Some clients and referral sources are getting a pitch from a company that takes other company's employees in conjunction with them joining a union, which supposedly has collectively bargained for flex benefits where the now "union employees" can choose which benefits they want "purchased" for them under an ala carte menu of benefits (say $500 per month). Since they're union and collectively bargained the client can now exclude them from their pension plans using the union employee (w/collective bargained benefits) exception to 410(b). It will shock you to know that most of this is being offered to doctor groups.

Anyone seen this ? I have a hard time seeing the "good faith" collective bargaining here. It doesn't appear the union employees hired their own attorneys for the "collective bargaining". Also the employees were not approached by the union to join the ranks, but rather the employer basically tells the employee you "will" join this union as we're only hiring from this "union" now.

Brilliant idea ? or one step ahead of the IRS to be closed down next year ?

One of our clients has an underfunded DB plan with funding deficiencies They have been filing the 5330s and paying the tax. In 2004 the HCE forfeited enough of his benefit to make sure the NHCE received 100% of her vested benefit. The IRS claims that eventhough the HCE waived a portion of his benefit, they still must file the 5330 and pay the tax. Our position is that the HCE waived a portion of his benefit, effectively freezing the benefit, therefore the plan is no longer underfunded and no need to file a 5330. The IRS is looking for some regs to back up our position.

Any help is greatly appreciated.

Obviously I'm not well versed in the land of DB plans, but had this question posed to me recently...

Can a business owner -- who along with his wife are the only employees of the company -- start a DB plan after reaching age 65? What are the limits, if any, of DB plan startups and payouts. Thanks for the input.

A 401(k) plan with match feature excludes commissions and bonuses as an eligible form of compensation. The plan would pass the compensation ratio testing. The plan year runs 01-01 to 12-31. Can the plan be amended prior to 01-01-2006 (i.e. November 1, 2005) to remove the compensation exclusions or would this be some type of cut-back?

The match is paid on a pay period basis and has no accrual requirements.

A company wants to start a 401(k) plan effective 12/1/2005, with a 1 month SPY, before operating on a calendar year starting in 2006. It is a doctors office, with about 17 employees. The 2 owner docs will receive very large bonuses in December, from which they will make 401k contributions. ADP testing is always a concern, but other than that, is there anything else to worry about with this situation? For example, if the docs get bonused (and do 401k from the bonus) and no on else does, is that a problem? ADP may not be too bad, since although there will be a small dollar amount of 401k for the NHCE's, we would use only 1 month of comp which would drive up the ADRs.

Thanks

Anyone here using debit cards with success? Any problems? Does anyone know of a vendor that can outsource the debit cards without "taking over" and existing cafeteria plan?

Thanks

Wisln

What does an employer need to do (if anything) if an employer contribution is mistakenly made to a participant's 401(k) account. Several employees were laid off and received severance checks (not "comp" under 401(k) plan definition). However, employer contributions were made based on the severance amount. I cannot find anything on this in the IRS correction procedures. Is this a windfall for the participants? Thanks.

I am wanting to contribute to an HSA using pre-tax dollars with no employer contributions/connections whatsoever (personal HSA plan). Is this possible? Thank you for your help in this matter.

1) I am doing payroll for employees that are now participating in a 401K plan for the first time. Should the taxes for Fed Withholding, Soc Sec and MC be calculated on the remaining amount of pay (gross - 401K contribution) or just the gross amount? 2) If one of the employees is putting 100% of his paycheck into the 401K, is there any difference in calculating the taxes? 3) When do I have to send it the contributions to the 401K management company. Thanks for your help on this matter.

I've come across an employment agreement in which the employer agrees to hire an employee on a consulting basis after 'active employment' ends. The payments for the consulting work will be bi-weekly or monthly and they will be a % of the employee's average pay during the last 3 years of active employment. At first blush, it looks like a simple agreement to keep a valued former employee's knowledge with the company. I don't see a deferral of compensation. The former employee will be paid as the contract calls for and may be terminated at anytime.

However, the new 409A regs lead me to believe that the Service would consider the agreement to be a deferral of compensation; though it's not entirely clear.

I'm guessing that termination of the agreement will not lead to penalties, so long as nothing is paid out as a result of the termination. What about payments that have been made to current 'consultants'?

I'm not sure what to do here....

Company X provides a 401(k) plan to its employees in which the first y% of employee after-tax contributions and/or 401(k) contributions are matched dollar-for-dollar. Company X also permits to employees to make after-tax and/or 401(k) contributions in excess of y% but these contributions are not matched by the employer. In the withdrawal provisions the employer restricts withdrawals of matched after-tax and/or 401(k) contributions to contributions which have been in the plan for at least 24 months unless an employee has participated in the plan for at least 60 months. When a participant questioned whether this was necessary, the employer referred the participant to its TPA which stated that these restrictions were required by two Revneue Rulings issued in 1974 with respect to employer contributions geared to employee contributions. The Revenue Ruling numbers are 74-55 and 74-56. I thought that when 401(m) was enacted, these rulings were made obsolete. Has anyone heard of this or have any thoughts on this?

We have a plan sponsor who mistakenly withheld deferrals on severance pay for one individual and this amount was deposited into the plan. According to the ERISA Outline Book, one of the ways that this can be corrected is to distribute the mistaken deferral to the participant.

Since the participant was not previously taxed on this amount, I believe that this participant should be receive a 1099R at the end of the year. What Distribution Code should be used?

May an employer establish a 401(k) solely to match SARSEP deferrals? If so, are there any pitfalls in doing so?

Has anyone used a reputable collection agency for pension overpayments? Thank you!

This may be a stupid question - but may a nonstandardized prototype plan only cover union employees of an employer (assuming this is properly reflected in the adoption agreement) and have the non-union employees in a separate individually designed plan?

The DOL National compensation survey reports employer premiums for health coverage as $252 and $576 for single and family coverage respectively.

http://www.bls.gov/news.release/ebs2.nr0.htm

The Kaiser Family Foundation reports premiums as $335 and $907.

http://www.kff.org/insurance/7315/summary/index.cfm

Anyone else find this gap interesting? I dug a little into the survey methodology - couldn't find any glaring differences.

Hey Dave,

I take a day off and everything changes.

New Look. New Name.

Looks good.

anyone aware of whether the service is going to apply the katrina hardship rules to wilma victims?

One of my groups has temporary lay-offs up to 3 months. the carreir is willing to cover the eeys. They company continues to pay 75% of the single premium but some eeys do not elect to maintain the insurance as they do not get paid any more. Do they need ot get a COBRA notice??? Is this a qualifying event?

Sometimes the temporary lay-off turns into a permanent at which point they eeys are terminatred and COBRA is offered. How about the ones that did not elect to continue? If they discontinued coverage earlier, woudl this event allow them to pick up COBRA?

Let us say the first plan year is 12-31-04 to 12-31-05 and the fiscal year of the employer is 1-1-04 to 12-31-04. The beginning of the year minimum required contribution is $75,000 and the end of year contribution with 6% interest is $79,500. Is the deduction for the 2004 fiscal year the full $79,500 or just the $75,000 with interest to the end of the fiscal year - which is zero. I think it would be the full $79,500 but have come across some valuations deducting $75,000 in 2004 and the rest of the minimum required contribution in 2005. It looks to me like the timing rules of 1.404(a)(14)(f)(3) just apply to maximum deductions higher than the minimum funding requirement.