This request is being posted under Cafeteria Plans, Health Plans and Welfare Plans in hope of getting a response.

We have a client with a health flexible spending account that is considering establishing a tobacco cessation program – those that certify that they do not/will not use tobacco products will receive an employer contribution to the health fsa. Following research and discussion with the client, we have the following questions –

1. Does a program that rewards its participants based on the criteria that they do not/will not smoke have to be considered a wellness program? Could it be a stand alone employer- sponsored plan/program/benefit that provides for employer contributions into an employee’s FSA account if the employee certifies that s/he does not/will not smoke? Can the employer use non-smoking as its criteria for the reward without concern of a discrimination issue? Is there a way around the discrimination issue? Would there need to be a reasonable alternative to the certification in order for smokers to qualify for the reward? If the employer did not offer a reasonable alternative to the certification, but offered a smoke cessation program through its health plan, would this suffice?

2. If such a program does not have to be considered a wellness program, what would it be and pursuant to which regulations would it be established?

3. If such a program could not stand alone, would it have to be linked to the employer’s group health plan? Could it be linked to the FSA? If this program had to be considered a wellness program and HIPAA applied, and the program was linked to the FSA, what could we use as the cost of coverage to satisfy the requirement that the reward not exceed 20 percent of the cost of coverage?

4. If we wanted to offer the program to all employees, not just those participating in the health plan/FSA, and if we did not make the certification a condition of employment, how could we open the program up to all employees?

5. If the program sponsor were to make a determination that an employee who received the reward falsified the certification, can the employer cease additional contributions to such employee? Request and demand that such employee repay the prior contributions? Can the money be withheld from the employee’s pay? Can the employer cease the employee’s participation in the FSA plan? In the health plan?

6. What types of safeguards do wellness program sponsors have in place to determine/monitor that participants are being honest? Is there an appeals process when an employee’s honesty has been challenged?

7. How does the requirement to provide a terminated participant with a certificate of creditable coverage if s/he received employer contributions in excess of $500 negatively impact the program?

These are the remaining questions we have after reading the final HIPAA regulations. If you are aware of any research material or if you have any experience in this area, your assistance is greatly appreciated.

Thanks!

This request is being posted under Cafeteria Plans, Health Plans and Welfare Plans in hope of getting a response.

We have a client with a health flexible spending account that is considering establishing a tobacco cessation program – those that certify that they do not/will not use tobacco products will receive an employer contribution to the health fsa. Following research and discussion with the client, we have the following questions –

1. Does a program that rewards its participants based on the criteria that they do not/will not smoke have to be considered a wellness program? Could it be a stand alone employer- sponsored plan/program/benefit that provides for employer contributions into an employee’s FSA account if the employee certifies that s/he does not/will not smoke? Can the employer use non-smoking as its criteria for the reward without concern of a discrimination issue? Is there a way around the discrimination issue? Would there need to be a reasonable alternative to the certification in order for smokers to qualify for the reward? If the employer did not offer a reasonable alternative to the certification, but offered a smoke cessation program through its health plan, would this suffice?

2. If such a program does not have to be considered a wellness program, what would it be and pursuant to which regulations would it be established?

3. If such a program could not stand alone, would it have to be linked to the employer’s group health plan? Could it be linked to the FSA? If this program had to be considered a wellness program and HIPAA applied, and the program was linked to the FSA, what could we use as the cost of coverage to satisfy the requirement that the reward not exceed 20 percent of the cost of coverage?

4. If we wanted to offer the program to all employees, not just those participating in the health plan/FSA, and if we did not make the certification a condition of employment, how could we open the program up to all employees?

5. If the program sponsor were to make a determination that an employee who received the reward falsified the certification, can the employer cease additional contributions to such employee? Request and demand that such employee repay the prior contributions? Can the money be withheld from the employee’s pay? Can the employer cease the employee’s participation in the FSA plan? In the health plan?

6. What types of safeguards do wellness program sponsors have in place to determine/monitor that participants are being honest? Is there an appeals process when an employee’s honesty has been challenged?

7. How does the requirement to provide a terminated participant with a certificate of creditable coverage if s/he received employer contributions in excess of $500 negatively impact the program?

These are the remaining questions we have after reading the final HIPAA regulations. If you are aware of any research material or if you have any experience in this area, your assistance is greatly appreciated.

