I'm looking for some guidance on the one-time rollver from an FSA to an HSA provision in HR 6111

We put an HDHP/HSA option in place eff. 1/1/07.

Some ee's who were in the FSA for 2006 will incur forfeitures because they overestimated their expenses. Our FSA does not have a grace period.

Our run-out period ends 3/31/07.

Can we give employees the option to rollover any unclaimed balance in their FSA account ? If we don't do it before the end of the run-out period, do they forfeit that money ?

A DC plan has adopted cash-out forfeiture provisions, and as required the plan allows repayment of distributions to restore forfeited benefits.

The question is, upon re-hire, is any notice required to be provided to the employee about their ability to buy-back the forfeited benefit by repaying the cash-out distribution? The regs at 1.411(a)-7(d) do not contain a notice requirement, and I've checked a few reference manuals that do not speak to any required notice. However, I'm working with an accountant who believes a notice is required. SUch a notice would seem fair (especially since this is not described well in the SPD).

If anyone is aware of any authorities regarding participant notices in this situation, I would appreciate any information you can provide. Thanks.

I am curious about when a company can change its safe harbor matching contribution. For example, the annual safe harbor notice was distributed in November 2006 for the 2007 plan year. The notice said that the company was going make the basic matching contribution. Then, in December 2006, the plan was amended to change the matching contribution. The basic matching contribution provision was amended to provide a matching contribution formula that was more generous then the basic matching contribution. Is this a safe harbor enhanced matching contribution? Can the employer do this after it already distributed the notice?

Can a Safe Harbor Matching contribution be counted towards meeting the minium gateway for crosstesting ,

can a QNEC?

Thanks in advance!!

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