Is there a copy of the final regulations showing only changes from the proposed regulations? If you know of a link, please share it. Thanks.

I am in the process of getting contracting with a Wellness Provider. We would like to have Health Assessments, a Wellness self help portal and communications, Biometric Screenings, and High Risk Wellness Coaching. According to the VEBA requirements, an employer can pay for life, sick, accident or other benefits to its members or their beneficiaries. My understanding from that sentence is that since this is for the benefit of employees, these expenses can be run through our VEBA.

Does anyone have an opinion in agreement or disagreement?

Can a spouse rollover pre-tax qualified plan assets to a ROTH IRA?

Can a nonspouse rollover pre-tax qualified plan assets to a ROTH IRA beginning next year?

Can an owner of a self-directed IRA direct the IRA to obtain an interest (15%) in an LLC where the owner of the IRA is also an employee of the LLC? Is this a prohibited transaction under Section 4975(e)(2)©? Thanks.

Hello,

I am a relatively new user to Relius and would like to learn more about the system. I am hoping someone in the forum can suggest a good workshop/conference for a new user as well as one new to working with employee benefits.

Thanks in advance.

As we look at implementing the Roth 401(k), I wanted to make sure that our payroll department is properly handling the deferrals.

Let’s say that participant has:

 Annual Salary = $30,000

 Elected Pre-Tax Deferrals of 2%

 Elected Roth Deferrals of 2%

Will the total amount contributed to the retirement account be $600 ($300 in the traditional and $300 in the Roth)? The difference is that only $300 (pre-tax) reduces taxable income for tax purposes? This will result in less take-home pay for the participant because more taxes are taken out, but I don’t have to figure out the taxable net salary on 2% and have the net deposited into the Roth, do I?

Last year PLR 200620025 said that a disabled beneficiary of a parent's IRA could essentially re-designate the IRA, naming as beneficiary a newly-created special needs trust (SNT) of which he was the sole beneficiary. The IRS said that (a) the transfer of the IRA to the SNT was not taxable because the SNT was a self-settled "grantor" trust; and (b) the SNT beneficiary's life would be the measuring life for minimum required distributions from the IRA.

In the PLR situation the SNT was created after the death of the IRA holder, as a way for the disabled beneficiary to remain qualified for Medicare and other gov't. benefits. So it was not an estate planning technique, per se.

My question is the degree to which practitioners are using the PLR as a basis for estate planning, for instance by instructing clients to name SNTs as IRA beneficiaries during life, whether or not the SNT is a grantor trust or third party trust.

Would the transfer of the IRA to the SNT on the IRA holder's death under these circumstances still be a nontaxable event under these circumstances? Would the SNT beneficiary still be the measuring life in such circumstances?

Just trying to figure out if practitioners are interpreting the PLR aggressively or cautiously, given the eternal provision about applying PLRs to different factual circumstances. I have posted on the "IRA/Estate Planning" board but also interested in opinions shared on this board.

Last year PLR 200620025 said that a disabled beneficiary of a parent's IRA could essentially re-designate the IRA, naming as beneficiary a newly-created special needs trust (SNT) of which he was the sole beneficiary. The IRS said that (a) the transfer of the IRA to the SNT was not taxable because the SNT was a self-settled "grantor" trust; and (b) the SNT beneficiary's life would be the measuring life for minimum required distributions from the IRA.

In the PLR situation the SNT was created after the death of the IRA holder, as a way for the disabled beneficiary to remain qualified for Medicare and other gov't. benefits. So it was not an estate planning technique, per se.

My question is the degree to which practitioners are using the PLR as a basis for estate planning, for instance by instructing clients to name SNTs as IRA beneficiaries during life, whether or not the SNT is a grantor trust or third party trust.

Would the transfer of the IRA to the SNT on the IRA holder's death under these circumstances still be a nontaxable event under these circumstances? Would the SNT beneficiary still be the measuring life in such circumstances?

Just trying to figure out if practitioners are interpreting the PLR aggressively or cautiously, given the eternal provision about applying PLRs to different factual circumstances.

I am desperately searching for any conversation "out there" about continued health coverage for retired/terminated executives. I'm looking primarily for articles in print, but I'll take blog entries if I have to. Any suggestions of where to look?

Are their any rulings that specifically state that an employer is required to maintain enrollment forms for it's employees regardless of participation? I know it makes sense in the event of an audit, but is there a ruling that states this?

Thank You,

CConnell

I have what I hoped would be a simple question: Pension plan has a plant shutdown benefit -- unreduced pension if 55 and 10 years of service. Employee has over 10 years of service at time of shutdown, but he is only 50. Is the employee allowed to "grow into" the benefit and receive the unreduced pension at 55?

The Bellas case and the 411(d)(6) regulations indicate that shutdown benefits are accrued benefits, and the Gillis case and RR 85-6 indicate that an employee may "grow into" eligibility to receive accrued benefits, but I haven't found anything directly on point.

Relevant plan language: any employee who shall have had at least 10 years of service and shall have attained the age of 55 may retire, provided that at the time of retirement the Employee has been laid off as a result of a plant shutdown.

A business owner and one other employee paticipated in nonintegrated SEP. The owner consistantly received a 10% contribution for the last 8 years and the employee received 7%. In addition, the owner's 2 children were eligible for at least some of the years, and it is not know whether they received contributions, and if so, at what rate.

