We are planning for our annual enrollment. We will be unbundling dental from medical and offering full time employees three options - a DMO, a basic option POS and a high option POS. Since we are unbundling dental, we will also be offering dental only COBRA if someone is only enrolled in dental coverage when an event occurs. Also new this year, we will be offering the basic dental POS option to part time employees. Our question is this - when a full time employee who is enrolled in the DMO or the high option POS decreases hours to part time and loses eligiblity for the DMO or high option POS, does COBRA need to be offered due to the reduction in hours? They will still remain eligible for a dental option, just not the one they are enrolled in.

Hi everyone;

I am looking for a recent used copy of the DC-2 book and the first two PA exam books. Is anyone willing to sell or donate their copy? I took a break from the 'rat race' for a while and have recently gone back to work, 2 children later... The last test I took was C-1 back when ASPPA only had one P in the name! Well, the sunset rule is about to take that test away... I MUST take DC-2 (& two of the three PA's) and apply for my designation by December or I will have to take C-1 (or 40 hrs of CE) to finally achieve my QKA. Please help??

Please email me at lschnur@vanfin.com or call 216-642-8033 (day) or 330-461-3187 (cell).

Sincerely

Lana

Hi all,

So glad I found this forum!

Current situation: I expect to have around $3,000 - $4,000 in freelance income for 2007, and wanted to shield all of that amount from taxes.

Other info: I will be employed and contributing to a company 401(k) for the latter half of 2007. I have already maxed out a Roth IRA.

By the way, I've already received $1,000 for freelance income. The thought of having 30-40% taxed sucks.

I want to know - SIMPLE or SEP? I can contribute more money to SIMPLE, but other than that I am confused on the best option for me. Also, can I convert SIMPLE or SEP to a traditional IRA after 2 years?

Thank you for your help in advance!

CN

I have put $10,000 into my Roth IRA through Vanguard for the years 2004,2005,2006. My account is valued at over $12k. I would like to take the $10,000 that I've put in. I believe that I can take this amount out without penalty, however when I attempt to do it on the website, it says that this is an illegal distribution(early withdrawal) and will be subject to penalty. Should I just ignore this and take the money out being that it's only money that I put in.. Thanks.

Hello,

In 2006, I had ~80 shares of VQNPX in a Vanguard Traditional IRA. In an attempt to consolidate to ETrade, I performed a transfer from Vanguard to ETrade. In the process, I moved the shares into a Roth IRA account (assuming that the amount would be treated as income, and that I would owe the tax on it).

Unfortunately, I've discovered that I was not supposed to add anything to my Roth IRA account because I would be (am) in excess. As a result, my goal is to "un-do" the operation and move all of the shares back to a Traditional IRA (this time, using my Traditional IRA account with ETrade).

From what I've read on this forum (and other places), it seems like there's at least 1 or 2 options. I'd hate to make another mistake because it would seem that I don't know what I don't know yet. So, I have the following questions:

1) Is this the correct approach? Am I asking the right questions?

2) I'm assuming that ETrade can help me with this. If I contact them, what specifically should I ask from them? i.e. Am I asking them for a "Recharacterization" of those shares, or am I asking them for a "return-of-excess" ? Are these the same thing?

3) Should I be working with another professional, and not ETrade to help with this activity? If not ETrade, then who would you suggest?

4) The stocks have increased in value, and paid dividends which were automatically reinvested as new shares. Is the increase in value/shares treated any differently, or can I simply move 100% of the shares back to a Traditional IRA?

Thanks in advance!

Cheers,

-Alan

As a SAS 70 auditor for a number of years, i have witnessed the healthcare and benefits industry increasingly coming under the microscope for this audit. There are many misconceptions and myths regarding this audit, ranging from price, to timeframe and many other issues. I wanted to start a forum and discussion where i can help assist and alleviate any concerns organizations may have. I have assisted and issued over 150 of these reports over the years, many in the benefits arena.

-SAS70Auditor

EXECUTIVE SUMMARY: Based on the fact pattern below, I am sure that the SSA we filed with the final filing for a terminated plan was not plugged into the SSA system. How do I go about fixing that?

BACKGROUND: I work for a pretty big controlled group that has grown primarily by acquisition. So I've terminated or merged a bunch (over 40) of plans covering lots of employees. And we hardly ever get inquiries from participants who were paid out but have gotten a SSA-L99 saying that they might be entitled to a benefit. But over the last couple of months I have gotten six or eight inquiries from people we paid out and reported on the 2001 filing as D--previously reported, but no longer entitled to a benefit.

Should I:

Resubmit the original filing?

Submit an amended filing, reporting them again on the current format?

Try to call my way to an official answer? I've already been throguh the IRS, EBSA and SSA websites without any progress.

Thanks for any advice.

