ERISA Section 4021©(2)(A)(i) defines a professional service employer as owned or controlled by professional individuals or by executors or administrators of professional individuals. What does "administrators of professional individuals" mean?

(1) Client offers a self-standing Section 105 medical expense reimbursement plan ("MERP"). They also allow employees to maintain HSAs. Can anyone confirm that Revenue Ruling 2004-45 allows a self-standing health FSA to provide limited purpose benefits in conjunction with an HDHP?

(2) The MERP was revised to provide limited purpose benefits (dental and vision). The client wants it also to reimburse preventive care expenses.

The HDHP already provides preventive care and in accordance with Notice 2004-23 the preventive care does not count towards the deductible, it is "first-dollar" coverage.

So is it possible to still have preventive care expenses be reimbursable under the MERP, presuming they are not the same expenses that are covered under the HDHP? Would it have to do so only after the HDHP deductible is met?

Example 1 - HDHP allows for one checkup visit per year. Employee gets a second checkup visit. Can the MERP reimburse the cost of the second checkup visit? If so can it do so only if the employee has met the deductible under the HDHP?

Example 2 - Employee gets a full body scan, which detects for cancer, even though it is not a covered preventive expense under the HDHP. Can the MERP reimburse the cost of the body scan? If so can it do so only if the employee has met the deductible under the HDHP?

All help would be greatly appreciated.

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Just got back from vacation and apparently my brain is still on vacation. . .

Plan year end is 5/31/06 - what would the limit be to determine HCEs for the 06/01/05 - 05/31/06 plan year? 90k or 95k?

THANKS!

For the new PPA 06 notice requirement for employer stock diversification, the notice has to be given when the participant is first eligible to diversify. Does this apply separately to eligibility with respect to employee and employer contributions? What's the general opinion. Have heard different interpretations.

We have a claim for the wife of an attorney in one of our law firm clients, who have submitted a claim for breast implants. She submitted a doctor's letter explaining that he was treating her for assymetry. This looks cosmetic to me, but I wanted other opinions because I know that this action will be harshly questioned by the client. Thank you for your help.

S-corp ESOP – effective 2001, terminated 12/31/2004. No administration was ever done. My recommendation is to bring it in under VCR. My concern is - what if they classify it as an abusive transaction. The attorney feels comfortable that it is not, however, a review of a different plan by this attorney, felt that it was.

Another question – since no payments were ever made on the note, should they rush to setup an account to put all the money in? or it doesn’t make a difference?

This 401(k) with Safe Harbor feature has decided to make a discretionary PS contribution - the first one since Plan inception ten years ago. The owner prefers not to receive any of it - can he simply waive his right? If so, would the waiver be permanent or can it be a year by year thing? Thanks in advance...

Can anyone list or point me in the direction of what should be included in an annual retirement plan review?

I have a client (I took over in 2004) that implemented a 412i plan back in say 2000.

The plan they implemented was a 100% life insurance plan that clearly violated the incidiental death benefit requirements and thus many other qualification issues. The client was aware of this, but prospectively chose to handle new participants more in line with the rules, such as limiting the insurance premium to 50% of the employer contribution, but made no change to its original participant.

The IRS will not allow the plan sponsor to enter its national global settlement program for 412i plans and the plan will thus likely be subject to a full local audit and be disqualified.

Does anyone have suggestions as to how this situation can be remedied in some fashion? That is, pursuing a voluntary compliance intiative of some sort or somehow minimize the damages?

I can come up with a suggested solution that essentially converts the plan to a standard 412 insurance funded plan where a side fund is established and ultimately consists of at least half the costs, and perhaps the insurance is converted to a paid up policy thus lowering the death benefit and not requring future insurance premiums.

Of course my main question is what can be done with the IRS to get on track, before a specific approach is even relevant?

Thanks.

