Question: What can be done by an employer to correct excess contributions made through a cafeteria plan to employees' HSAs? If not "corrected" what is the penalty to the 125 plan, if any?

My understanding is that the employer can't recoup any $ from the employees' HSA accounts. I understand the implications for the individuals and they need to remove any excess contributions from their HSA accounts and include the excess contribution amount + income as income by April 15 (or applicable tax filing deadline) or be subject to the penalty, but what I am worried about are the implications to the 125 plan, if any. So, please only comment on that aspect. Thanks!

Anyone have a good reference source for old Revenue Ruling (1959) and old GCMs (1977). I tried the IRS.gov website but it didn't pull these up using a general search. I have CCH online but it doesn't seem to go back to 1959 on R.Rulings, Same with Kleinrocks CD.

Regarding fees from the final QDIA regs:

Section ©(5)(ii)(A) shall not apply to fees and expenses that are charged on an ongoing basis for the operation of the investment itself such as investment management fees, distribution and/or service fees, ‘‘12b–1’’ fees, or legal, accounting, transfer agent and similar administrative expenses), and are not imposed, or do not vary, based on a participant’s or beneficiary’s decision to withdraw, sell or transfer assets out of the qualified default investment alternative;

Does this mean if the plan charges a $50 processing fee against a participant's account for the distribution of the QDIA within the first 90 days after the initial investment that is okay even if it wipes out the entire account value?

If the answer seems obvious, I apolgize.

FAB 2006-3 essentially states that a Section 101(m) diversification notice is not required to be furnished if: (1) the plan provided diversification rights prior to 1/1/07 that were at least equal to those required under ERISA 204(j); and (2) the participants received quarterly benefit statements in 2007 that were PPA compliant. That first quarterly benefit statement would satisfy the diversification notice requirement.

Please tell me if I'm wrong, but I don't read the FAB to provide relief from furnishing the diversificaiton notice to participants entering the plan during or after 2007. That simply wouldn't make sense. Anyone agree, or disagree?

What is the difference between a medical expense reimbursement plan (under Code section 105) and a Health Reimbursement Account?

An employer has a MERP in place and has been approached about establishing a HRA. I cannot seem to figure out what the difference is besides the rollover from year to year.

Partners have different ages and thus have different levels of benefit value in a traditional DB plan. I wonder what philosophies you folks are using to "assign" costs to each partner in these DB plans of partnerships in year 2, 3, ...... Of course each partner wants to make sure they aren't getting the shaft by having a greater percentage of costs versus benefits assigned to them than other partners.

the employer notified employees that the plan was a safe harbor matching formula. later in the year the employer implemented a plan design that requires a safe harbor nonelective in connection with another plan. they basically make a mistake in thinking they had a safe harbor nonelective. would they be able to just make the safe harbor nonelective essentially changing the formula they have in their plan? no ee would receive any less.

Does anyone know if any of the main Volume Submitter Doc providers out there have a Volume Submitter plan w/401(h) post-NRA medical expense "account" language as an optional feature ? We use Accudraft and they said they don't have this as an option within their pre-approved Volume Submitter plan. Would prefer to keep it in the Volume Submitter realm if possible, if not, we'll go the long way via attorney drafted customized plan. We'd be happy to edit a Volume Submitter to include this language and submit as customized plan doc but I have no idea of what language needs to be in there.

Plan Sponsor of a terminating 401(k) Plan sent out a notice to interested parties notifying participants of its intent to seek a determination letter on termination of the Plan. Notice was sent out 10/17. Notice must go out not less than 10 or more than 24 days prior to the day the 5310 application is made. Seems Plan Sponsor still can't get its hands on some data required to complete the 5310. If the 5310 application won't be filed within 24 days of giving notice, what happens? Do they send another notice and start the clock all over?

Thanks for any insight.

My client AAA, Inc. is having its stock purchased by BBB, Inc. a Delaware corp and CCC, Ltd (BBB's parent company) which is an Austrailian company. They want the plan to remain intact and to have it cover only the employees of AAA. In the agreement BBB, Inc. is specified as the "Buyer".

