An employer with a 125 plan wants to increase decutibles, but only require employees to pay the old amount and therefore reimburse employees who exceed the old deductlbe amount up to the new amount. Is the payment from the employer to the employee for the difference in deductible taxable to the employee? I'm not much of a tax guy.

An employer with a 125 plan wants to increase decutibles, but only require employees to pay the old amount and therefore reimburse employees who exceed the old deductlbe amount up to the new amount. Is the payment from the employer to the employee for the difference in deductible taxable to the employee? I'm not much of a tax guy.

I am a "newbie" ... are there some sources I can go to which publish what health insurance trend has been for 2005? Our firm just got our 1/1 health insurance renewal. My carrier had trend of 12.5% and I'd just like to see how that compares to the industry average. I tried mercer.com and couldn't find anything, and on milliman.com they only have 2004 trend. Where can I look to see what insurance carriers are averaging for 2005? If anyone could give me some advice I'd sure appreciate it.

A start up will pay COBRA premiums for new employees until they have enough employees in California to quality for a group health plan since most of them are out of state currently. The maximum head count will be under 20 once the company is in place.

Since the premiums are paid by the new employer for the COBRA premiums for continuation coverage from a previous employer on behalf of their new employee, two questions:

1) Are these COBRA premiums deductible to the corporation as an expense if they provide this for all the new employees in lieu of a group health plan?

2) Are these premiums tax free to the employee or taxable income?

I know that most do treat them the same as group benefits and have had no tax issues but wondering if it is sanctioned by IRS or not. On one hand, they are the new companies employees and these are employee benefits. On the other hand, the benefits are not tied to the current employer but to the previous employer.

I would really appreciate your help on this because I looked through tax facts 2005 and other publications and could find no mention of this.

THANK YOU!

Can an employer, with two classes and waiting periods for benefit eligibility, offer a Cafeteria plan with two waiting periods?

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Hi,

Can anyone please tell me if small business owners are allowed to defer after the plan year has ended? That is, can they defer at the same time that they are making their profit sharing contributions.

Thanks.

Reg

We no longer wish to maintain our volume submitter specimen plan. Does anyone know what we have to do to discontinue it? Is there any guidance regarding what kind of notice must be provided to adopting employers, etc.? Thanks.

A DB plan has held a small amount of employer stock for several years. The stock has done fairly well and we were just told that it represents about 18% of the plan assets.

The employer can sell enough stock to bring the level in the plan down to below 10%, but was there a prohibited transaction (and applicable penalties due) for the period that the employer stock exceeded the 10% limit?

An employer asks if he only pays people via 1099 does he have to let them participate in a business retirement plan. Does anyone have an answer to this?

According to the DOL regulations Sec. 2520.104-20(b), the cancer plan doesn't appear to be excepted from the Form 5500 filing requirement, but I was under the impression that if a plan has less than 100 participants and is fully-insured, it didn't have to file a Form 5500. Am I missing something? Any thoughts would be greatly appreciated.

Our small (but growing) TPA firm is looking for a flexible loan amortization software (either an Excel macro or stand-alone). The one in Relius is OK, but lacks some printing options we would like. We wouldl ove to find something that allows us to change most of the variables. Can anyone point one out to us?

We have a client that sponsors two DB plans, one for hourly employees and the other for salaried employees. Both plans are underfunded on a termination basis (417 interest rates).

The client wants to merge the plans into one plan. In order to comply with 414(l) what do we need to do? What type of statement needs to be attached to the form 5310-A?

This question was posed to me today:

Re: Changing the Vesting Schedule

You would not be able to keep the prior vesting schedule for the monies deposited before their desired vesting schedule change, while having monies deposited after this change subject to a differing vesting schedule.

Since you are proposing an accelerated vesting schedule, we needn't be concerned with protecting a participant's vesting percentage as required per IRC §411(a)(10)(A). However, the IRS interpretation of IRC §411(a)(10)(A) can be used to help explain why you can't have 2 vesting schedules apply to the same contribution(s).