If an organization has both a 403(b) plan (to which contributions are made by employees only) and a Defined Contribution (Money Purchase) plan (to which only the employer contributes), is an employee subject to a specified overall aggregate contribution limit for both plans combined? Or may the employee contribute up to the maximum allowed contribution for each plan considered separately?

Thank you.

I have a plan that excludes bonuses from the compensation definition, and for this plan year fails the compensation ratio test. The plan is meeting the ADP safe harbor with a 3% nonelective contribution. There is also an additional discretionary match. I cannot find anything definitive to tell me what we need to do with this situation, although my assumption is we need to do the 3% nonelective on the basis of total compensation instead of compensation less bonuses. Correct? Thank you.

I heard today from an annuity carrier that it could not comply with the provisions of our client's retirement plan, which provide for automatic rollover distributions on the plan's termination (for participants who fail to respond to election forms). The stated reason was that New York law prohibits the establishment of an IRA without the account holder's signature. That would seem to interfere with the automatic rollover rules under 401(a)(31). Has anybody heard of this? Client is going out of business and needs to roll these accounts out of the terminating plan. Thanks.

While starting conversion of a takeover plan have discovered prior loans did not follow loan provisions of the document, ie multiple loans were made under the document specified minimum of $1,000. In addition all loans were made at a 6% interest rate.

This is a large plan and will be audited. The last seminar I attended regarding EPCRS and VCP seemed to suggest there are no correction methods for loans.

Any cites or suggestions would be appreciated.

I know that compensation of participants that are eligible to defer, but elect not to, is included for determining the maximum deductible contribution to a 401(k) plan, but do not have a referral cite. Does anyone have a cite that refers to this?? Thanks.

can a DB plan, w/ treasury approval, implement a retroactive benefit accrual reduction??

has anyone heard of such a thing and if yes, by what authority?

Not sure what happened with my first attempt to post this, but here's another try.

To what extent does the $5,000 consent rule apply to the termination of a money purchase plan? More specifically, if one or more participants with more than $5,000 do not consent to a distribution and the employer has another DC plan, must the money purchase plan remain in place until consent is given (or merge into the other plan), or can the plan purchase annuities for the participants?

A client contacted me earlier this week to let me know that they have not been removing deferrals from soneones paycheck - since January! The new firm administrator let this woman know about an plan meeting and the partiicpant mentioned the fact that no deferrals have been coming out of her check.

Anyway, as much as I want to go the "to bad, so sad" route, we are looking at EPCRS to fix this mess. I just got a copy of her enrollment form (which was sent to Hancock in a timly fashion) and she elected to defer $40 per pay. This plan has a safe harbor match with the 100% to 3% & 50% on the next 2%. I have a list of her gross pay per pay period, and it varies each period, but the $40 is around 3%.

Opinions:

Should the company make up the $40 for each pay plus the SHM? (citing 2006 TEOB page 15.647 Issue 16) OR

Should the company make up 50% of the deferral plus the SHM (Rev Proc 2006-27 Appendix A page 60 ©)

I am having a hard time wrapping my brain around the fact that this woman went months without noticing that she was not deferring........

Your thoughts are appreciated.

Do you include receivables in the Top heavy test?

Say we have a 1 participant DB plan.

Under 74-307 the maximum death benefit allowed is either:

1. The proceeds from a life insurance policy where the premium represents less than 50% of the total employer contribution, plus the amount of the auxiliary fund.

My understanding of the auxiliary fund is that it is essentially the total value of the side fund that is used to fund the retirement benefit. Is that correct?

Of course the death benefit must be at least as much as the QPSA, which in this plan's case is a 100% j&s of the AB (unreduced).

2. The maximum of

- 100 times the projected monthly benefit or

- the reserve (not the face amount above) plus the auxiliary fund

My understanding is that the Reserve is amount obtained from the insurance company. That is, the actuary doesn't compute it based on what he considers reasonable assumptions. Is that correct?

So the two questions pertain to the auxiliary fund and the reserves.

Thanks.