I thought I read somewhere that coming up the SSA won't be needed any more. What year will that be?

When closing a Defined Benefit Plan that is fully funded, may the Plan pay out a cash payment in the form of a tax deferred custodian to custodian rollover to an IRA? (like when transferring funds from a 401k to an IRA). The beneficiary does not want an annuity and is age 51.

New safe Harbor with a profit sharing portion went effective Sept. 1 2006. 4 HCE's all earn over $220,000/yr., 3 employees NHCE's. can the 4 HCE's put in all their $44,000 for tax year 2006, being that the majority will come from the profit sharing portion even though the plan didn't go effective until Sept 1. Will profit sharing contribution be capped to their salary only earned between Sept 1 - Dec. 31?

Just took over a new plan that uses a corbel document (prototype). We don't have the trust portion, but the adoption agreement does not have anything on previous terms that are rehired. Does anyone know how corbel document handles the following:

Participant terms in 2003, with break in service. He was paid out in 2004(100% vested). Rehired in 2005. Does he become eligible upon rehire with a 2 year break and fully paid?

Thanks

On another forum I frequent, there was a question about dropping health coverage, not due to open enrollment or a status, but just because someone didn't want it anymore... a poster replied that at her company people can drop the coverage at any time, but because it is a Section 125 plan, they continue the deductions until open enrollment. I can understand the reasoning there, but that seems really legally problematic to me, and I would like to post back about it, but I can't seem to gather my thoughts properly and I was wondering if anyone here had any thoughts on this practice. Would ERISA have anything to say on employees paying for coverage they aren't receiving? It seems like state law might also come into play for improper deductions. I just don't see how a company could legally take this money (and I assume keep it for themselves since they no longer have premiums to pay?) when the employee isn't getting anything in return. The proper thing to do would be not to allow these employees to drop the coverage at all until open enrollment or a qualifying event, right?

Need to confirm that employee who joins union during plan year still receives match and profit sharing contribution for part of year he was non-union. Plan calls for EOY and 1000 hrs both of which employee would have satisfied at year end. Plan excludes union employees from participation

I understand that the change to a Health FSA election must be consistent with the type of change in status event. Please advise regarding the following: Employee has a baby and wants to cease contributions to the Health FSA. Is this allowable? I thought they could elect to enroll in the Plan, or increase their current election only.

Thanks so much for all responses.

Darla

Are non-plan imposed limitations taken into account for purposes of 401(a)(4)? For example, an investment option in a plan is available to all, but only permits liquidation if the investment is worth X dollars. This limitation is imposed by the fund, not by plan design. Although not discriminatory on its face, it could be perceived as having discriminatory effect since it's likely that those eligible for liquidation will be HCEs only. Any thoughts?

It is my understanding the balance of an Inherited IRA (beneficiary is not a spouse), must be paid out by the end of the 5th year following the death of IRA account owner. The problem is the stock was worthless upon the IRA owners death and still worthless 5 years following his death. It wasn't until 10 years after his death was their any value to the stock. In a situation such as this, how could the distribution take place by the 5th year following the death and what is the penalty? This beneficiary would prefer to take the zero valued IRA distribution and pay capital gain income rather than ordinary income as with an IRA distribution.

We administer a very simple small profit sharing plan. They are re-locating and would like to terminate the plan and distribute benefits. We feel comfortable terminating this plan without obtaining a determination letter. Does PPA '06 force us to apply for a DL? I would think the plan must conatin the language for PPA '06.

How do others handle this situation?

Thanks.

I'm taking over a new account in which a portion of the client's db assets are held by financial company A in what the client calls a fiduciary service account. This account consists of several subaccounts which has the names of existing mutual funds and were treated as such in prior years Schedule H. Prior audit reports has shown them as PSAs.

Upon discussion with the client, these holdings are not mutual funds. Their description of these acounts is that company A pools assets from my client as well as others and has mutual fund companies B, C and D manage them. Unlike other comingled funds I've seen, where my client would have a share of the each of the funds in B, C and D, each subaccount provides them with a statement showing their holding of shares in stocks.

I have never heard of a fidcuiary service account before. What do I have on my hands - is this a CCT, PSA, ...??? Does the handling of these subaccounts make sense or is my client just misinformed? And since these funds are not mutual funds, would I need to go back and correct years of prior filings?

Thanks for any help or insight.

A question has come up as to what HIPAA disclosures are necessary on a paper enrollment form

We are also thinking about utilizing a survey tool to capture the enrollment information for 2007.

The employee would log on to a website from either work or home and enter their info , name , ee#, benefit elections and then hit submit. The online tool does not require a userid or PIN

Do we need to worry about adding any sepific HIPAA disclosures ?

