My individual life insurance client has a heath insurance program at her firm which I am unfamiliar with and was hoping one of you could help me out. She was a regular employee in the state of California covered under the group health plan. In the old employee handbook, it states that any employees living outside of California will receive a $300.00 health insurance stipend with which they can purchase health insurance on their own, since the group plan offers limited access to providers out of state. In the most recent copy of the employee handbook (issued this month), this benefit does not appear. My client is planning to move from California to Washington D.C. and would like to receive this $300/mo stipend.

1. Can the employer simply "remove" this benefit (as it appears that they did based on the ee handbook)?

2. Assume that other out-of-state employees are still receiving this benefit. Can my client make a case to receive this benefit as well?

3. Is this sort of benefit subject to any sort of non-discrimination requirements? For example, if my client wants to receive this benefit could she negotiate to receive this benefit even if the employer does not give this benefit to everyone that moves out of state?

Any advice you can provide would be greatly appreciated.

Thanks!

A participant had a loan from a 401(k) plan. When the loan paid off, the payments were never stopped, resulting in 16 additional payments totaling $7000 going into the plan.

We are taking over this plan and it is not clear to us why this was not noticed either at the payroll level or at the recordkeeper level.

What is the required method to correct this? Have the plan issue a check to the participant?

If the payments were invested in the money market fund, do the interest and earnings on the overpayments need to be refunded? If they invested in funds that are worth less now than the amount of the overpayments, is just the current market value refunded?

Any reporting that needs to take place to get this all straightened out?

Does anyone have any input:

Hypothetical - Company A's assets are acquired by Company B during the Plan Year. Company A and Company B maintain 401(k) profit sharing plans. Company A will stay in business through the end of the Plan Year to collect receivables, etc.

Do the employees of Company A have the ability to receive annual additions greater than $42,000 ($46,000 for those who are catch-up eligible)? I can make an argument that they do, because A and B are not in a controlled group or affiliated service group.

Does anyone have any thoughts either way? I can't find a solid answer.

Thanks!

An employee earns $10,000 the first half of the year and defers 6% ($600) into their simple IRA plan. The employer then contributes the 3% ($300) to that persons account as they are matching on a pay period basis (versus year end). The second half of the year the employee earns an additional $10,000, but elects to defer nothing.

Is the employer require to fund an additional $300 since the person made $20,000 and deferred a total of 3%, but the employer matched only 1.5%? Please advise.

Elfman

I'm setting up a new calendar year Cross-Tested PS plan effective 3/1/05. This is the date the company incorporated and started business.

For this first year, will the $42,000 max contribution and the $210,000 max compensation limits be prorated for 10/12 of the maximum?

My mind is drawing a blank. Thanks!

We have a plan on a Principal document - their former TPA. It is update, so we are continuing to use the document. There is a limit on the deferral of 10%. The sponsor want to eliminate it for 2005. Is an amendment we draft to change this to eliminate the limit sufficent enough for a document that we do not sponsor?

I have a client that was late once with a 401(k) deposit. Is it possible to have the key employees wave their right to lost earnings (and also pay less of a prohibited transaction penalty by only considering the non-key participant's deferrals late)?

If you have a plan year ending February 28, 2006, can they add the ROTH 401(k) feature January 1, 2006 or do they have to wait until March 1, 2006 (the plan year begining in 2006?

Can an emloyer offer a match on contributions exceeding 100%? For example, 200% match on the first 5% contributed?

Suppose a prohibited transaction occurred in 2000 and the amount involved was $500,000. The PT was never corrected before it was discovered by the IRS on audit. The PT involved a sale of an LLC interest. It doesn't appear that it would matter if FMV was paid or not ... a PT occurred. Does the 15% first tier tax apply for each year beginning in 2000 (let's assume PT occurred on 1/1/2000) and ending in 2005 (let's assume IRS discovered PT on 12/31/2005)? Additionally, is the 100% second tier tax an ADDITIONAL tax that could be assessed? This could result in a tax of 175% of the amount involved. Any help would be appreciated. Thanks. Ed

We have a client (C-Corp) with two owners that sponsors a non Safe Harbor 401(k) Plan. This year, one of the owners did not receive any compensation. For ADP testing, is he treated as a 0% deferral or does he need to be omitted from the testing?

