Hello,

I am he benefits administrator for a large company. Our 401k plan caps HCEs at 6% so we can pass our discrim tetsing. Our recordkeeper miscoded about 100 non-HCE employee's and capped them at 6% when they should not have in January. I just realized the extend of their error and I would like to know if the employees who were incorrectly capped can claim that they meant to contribute much more and demand that the company pay for the mistake.

If the employees do have a right to demand the exces contribution amount, will the company be liable or the recordkeeper?

Thanks,

Wappaus

We have a 1-Participant Money Purchase Pension plan that will be to terminating. According to the IRS website, "the 204(h) notice should be provided at least 45 days prior to the effective date of the reduction, 30 days for an early retirement subsidy in a merger or acquisition, and 15 days for other mergers or if a small pension plan is involved".

Since this is a "small pension plan", is 15 days sufficient notice or do we have to give the notice 45 days in advance?

Thanks for your input!

Hi, apologies in advance if this is off topic. I'm a former Mormon (aka Latter-day Saint or LDS), did the whole two-year mission thing, etc. If you're not familiar with the structure of the LDS church, they have a lay ministry of unpaid local leaders. But the hierarchy includes roughly 100 "general authorities" who serve full-time and do not have other occupations.

These are unsalaried positions, but they do receive a living allowance, apparently to cover things like food, clothing, housing, travel, etc. I'm not privy to the amounts or how exactly this is done. My question is why call it a living expense instead of a salary? Is there some tax benefit to doing this? Maybe it just sounds better to the membership?

Any insight or suggestions will be appreciated.

Guap

I understand that final 409A regulations generally exempt payment / reimbursement of health insurance premiums on behalf of former employees for up to the COBRA period. What if employer with self-insured plan wants to provide coverage for up to 2 years as part of severance benefit?

Can you provide for reimbursement of COBRA premiums paid by ex-executive for up to 18 months to get around the 105(h) discrimination issue but then also provide for reimbursement (or possibly even direct payment of) premiums for ex-executives coverage under a fully insured individual health insurance policy for the remaining 6 months.

Seems reimbursing under an individual policy rather than the self-insured group plan for the last 6 months should take care of any discriminatory concerns under 105(h) and should also arguably be exempt from 409A as that remaining 6 months would be nontaxable benefits to the former employee under applicable IRS guidance that provides for a broad definition of the term "employee" under 105 and 106 extending to include former / terminated employees. Since 409A seemingly exempts unlimited payment / reimbursement of nontaxable benefits, the last 6 months of payments should also be exempt from 409A. In short, the entire 24 months of continued health coverage payments would be exempt from 409A--the first 18 months exempt under the general reimbursement for COBRA period rule and the last 6 months exempt under the exception for non-taxable amounts.

I suppose in some (perhaps many) cases it may be cheaper to cover individuals under an individual policy from the start rather than under COBRA. Seems allowing for reimbursement of either COBRA premiums or premiums for substantially similar individual policy for first 18 months should also be fine so long as it is clear that reimbursement after the COBRA period must be limited to coverage outside of the self-insured group plan / COBRA.

Any thougths?

Not from a regulatory perspective but from a practicle one, how long should record keeping reports, enrollment forms, distribution forms, etc. be kept in storage.

Since software changes every few years and there may not be a way to go back on the computer to pull up old information, we feel that we should probably keep the hard copies indefinitely.

Please weigh in.

Would a Headhunter be considered a Service organization for Qualified Plan Affiliated Service Group rules?

Thanks

I received a question today regarding the application of Section 415 to nondeductible IRA contributions.

It has been suggested that the $45k limit (or possible some other qualified plan limitation - 402(g) for example) applies to IRAs, and since the individual has maxed out the 45k limit this year, she is not able to make a nondeductible IRA contribution.

I am not aware of any rule (qualified plan rules or otherwise) that would prohibit contribution to a nondeductible IRA if the client has income and desires to do so.

Am I missing anything? Thanks for responses.

Participant wants to defer "income" until retirement. Looking to set up either a funded or unfunded 457f plan. Assuming participant takes contructive receipt after termination of employment are both FICA AND Withholding Taxes due when the risk of forfeiture lapses or just FICA?

assuming a TPA is not a fiduciary what course of action in addition to sending letters should be taken to protect the plan and avoid liability for the TPA? case law seems to state that steps should be taken to protect the plan but it is not necessary to inform the DOL or the participants.

Does anyone know of a requirement that the HRA must state the amount of the employer contribution?

A client wants to establish an HRA and plans on increasing the contribution amount each year (at least for the first couple of years). They don't want to have to amend the plan each year to state the increased amount.

