We are going through two transactions - one stock and one asset sale. One closes in 7/2006 (asset) and the other closes 10/2006 (stock). With regard to the asset sale - we are not assuming any of the plans and will let the transferred employees participate in our plans. With regard to the stock sale, we will terminate the plans at the closing and have the employees participate in our plans.

My boss wants to recognize prior service for purposes of the 401(k) plan, but not for the cafeteria plan.

I found the predecessor employer requirements which appear to apply to the 401(k) plan and the stock transaction - but with regard to the asset transaction - has anyone ever heard of recognizing service for one plan (401(k)) and not another (cafeteria plan)? Also, do the predecessor employer rules (IRC 414(a)) apply to the cafeteria plan? I did find that for self-insured med reimbursement plans prior service does count as service if it is with a predecessor employer per 1.105-11 testing.

I am trying to find out what why so many companies do not have equalizing coverage for mental health and physical health. Any input would be greatly appreciated. Also if you would like to share what your company offers for both it would be great. At The Mental Health Association in Texas we have comprised a list of honor roll companies that do have equalization. If you are one of these companies, we would like to recognize you.

Thanks Deena

We have a profit sharing plan where one of the HCE's wants to amend the plan to allow in-service distributions after the participant has been in the plan for at least 5 years. Then he is going to take a large portion of his account balance (to pay for his personal bankruptcy!), and then he wants to amend the plan again to remove the in-service distribution provision. I know hardships and loans are not considered a protected benefit, but would this type of in-service provision be a protected benefit? If we did the amendment then another amendment to remove the in-service, would part's w/ an acct bal at the time of the initial amendment have to grandfathered into the in-service provision? Finally...he wants to have the in-service provision only open for 2 days...seems to me that it should be open for a longer period...any thoughts?

I'm drawing a blank on this - it seems to me that I recall that an employer may not make employment conditional upon waiving participation in a qualified plan. But I'm not sure why I think that - is it true? If not, was it ever true, and got changed? It's bugging me, and I can't find anything addressing this specifically. (Even if permissible, it wouldn't work for long as they would fail coverage testing at some point.)

Thanks!

I have a 401(k) Plan that has laid off a group of EE's. It is Safe Harbor Plan with 3% SH contribution.

Some of the EE's were sales people with Cars. They are going to run the Cars through the payroll system because they are now taxable income. The employee is not receiving any cash payment. Just the Car.

With New/Proposed Severence Rules would a Safe Harbor Contribution be due on the Amount of the Car that is being run through Payroll as Part of the Compensation Package?

Document is Corbel Prototype. NonStandardized.

Thanks

P

Employer wishes to start an ERISA 403b plan. They currently sponsor a Non-ERISA 403b plan, but due to surrender charges on current policies, wonders if he can maintain both. Would one 5500 reflecting both plans suffice?

Can a 401(k) plan allow participation to temporary employees (i.e. employees hired by the company for a specific time period to complete an assignment)? If so, are there typically any requirements for eligibility of this group - could it be different than eligibility for regular employees?

How does ERISA section 408(d) work? To whom does it apply?

I can't find much at all on it.

Any help will be appreciated.

Is it possible to designate a higher match level for the NHCE group than the HCE group such as:

NHCE: $ for $ on first 3% then 50% of next 3%

HCE: $ for $ on first 2% then 50% on next 3%...4%

PBGC has released the 2006 PBGC forms to it's software vendors. How are other TPA's proceeding with sending completed PBGC premium payment forms to their clients? Does it make sense to proceed with the calculations of the variable rate premiums for 2006 before Congress has finished work on the pension bills or should we wait to see if we get any relief in interest rates or changes in the actual calculations.

Employer contributes an amount equal to 18% of employee's salary toward the organization's (fully-insured) health plan premiums. If the 18% is more than enough to cover the premiums, then the excess is contributed to the employee's 403(b) plan account. If the 18% is not enough to cover the health plan premiums, the employee must pay for the difference.

Is this arrangement legal? Since the 18% is based upon individual employee salary, higher paid employees are going to get a higher contribution. Presumably, since it is a fully-insured health plan, the health plan contribution piece is fine. But does the arrangement violate 403(b)(12) on the retirement plan side?

