I understand that the small employer exception which allows small employers to have Medicare pay primary rather than secondary for working aged employed by a small employer can generally be extended to small employer groups participating in multiple employer group health plans (which I assume includes MEWAs) but only if the MEWA formally elects to have Medicare provide primary coverage. If the MEWA properly elects the small employer exception and complies with some basic reporting and disclosure obligations established by CMS, it is my understanding that the small employer threshold to be applied on a group-by-group basis in the context of a MEWA, even if the MEWA has some very large employer groups and a large number of total "plan" participants overall. In the absence of such an election, small employer groups participating in a MEWA with a range of large employer groups presumably are not entitled to the small employer exception.

My question is what happens if the MEWA has been acting as if this mandatory small employer election had been made years ago but, in fact, an election was never made. I assume the MEWA is on the hook for having to repay all amounts to Medicare for which Medicare paid as primary rather than secodnary and possibly pay interest and penalties as well. However, I have heard refernce to possibly being able to negotiate or work out a compromise with CMS as to back amounts if the MEWA voluntarily corrects the problem. I am curious if anybody out there has negotiated a compromise with CMS on similar grounds and, if so, exactly what is realistic to expect. (For example, is the compromise just that you have to pay Medicare back for all amounts they paid as primary but you get interest and penalties waived or is there a possiblity you can get Medicare to agree not to require return of all the amounts on which they paid primary if you can show that, but for the filing of the election, Medicare would have generally paid the amounts as primary. Thanks in advance for any assistance.

A plan has forfeited some ineligible deferrals. Normally the interest earned would be reallocated to all participants. Due to an administrative burden this really isn't an option. Is it appropriate to put these earnings to the forfeiture account?

Our test is 1/1/04 to 12/31/04 and there is a HCE who is due an ACP refund.

They were 50% vested on 12/31/04 and they are 75% vested now.

Anyone know what vesting % to use to determine how much of the refund has to be forfeited?

Thanks!

Does HIPAA offer credible coverage provisions for US corporations who employ international employees, both ex-pats and foreign nationals, when leaving governmental or social health programs and joining the corporate plan?

To determine HCE's, I've been instructed to use "gross compensation". Does this include things like moving expenses, company use of vehicle, life insurance, etc? We have an employer who payrolls totalled $80K in compensation, but these additional items will put him over $90K.

Perhaps this is out there somewhere, but I have not seen a clear answer to the question of how a stock award that is subject to 409A must be drafted to comply with 409A. Here's the situation: Company A has granted nonqualified stock options (nondiscounted and no deferral feature) and restricted stock to employees of Company B. The relationship between Company A and Company B does not satisfy the requirements under the proposed regs for Company A to constitute the "service recipient." Thus, the awards are subject to 409A and there is no "fix" (as there is for discounted options) to exempt them.

How must the options be amended to comply with 409A? Since the regs provide that a calendar year can be designated as the payment date, can the options provide that they can be exercised at any time during a specified calendar year? Must anything else be done to them?

For the restricted stock, is it really subject to 409A, and if so, what exactly does that mean? The shares will vest according to a vesting schedule, at which time the shares will be unrestricted and the employee will be taxed. It seems that the payment date and the vesting date are the same, which should satisfy the short-term deferral exemption. Am I missing something?

It's my understanding that a 2004 calendar year PSP that timely filed Form 5558 extension (by 7/31/05) had until 10/15/05 to file its 2004 Form 5500 and had until 10/15/05 to contribute its 2004 PSP contribution (and thus get a tax deduction for it on the employers 2004 business tax return).

Am I correct in thinking that if the employer is located in a Hurricane Katrina declared disaster area .... then the employer automatically has additional time to file the 2004 5500 and pay the 2004 contribution ( in order to deduct that contribution on its 2004 business tax return)?

Is that automatic exteded date 01/03/06 or 02/28/06?

---------------------------------------

What about if the plan was a MPPP. The 2004 5500 was extended to 10/15/05 and the contribution was going to me made on 09/15/05..... But Hurricane Katrina hit on 08/29/05. Does the Katrina Emergency Tax Relief Act of 2005 cover a MPPP?

