Our company requires a new election form each year for our cafeteria plan. If an employee does not turn in a new election form, can we continue to use the previous year's elections or assume no elections at all?

Thanks!

Pam

We have a client who offers three health insurance options to its employees, the newest one being a HDHP HSA. The other two options include a standard indemnity plan with deductibles and a PPO with co-pays. They also offer Health FSAs. Only 10% of their employees have elected the HSA option for 2007. The question is, must the employer convert ALL General FSAs to Limited-Purpose or Post-Deductible FSAs during the grace period REGARDLESS of the health insurance option the employee has elected? We have read the regs numerous times, but cannot clearly asertain if the language is addressing an employer who is offering only the HDHP HSA and no other health coverage option to its employees or if the language applies across the board even to those employers who offer multiple health plan options. If it is indeed across the board, it really appears it is penalizing those employees who do not elect the HSA option. Has anyone else run into this question or know where it is clarified in the regs?

Can someone confirm if my thinking is correct: If after a DB plan is funded to only meet minimum funding requirements for the 2007 (calendar) plan year (no credit balance) it is 65% funded based based on PPA interest rate. Is it true that the only way to avoid the benefit restrictions would be for the plan to be sufficiently funded at 92% based on assets less the pre-funding credit balance (which would be $0 at 1/1/08). If the plan did not meet the 92% threshold, the assets used to determine the funded percentage for the benefit restrictions are reduced by all credit balances so any additional 2007 contributions would only be a wash in regard to the benefit restriction funded percentage calculation.

Any guidance would be appreciated. Thanks.

Suppose two unrelated employers domiciled in State A form a MEWA to provide welfare benefits to their employees. Further suppose that one of the employers has limited operations in State B and therefore some of the employees covered by the MEWA reside and work in State B. Does the MEWA need to be registered and otherwise comply with State B's MEWA laws?

This question came up with a client of mine that is domiciled in one state (i.e. it is incorporated and headquartered in that state) but has employees in up to 15 different states. It wants to cover its employees and the employees of another related (but less than 25% commonly owned) employer (domiciled in the same state) under a single group health plan. Is this possible or would this arrangement be a MEWA subject to regulation of all 15 states?

Employer wants to change vesting schedule effective 01-01-07.

Employer contributions made prior to 01-01-07 will continue to vest on the prior 5 yr cliff vesting schedule and beginning 01-01-07, any contributions made will vest on the 6 yr graded schedule; of course, salary deferrals are 100% vested.

Is this a problem? Any IRC/reg guidance would be appreciated.

Thanks!

This topic was brought up a few years ago, but I wanted to see if anyone had heard or seen anything definitive. The employer is an LLC that checked the box to be taxed as a corporation. We're not so much concerned about the IRC, but can't seem to find anything related to ERISA s 407 that would allow LLC interests to be considered "stock." Any thoughts?

Does anyone have any relatively recent disability tables they could share? I’m looking for incidence, not disabled mortality. I have the old UAW tables and a table from 1985, but I was wondering if anyone has anything more current. We looked on the SOA site and didn't really find anthing.

We are looking mostly at blue collar groups (1,000 lives) and as we update mortality to one of the RP2000 tables, using a 1955 disability table doesn't seem reasonable.

Non profit has 1 HCE 50 non union NHCE and 100 union HCE

Can the union NHCE be left out of the ADP test? i.e. disregarded because the benefits are part of their bargained package

We have a Davis-Bacon/Prevailing Wage 401(k) Safe Harbor Plan. The DB/PW contribution for the year offsets the employer's liability for the Safe Harbor. This Plan also allows participants to take hardships from the DB/PW (QNEC) source. I wasn't involved in the design and couldn't persuade them otherwise. The prior TPA appeared to be recharacterizing the DB/PW amount that was equal to the 3% Safe Harbor for participants that qualified. While I've never encountered it in practice, I speculate that this was done because of the different distribution restrictions that are imposed on the Safe Harbor (not available for Hardship).

So, by using an offset, does the DB/PW amount that offsets the Safe Harbor need to be subject to the same distribution rules as the Safe Harbor or is the full DB/PW amount available for hardship, even though some of it is satisfying the sponsors Safe Harbor Contribution obligation.

Does anyone have any idea how you test a plan that is part of a controlled group for part of a year?

For example, Company X, Company Y and Company Z are part of a controlled group. They each have a 401(k) plan and they are tested together for 1/1/04 to 12/31/04. But on 8/1/05, Company X is purchased by an unrelated employer - so they are no longer part of the controlled group on 8/1/05.

For 2005 testing, would you:

a) Test X, Y and Z together from 1/1/05 to 8/1/05. Test Y and Z together from 8/1/05 to 12/31/05. Then test X separately from 8/1/05 to 12/31/05?

b) Text X, Y and Z together from 1/1/05 to 12/31/05 - but only testing the comp and contribs of X from 1/1/05 to 8/1/05. Then test X separately from 8/1/05 to 12/31/05?

c) other options?

Thanks for any help.

