Does that say the gateway would have to be provided for the overall plan, not just the component, or am I misunderstanding the intent of this?

edit: typo

We intend to freeze the match for 1 of our 401(k) plans. Match is defined in Plan as 50% on first 3% and 25% on next 3%.

It is done each payroll period which is weekly. There is at least 1 union participating in plan. All unions have adopted Management benefits programs.

There is immediate eligibility for 401k deferal at hire and match eligibility is immediate as well. This is not a safe harbor plan.

Question: Is there a notice requirement to freeze match? if so, how many days? Does union have to be notified separately and if so how many days notice?

My guess is that plan had to have been amended prior to beginning of calendar plan year 2008 so we may have to wait until 1/1/2009 to freeze? correct?

After requiring disclosure regarding whether a plan or trust is "currently under examination," Form 5300 also requires disclosure regarding "any issue related to this plan or trust currently pending" before the DOL. It goes on to say that a filing under EPCRS doesn't trigger a positive answer.

My client has recently filed under DFVC for late filings of Forms 5500.

Does the DFVC filing require a positive answer and related disclosure?

I'm surmising yes, since the Form specifically excepts EPCRS filings but says nothing about DFVC.

Given that this client will be filing Form 5500 in conjunction with an EPCRS filing (because it adopted the mandatory rollover notice late), I'd rather not be giving any more indications of foot faults than required.

(And, yes, I began working with this client after these errors occurred!)

I have seen a number of pension plan service providers state that 401(k) plans may limit eligibility in such plans to U.S. citizens. Nowhere have I seen a citation or authority for this proposition. The other issue is whether this would create problems for employers who use H-1(B) employees, and thereby are committed to equality in benefits.

If the employer contributes zero to his 457(b) account what is the maximum the employer may contribute to his account?

Assets arising during money purchase pension plans retain many interesting features in later years, even after the money purchase pension plans have gotten merged into profit-sharing plans or 401(k) plans.

Do the J&S and no-in-service-withdrawal features apply in remote years to interest and dividends that emanate from assets attained during the money purchase pension plan years?

Can someone provide a citation from official literature regarding this?

Any other information on merging money purchase pension plans into 401(k) plans or profit-sharing plans would help.

Why is it that the industry categories in Rev. Proc. 91-64 are so limited? Is there any "wiggle room" if a business doesn't fit squarely within one of those categories? What if it doesn't fit within a category at all....is this safe harbor out the window?