Some of my physician group clients are asking if they can request patients to sign an assignment of HSA funds. I know HSAs are covered by the prohibited transactions rules, but I have been unable to find any guidance on whether such an assignment would be a prohibited transaction. The physicians want to increase their chances of getting paid for services which fall below the patient's deductible. They understand that there is no guarantee that the patient will have sufficient funds in their HSA to cover the expenses. Any ideas? Thanks.

I rec'd a call from the auditor on one of my plans who said that she received information from the EBSA that her audit was not suifficient and she would need to complete a new one. She then contacted me and told me that there were a couple of changes that needed to be made to the form itself including the 5500 itself and the schedule H. From reading the instructions, it appears that since the EBSA has requested a revised form, the amended return box should NOT be checked off. Is this anyone else's understanding as well? (It seems odd.) Also, when processing an amended return, the instructions say to attach only what is changed. In my case, the 5500 and Sched H. However, since we are amending it due to EBSA, do we attach everything or only the selected Scehdules?

Any input would be appreciated.

Form 5330 instructions say the due date is the 7th month after the employer's tax year. The employer's tax year ends 12/31/04. The employer files a 5558 extension for the 5500. Is the 5330 and tax payment due by January 31, 2006?

I have a takeover plan, allocation groups are defined by birthdate ranges (Example: If born before 1/1/1949 you're in one group, if after 12/31/1948 you're in another.)

Question is, could this allocation grouping possibily be in violation of federal age discrimination laws?

Is there any requirement that there has to be an annual open enrollment period?

I guess this relates to the requirement that the open enrollment period be prior to the period of coverage. Does it say a period of coverage couldn't be more than a year in length? E.g., two years, three years?

Thanks!

I have a client that has been having ADP issues recently due to a myriad of reasons. The ADP percentage of the NHCE group has been around 5.5 - 6%. Typically one would think that's a fairly good percentage given that his company is a manufacturing facility with average wages of 30-50k. But the HCE hasn't been paying himself a whole lot of $$ over the last few years and thus his actual dollar limit is rather low.

He's upset over the expenses of the plan in relation to his benefit. You and I know that his benefit is in proportion to his compensation, but getting him to see that is tough. Especially when all he sees is the SS taxes involved in raising his comp.

His current plan is a 401(k) with a comparability test profit sharing plan. Someone (there is always a "someone" to muck things up) told him that he could terminate the 401(k) portion of his plan and start a simple 401k. Well that's not possible, nor plausible, but it got me to thinking...

If he were to start a separate entity, with just he and his spouse, and that new entity had a 401(k) plan. He could receive comp from both entities...defer into new one and receive a profit sharing contribution from the old. So long as the matching (if any) contribution were the same, the level of benefits would be as if it were a single plan....However, he wouldn't be limited by the ADP test issues that he is now. Am I missing something here?

One of our employees enrolled in our Health Care FSA has filed a claim for a home drug testing kit for marijuana. This is a first for us. Does anyone know if this is a reimbursable expense? Its not technically needed to treat an illness or injury unless your consider it for diagnosis similar to a pregnancy test kit.

Are there any auditors out there?

We are looking for some help for the following note disclosure and would very much appreciate your opinion(s).

The second paragraph of the AICPA’s sample note disclosure for Investment Contract with Insurance Company reads as follows:

There are no reserves against contract value for credit risk of the contract issuer or otherwise. The average yield and crediting interest rates were approximately 8 percent for 20X1 and 20X0. The crediting interest rate is based on a formula agreed upon with the issuer, but may not be less than 4 percent. Such interest rates are reviewed on a quarterly basis for resetting.

What source documents should we use to obtain these figures? We have inquired of our client’s third party administrator and they were not familiar with the terminology and consequently, did not know where to get the rates or the source of the formula.

Thank you for your help.

Hello. I am trying to rollover my pension trust from the Southeastern Carpenters and Millwrights Pension into a Traditional Ira. I no longer work for the union and my pension will not make any more money but the potential to lose it all is very possible. According to the plan summary it is allowed if 100% vested which I am, but when I called to get the process started I was informed that it will not be done and when I asked why the answer was "because we don't do that".

