I always believed that under the Dependent Care Program, the provider had to be a licensed day care center, and that relatives were not acceptable. I have read that this is not the case. Has it always been this way? Also, can language be added to the plan document indicating that only "licensed" providers can be used?

I am aware that one of the prohibited transaction exemptions is that if a DB Plan has insurance policies, that when the plan would otherwise surrender the policy, that it could instead sell the policy to the Participant.

PTE 92-06 says that the price of such a sale would be at least the "amount necessary to put the plan in the same cash position as it would have been in if it had...surrendered it"

So, when a participant terminates employment in a DB plan with insurance, I will inform the client that any policies held for that participant are to be surrendered and the proceeds should be deposited with Plan Assets. However I tell the client that before they surrender the polices they should first see if the participant wants to buy the policy from the Plan, and the price would be the Cash Surrender Value.

I was recently told by someone that new guidance says that the Cash Surrender Value is no longer what the participant would have to pay to buy the policy. That the price is now some formula or whatnot. Can anyone explain or cite me this new guidance.

I went wireless and broadband this fall after a lot of nagging from daughters and wife. System works great, should have done it long ago.

BUT.... I find problems getting past security at this site on anything but the new system. There are four family computers I use at home or when I travel, plus the occasional public library / hotel system. Is there a connection between the log on system using email addresses and the email address associated with the computer you are using? I hope not. Any suggestions?

With PFEA expiring, i was curious to know if anyone has heard anything other than going back to 30 year treas. rates for calculating 415 limits. Thanks.

My plan is allowing Roth 401(k) contributions begining in 2006. Can I also make a contribution to my Roth IRA in 2006? I meet the Roth IRA AGI limitations.

Our company excludes the son in our documents to remove the negative impact of a young hce receiving an allocation in 401a4 testing.

I believe we should make children their own rate group and give them a 0% allocation to help our testing further with a 0% allocating to an HCE under 401a4.

My colleague believes the IRS would not approve of my strategy. What are your thoughts?

Thank you

I barely know enough about this to be dangerous, but I'm trying to help out a CPA. If a kind soul can help out a newbie I'd appreciate it...

Medical group pays 100% of medical premiums for owners. My understanding is that this is OK, since there is essentially no non-discrimination testing of health plans themselves - if that's wrong please advise.

The practice pays some portion of premiums for everyone else. They have a POP plan to let the employees pay their portion on a before-tax basis. A quick look at the non-discrimination requirements under 125(b)(1) appears to indicate that as long as everyone is getting the same portion paid by the employer, this shouldn't be a problem.

And the requirements of 125(b)(2) can't become a problem because there are no Key employees in the POP plan, since their premiums are paid by the company.

Thanks for any feedback.

re new relative value regs: We were just told that three of the optional forms of benefit under the pension plan are not actuarially equivalent to the QJSA. We understand it would be good to amend these to be actuarially equivalent by 12/31/2005 - but they are union plans so we really can't make that type of change without bargaining w/ the union. Also, are there any anti-cutback problems with amending the non-actuarilly equivalent optional forms to make them equivalent to the QJSA?

Here, for your reading pleasure, is an excerpt from Prop. Reg. Section 1.409A-1(b)(9)(iv), relating to the reimbursement of post-employment expenses for a limited time:

"To the extent a separation pay arrangement (including an arrangement involving payments due to a voluntary separation from service) entitles a service provider to reimbursement by the service recipient for a limited period of time of payments of medical expenses incurred and paid by the service provider but not reimbursed and allowable as a deduction under section 213 (disregarding the requirement of section 213(a) that the deduction is available only to the extent that such expenses exceed 7.5 percent of adjusted gross income), such arrangement does not provide for a deferral of compensation."

I would be particularly interested to know if anyone has any thoughts about the red italicized language or has heard anyone at IRS or Treasury make mention of it. The context is this: what if an employer agrees to pay or not charge or subsidize an terminating executive's COBRA premiums for 18 months -- how do you steer that around 409A? COBRA premiums are deductible under Section 213(a) (assuming you satisfy the 7.5% AGI test). If the "not" in the foregoing excerpt applies only to the word "reimbursed," you've got a clear way to exclude the COBRA subsidy from 409A, and the "allowable as a deduction" phrase clearly liberalizes things by excusing the former employee from the 7.5% AGI test. On the other hand, if the "not" applies to both "reimbursed" and "allowable as a deduction," you'd need another exception or else you'd need to comply.

The welfare plan exception in 1.409A-1(a)(5) is a little troubling because it refers to "any other medical reimbursement arrangement, including a health reimbursement arrangement, that satisfies the requirements of section 105 and section 106." What does it mean to satisfy the requirements of Sections 105 and 106? Does that mean a COBRA subsidy limited to random HCEs who terminate would be a problem due to Section 105(h)?

Maybe the COBRA subsidies are just hard-wired into a severance plan or agreement and provided on an unalterable monthly (or whatever) schedule, thereby complying with 409A?

Anybody have any brilliant solutions to this one or am I just missing the forest for the trees?

