Hello,

Would the follow situation be considered a second qualifying event? If you agree that it would for how long?

An employee and family are on COBRA, the QB finds another job out of state and moves. This in turn causes the Dependents to lose coverage through COBRA and since the QB's new job is out of state, no insurance is being offered to the dependents.

I feel that this would be acceptable as a 2nd event, but not sure if this should be 18 or 36 months.

Thanks your opinions are appreciated.

Is the 18 month COBRA term a maximum period of coverage for an employee from any one employer under all circumstances or is it the maximum term associated with a discrete qualifying event? An employee went on an unapid leave and started COBRA for one month. He returned to work and one month later took a permanent work force reduction offer. Does he get a new 18 month term? Or is the 18 month term for reduced hours or termination reduced by the earlier one month of COBRA coverage leaving 17 months from the second event, the termination? Does the length of the return to active status make a difference? Thank you for your thoughts.

What are the qualifications for maintaining status of a Church Affilated Health Plan?

I have a QDRO in which the Alternate Payee's distribution is to be paid to a trust account for his benefit. I know I should know this but does anyone know if that is okay?

I think the QDRO is not the issue but whether a distribution can be made to a trust in general?

I have done some research but have not had any luck.

We have two retirees who are both enrolled in a Medicare Advantage plan. Both have also signed up to cover each other and are enrolled in the same plan. Our vendor is not coordinating benefits for these individuals. Is there a Medicare rule which prohibits individuals from being enrolled in two Medicare plans? I am just a little confused. The vendor coordinated benefits earlier in 2006, then stopped mid-year. This leads me to believe that the vendor thought COB was okay (at least originally). Any help/guidance will be appreciated!!

I am trying to find support for the statement that a custodian holding plan assets is not a fiduciary. I am also looking for the standard of care applicable to custodians. Thanks for any help.

A 401(k) plan will match either voluntary after-tax or deferral contributions. What are the restrictions on withdrawals of after-tax contributions that are matched? I know that generally if the after-tax contribution is required to be made as a condition of employment, the after-tax contribution could not be withdrawn at any time. But I am not sure what the withdrawal restrictions are with regard to a matched after-tax contribution. Any authority?

I am new to the ROTH IRA field. This may be a simple question for most of you. I received some Contingent Convertible Shares in an IPO. The shares are restricted and will not convert to common shares until the Company has met certain performance levels. The shares will lapse on December 31, 2008, if the performance is not achieved. The question is how do I transfer the shares to a ROTH IRA? MY thoughts are as follows:

1) Contribute directly - The problem is can you contribute stock to a ROTH IRA and how do you value it.

2) Contribute Cash and buy the shares as an investment.

Any thoughts would be appreciated.

For a distribution of excess contributions (failed ADP test) attributable to Roth 401(k) contributions within 2 1/2 months after the end of the plan year, how should the Form 1099-R be completed?

Assumptions

For the 2006 Plan Year, the plan's only HCE made $15,000 of Roth 401(k) Contributions. After performing the ADP test, it is determined that a $1,000 excess contribution needs to be returned. Further, there is $75 of earnings (including gap period earnings) returned. A check for $1,075 is cut on March 1, 2007.

Option #1 - 1 Form 1099-R

Box 1 - $1,075

Box 2a - $75

Box 5 - $1,000

Box 7 - P (note that the 1099-R instructions do NOT permit use of Code P and Code B)

Option #2 - 2 Form 1099-R's

The return of Roth 401(k) contributions would be reported as:

Box 1 - $1,000

Box 2a - $0

Box 5 - $1,000

Box 7 - B

The return of earnings would be reported as:

Box 1 - $75

Box 2 - $75

Box 5 - $0

Box 7 - P

Or is there another option that I am missing? Thanks for any help.

One of our clients discovered they under-deducted an employees FSA annual election for 2006. The employee has not submitted or been paid any claims yet. What are the client's options at this point?

In preparing for the new statement reporting requirements under PPA, have there been any changes in the frequency in which updated vesting must be reported? A model benefit statement is due to be released by the DOL but they have up to a year to make this available. Are practitioners considered to be acting in good faith until further directions are provided?

We operate in a daily environment and our plans receive participant quarterly statements as well as have access to their most current information online. For clients who only provide participant hours once a year their vesting is usually updated in time to be reflected on the 3/31 statements. Is there anything that requires vesting be updated more frequently than annually and (more importantly) in time for the 12/31/06 statements?

Thank you!

A company that would fall into Cycle A adopted a Fidelity prototype 401(k) plan several years ago. In 2003, it amended the plan to provide for multiple matching contribution formulas, which took it out of prototype status ("amended prototype"). Fidelity has issued a notice to its employers advising them that "the vast majority" of amended prototype plans (i.e., those that have not been amended "extensively" off prototype) can file under the 6-year prototype cycle and that it would actually do more harm than good to file an amended prototype plan during the individually-designed 5-year cycle.

However, this article by Deloitte (recently appearing on BenefitsLink) says that only amended prototype plans that were amended after February 16, 2005 can take advantage of the 6-year cycle and all others must file during the applicable 5-year cycle.

Both articles state that they are based on conversations with IRS officials.

Fidelity appears to rely on Section 19 of Rev. Proc. 2005-66. Deloitte appears to rely on Section 17.02 of Rev. Proc. 2005-66.

The company felt reasonably comfortable with Fidelity's position until it came across the Deloitte article. Obviously with the January 31 deadline fast approaching, it needs to decide who is right quickly. Any thoughts?