Can anyone give me some advice on what my nextstep would be. I am running into brick walls laeft and right and I am stumped on the next step. Please help. I would greatly be in your debt

Thanks for your time, caclancy

I have a nonqualified retirement plan that does not meet the top hat exemption. Plan contributions are made to a secular trust and participants have the authority to direct investments. Since we are subject to Part 4 of title 1 of ERISA, we should make efforts to comply with 404© to avoid liability. Even though everything is telling me that we should comply with 404©, it seems very odd to me that we need to worry about 404© when the amounts are held in each employee's secular trust. Any comments?

I know the proposed regs did not cover everything we need to know but can they be relied upon since these plans can be effective Jan 1, 2006?

Who is permitted to make investment elections when one 401(k) plan is being merged into another existing 401(k) plan?

The prestigious New England Journal of Medicine (NEJM) weighs in on the issue of Health Savings Accounts (HSAs).

From an article in the NEJM, by Dr. James C. Robinson, Ph.D., a professor of health economics and chair of the Division of Health Policy and Management at the University of California, Berkeley, School of Public Health:

"...the HSA represents a milestone in the ongoing debate about health care reform."

"... Today, the most visible embodiment of this goal in the health care sector is the health savings account (HSA), which reflects a philosophical shift in emphasis ...

NEJM_Article.pdf

A portion of Company A's plan is spun off into a new plan for a new Company B. Company B then restates its plan on a new document by a new provider. It makes sense that the beneficiary designations from Company A's plan would continue over to Company B's plan and would continue through the restatement, but I cannot find legal authority for that argument. Is the beneficiary designation a protected benefit? How do I get a designation to stick for assets that were transferred over from Company A's plan as well as assets accruing under Company B's plan?

When did the FICA witholding regs go into place on ER contributions for 403(b) plans. Was this in the 1/1/06 regs?

A business owner has five employees and wishes to adopt a Safe Harbor 401(k). They will do the basic matching to satisfy the Safe Harbor requirements . In addition to the basic match they will match up to 6% of compensation(anything above the basic match will be discretionary) . Will this satisfy the ACP testing?

We have taken over administration of a 401(k) plan that allows for participant loans. The prior TPA told the plan sponsor, and a participant with an oustanding loan, that payments should come out of the participant paycheck on a Pre-tax basis. The plan sponsor had taken a number of payments out of the ee's paycheck on a pre-tax basis. Oops!

I am having a hard time convincing the participant that the payments should be after tax. I can't find a cite in the code/regs that specifically says "repayments should be made on a post-tax basis". I read through the loan regs and, although they talk about creating basis when you are repaying a loan after it has been deemed, the participant doesn't understand. He needs something clear and preferably official.

My latest response to him was "Have the prior TPA give you a cite that allows for loan repayments to be made pre-tax". I would like to provide something more concrete. Does anyone know how to win this argument before the participant, and possibly the plan sponsor, spend money on an attorney (not that I have anything against attorneys!) ? Any cites or articles???

We are looking at a takeover plan401(k) plan.

It has a match formula that is tied to the medical insurance program. The document simply says the match is discretionary (no details).

Here are the facts- small business owner is short on cash for all benefits. He decides to match the deferrals based on how much he pays for the employees' insurance premiums. If the participant's monthly premium is less than $100 per month, he matches $1 to $ up to 8% of comp. If the premium is over $100 per month, he matches $1 to $1 up to 5% of comp.

Is there a problem with this? There are no highlys in the plan.

Do the document need to spell the formula out?

Appreciate any help here.

Pat

In the situation where the alternate payee is also an active participant in the plan, can the alternate payee rollover the portion of their account attributed to the QDRO?

Dr. is a 12 1/2% owner of a medical group corporation that has a 4/30/05 year end. Corp has a 401(k) Safe harbor plan with a 3% contribution, year end employment is required for match and profit sharing. Dr. received a full contribution for the 4/30/05 year and continued to defer through 8/31/05 when he terminated to accept a position (under and independent contractor agreement) with a local hospital.

He wants to start up a defined benefit plan for his new sole proprietorship. For 1/1/05 through 8/31/05 he has deferred about $13,000 and will receive a safe harbor contribution. There will be no employees in the sole proprietorship.

For the 2005 year, what effect will the (1) deferrals have on the db plan and (2) the corporate contributions have on the sole proprietorship db plan?