The following paragraph appears in LRM #94 for Cross Testing in a Profit Sharing

For plans with only one or two eligible NHCEs, the allowable number of NHCE allocation rates is one. For plans with 3 to 8 eligible NHCEs, the allowable number of NHCE allocation rates cannot exceed two. For plans with 9 to 11 eligible NHCEs, the allowable number of NHCE allocation rates cannot exceed three. For plans with 12 to 19 eligible NHCEs, the allowable number of NHCE allocation rates cannot exceed four. For plans with 20 to 29 eligible NHCEs, the allowable number of NHCE allocation rates cannot exceed five. For plans with 30 or more eligible NHCEs, the allowable number of NHCE allocation rates cannot exceed the number of eligible NHCEs divided by five (rounded down to the next whole number if the result of dividing is not a whole number), but shall not exceed 25.

Would you include this in a Volume Submitter plan or just M&P?

Would a provision in a 457(f) plan that allows a participant to change the payment/vesting date result in a lapse of the substantial risk of forfeiture?

Rollover_Memo_no_name_pre_1107.docAnybody see anything wrong with the attached memo to employees regarding FSA/HSA rollover? Group has a grace period for FSAs.

I'm looking into a retirement plan and is not sure an IRA or a 401k will better suit me. I work for myself and own a small salon business. I don't want anything too complex. I'm not too sure the difference between tax deferred and tax deducted and all other tax related terms. I appreciate any help with my situation. I've researched and learned a little about each one between the traditional and roth, but still hasn't help me lead to an answer.

Thank you in advance,

~Jen

Since my company has no plans to offer a Roth 401(k), I thought I could achieve nearly the same thing by:

1. Contribute $15,000 to a regular 401(k)
   
2. Convert $15,000 from my regular IRA to a Roth IRA
   

I waited until the end of the year to be sure that my Modified AGI remained below $100,000 (excepting the conversion amount). And, knowing that I'd owe more income taxes, I made plans to make an estimated tax payment for 2006 on 1/15/07.

As I worked through the number with TurboTax 2006 (which is available now, although subject to additional updates), I discovered two things that I didn't anticipate:

1. The converted $15,000 raised my MAGI high enough to partially reduce my maximum contribution to my Roth IRA for 2006.
   
2. My income tax withholding for 2006 is slightly less than what I paid in 2005, so I'm potentially liable for a penalty for underpayment.
   

I'm going to try using the annualized income worksheet, and if that doesn't help -- request a waiver. Hopefully, since I was only a couple of hundred bucks short, the penalty won't be large.

But, my real question is: did TurboTax correctly forecast the reduction in what I can contribute to my Roth IRA this year (aside from the conversion)? Or did i enter the wrong code in box 7 of the 1099-R? I used "2": early distribution (except Roth), exception applies.

Or is there something else that I need to do, so that the amount converted from regular IRA to Roth IRA is not added to MAGI, when determining the amount I can contribute to a Roth IRA?

Can someone explain to me the same desk rule...

Thank you

An ineligible employee (not highly compensated) was alowed to withold and make contributions into plan (no employer match). This was done by an agreement with the owner at the time of hire. Neither were aware of the violation. The employee then left the company and rolled over their money into a IRA. Now the plan administrator has caught the error. What are the options for correction, or do we need to do anything since the employee is terminated?

Can an employer limit administratively what pay is used for deferrals? That is, can the sponsor say that deferrals are not permitted on overtime, bonus pay, sick or vacation pay for time not taken or other segments?

Pay for TESTING is not limited in the document. In fact testing is on total pay.

Searching on RIA Checkpoint turns this up in the Pamela Purdue / Qualified Pension and Profit Sharing Plans which points to a regulation under 401(a)(4), but I am looking for any other reference.

Thanks all.

Are they retired on the last day they work or one year later?

My situation, 71 year old employee left 11-8-06 and doesn't want to take any money out. He is planning on coming back next summer for the busy season. If he does and I have paid his RMD by April 1st, I have caused him unnecesary taxes.

If I don't pay him (his health is not good) and he does not come back, I have missed the RMD.

Further question along these lines, If we are supposed to use the last day worked as retirement date, how will we spot the people who retire late December. I do the RMD's for all of my Plans long before December 31st. Do other people look at all 70 and a half people again during the first quarter?

I sure hope someone can give me a cite showing that I can wait until he is gone for a year. I haven't found anything under break in service rules yet, but I am still looking.

We set up a 401(k) plan effective 1/1/2004, filed a 2004 Form 5500 and Schedules (showing $0 assets at begininng and end of year), and filed a 2005 Form 5500 (also showing $0 assets at the beginning and end of year). There were 10 eligible participants, all of which worked more than 1,000 hours in each of those years.

It is our understanding that you are supposed to file, even if there were $0 assets, so we did.

We got a letter from the DOL on the 2005 filing asking for "clarification" (why was the "Trust" box checked on page 2 of the Form 5500, and please check your math on the Schedule I). We sent them a letter back explaining that there are no assets, but that there are plan participants. They sent back another letter asking for further clarification.

Has anyone ever run into this?

Any input would be greatly appreciated.

Thanks ;-)