A company that would fall into Cycle A adopted a Fidelity prototype 401(k) plan several years ago. In 2003, it amended the plan to provide for multiple matching contribution formulas, which took it out of prototype status ("amended prototype"). Fidelity has issued a notice to its employers advising them that "the vast majority" of amended prototype plans (i.e., those that have not been amended "extensively" off prototype) can file under the 6-year prototype cycle and that it would actually do more harm than good to file an amended prototype plan during the individually-designed 5-year cycle.

However, this article by Deloitte (recently appearing on BenefitsLink) says that only amended prototype plans that were amended after February 16, 2005 can take advantage of the 6-year cycle and all others must file during the applicable 5-year cycle.

Both articles state that they are based on conversations with IRS officials.

Fidelity appears to rely on Section 19 of Rev. Proc. 2005-66. Deloitte appears to rely on Section 17.02 of Rev. Proc. 2005-66.

The company felt reasonably comfortable with Fidelity's position until it came across the Deloitte article. Obviously with the January 31 deadline fast approaching, it needs to decide who is right quickly. Any thoughts?

Folks,

Any thoughts as to whether or not qualifying an unsigned DRO is a violation of the fiduciary's responsibility under ERISA?

The judge signed the DRO, however, none of the parties signed. Neither Attorneys signed - the weren't aware of the DRO. Nor did my ex-wife sign - (she was effectively representing herself pro-se). Instead, she listed the Atty's info (bar #, address, tel no.) but ommitted their signatures.

An unsigned order, pleading, etc. - gives me certain minimal rights against my ex-spouse for a violation of the MO Rules of Civil Court (55.03). However, she is what has euphemistically been referred to as "judgement proof." I filed an ERISA claim with the plan based upon the failure of the fiduciary to provide timely notice of the qualification of the DRO. However, I'm interested in knowing whether or not other grounds for action exist.

For those of you that know, would qualifying a DRO that has the judge's signature (but none of the parties) raise any eyebrows?

Regards,

Bjorn

What schedules for form 5500 are needed for a 403(b) with Employer Match?

Our cafeteria plan administration software company is causing us no end of headaches. We're a TPA, and many of our clients are using the FSA debit cards for Unreimbursed Medical Expenses. For some reason, our nightly uploads of info to the software company are not working as they should. The "purse values" keep slipping back to zero ($0.00) overnight. Purse values=available funds in their FSA accounts. So when a participant goes to swipe the card for a valid (or even not valid) expense, the card is declined for lack of funds, when they in actuality, have thousands of dollars available. Three of our largest clients are very upset, because this is an ongoing problem, and has happened three times this week.

Any TPA's out there have relatively little problems with debit cards?

Also please share if you do have issues, and what they are (for those that do have signifigant problems).

Thanks in advance.

Jeremy

In reading the Act it appears to me that if a DB plan is covered by the PBGC, it appears that the combined limit will not be applicable. Or to put it another way the DB plan would not be factored in the 25% deduction limit for the DC plan.

Assuming the above is correct, my question is "When does this become effective?" Is it for plan years beginning in 2007, 2008?

Thanks.

Continuing from where that leviathan thread left off... jims made a suggestion that intrigues me:

"I assume your 2006 income is extra high compared to 2005 and 2007 due to the inheritance. I also assume you like Roth IRA better than traditional IRA (I agree.). So here's how to get the best of both and save taxes. Contribute the max to traditional IRA for 2006 - you can still do it in 2007 up until you file your tax return (4/16/2007). At your income level, you can still get an IRA deduction (even though you contributed to a 401(k)) along with the Savers Credit to reduce your taxes for 2006. After you contribute for 2006, immediately convert to Roth IRA for tax year 2007. You'll owe taxes on the conversion and you should make an estimated tax payment to the IRS. Convert now and pay taxes while you have the extra cash, otherwise you'll never get back to it. Plus the sooner you convert, the less taxable earnings you'll have. When you convert, make sure you covert the entire balance to Roth IRA. Use other funds to pay the taxes. You effectively contributed to a Roth IRA, but you didn't waste the regular IRA deduction for the year you had high income."

Yes, income for 2006 is 20,000 higher than for 2007, not because of the inheritance per se (which is tax free and still forthcoming) but because of a taxable amount of money outside of the estate, so essentially, that supposition is correct. Total income for 2006 is about 65,000 and for 2007 will be about 48,000.

I had pretty much decided to just fund Roths for both years even though the lack of tax break will hurt (a lot). My instincts tell me to just cough up the tax while we're young and working if the tradeoff is to never pay tax again on that money. (by the way, calculated tax break for 2006 for us, if we decided to fund trad. IRAs instead, is about $1200 and for 2007 is about $950, give or take. We are in the 15% bracket currently and barely into the next bracket up for 2006.)

The thought of doing something like suggested above did cross my mind, but I assumed that Uncle Sam would have safeguards about people pulling a fast one, and the tax on the conversion would be just about the same.

I am probably missing something and honestly, I don't completey understand the process. If you could break it down in easier-to-understand chunks I'd appreciate it. For example, I understand how to open and fund IRAs, whether new or established, but I have no idea how a conversion is done or what taxes are assessed and when on a conversion. THANKS in advance!

I am trying to find the rate for 30-year Treasury securities for certain months in 2006. The IRS used to refer to the interest rate published in Fed Reserve release H.15 (average yield on 30-year Treasury Constant Maturities for the month). Now, the IRS issues a notice with the rate, based on the "monthly average of the daily determination of yield on the 30-year Treasury bond maturing in February 2036." For 2006, the rate in the IRS notice usually, but not always, matches the 30-year rate in Federal Reserve release H.15. For June 2006, for example, the rates are 5.16 and 5.15. Why is there a difference? And does this mean I should not use H.15 to look up the interest rate, even though 30-year Treasury securities are back?

Does anyone know of any potential issues with having a self-directed brokerage account in a non-qual plan? I have heard conflicting opinions on this topic. Thanks