I am starting a research paper on Cafeteria plans. I am looking for any input on what you know about disadvantages to the employee on a Cafe plan, both health and daycare.

I know there is the "use it or lose it" rule and that the grace period has been extended to 14 months and 15 days. I also know that the plan reduces your taxable income which can also decrease some of your benefits like social security, pension, disability and life insurance when those benefits are based on taxable income.

I know that you must enroll annually and determine an annual election amount.

I know that you must submit claim forms and wait for reimbursement (some companies have the new Flex Debit Card)

Anyone know of more disadvantages to the EMPLOYEE?

Also, anyone know what the eligibility requirements are to participate in a cafe plan?

I recently retired and attempted to make a redemption from my ERISA qualified 403B--I also wanted to transfer it to an IRA. I was told I need a form signed by myself and the plan adminstrator. When I called my ex employer I found out the plan adminstrator had left three years ago (the former CFO) and no had been named to replace hiim The employer said they were trying to straighten out this problem as they were also in the process of terminating the 403B plan and switching to a 401K. I am just curious. in the absence of a named plan administrator what , if any, options do I have to redeem or transfer my funds to an IRA. This involves considerable money and I am somewhat anxious about how long it will take them and what problems could arise. Thanks fca

Employer contributes an amount equal to 18% of employee's salary toward the organization's health plan premiums. If the 18% is more than enough to cover the premiums, then the excess is contributed to the employee's 403(b) plan account. If the 18% is not enough to cover the health plan premiums, the employee must pay for the difference.

Is this arrangement legal? Since the 18% is based upon individual employee salary, higher paid employees are going to get a higher contribution. I know that 403(b) plans are not subject to discrimination testing, but what about health plans (particularly regarding employer contribution for premiums)? I think this is a fully-insured health plan.

Thanks.

Could a designated beneficiary be changed after a participant's death?

Just curious if it's feasible to take more than one exam during a testing window. I may have a block of time that I can set aside to do nothing but study. How much preparartion time is needed to study for the DC-1, DC-2 or DC-3 exam? I have not taken any of the exams so I have no clue what the practical time requirement might be to get prepared for them. For example, would it be possible to schedule the DC-1 at the beginning of the testing window and the DC-2 toward the end of the testing window or is that not at all doable nor sane...?? Thanks for any help.

Is there any Federal law that states how quickly (two days, one week, two weeks ets) a custodian has to transfer your IRA to another custodian either a broker dealer or Federal Government plan assuming all of the paper work is given to the custodian? I believe you have to complete a Form TSP 60 and give it to your current custodian if you are transferring an IRA to the Federal Thrift Savings Plan.

Thanks, Dan

Our company has a VEBA that was established pursuant to a CBA in connection with a self-funded long term disability plan . The company must pre-fund 12 months worth of benefits for a newly disabled participant. Once a quarter, the company draws down from the VEBA the equivalent of the past three months worth of payments that have been funded from general assets. This amount goes back into general assets. For example:

Joe starts monthly disability payments 1/1/06. His benefit amount has been calculated to be $1,000/month. The company pre-funds $12,000 to the VEBA for the first twelve months of his disability payments. Each month, his payment is made from general assets. At the end of the first quarter, the company requests that $3,000 be paid from the VEBA back to the company.

Does this represent a prohibited transaction? This plan has been audited since the VEBA has been established but I don't see where this has been raised as a potential issue. Any input is appreciated!

Thank you!

Folks:

In today's Benefits Link, I noticed this story.

I was under the impression that the federal government passed legislation detailing how health and wellness incentives could be incorporated into plans, without being discriminatory.

Why couldn't insurers in MI be offering plans duplicating these federal incentives now, without legislation needing to be passed in MI?

As I understand federal law, the states can pass legislation, which would be more favorable to the employees.

Don Levit

Employer currently has a SEP, but now wants to stop funding that plan and start up a safe harbor 401k. To do so right now would mean the plan year (they want calendar year) would be less than 12 months. Since the initial plan was a SEP, does that make a s/h 401(k) a successor plan, and therefore we would have to wait until 1/1/2007 to start the s/h 401(k)?

Thanks