I havn't seen anything that allows a MPPP employer in the Katrina disaster area to be allowed to wait until 01/03/06 (or 02/28/06) to make its 2004 MPPP contribution. Does anyone know ?

I know (or I think I know) that participants inside of a 401k can continue to contribute after age 70 1/2 as long as they have earned income. I understand that RMD must also be taken after age 70 1/2. I cannot find any information to support either way. Any advice? Thanks!

Section 3508 of the IRS code says that 3 groups of employees are to be treated as non-employees for withholding purposes, including getting a 1099. These three are direct sellers, real estate agents and companion sitters: even when they are in fact common law employees. In Who's the Employer?, Derrin tells a little more about this, but I still have one question. For compensation purposes, do I use 1099 minus business expenses reported on schedule C?

Also, can anyone with experience tell me of any surprises in adiminstering a Plan with a few of these people in it?

Or provide any tips on how to get the information on expenses from these people?

Here is the situation:

Participant (5% owner) dies this year. His named beneficiary was his wife, who predeceased him. He never completed a new beneficiary form.

The plan document states that in the absence of a living beneficiary, the beneficiary is the kids, then parents, then estate if there are no kids or parents.

The (10) kids want the money to go to the estate.

Now, I would guess that at the very least, the kids need to get an equal share of the RMD? Then the rest can go to the estate? Or do they need to also get an equal share of the remainder? Also, to further muddy things up, there were 11 kids, but one of them died. Do we need to include his beneficiaries in the mix?

Not even sure how to begin this one. I have been advised to have their ERISA counsel give us direction, but since he wants us to also distribute enough RMD money to cover their IRA RMDs (they each inherited an IRA), I'm a little leery. Is there a cite somewhere that would specifically state you can't take an IRA RMD from a qualifed plan?

Thanks

Would anything invalidate a properly prepared IRA beneficiary designation that was completed a week prior to the IRA owner's death? Company policy? Something in the code? Thanks.

Sorry, I have to ask the question and verify. Can an employer set different flexible spending account (healthcare) limits based on years of service or position? This is discriminatory and would disqualify the plan, correct?

Is the 5 year rule for Roth 401(k)s separate from Roth IRAs? In other words if an individual were to roll over an eligible distribution of his Roth 401(k) account, does that Roth IRA have another 5 year period on the assets assuming the rollover opened the Roth IRA account?

401(k) Plan allows for in-service distributions after Age 59 1/2. Participants is 62 and would like an in-service distribution, the plan allows for it. Is he allowed to take his entire vested account balance when he requests the In-Service?

Are there any general rules/restrictions for In-Service Distributions? The plan does not mention anything besides having be 59 1/2, and they are allowed to take distribution from all fully vested sources.

Thanks

May an employer who has failed coverage testing retroactively amend the plan to exclude highly compensated employees from receiving a contribution?

Can you roll a existing Roth IRA to a Qualified Plan (QP) ? Although I'm not talking about new contributions to a "deemed IRA" within the QP, if that language is also relevant to it being able to accept Roth IRA rollovers, we'd of course put it in. However, I want to be clear that in this case the money is truly non-deductible contributions made to a Roth IRA (not in a QP) that they now want to roll into a QP for broader investment purposes (yes, I know there are self-directed IRAs available too). Thx.

Q/A18c of Notice 2005-1 allows a grandfathered plan to be terminated in 2005 provided all deferrals are paid out. Does this mean all vested and non-vested deferrals? If non-vested deferrals are vested and paid out does a material modification occur?

has anyone come across any fiduciary issues associated with allowing participants to select their own investments?

particularly, to what extent can the plan sponsor be held liable for losses resulting from participants having access to stocks and bonds outside of a traditional mutual fund investment menu? am i correct in assuming that this sort of arrangement would eliminate 404© protection?

Can a representative under a Form 2848 Power of Attorney sign a Form 5500, Sch P and/or SSA on behalf of the administrator and/or fiduciary and/or employer?

An employee's spouse has a medical doctor prescription for a special mattress and the employee wants to know if he can purchase it next year and add the amount of the mattress to his next year's FSA. Any thoughts?