My company is going to be implementing a FSA Debit Card for our clients. A question came up about when a participant disputes that a charge occurred. For example, participant walks into a drug store and swipes their card for $20. When they get their FSA Account Balance Statement, they see that there was 2 charges for $20. The card company that we are going through says that VISAs dispute process can take upwards of 180 days to make a determination. My question is what happens at the end of the year (and grace period if applicable) if it is determined that the $20 was a faulty item, and as a result, the $20 gets put back into the participants account. Since the plan year is technically over, they can not submit an expense to obtain that reimbursement for the $20. At that point is it forfeited based on the Use-it-or-lose-it rule? Can the money be returned back to the participant as part of a mistake clause or something like that? My concern with that is that they are then receiving tax free money without having an eligible expense. Can the money be returned, but then taxed? If that is the case, then W-2's and taxes would have to be redone at that point as well. Has anyone run into this before? Thank you in advance for your assistance.

I have a client who died 7/15/06. She was 85 years old and left three (3) siblings as beneficiaries. I have attempted to answer the following questions posed to me by her CPA. Can someone confirm or guide me to the correct anwsers.

Many Thanks!

1. When must they transfer to Inherited IRA? No later than December 31, 2007. The end of the year following the year of the IRA owner’s death.

2. When must they take the first distributions from the Inherited IRA? By December 31, 2006. Since owner is receiving 70 ½ distributions a distribution must be taken for plan year ending 12/31/06 payable to each beneficiary.

3. Is a distribution required to be made to the estate for the deceased for year of death? Not required.

4. Can the inherited IRAs be annuitized over the respective lives of the three siblings?. Under the new Pension Protection Act, for distributions made after 12/31/06, a non-spouse beneficiary can rollover the IRA or take a lump sum.

Question is: does the plan hold more than 20% of it's assets in a single security?

My question is, what if more than 20% is held in a single mutual fund? Or a separate account?

I know that this item applies only to pooled accounts, which mine happens to be.

I would have assumedthat the instructions would have clarified on this obvious question, but they do not seem to shed any light.

I am tryign to allocate 10,000 to five employees. If I use the limits for 2006 with 613,821 as my total compensation, I have 2 employees not receiving any money at all. What am I doing wrong?

Here is the comp of all five employees.

137,500.00

220,000.00

200,000.00

36,833.42

19,487.82

I am trying to change my username, but I don't see any options for doing this. help!

Would a County Hospital qualify as a government entity exempt from ERISA? County Hospital is established by the county pursuant to state statute and is run by the county (as opposed to a private non-profit)

W-2 Contribution Cont. %

NHCE $12,480.00 $268.00 2.15%

NHCE $44,325.00 $953.00 2.15%

HCE $210,000.00 $13,339.00 6.35%

HCE $6,510.00 $140.00 2.15%

I was asked to review a plan with the above contributions and contribution perecntages for 2005 plan year. Plan is and was TOP HEAVY as far back as I was provided data - 2002. Plan passed the required tests, and is using the 3/1 gateway.

Seems like the NHCE's should have received a 3% contribution, or have I missed something here.

Bill

Have a plan where a non-owner received an RMD in 2003 and 2004, then signed paperwork to stop receiving them for 2005 going forward. Allowed????

I'm trying to figure out whether the new diversification notice due on 12/1/06 is necessary for a plan that has always allowed participants to freely diversify employer stock. Granted, these participants have never been eligible to exercise their right under ERISA 204(j) because 204(j) is not yet effective. On the other hand, the plan has never restricted diversification to the point where it would have violated 204(j) (if it were in existence). I'm leaning towards giving the notice since there is no harm that could come from providing it, but was looking for some input.

A multiemployer plan has a large claim (in excess of 100k) and seeks to obtain information as to the identity of the individual making the claim. The plan is a small local union (Local Union A) and the trustees of the plan are concerned that the insurance company made a mistake in assigning the claim to their plan. Another small local union (Local Union B) in the area had a claim that is similar to what has been described to Local Union A and, therefore, Local Union A believes that the insurance company made a clerical error in assigning the claim to Local Union A's plan. How can the info. legally (keeping in mind the HIPAA regs) be obtained from the insurance company to verify that the individual making the claim is member of Local Union A and not B?