Thank you for your assistance.

There was quite a bit of discussion about the "Use it or lose it" amendment that cafeteria plans should (but don't have to) adopt. However, I haven't seen much about amendments that must be adopted.

For example. does a plan need to adopt an amendment that addresses the new definition of dependent?

And does a plan need to adopt something formal that discusses health information in electronic format?

Normally, I get all kinds of reminders from various sources that time is running out on required amendments, but not this time. Maybe I haven't been looking in the right places?

A limited partnership (LP) wants to set up a retirement plan. LP employs 4 W-2 employees. There is one limited partner who owns 99% of the LP and the same person owns an LLC that is a 1% general partner of the LP. The LP is an investment management company.

Would there be a problem with them setting up a plan to cover the employees and the general partner?

A plan participant has an outstanding liability with the IRS. The participant has a small retirement balance in her 401(k)/profit sharing plan. The IRS is pressuring her to withdraw that money to cover her liability.

Is that legal for them to do?

Hello,

I have been paying into my 403b account through my employer for many years

now. (They match 200%, so it's a great deal.) This year I opened a Roth

IRA in addition to my 403b deposits. However, a surgery gone bad landed me

on disability (insurance provided through my employer) part-way into 2005.

I expected to go back to work this calendar year, but I now find it isn't going to

happen. Further, my doctor is unsure if I will go back to work in 2006.

Because my employer pays the premiums on this disability policy, I pay

federal and state income tax on the disability income, but I do not pay

medicare or social security tax.

My question is that if it turns out that I remain on disability through

2006, will I be ineligible to make deposits to my Roth IRA in 2006?

Further, does it make a difference if I start receiving social security

disability? (My employer's disability policy requires that I apply for

SSDI, which I did, but I was denied and have an appeal pending. As my

employer's policy is coordinated, any income I ultimately receive from SSDI

will reduce what I receive from my employer's insurance.)

One other question.... Let's assume I am not eligible to make deposits to

my Roth IRA while on disability. If I make desposits to my Roth IRA in 2006

expecting to return to work before the end of the year, and I end up not

working in 2006, what happens? I know I would have to retract those

deposits, but is there any penalty for doing so? Or does that depend on the

investment company? (My account is with Vanguard.)

And finally, can anyone point me to a source for all the Roth IRA rules and regulations?

Thanks!

Do you have to subtract an outstanding loan balance to get the total amount a participant can have as a hardship distribution?

upon our review of a 2 participant psp with an effective date of 1/1/95, they never updated for gust/egtrra, which we agreed needed to be submitted under VCP. upon digging deeper, the original non-standardized prototype doc was never submitted for determination. should this be disclosed under the VCP? we are updating to a gust approved Standardized prototype doc.

If a multiemployer fund is underfunded (due to performance of investments) can the trustee unilaterally require participating employers to pay more into the fund than is required under the CBE? There was a thread a couple of years ago but this wasn't really fleshed out. I guess it could happen in a reorg. But outside of that, I'm just not sure of the answer.

I have a 401(k) client that is currently matching @ 100% of deferrals up to a 4% deferral rate and the match is 100% vested from day one. Does this qualify as a "safe harbor" discretionary match? Many thanks for your thoughts and help!!

Gee Bee Fran

Sounds like a soap opera.....

I have a participant who named his fiance his beneficiary in 2000, later married and divorced her. He then remarried a co-worker, but never changed his beneficiary form. He passed away last week. Who is the beneficiary? Is it his current wife?

The participant also had an outstanding loan. If his wife wanted to pay it back before she takes the rollover, can she?

Thanks in advance.