Employer has H.S.A. and FSA. An employee has a qualifying high deductible health plan covering his children and himself, but not his spouse. She is on COBRA from her prior employer and the plan is not an H.S.A. qualified plan. He elects to also have the FSA for dental and vision for him and the children. But he also needs the FSA to provide for his spouses medical copays, ded, coinsurance, etc.

Can this be done?

A new plan grants 5 years of past service so it has $50,000 of liability and $0 assets at the beginning of year 1. IRS instructions state that in year 1 the answer to Q/A 4 of Schedule B is 100% and quarterly contributions are not required.

The answer to Q/A 4 of the year 2 Sch. B appears to be 0% and therefore quarterlies would be required for year 2.

However, I found the following that appears to contradict this.

2004 ASPA Annual Conference – IRS Questions and Answers:

Q/A 45:  The instruction to the Sch. B provides that for the first year of the plan the funded % should be reflected as 100%.  Quarterly contributions are not required if the funded % for the prior year is 100% or more.  It would appear that, since the funded % for the first year of a DB plan is reports as 100%, quarterly contributions for the second year of a DB plan would not be required.  Does the IRS agree with this conclusion?

A: Yes

Maybe this Q/A didn’t anticipate the possibility that past service would be credited, but I don’t think the answer is correct. The Schedule B instructions clearly state that you enter 100% on line 4 in the first year or if the RPA liability was $0 at the beginning of the prior year, neither is true in my example.

Does anyone think the employer would not need to make quarterlies in year 2, if the plan has a liability on the year 1 Schedule B?

Can a individual over 59.5 take a tax free withdrawal from an IRA to pay for long term care premiums?

Plan requires a break in service for a distribution. Calendar year plan. Participant is over age 50. Plan does not have immediate payment to alternate payee. QDRO entered in February before particpant has 500 Hours of Service. QDRO rceived by plan in March after particpant has 500 hours of service. What is the earliest retirement age? I know in this situation it would be "The earliest date on which the participant could begin receiving benefits under the plan if the participant separated from service with the employer " However, when do you determine the hypothetical termination? When QDRO was entered (which would mean the participant would have a break in the current year)? Received(which would mean the particpant woudl not have a break into the folloiwng year)? Some other time?

deferred vested plaintiff claims disability pension benefits under ERISA 502(a)(1)(B). defendant plan and plan committee deny entitlement under plan terms. if plaintiff is successful, he would be entitled to present value of earlier commencement date "missed" payments plus difference between dv benefit and disability benefit (if any). would these benefits be payable from the plan or from company assets? thanks for any thoughts.

A former employee was eligible to participate in a SIMPLE plan for the years 2003,2004 and while employed for part of 2005. The employee was never notified of their eligiblity but it is reasonably certain the employee would have contributed 3% and the employer would have had to match.

The employer would like to make the former employee whole, but is also afraid the former employee, who is NOT aware of this issue, would want to cause trouble for the sake of causing trouble. It was suggested that since the dollar amount is not an issue with the employer, that the employer calculate lost earnings based upon the investment that generated the highest return each year as if the money was contributed at the beginning of each year. (It doesn't seem apparent that there would be a way to calculate a higher return.)

The ultimate questions are these:

1. Taking the above approach, what exposure does the employer have if the employee wants to cause troubele for the sake of causing trouble?

2. What can the employer do to make the correction while insulating themslves from a potentially troublesome former employee that is not aware of the oversight?

Has anyone dealt with a situation where the client has been behind on contributions and the DOL gets involved? The DOL is recommending suspending deferrals until the employer is caught up on the late contributions. Do you have the participants sign deferral agreements electing 0%? Do you amend the plan to discontinue deferrals for a period and then amend the plan to add the deferrals back when they are caught up? Any insight would be wonderful.

I have someone asking if an electro dermal screening provided by her chiropractor is covered under the Health FSA. It is a procedure that is not covered under insurance. Please give some guidance or thoughts on this.

For some reason at least every 3 years sticks out in my mind. The land in question is actually in a profit sharing plan, so I'm not sure if that makes a difference or not.

Thanks!

Dennis

Trying to figure out ADP/ACP and 410 issues.

Company A has two (k) plans, Plan 1 is merged into Plan 2 effective as of the close of business on 12/31 but Plan 1 participants don't begin participation in the new merged (k) plan until 1/1.

For ADP, ACP and 410) testing, is the company considered to sponsor one or two plans in the year the plans were merged effective 12/31 ?

Does the service have any official stance on this situation ?

do you think it is appropriate to required the parent/guardian of a minor beneficiary to open an UGMA account in order to receive the distribution from a401(k)? the plan allows for this but it also says you can just make the check payable tot he minor?