Thanks

A participant in the multiemployer welfare fund has what is called a dollar bank and for each hour he works he earns an amount equal to the contribution rate for the Fund. Upon establishing the required contribution amount in his dollar bank, the participant becomes eligible for participation in the Fund. If the participant has a shortfall in his dollar bank, he is allowed to self-pay in order to maintain he coverage. If the participant has a balance in his Dollar Bank that does not meet the eligibility for coverage, and he does not choose to make self-payments to maintain coverage, the participant will be offered COBRA. If the participant does not elect COBRA and he does not provide documented proof that he is eligible and enrolled in other health coverage, any existing Dollar Bank balance will be forfeited.

Is it legal for the Fund to forfeit the participant's balance in his dollar bank keeping in mind that the contributions are part of a wage package?

Thanks

A plan paid out a terminee 100% of his account balance (paperwork did not go through our office), but he was only vested 40% in the employer contributions. The difference comes to about $11,000. We instructed the trustee to request the excess from the terminee. They have done so, but did not pursue it. We have also told them that if he will not give the money back, the plan sponsor needs to reimburse the plan for that amount. Their response, "what if we don't?"

So, does anyone know the ramifications of not putting the forfeiture back into the account? Qualification issue?

thank you

RMD in year of death

IRA rules state that required minimum distributions not already distributed in year of death of IRA owner must be distributed by beneficiary in the same year as the deceased’s death before beneficiary rolls the account over to a new IRA account.

Is custodian of IRA obligated to distribute the funds requested by beneficiary upon receiving a valid death certificate?

Are distributed funds to be distributed to estate of deceased who would be obligated to pay income tax or to beneficiary who would pay tax?

PPA provides that the IRA income limits are adjusted for inflation beginning in 2007. Has anyone heard when these adjustments will be announced by the IRS? (CCH and others have already projected the new dollar amounts.)

thanks

card

We will be filing for a favorable determination letter on the termination of a previously frozen DB plan. When completing the applicable forms (e.g., Form 5300, attachments, NIP), must everything be filled out as if the plan were not frozen? For example, Form 5300 requests information regarding the plan's eligibility provisions and benefit accrual formula. As of the freeze date, no new participants and no additional benefit accruals. Do you include the pre-freeze information or just leave blank with a note that the plan has been frozen?

We are trying to determine if a client of ours needs to consider two individuals "employees" for purposes of his 401(k) plan. The client is a realtor who has 2 full-time administrative assistants. They are not being paid by the client, but they are being paid from the main Realty Company and the client reimburses the Realty Company. The Realty Company has stated that they are not employees of the Realty Company, and they just process their payroll as a courtesy to our client.

The work of these two individuals appears to be controlled by the client.

Our thought is that they are employees of the client and need to be considered in the 401(k) plan if they meet eligibility. Any thoughts on this would be appreciated.

We all know the "use it or lose it" rule with regards to employees and FSA's. The question that arose during a meeting with a potential client the other day is, what can the company do with the leftover funds?

Employer with several employment classifications has a safe harbor 401(k) plan (matching) which excludes non-resident aliens, etc.; however, they also exclude one classification of employees (otherwise common law employees of the employer) - let's call them traveling salespersons. Is this allowed - and can they retain safe harbor status by excluding the traveling salespersons?

I'm looking at IRS Notice 98-52 (especially example 4) and 1.401(k)-3(b) and © and I can't find out if this is permissible. I did notice that the fourth example in the Notice does speak of two divisions (D and E - which I assume means there are other divisions A, B and C); however, it also says that there are no other plans.

If they are not allowed to exclude these employees - doesn't it mean that either (1) they failed to follow the terms of the plan, (2) the plan loses the safe-harbor pass for ADP and ACP testing or (3) both?

Or would the question come down to whether they can pass 410(b) - and the safe harbor aspect of the plan has nothing to do with it at all (as long as you can pass the RPT, ABT, etc.).

Any thoughts would truly be appreciated!

Are Simple plans required to have a 12/31/year end ?

What implications are there then for a corporate client that has a March 31 year end ?

Are the company matching contributions deductible as paid each pay period thru the year?

Any other bogeys to watch out for ?

Many thanks.

I need to confirm that an addtional discretionary match made in a Safe Harbor plan ( that meets all the requirments for passin acp ) would then cause a plan to be top heavy.

In essence even though the plan satifies ADP / ACP from Safe Harbor Contributions does the act of making this addtional discretionary Safe Match cause the plan to now be top heavy tested?

Thanks ina advance.