Would it be as simple as stating in the HRA that the amount of the employer contribution shall be determined each year by the BOD in resolutions adopted prior to the beginning of the plan year? They would also do a communication piece each year.

Any guidance/citation is appreciated - thanks.

I am an employee at Company A. Approx 3 years ago Company A merged with Company P, but the 401(k) plans have not been merged. Approximately 2 years ago I started working for Company P and my funds with the Company A plan remained with the Company plan.

In the last week, I have learned that one of my children needs medical care not covered by my POS insurance policy and I need to provide approx $30k to the provider who initiated care early this week. I urgently need to borrow against the Company A plan funds. I have been informed that I cannot borrow against them since it is a separate legal entity, and that I cannot roll my balance from Company A 401(k) plan to the Company P 401(k) plan. They apparently are in the process of doing a plan to plan transfer to merge the 2 plans, but this will not be complete for approx 2 months. In the meantime, I cannot borrow against the balance in my Company A 401(k) plan account. If I cannot borrow the funds within 10 days, my daughter will be discharged from her care (2 weeks early) because I have not been able to pay them.

Is my company correct in denying me the ability to roll the funds from Company A to Company P or let me borrow against the Comany A account?

If a non-qualified plan makes a gross-up payment to a specified employee for federal income taxes owing because of participation in the plan, is the plan required to wait six-months because of the delay requirement for specified employees?

I see that payments on account of state, local, and foreign taxes are subject to the six month delay (1.409A-3(i)(2)(i) doesn't exempt them as it does payments of FICA taxes). However, I don't see a provision similar to 1.409A-3(j)(4)(xi) (relating to state, local and foreign tax payments) that deals with federal income taxes.

Any ideas? Am I failing to see the forest through the trees?

Does the Internal Revenue Code (or ERISA) require a 457 plan participant to obtain his spouse's consent to name someone other than the spouse as beneficiary?

I have seen in other topics that spousal consent may be required by the plan document or by state law, but I have been unable to determine whether it is also a Code requirement.

The final 403(b) regulations provide that for contracts that are not part of a governmental or church plan, the required beginning date for a more than 5% owner is 4/1 of the year following the year the participant attains age 70-1/2. When would there be a more than 5% owner in a 403(b) plan?

My question is whether or not the Enrolled Actuary for the plan is required to prepare a Schedule B if he is not going to be paid for the preparation of the "B" just because he prepared the actuarial valuation report

If a plan has any eligible employees away on USERRA-protected active duty, can the plan be terminated?

If so, how does the employer honor the obligation to make USERRA-required contributions upon the employee returning from that active duty after the plan's been terminated?

Contributions to a qualified plan by a sole proprietor are excluded from gross income but subject to self employment taxes. If that sole proprietor sets up an LLC and elects to be taxed as a corporation, can they avoid the self employment tax? What if they are the only member?

DoL Tech Release #92-01 exempts cafeteria plans that do not voluntarily create a trust from the ERISA requirement to have a trust. If the sole source out of which benefit claims are paid is the general assets of the employer, then the cafeteria plan has not voluntarily created a trust as to which the ERISA trust rules apply.

If such an employer chooses to pre-pay debit cards in the amount of the medical flex accounts elected by employees, by transferring funds of the employer at the beginning of the year to the issuer of the debit card, has the employer voluntarily created a trust (i.e., the pre-paid debt cards) that is subject to ERISA trust rules?

Any citations to applicable DoL authority would be appreciated. Thank you.

One person doctor corporation. For 2005, we told the doctor that he could contribute $14,000 401k plus $28,000 profit sharing. He deposited the $28,000, and his 2005 W-2 shows the $14,000 deferral.

However, he never deposited the deferral. Is it too late? He files a 5500EZ so DOL probably not an issue.

Med

Doctor group wants 3 tiered CB formula (10k, 25k, 50k) where each doctor will initially choose which formula they want to be under and plan doc will be drafted accordingly. Only Doctors will be in the plan as plan easily passes 401(a)(26) as they're emergency room docs with few staff ee's. Plan is aggregated with existing PS plan using permissive aggregation, staff ee's under the PS benefit under rich formula 16% formula (this level of contribution has more to do with their historical benefits package than discrimination testing though it is sufficient to pass 401(a)(4) on an aggregated basis).

Anyone have any problem with naming names in the CB plan doc in a case like this. Maybe something like:

Group A will get 10k and consists of: Dr. A, Dr. B, Dr. C

Group B will get 25k and consists of: Dr. D., E., F.

Group C will get 50k and consits of: Dr. G, H, I, etc...

I assume I can use a flat dollar amount instead if % of compensation, so I guess I'm mostly wanting to check on using names instead of job classifications. Do I need to pass the 401(a)(4) using the 70% test instead of ABPT ?