We are trying to understand the ins and outs of Church Plans and have been unable to find any real guidance. We are making a proposal to a group that encompasses several churches. They would like to set up two plans 1) for clergy and 2) for lay persons. The Clergy Plan would receive a 15% across the board employer contribution and the Lay plan would have either a profit sharing or a matching arrangement at the discretion of each individual parish.

Could someone tell me if:

1) They would be subject to ADP/ACP or discrimination testing, 415 limits, etc.

2) Would HC's be restricted in how much they could defer as opposed to the NHCE in the either plan.

3)Compensation of clergy includes not only salary, but housing & car allowance, schooling etc., What are the guidelines for compensation consideration in a Church Plan.

4) Will a Form 5500 be required since there will be employer contributions.

And, lastly is there a good information site that will help us understanding how church plans work and what is required.

Thanks

A DB plan determines lump sums as the greater of (1) the amount using the "applicable" mortality table and "applicable" interest rate or (2) through the year 2010, the amount determined using the PBGC interest rate at the beginning of the plan year and the "applicable" mortality table.

Assuming that for a particular participant the plan annuity benefit is less than the 415 dollar and comp limits, my understanding of current law is that the 415 Lump Sum Maximum for a current payout would be determined using '94 GAR mortality and 5.5% .

Is my understanding correct ???

This is too much for my monday morning brain.

I have a plan that terminated in January 2005. Employer merged into new company and started participating in that employer's plan in February 2005.

Do I do the ADP test for the single month of deferrals? I thought so, and started to, but something keeps nagging at me...? that the employer would be testing those deferrals on the test for the new plan.

Are there any current Relius users that have past experience with Investlink (TSM) that would be willing to share some general thoughts on Relius vs TSM?

I have been working through some problems with a VEBA. Currently, the

VEBA (a multiemployer plan) allows a person to take his entire "account" balance upon a 12 month severance from employment. This provision applies regardless of the reason for leaving the trade...including retirement.

The regulations seem to clearly prohibit any severance pay that is triggered directly, or indirectly by a person's retirement. 29 CFR 2510.3-2(b). We also found a couple of cases that which held the same.

Am I missing anything? Is there a rule out there that would allow such a payment to be made?

I wanted to know what the process is to form a Roth IRA LLC and how to handle things like a rollover into it. Very little information is available on the net. Can I do it by myself by getting an EIN, what are the annual federal filing requirements for it and can the LLC act as the custodian of the account FBO of my roth IRA. My reason for the information is the prohibitive recurring fees most custodians charge for holding land within an IRA account. Can anyone help or give advice?

Employer maintains SIMPLE IRA at a financial institution. All the accounts under the SIMPLE is at the same financial institution.

Employer sent in checks to financial institution along with breakdown/allocation sheet.

Employer made a mistake (clerical error) and gave instructions to deposit more than the correct amount to one participant’s account, and less than the correct amount to the other participant. (One person got too much, and the other got too little).

These were employer matching contributions

Can the employer just send a letter to the financial institution to make the adjustment?

Is this affected by the irrevocability of IRA assets?

We have come across the case of a cash balance plan that bases it's interest credit off of S&P 500 rates.

The plan does not allow for distributions prior to normal retirement, so generally, the whipsaw effect doesn't affect the plan. However, the clients are interested in terminating the plan, and if that happens whipsaw will have a big effect, and we feel that the plan will be underfunded on a termination basis as a result.

Are there any issues with amending the interest credit rate to match the 417(e) rates? Are future interest credits a protected benefit?

My instinct is no because the 417(e) rate is variable itself, but I wanted to see if anyone has had any experience with this.

Thanks!

We are in a situation that may be unique, at least it is to us. A doctor who practiced until his recent death (age 87 or so) administrered his money purchase pension plan himself. There is approximately $1,200,00 in plan assets at a brokerage firm. He also filed the 5500's himself, but that's another story. It also appears that the plan has been frozen since at least 1994 sice the 5500's indicate that no contributions were made. The last 5500 filed was an EZ. No plan documents can be found.

We've been retained to correct the plan document problem. We're reasonably sure that the plan was never restated for GUST and EGTRRA. There is a good chance it wasn't updated for TRA'86 either, but we cannot tell without documents. Up until 1980 or so the plan was administered by a bank, so we're fairly certain that a document did exist at one time, but the bank no longer has a copy.

We've corrected for nonfiling under VCP, but never without any documents at all. Has anyone been in this situation? I've considered doing GUST and TRA 86 documents and filing under VCP. However, with no prior documents to begin with, I'm not sure this is the way to go. I've considered filing through VCP as a John Doe submission to get a feel for how the IRS would treat the plan. However, the family wants it resolved and time is important. Any ideas? Thank you.