What do you think: is the failure to allocate in accordance with the plan's provisions an egregious failure under Revenue Procedure 2006-27? Assume children received (a) $0, (b) 7%, and © 10% in years that they were eligible.

From Rev. Proc 2006-27

Egregious failures. SCP is not available to correct Operational Failures that are egregious. For example, any of the following would be considered egregious: (a) a plan has consistently and improperly covered only highly compensated employees; (b) a plan provides more favorable benefits for an owner of the employer based on a purported collective bargaining agreement where there has in fact been no good faith bargaining between bona fide employee representatives and the employer (see Notice 2003-24, 2003-1 C.B. 853, with respect to welfare benefit funds); or © a contribution to a defined contribution plan for a highly compensated employee is several times greater than the dollar limit set forth in § 415. VCP is available to correct egregious failures; however, these failures are subject to the fees described in section 12.06. Audit CAP is available to correct egregious failures.

a non profit tax exempt org wants a executive benefit plan for a select group of HCE's.. the plan would not allow for elective deferrals. it would only be employer money. could this entity do this plan or are they restricted by 457?

DB plan sponsor pays reasonable plan expenses (actuarial fees, PBGC premiums) from company assets. Can the plan sponsor be reimbursed from the trust from the trust for these expenses?

For example,

Plan Sponsor ABC receives invoice from Actuaries-R-Us for $50,000.

ABC pays invoice out of company assets.

ABC then requests reimbursement of $50,000 from plan assets, determining that they are reasonable plan expenses.

Can/should trustee reimburse ABC for these expenses?

Thanks!

I have a new client that was using a prototype plan from another firm for its integrated DB plan and its 401(k) plan. That firm adopted an amendment for all its prototypes, DB and DC, in 2005 to reduce the involuntary distribution threshold to $1,000. We are now restating their plans and now that they are aware of what happened to their plans in 2005, they would like to change the threshold back to $5,000.

As I read the 411(d)(6) regs, it looks like they can only do this prospectively for benefits accruing after the amendment is adopted or effective. Reducing or eliminating the threshold is OK, but increasing it is not. (1.411(d)-4 A-2(b)(2) Ex 3(v))

Before I rewrite the plan, I'd like to hear from others on whether you think I'm correct or not.

Terminated participant has 200k account balance and is in latter stages of cancer treatment. Plan currently only allows for lump sum distributions but employer is willing to amend if it will benefit the participant. Participant needs a portion (1/4) of the account to pay for care which will likely take him through his passing. Beneficiary of account is participants daughter.

Can anyone tell me the best way to go about this to make sure that the distribution works for all involved?

Seems to me that the money is better served being left in the plan based on non-spousal rollover options; assuming that an amendment to allow for continuous right of withdrawals or installments could be made. But, perhaps I've interpreted that incorrectly. Thought that if it was rolled from a qualified plan into non-spousal IRA that it goes in the name of the beneficiary but if it's from an IRA then it remains in the name of the decedent FBO the beneficiary. That brings MRD into play far sooner...

What are the pitfalls here? Not likely that anyone else will fall into this category as it's a small business and plan termination is likely within 5 years so precedence of allowing for partial withdrawals isn't a big deal. Participant is not an HCE either.

Anything I'm missing to help get an answer?

Employer has declared chapter 11. As the TPA we are no longer getting paid, and should be a class 6 creditor, so probably nothing will ever be paid.

However, due to the drop in work force, we have 14 individuals that have been sent enrollment forms prior to us knowing of the bankruptcy. Two people, thus far, have returned them expecting to be eligible for benefits.

Our company has not been administering COBRA for exceptionally long and this is our first bankruptcy. My understanding is that once they file, all plans cease to exist. No one is eligible for COBRA. I'm wondering two things.

1) Do the COBRA bankruptcy rules apply to all bankruptcies, 7, 11, 13 etc... Just seems like if it is 11, and they are going to reorganize wouldn't the plan stay in place unless the employer dropped them.

2) If the plans are dropped, shouldn't these employees receive a notice that there are no benefits? I think we could be seen as responsible for this and don't mind getting a letter together and the cost even though we won't be paid.

Any thoughts?

Are disability insurance policies issued by insurance companies and paid by employers treated as deferred compensation under Section 409A? These policies sometimes have a definition of “disability” which does not match 409A.

I’ve seen Sec. 1.409A-3(i)(4), but that seems to pertain to plans of an employer where payments would be made out of the general fund (or, in our most common situation, from receivables that come in after the onset of disability). I’ve also seen 1.409-1(a)(5) which excludes “disability pay” from the definition of nonqualified deferred compensation.(with the same meaning as in Sec. 31.3121(v)(2)-1(b)(4)(iv)©) but, quite frankly, I don’t understand 31.3121(etc.).

Please be kind – I’m a paralegal who does not want to be throwing together plans on Christmas Day.

A single employee plan with assets under $100,000 was terminated effective Dec 31, 2006 but the assets were not distributed from the plan until March 2007. Do we have to file a 5500 for 2006? 2007?

Must FSA elections be spread equally over the plan year? Group is faced with almost impossible task of getting national enrollment done by the first pay period in the new plan year. They want to start with the second pay period and divide FSA elections equally over the remaining pay periods.

Anybody?