This is a healthcare FSA. Plan year begins on 7/1. The employee terminated employment 8/1. Employee did not elect COBRA. Due to system problems, the termination was not put into the system until September. However, claims were reimbursed for services rendered in August (after the term date). Because the services were incurred after the termination and the employee did not elect COBRA, can we pursue reimbursement of those claims from the former employee?

I'm left a little confused about ERISA Reg. Sec. 2530.203-3(b)(4) after reading some of the posts on suspension of benefits. We had a system failure and did not get notices sent to a group of rehired employees most of whom were under 65 (just a couple over 65). Neverthless, their monthly pension payments were stopped.

The regulation states that no payment shall be withheld unless the plan notifies the employee by personal delivery or 1st class mail during the 1st month or payroll period in which we withhold payment that his benefits are suspended.

I have learned by reading MGB's posts that stopping benefit payments when reemployed is NOT what suspension means. That confuses me in light of the regulation. Can anyone help me sort this out?

Thank you.

Hi everyone,

I wanted your opinion on the following situation, as in light of the circumstances below, I advised to client to obtain ERISA counsel. I was questioned by our in-house contact to the client on this (I think they figured that as TPA we would know how to proceed).

If you could let me know that it was the right thing to do, I'd appreciate it. Or, maybe, this was a situation that occurs often but we don't see?

The situation:

2 Owners, husband and wife. Both over 70 1/2 in a PSP. Husband dies and wife is the bene. Wife dies 3 months later without taking any of the bene money.

Neither had ever taken any MRD's and should have been for probably the past 10 years.

Estate has bene's - the 3 children. Per the trust, husband's $ goes to his trust (passed to bene but she died prior to taking) and wife's goes to her children since no living bene, so techincally both proceeds go to same people

2 out of 3 children are questioning their options. client thinks the 3rd will not as he is "mentally incapacitated". i advised them that they had until 9/30 to make a choice, and that technically since we were past the beginning date of the mrd's that the $ must come out at least as quickly as the MRD's would. After that, I was clueless.

what would you do in this situation? thanks for the replies!

A school system has a cafeteria plan and has allowed participants to be reimbursed for life insurance premiums. The school system already provides a $50,000 life insurance policy for each employee, so the premium for the additional life insurance policy should be taxable to the participant. It is my understanding that this situation has existed prior to this year. How can this be corrected?

Thanks.

I posted this originally in another area in error. I hope someone can help me here. I am an employer who will have several U.S. folks providing services in IRAQ. They will be able to exclude up to 80K as foreign earned income for federal filing purposes.

We have a SIMPLE-IRA plan. How in the heck will this work? For instance let's say the total annual compensation for an employee is: 120K. He will be excluding 80K (except this is only potentially depending on how long he's in the country etc...). If he decides to max out his contribution (10,000 per year) and we are matching at 3% is it 3% of the entire annual compensation or 3% of the amount which exceeds 80K?

If anyone can offer any guidance etc...that would be great.

If a control group situation exists with multiple plans and multiple plan sponsors, must there be uniformity in plan design? Also, must you aggregate the plans for non-discrimination testing? I understand that the 410b test must include everyone from all of the companies as part of the denominator, but is there a situation where you are required to aggregate for testing?

We have a plan that has two lost participants. One has a vested balance of $47 and one has a vested balance of $6. We have tried numerous times to find and contact these people but have had no luck. So I was wondering if there is an amount that if an account is under that, we can give up searching for these people and forfeit the balance? I thought I might have heard $50 at one time. What do you think?

Is there any "guideline" per se regarding the fees that a consultant receives when placing welfare coverages with a TPA, stop loss carrier, etc.? My current employer - I wasn't employed when the contract was negotiated, is paying the consultant 15% of the stop loss - specific and aggregate premiums - as their "fee." Is there a norm and, if so, what it should be? I think $50,000 is a little much for a plan with 200 employees. Am I wrong?

Thanks for any help.

Dolores

Client has 401k Plan with 3% Safe Harbor and does max PS every year.

Client is unhappy with the cost of administration because independent audit is expensive.

Is there any way to get around audit reqs, such as breaking plan into 2 or 3 separate plans with same exact benefit structure in each plan?

One of my sales people would like to set a plan up that when a distribution is paid the distribution fee will come form the forfeiture account. I am aware the the ruling has come out that it is ok to take a distribution fee from a pariticipant account. Is it still ok to label a distribution fee as a General Administrative fee and take it from the plan then the participant who is actually the cause of the fee being incurred would not pay it but all other plan participant's would?

What will be Tax Year if we are filling a return for a short plan year say if it is first plan year beginning on May 1st, 2004 and ending on Dec 31st, 2004.

What Tax Year we will report in Plan Info Worksheet??

Thanx in Advance...

Amit

I might possibly qualify for a Medicare Savings Program through my state (CT) which could save me about $2K for the year. There is an income limit but no assets limit. The problem is that in addition to my SSDI income, I also have to claim my interest (on a CD) and dividends (from mutual funds) earned as part of my income and this puts me just over the allowed income limit. My specific question; Is there somewhere I can put my money (for the next calendar year) where it will grow, but not yield interest and dividends annually? I realize that growth stocks fit the bill, but I’m conservative and inexperienced in investing. I currently only have about 5% of my savings in Apple stock. I don’t know if it’s wise to put more money into just individual growth stocks. Do I have any other choices, given this specific situation?

p.s. I am 38 yrs. old

If employer maintains a VEBA to fund its insured retiree health plan, which includes a drug plan, is the retiree drug subsidy payable to the employer or to the VEBA?

Is there an inurement issue if the subsidy is paid to the employer?

I'm working on Form 5500 for a new client. The previous accountant had made a mess of things, and the Beginning of Year balances on Schedule H are wrong...by some very material amounts.

I know that I can't change the opening balances, and that my options are to:

1. Amend last year's return (don't want to do that), or

2. Make an adjustment to net assets on this year's return (sounds good).

But, where do you plug the adjustment on this year's Schedule H? Good ol' Form 990 provides a very convenient Line 20 for making adjustments to net assets. There's no similar line on Schedule H. How do you plug the difference?

Believe it or not, I've never encountered this situation until now.

How does everyone handle benefits when an employee goes out on military leave? We extend COBRA for medical/dental/EAP/physical after 30 days, but what about other benefits like LTD, Life, AD&D? Do you carry for the term extended to other Leaves? (we carry for 12 months) And then if you term these benefits do you still leave ee active but on military leave? What's the limit for leaving on military leave - 5 years?

Is there any exception from 20% withholding on distibutions on account of disability ? Presumably most disability distributions are still eligible for rollover treatment (except the rare very severe ones that may be excluded from income altogether) so I'm inclined to think they are subject to the 20%, but would appreaciate any opinions/thoughts. THx.

Advisor wants to put in whole life policies for owners and term policies for staff. No doubt this flies in the spirit of the (a)(4)-4 regs on discrimination within benefits, rights, and featurs. However, is there something "explicit" that states the polcies have to be of the same type ? Did the guidance on insurance that the service issued a year or so ago (mostly directed at 412i policies) address this issue ? Just looking for something specific if it exists to show the advisor.

How would a Company decide how much to charge for COBRA on a medical expense reimbursement plan? Can they simply charge 102% of the maximum amount available under the plan? The plan is fully funded by the employer from their general assets.

edited

Wife's out of town on business and kids are at school, so I guess you're the only ones to crow to. 20th anniversary today and my mother turned 80!

Snide comments always accepted!