Hi,

I'm new to this board and I have a dilemma. I was working for a small employer in California (less than 20 employees). Upon satisfaction of my 3 month company-defined waiting period, I was enrolled in a Blue Shield HMO plan, that was paid 100% by the company. If I elected to have a PPO or more comprehensive HMO plan, I had the option to have the additional premium deducted from my paycheck, however, I elected for the standard coverage to avoid additional costs. Shortly after becoming enrolled in the HMO plan, I began the process of obtaining the necessary preapprovals from my Primary Care Physician to have a major surgical procedure. I went through all the steps, and received my authorization, and surgery was scheduled for this past August 10th. On Tuesday, August 7th (3 days before the surgery, and 1 day before I was scheduled to leave on medical leave for 10 days), I heard a rumor around the office that we no longer had health coverage. Since I was planning on having a major (& expensive) procedure in the next few days, I confronted my boss. Only after asking about the rumor, was I informed that our coverage was scheduled to be cancelled THE FOLLOWING DAY! And a full 2 days prior to my scheduled surgery. Apparently, my employer stopped making the premium payments, and neglected to notify ANY of the employees of the impending cancelation of the policy. I cannot seem to locate the correct resource that would govern the employer's obligations and requirements to properly notify their employees, if there is one, however, it is not my primary concern. My employer advised me that they would "take care of it" and to continue with the surgery. I've now had the surgery, along with the required 3 night hospital stay, and was only required to pay approx $300 (possibly a copay for the hospital?) upon admittance at the hospital. Since then, I've learned that my employer did NOT "take care of it", and our policy was officially canceled as of August 9th (the day prior to my surgery). They are now saying that they are attempting to get me enrolled in a Conversion Plan with Blue Shield on a PPO plan, so there would be no need for Re-doing my Prior Authorizations. Everything I seem to read on the subject specifically mentions that you're only eligible for a Conversion Plan or to be considered "HIPAA Eligible" only if the cancelation was not due to "YOUR failure to pay plan premiums." I'm extremely concerned at this point, because the definition of "Your failure" is the difference between a $300 copay and a bill for $35,000. Since I was not personally responsible for the non-payment of the premium, do you believe I can still be eligible? Or is Non Payment of premium a reason for disqualification, regardless who the responsible debtor was? I plan on contacting the California Major Risk Medical Insurance Program tomorrow during business hours, but I'm trying to find any and all information possible ASAP. Please let me know if you have ANY advice! (Also, since I"m sure it will be suggested, the company is on the verge of bankruptcy any day now, and I have subsequently quit my position there due to pure disgust with the owners/management in this issue, so even if I were to sue the company, it would be included in a bankruptcy and I'd most likely receive nothing). Thank you for listening and your advice!

I am a 46 y/o who started a Roth IRA this year with an initial lump sum contribution of $4K. After some unwise investment choices that original investment is now worth $3,700. My question is - am I allowed to put in $300 to bring it back up to $4,000 or are my deposits strictly limited to $4000 for the year.

I have not withdrawn any of the funds and do not intend to do so anytime soon. I am simply trying to find out if I can put in additional cash to get back to my $4000 starting point before choosing other invesments within my 401k.

I appreciate any and all responses and advice. If additional info is needed please let me know.

-Dave

This might be too obvious but I am looking for a cite that talks about how the IRS will apply a facts and circumstances standard to determine if there has been a "separation from service" (or "severance from employment" pos-EGTRRA) for distribution purposes.

Does anyone know of one off the top of his/her head?

Would you generally use the Ordinary business income Line 1 Part III or the Total to Schedule K-1 which generally has deductions and shows up in Part II section N when running the ADP and the def. of comp. has no exclusions?

Employer established an agreement with one HCE that provided additional compensation each year calculated like a profit sharing allocation, but not intended to be deposited into their 401k. The purpose was to compensation the employee for the employer's decision to replace the plan's profit sharing with a straight 3% safe harbor. Safe harbor and this agreement was effective 2002.

Staff misinterpretted the agreement and has been each year contributing this additional compensation as an additional safe harbor contribution to the 401k.

Employer has approximately 300 participants

Do we have to go VCP and $5,000 submission for this?

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