Our leadership team has indicated that they would like a full (we currently do premium only) cafeteria plan considered for 2008. While I know this was a hot topic several years ago, I'm wondering who is doing this today and what's working and what's not? Currently about 25% of our population opt out of health care and are not receiving any type of opt out payment. My concern is that while this approach provides greater choice to the employees that it will be a cost increase to the employer.

Any feedback on plan designs that are working in providing choice while minimizing cost are appreciated!

Are Municipal Retiree Health Plans exempt from ERISA?

Are Municipal Retiree Health Plans exempt from MEWA Regulations/Statutes?

GASB43/45 is shifting retiree health insurance plans from a DB to a DC approach. A Purchasing Group is being established to offer Medicare eligible Retirees Health and prescription Drug coverage from several insured plans. The Purchasing Group would establish a trust. The Trust would enter into contracts with the insurers providing coverage. The Trust would contract a TPA, approved by each insurer, to provide Retiree billing and premium payments to insurance plans. The Purchasing group would use their collective member participation to establish the best premiums, net of commissions for the retirees

Many of the Municipal plans are offering the Medicare eligible Retiree the option to continue coverage on the group health insurance plan. The monthly premiums are paid by the Retiree. However, the monthly premium is the same as that of an active employee!! The Retirees are enrolled in Medicare Parts A & B. The Trust can provide this retiree population monthly premiums and very similiar health and prescription drug benefits, PPO or Indemnity Medicare Benefits, with savings of $75.00 to 150.00 a month. Of course if a retiree elects a Medicare Advantage plan or PFFS plan, the savings would be greater.

Would an Association plan acheive the same or better results? Any comments/uggestions would be apprectiated.

sfjfl@bellsouth.net

Profit sharing plans are not required to have the QJSA and QPSA forms of benefits, but many have had in their early history.

The 411d6 regs were changed a few years ago to permit the elimination of certain forms of benefit payout.

Many profit sharing plans have since been amended to remove the QJSA/QPSA forms of benefit, as they may do so without such disqualifying the plan from tax advantages.

But what about the spouse whose REA rights were stripped by such an amendment? Aside from the tax qualification issue for the profit sharing plan, if the plan as amended paid out all of the benefits in a lump sum on just the employee's signature, does the spouse have a valid claim against the plan for the survivor benefits after the employee dies?

From the no good deed goes unpunished file.......

Employer faithfully deposited 401(k) contributions during the year. However, due to a payroll glitch, everyones W-2's reflect a slighlty larger 401(k) amount than what was actually the correct (and deposited) amount for 2006. W-2's were sent out with the wrong amounts.

There are quite a few people in this plan so, rather than fix and re-issue the W-2's, the employer decided to make an additional contribution to the plan for the difference between what the W-2 shows and what was actually deposited (Again, the actual amounts deposited as 2006 401(k) contributions were correct, it was the W-2 that was incorrect). This was done recently, well after 12/31.

The proper thing to do would have been to correct the W-2s, but that apparantly is not going to happen. If the employer does not take the amount of this additional deposit as an employer contribution deduction, does that help the situation somewhat? Also, would you consider this extra deposit as a "late contribution"? Really, its not late because it shouldn't have went into the plan in the first place.

This is messed up. Any comments or suggestions are appreciated.

Have a Plan we inherited that has a 50% match on the first 3% of deferral, 75% match on the next 3% of deferral (4-6), and a 100% match on the next 3% (7-9). I know the plan not only has to pass acp testing but also 401(a)(4) for a right or feature.

Appears to me that each level of match has to pass 401(b) with respect to availability. All participants can defer at least 9% of their pay per the plan document (no cap). Of course it appears the HCEs are the majority deferring the full 9%.

Is the 410(b) based on availability (which all participants have available) or is it based on the actual rate of deferral - in other words look at hces deferring at least 7-9% compared to nhces deferring at 7-9%.

First time I have had this and prior administrator did not address.

Thanks in advance

With regard to 5-percent owners 401(a)(9) has gone through some gyrations. Prior to TRA 86 only 5% owners were required to take distributions from qualified plans at 70 ½. TRA 86 changed this to everyone. SBJPA changed it back to only 5% owners. However, the pre- TRA ’86 rules and the proposed regs had specific rules with regard to what happens if you first became a 5% owner in a year after you reach age 70 ½. (You have to begin taking distributions).

SBJPA and the Final 401(a)(9) regs are silent on this and actually appear to say that the determination date for 5% owners is the plan year ending in the calendar year in which someone turns age 70 ½. It would appear from the language of the Code and the regs that if you become a 5% or more owner after this year you would not be a 5% owner and would not have to begin taking distributions.