Thanks!

This request is being posted under Cafeteria Plans, Health Plans and Welfare Plans in hope of getting a response.

We have a client with a health flexible spending account that is considering establishing a tobacco cessation program – those that certify that they do not/will not use tobacco products will receive an employer contribution to the health fsa. Following research and discussion with the client, we have the following questions –

1. Does a program that rewards its participants based on the criteria that they do not/will not smoke have to be considered a wellness program? Could it be a stand alone employer- sponsored plan/program/benefit that provides for employer contributions into an employee’s FSA account if the employee certifies that s/he does not/will not smoke? Can the employer use non-smoking as its criteria for the reward without concern of a discrimination issue? Is there a way around the discrimination issue? Would there need to be a reasonable alternative to the certification in order for smokers to qualify for the reward? If the employer did not offer a reasonable alternative to the certification, but offered a smoke cessation program through its health plan, would this suffice?

2. If such a program does not have to be considered a wellness program, what would it be and pursuant to which regulations would it be established?

3. If such a program could not stand alone, would it have to be linked to the employer’s group health plan? Could it be linked to the FSA? If this program had to be considered a wellness program and HIPAA applied, and the program was linked to the FSA, what could we use as the cost of coverage to satisfy the requirement that the reward not exceed 20 percent of the cost of coverage?

4. If we wanted to offer the program to all employees, not just those participating in the health plan/FSA, and if we did not make the certification a condition of employment, how could we open the program up to all employees?

5. If the program sponsor were to make a determination that an employee who received the reward falsified the certification, can the employer cease additional contributions to such employee? Request and demand that such employee repay the prior contributions? Can the money be withheld from the employee’s pay? Can the employer cease the employee’s participation in the FSA plan? In the health plan?

6. What types of safeguards do wellness program sponsors have in place to determine/monitor that participants are being honest? Is there an appeals process when an employee’s honesty has been challenged?

7. How does the requirement to provide a terminated participant with a certificate of creditable coverage if s/he received employer contributions in excess of $500 negatively impact the program?

These are the remaining questions we have after reading the final HIPAA regulations. If you are aware of any research material or if you have any experience in this area, your assistance is greatly appreciated.

Thanks!

if an employer purchases annuities for all participants ( i.e. irrevocable committments) but doesn't go through a formal termination with PBGC, are actuarial valuations for subsequent years still required ?

I would think so but what say you ????

Child is beneficiary of parent's Trad IRA. Parent was mid-70's at time of death, so RMDs were being taken. Child wants to move funds to an inherited (or "beneficial") IRA with another custodian. Since RMDs were being taken by Parent, RMD rules say:

"If distribution of the employee's interest had already begun under the RMD rules at the time of his death, then the remaining portion of his interest must be distributed at least as rapidly as under the distribution method being used as of the date of his death."

Does this mean that Child continues to use Parent's RMD for each subsequent year? e.g., Parent was 78 in 2006, so RMD factor of 20.3 was used; does child use factor of 19.5 for 79 year old in 2007 for the RMD she has to take from the inherited IRA?

I think Child could only use her own lifetime if Parent had been younger than 70.5?

Under COBRA each qualified beneficiary has a separate right to elect continuation coverage. For example, an employee's spouse may elect COBRA coverage even if the terminated employee does not. COBRA can be elected for only one, several, or for all dependent children who qualify. However, can a terminated employee elect COBRA for a minor child, and not cover themselves? I have searched the COBRA Handbook, notices on the DoL site, and even called the DoL - but have not received a satisfactory answer.

Two employers (located in US) are each owned by the same parent company (located overseas). Controlled group situation. One of the employers has a 401k plan in which no HCEs currently participate. They want to establish a Plan for the other Employer. The other employer has 3 hces and 3 nhces. The new plan would not pass 410(b) coverage including all the employees from both groups. If each plan could pass coverage considering employees of all employers, then we could test each plan separately for other nondiscrim testing, right?

Any suggestions on ways to separate these employers for testing purposes? I've thought of QSLOB but one employer only has 6 employees.

I have a plan where the company is closing or actually it is closed, all of the employees are terminated. The client doesn't have the money to pay for the annual fees out of the business. Can the owners/trustee's take the money out of their accounts in the retirement plan to pay these fees?

Kim

What filings, tests etc are required for a 401k under safe harbor?

