When a health insurance company contracts to provide health benefits to employees through an employer's VEBA is the insurance company contracting with the VEBA or the employer?

I posted this thread in the ESOP room, but perhaps someone in this room may know the answer:

Employer makes an employer contribution to an ESOP for an Employee. The contribution is subject to a vesting schedule.

The Employee's compensation plan states that the Employee is required to pay the cost of the employee's retirement benefits. The amount of the company's ESOP contribution is then deducted from the employee's pay.

Any thoughts on the legality of this?

Situation: Employee works for P and is eligible to participate in P's retirement plan. Employee also works for H (an unrelated employer to P) and is eligible to participate in H's retirement plans.

Question: for the 415 annual additions limitations, do the contributions to the retirement plans for Employee have to be aggregated for both plans?

Participant's husband has disappeared to South America and she has been unable to serve him with divorce papers. Can she and how would she name a nonspouse beneficary to her 401(k) plan?

Looking to talk to someone who also uses the Accudraft online system - we've had some issues with the system and are being told NO ONE ELSE IS HAVING THESE PROBLEMS which I find hard to believe. Don't want any specifics about your document, just want to see if you have any technical problems with the system.

Thanks!!

What types of Retirement Plans are available to 501©7 Social Clubs?

Looking for someone who is an Accudraft document system user, preferably the online system - just looking for some feedback. We've been having some issues with the system ourselves and are hearing from the vendor that we are the ONLY ONES HAVING THESE PROBLEMS.

Thanks!

We have a new 401k safe harbor plan with an effective date of 1/1/07. The 401k safe harbor was effective 10/1/07 and they only made deferrals and deposited a match based on 10/1/07-12/31/07 compensation. They also make a discretionary profit sharing contribution. The definition of compensation is W-2 comp plus deferrals less bonuses, and only for the portion of the year that they are a participant. I am trying to figure out if they can allocate the discretionary profit sharing contribution on full year compensation since the effective date of the plan is 1/1/07? If they are newly eligible I understand that they would only include compensation for the portion of the year they are a participant, but what if it's a new plan?

Thanks!

Client has Self Employment Income of 35,235. She can defer 15,500 into a solo 401k plan. I understand she can also contribute a profit sharing contribution for 6,508 (35,235*.9235*20%). Can she still have a company match on her 15,500 contribution and how much can that be? Does that affect the Profit Sharing Contribution number?

I have a plan where benefit accruals were frozen and the plan started termination proceedings (form 5310 filed) in 2006. The termination is still ongoing and I was wondering if the new restrictions on accelerated benefit distributions would apply. I did not see a specific exclusion for terminating plans. The sponsor intends to fully fund the plan, but only after IRS approval (but before final benefit distributions - i.e. lump sums). If I certify now that restrictions apply, could I then recertify later that the restrictions were lifted? I am trying to avoid this by some overarching exclusion for terminating plan. Thoughts?

Thanks much!

I'm having difficulty nailing down an answer to the following question.

If Actuarial Equivalence for all optional forms of benefit are defined as the 417(e)(3) Applicable Interest Rate and Applicable Mortality Table, does a change to the look back period result in possible 411(d)(6) issues?

It appears that Reg 1.417(e)-1(d)(10)(ii) indicates that a change in the interest rate is permitted as long as a 1-year "greater of" period is maintained. My concern is that this is strictly for minimum present value calculations and might not apply to all optional forms.

Does that fact that this change will result in changes larger than the de minimis amounts defined in Reg 1.411(d)-3(e)(5) for some participants as of the effective date of the transition matter?

An employer sponsor's a frozen defined benefit plan which allows payment of lump sum distributions as an optional form. The benefit accruals under the plan were frozen prior to 2005. In accordance with 436(d)(4), it appears that the limitations on the payment of lump distributions do not apply. Can someone please confirm this and point out any other issues that should be considered.

Lets assume the 2007 AFTAP is 75%. Do you agree that since the plan benefits were frozen prior to 2005, lump sum benefits may be paid in full for the entire 2008 plan year regardless of the 2007 and 2008 AFTAP.