The IRS interprets the code to indicate a participant's vesting percentage rather than account balance must be protected in the event of a vesting schedule change. It would stand to reason then that the IRS would view a change to the vesting schedule as applying to ALL contributions (rather than just the contributions after the effective date of the change) since the participant is now 100% vested.

What we are saying is if you changed to a 100% immediate vesting schedule, you would need to apply this to all monies--not just new funds.

I think the question being posed to my office is that this is employer money that is currently on a six year graded schedule, and as of 1/1/06, the company wants to change the schedule to 100% immediate, but only to moneys that go into the plan after 1/1/06. So all er money in the plan before 1/1/06 would stay at the old schedule.

We are contacting Datair to see if the plan doc allows for this crazyness, but if it does, I would imagine that the monies would need to be segregated.

My boss just told me that this is a 401(k) Profit Sharing plan, but we are not sure if the source in discussion is P/S or match. Thanks for your thoughts and opinions!

I'm 23 years old and I'll be getting married in about a month.

A short term goal of mine is to get set up with a ROTH IRA.

Is there any benefit to making this happen before I am married? Is there any benefit to waiting until after I am married to get started with a ROTH?

FYI - I already contribute to my 401(k) so I've got long term savings started already, I'm just looking for more.

Any help would be appreciated.

Thanks

Does anyone have or know where I may retrieve a generic notification and a waiver that could be distributed to employees. Im looking for the correct language that must be in a notification.

I have a SEP-IRA my company contributes to each year on my behalf, approx $10K - $15K. None of the money that goes into the SEP is my own, it's all company money. I was told by our company's financial advisor that I could open a Roth IRA and contribute to that on my own, but cannot contribute to a Traditional IRA -- is that correct?

I do have a Traditional IRA set up at Vanguard which I have periodically rolled over funds from the SEP-IRA into. The company SEP-IRA is at the evil Putnam Funds, so I try to move the money out of there as fast as possible. I assume these rollovers do not count as "contributions" to the Traditional IRA -- at least that's what Vanguard reps led me to beleive.

I'm single, make $80K year, 40 years old.

Thanks.

Here is a very interesting situation:

Business owner realizes belatedly she should have started filing 5500-ez last year as the total value of her two plans crossed well in excess of 100,000 at year end 2003. So, on her own, she filed for 2004 this year (two forms) but 'accidentally' showed an opening balance on one of the plans that brings he total opening lower than 100,000 when indeed it should have been higher to apparently avoid a letter and potential penalties for 2003. Her reasoning was that once she started submitting 5500-EZs in full compliance, her 'start up' error would fly under the radar of the IRS.

Clearly the right advice is (and was) for her to amend her return and submit returns for the two plans for 2003 as well, a concept that is tough medicine for her. To help make the case for doing the right thing to her, is there a std practice of auditing the balances reported against the 5500-EZs? Is her 'let sleeping dogs lie' scenario at high risk of being found out?

CA court issues judgment awarding AP an interest in plan. AP moves to the east coast, assuming all is well. Of course, all is not well, and the participant really isn't in a position to help her out (he's dead). The attorney who handled her divorce retired, and the attorney who took over his office will not return her calls. There is a benefit payable, but she does not have an enforceable order.

Does anyone have any guidance on how to deal with far-flung potential APs, beyond, of course, too bad you moved so far away.

Catchup eligible HCE made the following deferrals

1/1/03 -12/31/03 $0

1/1/04 - 6/30/04 $5,000

7/1/04 - 12/31/04 $11,000

1/1/05 - 6/30/05 $18,000

I need to test for 6/30/05 PYE

Total deferrals for PYE are $28,000. I believe I test $24,000. (Sal's book suggests that for testing purposes $3,000 is classed a catchup for 2004 and $1,000 is classed as catch up for 2005).

Of course the plan fails the ADP test. $15,000 needs to be returned to correct the test. Can an additional $3,000 be classified as catch due to ADP failure (presumably the remaining unused 2005 catch up of $3,000) and only $12,000 actually returned? That means effectively, $7,000 is catch up over the 2 calendar years, but it all seems to happen in one plan year. Is this correct?

(Who wrote these rules!?!)

Thanks.

Tom