I am 53 yrs old....I want to invest for 10 years...I have been told that the Roth IRA is the way to go for me.

Need opinions....I already have retirement thru my job, 401K, and 403B....this investment will be money coming in that I did not expect......what are your suggestions....which funds?....don't slam me...I am a rookie at this.

Are government employers, i.e. the State of New Jersey required to comply with the ERISA Law, specifically as it relates to the attached final report, and the State's obligation to pay in to the Public Employees Retirement System(PERS).

final_report.pdf

Retired doc continues to earn de minimis salary so he gets health insurance from the Employer. His accountant tells me he also has certain amount of 'deferred compensation' and will for a certain period of time.

He does not and will not provide services to the Employer.

Is 'deferred comp' in the situation described show up on a W2?

Thanks

Hope this is an acceptable place to ask whether Ortho Evra is a covered expense or not. I was surprised not to find it on the list offered at pacificbenefits.com. It has birth control pills, but not this one...

So is not covered then, or is my reference list not complete?

Another thought I had was just if it is a diferent category, like a prescribed med? Is that how it works? I don't see a lot of medications listed, but presume they are if prescribed and my insurance doesn't cover it.

I'm new to this so please excuse my lack of knowledge here, just trying to figure out if this is worht it or not and I have limited time and info.

Thanks!

Q. Upon distribution, what kinds of repurchase rules are there for 401(k) plans upon lump sum distribution of a participant's account that holds some closely employer stock? Obviously the put-option and repurchase rules of ESOPs do not apply, but if the Plan Document is silent as to form of payment, just that participants have a right to lum sump, could employers make distributions in-kind? If so, how the heck can a participant find a market for the closely held stock?

You can email me directly at koreambear@yahoo.com

Thank you and have a nice weekend.

Will L.

After numerous tries to log in, I finally decided to re-register. That took quite a few tries before I could get in.

I do not recall all the details but I recall that in both situations, I was told that a confirmation email would be sent. That never happened for the numerous tries. When I did get an email, I happily used it so that I could use the Board.

However, using the new name I get a new posting count while losing all that went before. In other words I lost my track record and search value. It might not mean much to some, and there are even some who might say that it is for the best (or worse), but I miss them.

Is there any way of reactivating the old name or merging the new with the old?

Someone has come to me asking for advice on his 401k allocation. Upon looking at his limited choices and the fees associated with all of them, it is apparent that there is NO good alternative. As a result, I was going to suggest, subject to the legality of it all and his employers' approval, that he "quit" for a specified period and then rejoin the company. Then we could roll over his funds to an IRA and have real latitude in his investment options.

Seniority is not an issue. There is no matching, so no vesting. Can't ID other relevant issues, sure would appreciate any thoughts.

I have a question about a situation we are in. A participant was in dire straights. They needed money BADLY. She already had a loan outstanding and did not qualify for a hardship or in-service. When all else failed we refinanced the loan so she could get at least some money. Ex. She had a loan outstanding of 1000.00. We did a new loan for 2000.00 and a loan payoff of 1000.00 for a net check of 1000.00. When we requested the check we inadvertently sent the request over for 2000.00 instead of the 1000.00. When the check left the trust it made the Plans cash negative (1000.00). We tried to stop the check in time put participant had already spent the money. We redid the loan in our system to match what actually happened but now it is blatantly obvious that she received more than 50% of her balance for a loan. When this Plan gets audited this will be a problem.

Is there anything we can do to make this fly? Can we have the Trust issue a 1099 for the extra 1000.00 we paid out to her or since she did not qualify for a hardship this can’t be done? No one can give me a straight answer to this problem, so I am turning it over to the experts. Thank you so much in advance…

Can anyone tell me whether 871(f), which generally provides an exclusion from gross income for amounts received as an annuity from certain qualified plans, would apply in the case of a qualified plan that only pays distributions in the form of a SLA or QJSA. In other words, can the word "annuity" for purposes of this section be interepreted so broadly as to include run-of-the-mill SLA pension payments? Or is it only an annuity that has been purchased by a qualified plan or something similar?

Several references including IRS training materials note that both cash and non-cash fringe benefits are excluded by the fringe benefit exclusion under 1.414(s)-1©(3). The IRS materials specifically note that such benefits include "taxable 'extras' such as the personal use of a company car, educational assistance, etc."

Can anybody point me in the right direction as to where the IRS draws the line with respect to what is a "taxable extra" for such purposes. For example, would a car "allowance" paid under a non-accountable plan be considered a taxable fringe benefit or should that be more properly thought of as general wages. Similarly, what about large cash employee awards or bonuses as opposed to small achievement type awards. I assume the smaller and less frequent the amounts the more likely these are to be thought of as taxable fringes rather than wages but I am trying to determine where the line should be drawn, especially for amounts that are fairly predictable and easily tracked and accounted for.

Thanks for any thoughts or assistance.

The proposed regs contained language to the effect that if an employer made a supplemental contribution in addition to a safe harbor, then the plan could not impose a last day/1000 hour requirement on that supplemental contribution. However, I can't find this provision in the final regulations. Does anyone know if it was intentionally removed or if it still applies?