In this case, does the 2007 AFTAP even need to be certified prior to April 1, 2008 in order to avoid a limitation on the payment of lump sum distributions? Furthermore, assume the 2008 AFTAP is not certified prior to October 1, 2008. Would the failure to certify to the 2008 AFTAP prior to October 1, 2008 create a limitation on the payment of lump sum distributions?

Does anyone have a copy of DoL Technical Release No. 88-01, released August 12, 1988?

It is the exemption from ERISA trust requirement for cafeteria plans.

I can't seem to find my old copy.

Thank you.

Does anyone have any thoughts on the propriety of the following situation:

Employer makes a contribution to an ESOP for an Employee. The contribution is subject to a vesting schedule.

The Employee's compensation plan states that the Employee is required to pay the cost of the employee's retirement benefits. The amount of the company's ESOP contribution is deducted from the employee's pay.

Any thoughts on the legality of this?

Here's an interesting one:

We have a safe harbor plan that uses the basic safe harbor match.

The only participants that defer are the husband and wife owners. There are seven other participants that are eligible to defer, but have chosen not to.

We got a call after running the match allocation letting us know that they cannot afford to put in the total match amount, and that they would only be able to contribute a portion of it.

I was wondering if anyone knew of a way to get around having to allocate the total basic match since they are the owners, and no other rank and file participants deferred for the plan year. Would it be possible for them to "waive" out of the contribution, and still maintain the SH so that the ADP test would not have to be run?

I don't think there is a way, since the document is a Sungard Corbel Standardized Prototype document, and no where does it have any guidance regarding this situation (at least none that I see).

Does anyone have any ideas or know of where the code talks about this situation?

I've come across a case where a dental practice has a 401k plan for it's staff, and each dentist was told by an Attorney/CPA/TPA that they could set up outside entities (the dentist being the only employee in each entity), and that these outside entities could have their own DB & 401(k) plans.

Everything that the client is telling me screams affiliated service group. I have no idea what basis the prior consultant justified these plans.

I explained that the clients should approach the IRS through one of the correction programs to see how to resolve this, and explained about adding back employees, making up contributions, and paying excise taxes.

Then, one of the dentists asked if it would be better to just have the plans disqualified.

The practice has about 25 employees in it. One of the dentists is in his early 40's and is about the same age as most of the employees. The other dentist is in his late 50's. The younger dentist has about $600k in his DB plan, and the older one has just over $1M in his plan.

By the way, the "individual plans" were effective 1/1/2004.

Has anyone seriously had to weigh plan disqualification as an option?

I know that the right answer is to call in the help of an ERISA attorney, but I'm still arming myself for the conversation I'm going to have to have with these guys.

Thanks!

Employer has paid cash dividends to ESOP, which ESOP has used to make payments on ESOP loan. In accordance with IRC 404(k)(2)(B), shares of company stock having fair market value equal to the amount of the dividend paid on allocated shares are allocated to participants.

Problem: Fair market value of shares has declined. Therefore, more shares are being allocated to participants' accounts this year than would be the case if shares were only being released and allocated based on normal amortization of the ESOP note. As a result, the ESOP debt is now more than the current fmv of the collateral shares in the suspense account, which means that the fmv of the shares allocated to the participants' accounts is now more than the "net" value of the plan assets. (Net value meaning "assets minus liabilities".)

The ESOP administrator is asking how to report this on the Form 5500? The problem is that the ESOP debt is greater than the value of the shares in the suspense account.

Any thoughts? Thank you.

We're discussing potential issues for automatic enrollment plans that transfer between service providers as we design our internal procedures. Has anyone seen any guidance about what to do if an autmatically enrolled participant's 90 day window for withdrawal falls during a black out period?

On April 1 a plan becomes restricted from paying full lump sums. What about participants that received distribution election forms prior to 4/1, at that time were entitled to a full LS, but did not return their forms by 4/1. Can they get the full lump sum payment paid to them after 4/1? Would their forms have to be signed before 4/1 or just provided before 4/1?

Just wanted to confirm that expanded 5500 reporting for 403b's will commence with the first report filed for plans years beginning on or after January 1, 2009. This is what I had read, but was getting conflicting information from a few sources.

This will mean 403b plans currently required to file a limited 5500 will now have to file a full return much like a similar 401k type plan? I.e. all schedules that could potentially be required and also the audit requirement.

Thanks.