The Section of the Code that provides the exception to the rule allowing distributions to be deffered to actual retirement applies only to “an employee who is a 5-percent owner (as defined in section 416) with respect to the plan year ending in the calendar year in which the employee attains age 701/2,”

The regs provide:

(c) For purposes of section 401(a)(9), a 5-percent owner is an employee who is a 5-percent owner (as defined in section 416) with respect to the plan year ending in the calendar year in which the employee attains age 70\1/2\.

Therefore it appears that if someone becomes a 5% owner after age the plan year ending in the calendar year in which they are 70 ½ they would not be a 5% owner under the current Code language. I wouldn't have thought that this was the rule, but looking back at the pre-TRA '86 Code provision and proposed regs--where this was specifically addressed--and looking at the current Code language and regs the conclusion appears to be that 5% owners is a one time determination and what happens after that date with regard to corporate ownership is irrelevant. Has anyone looked at this?

An advisor for a prospect of ours is debating that once an employee is eligible to defer into a 401(k) plan, they are always eligible to defer unless the plan is frozen/terminated, or the employee quits. The plan in question is considering excluding all HCEs from future participation in the plan: no more deferrals, no contributions, no forfeiture allocations. They are also considering excluding a fair number NHCEs to get their participant count under 100 (the plan has well under 100 with balances overall, but more than 120 eligible).

1. Assuming the amendment is not considered discriminatory, is their a problem with amending the plan to exclude certain employees from being eligible to make deferrals into the plan?

2. The document we propose is a normal nonstandardized prototype, or we could go the volume submitter route if that's really necessary. If #1 is ok, do you think such an amendment/restatement would damage the reliance on the D-Letter or advisory letter?

Employees have deferral elections in place for bonuses, and the deferral elections were made prior to year in which bonus was earned. Employee must be employed on bonus payment date to receive bonus (so substantial risk of forfeiture). Bonuses paid at the end of March following the year in which earned. Emloyer's payroll system has a glitch, and no deferrals are deducted from the bonus payments. Employees get checks and cash them. Employer discovers error.

One position is that the bonus amounts are not, and were not, deferred and so are not subject to 409A, and so no violation of 409A. However, another position is that the deferral elections were improperly "revoked" because they were not irrevocable, and thus a violation of the initial deferral rules occurred and so the "not deferred" amounts are subject to the 409A penalty. Yet another position would be that the amounts WERE deferred but then the payment of those amounts was accelerated, again in violation of 409A.

Thoughts?

I am having trouble justifying a "correction" by asking the employees to return the amounts that should have been deferred (and I find no direct authority that this is a transaction that can be rescinded), since they now are in actual receipt of those dollars, but am wondering if anyone has tried that strategy. Thank you for what I know will be some interesting responses.

A 401(k) plan mistakenly excluded an eligible employee from making deferrals. I believe I understand the Rev. Proc. 2006-27 correction to be a QNEC of 50% of the missed deferral (ADP for employee's group * employee's comp for PY), adjusted for earnings.

However, the employee excluded is over 50. Rev. Proc. 2006-27 does not seem to address correction as to the catch-up. Employee asserts he would have done catch-up, had he been allowed to make deferrals. What is the appropriate correction with respect to the catch-up?

Thanks in advance for any suggestions.

It is my understand that the conversion calculation includes all IRAs. You can't carve out a specific IRA as a non-deductible IRA and convert only it.

What does all IRAs mean?

I am guessing that SIMPLES and SEPs are excluded when calculating the percent of the conversion that is taxable?

Thanks

My knowledege was very limited when fees were brought up during the time I opened my account as I failed to do research. Can someone please help and explain whether a 5.25% front-end sales charge is good or bad? I opened up my ROTH IRA account at Washington-Mutual.

Just wanted to start a little open discussion. The company I work for is about to initiate a 401k, and the investment managers we're choosing to go with said two things that I didn't agree with. Now, bear in mind, I don't have industry experience dealing with these two questions, but I have certainly been reading everything I can get my hands on. So I was hoping some of you might be able to lend your expertise.

The two things I didn't agree with:

1. Investment Policy Statements aren't needed, and they add more liability to the business owner than they prevent.

2. "We're looking at offering your guys 25 investment alternatives, which would cover every asset class."

Now, although they aren't required under fiduciary law, I thought IPS's certainly streamlined the investment management process.

I also thought that after reading several behavioral finance studies people are coming to the conclusion that once you offer MORE than 9 or 10 investment options, participants start to become paralyzed by analysis and start leaning towards more conservative investments, because they aren't sure what they should choose.

Now for someone who really wants this 401k to take off and have a lot of guys participate, what do you guys think about these statements with your experiences?

Thanks so much.

I have contributed to my employer's 403b (TSA) plan for several years, and recently, the company moved to a 401k. What are the implications of rolling over the TSAs to the 401k plan. Are there penalties??