Who is going to be the employer? Will AAA continue or because BBB bought all the stock is it the employer? BBB is only a small part of CCC, so it controlls both BBB and AAA.

There needs to be a resolution prepared to exclude all non AAA employees etc. Whose reso?

School district created a trust fund that is used to set aside money that will be used to pay the district's post-employment benefit obligations when teachers retire. This is usually done for health benefits, but now the district wants to do it with its post-employment 403(b) contributions.

Will the district somehow cause problems for its 403(b) plan by depositing money into one irrevocable trust now then using the money as a 403(b) contribution at some point in the future?

I searched the 403(b) forum and 403(b) answer book with no success, so I'm wondering if anyone has ever run into this in the past? Something doesn't seem right, but I can't put my finger on exactly what the "something" is. Thanks.

Maverick

FAS 158 seems to eliminate the concept of Prepaid Pension Cost and Unfunded Accrued Pension Cost. My question deals with what to do with a Prepaid or Accrued when a company transitions to 158.

Prior to the adoption of 158, the company has:

PBO $1,000

Assets $1,020

Funded Status $20

Loss $900

Prepaid $920

What does the company do with the Prepaid asset when they adopt 158? Do they write down the Prepaid and recalculate the Gain/Loss? Or do they maintain the asset and recognize the entire Gain/Loss in OCI? Is there a choice?

The IRS is now releasing the interest rates for target liability and PVAB minimum lump sums for PPA. Has there been anything released with respect to PBGC (since they supposedly are using a different composition for their interest rates)??

It's election season for 457(f) plans that permit salary deferral elections. What are plans doing for 2008 in light of IRS Notice 2007-62, which said salary

deferral elections generally cannot be made subject to a substantial risk of forfeiture? No salary deferrals in 2008 at all? Continuing salary deferrals for current participants only? Operating as usual until guidance is issued? Any thoughts would be appreciated.

I have a client that purchased a limited partnership investment in his IRA. the K1 from the LP shows UBTI. how does the client or IRA deal with this tax? my understanding is the IRA must pay the tax and it is at trust tax rates.

I am trying to determine the initial five-year remedial amendment cycle for an individually designed plan which merged with a pre-approved plan (the plan is maintained as an IDP). Is the plan still considered an IDP for purposes of making an election under the the controlled group plan filing rules of Rev. Proc. 2007-44 or is it a pre-approved plan that must remain on a six-year RAC?

I am being told by a tax examiner with the state Dept. of Revenue that on eligible rollover distributions paid directly to participants, when the federal mandatory tax withholding is 20%, South Carolina requires 7% withholding. State tax withholding is voluntary on all other distributions. When I asked for a reference source for the required withholding, the examiner could not provide one. I have not been successful in locating any information on required tax withholding. The best I can tell is the 7% is the maximum tax rate.

Does anyone have information on South Carolina's tax withholding requirements on periodic and nonperiodic distributions from retirement plans? Thanks for your help.

Anyone know if new IRC 430 has a corollary to 412©(8) that would allow a plan to adopt an amendment within 2.5 mos after plan year end and use it in minimum funding ?

Does anyone know how the calculation of aggregate sales price under the registration exemption provided in Rule 701 applies with respect to phantom stock, phantom units, or restricted stock? Specifically, Rule 701(d)(3)(ii) provides:

“(ii) Time of the calculation. With respect to options to purchase securities, the aggregate sales price is determined when an option grant is made (without regard to when the option becomes exercisable). With respect to other securities, the calculation is made on the date of sale. With respect to deferred compensation or similar plans, the calculation is made when the irrevocable election to defer is made.”

However, when does the "date of sale" occur with repsect to the issuance of phantom stock, phantom units, or restricted stock?

so the final regs are out and i have a practical application question. a participant is about to receive a contribution but has no investment elections on file. under the final regs, the PA is expected to give notice 30 days in advance of the first investment. in the meantime (the time between when contributions are received and the 30 days passes) what does the PA do with the money?