I have a client that uses a discretionary match. Client started matching per the specified formula January 2006. They stopped matching end of February 2006 for financial reasons. They did not notify us so there is no amendment in place relating to any of this. What are the requirements for amending a discretionary match as far as timing of a board resolution? Does this client have to match for the year?

participant died with a designated beneficiary. plan says that the benefit must be paid out by the end of the plan year following the date the participant died. my question is as a practical matter how do you facilitate this distruibution? how do you force the participant to complete distribution paperwork?

I'm working with a company starting a 401(k) plan. The company was formed as a result of the merger of Spin-off A and Spin-off B.

Spin-off A had company stock in the 401(k) Plan -- closed to new money. However, as a result of this transaction, 10% of the Spin-off A shares will become Company C shares. Within the new Company C 401(k) plan, there will be two separate stock accounts: Spin-off A balances and Company C balances (both will be closed to new money - and all stock money can be traded out to core funds immediately).

What admin/compliance issues do I need to consider to implement this change?

if a calendar year plan is top heavy for 2007, does the ER have until 12.31.2007 to make 3% match?

Specifically, how does a top heavy ER make contributions to satisfy the 3% DC minimum?

1.416-1 says that all participants as of the last day of the plan year are entitled to receive the top-heavy contribution. so can one interpret that to mean that the top-heavy contribution doesn't have to be made until the last day of the plan year?

thanks in advance for your help.

Does an auto enrollment plan make sense when there is immediate eligibility to participate?

As a 3rd party actuary to a TPA, on a takeover case for 2006 work I noticed that someone had forged (bad forgery) my signature on the 2005 Sch B with my EA # and the rest of my information on page 1 of Sch B.

This is a classical case of the "dumb criminal" - the TPA or someone for him forged my signature and he expects me not to notice it! If I worked on the case last year then I wouldn't need last year Sch B or plan doc which he sent me!

Where does one report a case like this? I don't know if the local police or the DA's office cares about this kind of fraud!?

I started working with this TPA late last year and worked on only handful of his cases for 2005. So, I won't know on how many Sch Bs he has forged my signature unless I go through the 2006 cycle on his cases. But I have no intention of working with him anymore.

Company A aquires the assets of Company B ( both sponsor 401k plans). 2/3 of the company B ees will

be re-employed by Company A. Can a direct transfer from B's plan to A be required by company A for the reemployed participants? Isn't this a severance of employment?. Any assistance appreciated

A plan excludes HCEs from a safe harbor match formula and the plan is top-heavy - one of the HCEs is NOT a key employee - is it ok for the Company to continue to exclude him from the safe harbor allocation or must they give him a safe harbor match allocation to cover top-heavy?

Hello..

Please forgive me if this is posted in the wrong thread..BUT

My sister has worked for a LARGE THREE LETTER computer company since 1989.

She went out on a medical leave of absence in March of 2004 after a troublesome pregnancy, and resigned from the company last month.

She just received a letter which states that she owes over $10,000 by the end of March due to excessive benefits into her qualified pension plan. Essentially it states that both she and the company owe FICA and Medicare tax due to "recent changes in regulations, require that both you and XXX are required to pay FICA tax on excess pension benefits that you accrue each year".

My questions are

1) Why had this suddenly occurred..? She has not withdrawn any pension monies, nor was she a highly paid employee ie, less than $100K per annum

2) Are there any offsets to this payment ie, if she pays the $10K, is it deductible against regular earnings on her 2006 Federal return

3) What can be done to avoid this surprise in the future?

Your response(s) are very welcome and not construed as OFFICIAL professional advice for which there would be any liability. Recommended reading would be a welcome alternative to any other feedback.

Thank you

ED

Can an employer charge employees different amounts for the same level of health insurance?

Meaning two exempt employees both single:

Employer pays 100% for one and charges the other 50% of the premium

Does anyone know whether it's permissible to specify alternate forms of benefit payout that are based on the PV of the benefit at commencement? I'm familiar with the exception to the anti-acceleration rule for de minimis amounts, but my concern deals with the ability to design a plan so that the form of payment, though specified in the plan before amounts are earned, is driven by the PV at the time of commencement. For example, if PV is $25k or less, lump sum; if not, then default annuity.

I'm not finding an answer to this in the prop regs, but I easily could have missed something.