We are including HIPPAA Special Enrollment rights language in our benefits guide

Physicians group consisting of 8 doctors (equal ownership) maintains a Simple 401k Plan. 3 doctors resigned to take other jobs. The remaining 5 doctors decided that the corporation will be dissolved effective 11/1/06 and the remaining 5 docs will form two new entities, which will be unrelated after 11/1/06.

It has yet to be decided what will happen with the assets of the corporation but assuming the assets will be split between the new practices, is this an asset sale?

The plan sponsor mentioned plan termination, but wouldn't a spinoff work or a direct transfer of assets/liabilities here with one of the new practices assuming the sponsorship of the existing plan?

If the existing plan was terminated, what happens to the participant loans in the Plan? Would they be able to rolled over into the new plan of the practice where they will be working?

One of our concerns with plan termination is that this plan never submitted for a determination letter. The only amendments to it were IRS mandatory amendments and one change to add a trustee. The document provider and the employer felt that a D/L was not necessary because they were no modifications to the volume submitter in the plan design.

Thanks

Hi! If an employer overpays wages and as a result makes a larger than usual employee contribution and employer matching contribution to a 401(k) plam, how should this best be corrected? The employer has proposed that the employee will repay the excess wages and employee contribution via check or payroll deduction over a period of time. This does not seem to correct the problem that the money should not be in the 401(k) account. The error happened with a small number of employees at a very large employer. Thanks, JWIRA

A client and his wife are the only participants in a DB plan that is sponsored by Company A. Company A is owned by an irrevocable trust. The client owns 100% of LLC B that also employs 10 employees. LLC B pays Company A certain amounts for non-management services provided. Becuase of the existence of the irrevocable trust, Company A and LLC B are not required to be aggregated.

Of course now the client wants to sell Company A to an unrelated purchaser and retire. The client also wants to terminate the DB plan. The client and his wife are considered NHCEs and, as such, I thought that they were not able to effectively waive benefits under the DB plan. Am I missing something?

Is there a way for client and his wife to effectively waive benefits? If the DB plan were terminated, client would need to fund approximately $190,000. Of course they can freeze the DB plan, but that doesn't change the fact that they wouuld have to make up the shortfall anyway.

Thanks in advance.

Ed

A client is the beneficiary of an annuity policy. The annuity is qualified money and my client is not related to the annuitant who recently died. Can my client transfer the proceeds to another annuity or to an IRA? She doesn't need the money now and she would like to avoid current taxation if possible. Thanks.

Can a company apply a designated automatic enrollment percentage to all eligible employees(not contributing) and not just newly eligible. Would this cause a problem with those that origianlly chose not to contribute?

Is an unforseen emergency distribution from a governmental 457(b) an eligible rollover distribution?

I know this has come up before, but there seems to be disagreement about whether an employer can go after a participant to recover a money that was overpaid from the DB plan. In this case, the participant received a lump sum distribution. Several months later, the participant was notified that he received several thousand too much and the plan wants it back. In a perfect world, the participant would say "Oh, sure. Here you go." But nothing is that simple.

I've heard that it depends on if the money can be tracked to a specific account where it is still being held. Is that true?

Is there somewhere I can look to find out what the employer's, the plan's, and the participant's legal rights and obligations are?

Company X has a 401(k) plan permitting participants to elect, among other options, distribution in the form of an annuity contract. The plan language lists three or four available options. Under the annuity contract provided by Insurer I, more annuity options are available than are described in ths plan document but because of the plan's language, annuities offered to X's participants have been limited to thos specified in the plan. X would like to adopt a more flexible provision, basically allowing a participant to select any form of annuity offered by Insurer I.

However, I see two problems with amending the X plan to state "and any annuity form of benefit provided under the annuity contract with Insurer I at the time of the Participant's Termination of Employment." They are: (1) The IRS consent regulations require that the plan furnish a participant "a general description of the material features of the optional forms of benefit available under the plan." Reg. Section 1.411(a)-11©(2). and (2) IRS regulations provide that it is a violation of the anticutback requirement if the availability of an optional form of benefit is conditioned upon the exercise of discretion by the employer or a third party. See Reg. Section 1.411(d)-4, Q&A-4 and 5.

Does anyone have any suggestions on how to deal with these issues in this context? Could the plan be amended to state that an annuity contract will be purchased to provide an annuity in form X, Y or Z and such other forms as are then provided under the annuity contract between the insurer and the plan." The description required to satisfy the consent requirement would have to be updated to reflect the addiion of optional annuity forms.