Here's the arrangement contemplated: The employer will provide and pay for 75% of premiums for a high deductible medical insurance policy for all employees except the highly compensated and 5% shareholders, who will not be included in the HRA. The employer will also pay for a portion of deductible expenses for those covered employees by paying the provider directly for covered expenses up to a specified dollar amount.

Since the highly compensated and 5% shareholders aren't covered by the HRA, the employer wants to pay 100% of their premiums.

Does this violate any nondiscrimination rules or ERISA?

A money purchase plan has QJ&S and QPSA requirements. If the participant dies, can the surviving spouse make an election to receive payments in another form? Everything I've read so far relates to an election by the participant with spousal consent. Would like to give the survivng spouse the option of taking a lump sum option.

If possible, please provide cites.

Thanks.

Employer has 2 plans; a profit sharing plan and a separate 401(k) plan. The plans are aggregated for testing.

There are more than 100 participants in the 401(k) plan but fewer than 100 participants in the profit sharing plan.

We know the 401(k) plan must include an audit with the 5500. Because the plans are aggregated for testing, does the profit sharing plan also require an audit?

Thank you.

Is it permissible to pay out the employee contribution portion of a pension benefit first?

We have a plan that brought several employers together. Two of the employers had plans where employees contributed after-tax. All of these different plans were "rolled-up" into the current plan. We have continued to account for all of the employee contributions but when an employee leaves we would like to pay that amount first if possible. We have situations where employees terminate and rehire all the time and the administration can get very cumbersome.

Further clarification-

We are looking to pay the employee contributions out first, when distribution is sought by employee according to plan document provisions.

So, employee requests distribution, employee contributions are first ones out the door.

Any guidance on this issue would be greatly appreciated.

Thanks,

Fred

A plan has its first plan year-end on 8/31/04. Therefore, the minimum funding is due 8 1/2 months after that date.

Their corp tax return is due 5/16/05 since 5/15 is a Sunday.

They make their contribution on 5/16/05.

Is this a funding deficiency requiring a 10% excise tax?

My recollection is yes, but perhaps there is an exception someone knows of.

How does one prepare the Sch B in this case?

I know that in 2000, the IRS changed their ruling to allow employers to treat the election of a spouse during open enrollment as a qualified status change (for open enrollments conducted at a different time of year).

Can we allow spouses to drop our coverage if they joined their company's group health plan during their open enrollment, however not allow them to add their spouse for the same reason? We would, of course, be changing our plan document accordingly.

Thanks.

I am not at all familiar with government plans but a Fire Chief asked if I could help...so, here's the question....is there an online calculator or program available for employees to use that would give them an idea of what it would cost them to buy back service credit? I'm not even sure I know what this means but I got the impression from him talking to me that if a Department restructure is done, it will affect their existing pension. To enable the employees to get a better retirement benefit, they'd be able to buy back service. Because the State that manages this existing plan is very backed up, etc. he asked if I knew of a program that would give a general idea if employees entered data in using a certain interest rate, etc.

So - if anyone understands my question and, secondly, knows if there is some online calculator available for this, I'd appreciate a reply. Thank you.

What is it?

Is this a Controlled Group?

Joe Smith owns 100% of company A.

Company A owns 75% of Company B

Joe Smiths kid age 23 owns 10% of Company B

Joe Smiths brother owns 15% of Company B.

We have been using Relius for about 10 years, and are considering a change. The bottom line is that it's more than we need.

We are a CPA firm, and plan administration is a "boutique" service for some of our clients who want to keep everything under one roof. Our client base is relatively small and likely to stay that way. We work with defined contribution plans only and generally provide balance-forward administration and/or compliance services.

I would like suggestions regarding software packages that we should evaluate.

Thanks!

I'm working on a plan that has been underfunded and frozen since late 70s. It contains no substantial owners, no key employees, no HCEs. Just a few long service employees. It is < 100 participants, so the AFC's don't apply.

The funding ratio is around 50%, although they have never missed a required contribution. We have been using unit credit method w/ relatively conservative assumptions (6%), but due to a large credit balance, there hasn't been a required contribution for years. Since it they aren't required, the employer isn't putting anything in and the funding levels continue to drop each time someone is paid out. (It does pay lump sums.)

All of the remaining participants are now approaching retirement age, but the plan doesn't contain enough money to pay them all.

Is there anything that would force the employer to make a contribution before the credit balance is used up? What if it runs out of money? Is there a Reg that would force them to make a contribution to cover the benefit? Plan document doesn't really address it. The employer is solvent, although they aren't rolling in cash.

Does anyone have an SPD for an HSA? The only one I have seen is for a combination PPO/HSA, but I'm supposed to come up with and HSA only.

Assuming that there is a 409A violation and that the additional 20% income tax is imposed, would this additional income tax be witheld by payroll, or would it need to be paid/resolved by the employee when they file their tax return? I was unable to locate any guidance that addresses this issue. Thanks.

If an individual files his return on a fiscal year- say June to May, does he have until September 15 to make his 2004 IRA contribution?

Thanks in advance

(Also posted on the IRA section- )

If an individual files his return on a fiscal year- say June to May, does he have until September 15 to make his 2004 IRA contribution?

Thanks in advance

A plan passes ADP/ACP by making safe harbor matching contributions on a payroll basis (providing all appropriate notices).

The plan provides that employees are eligible to make unmatched contributions on their date of hire and become eligible for their safe harbor match on the entry date following 1 YOS (and age 21). Until the IRS announced its new interpretation of the rule of parity for 401(k) plans, the plan had applied the rule of parity for rehired participants who had not been vested in their non-401(k) benefits.

Based on the prior interpretation, a rehired participant who had been unvested in non-401(k) benefits had been treated as a new hire and was offered the opportunity to defer on an unmatched basis on his date of rehire (and elected 0% deferral). The plan now wants to "correct" for the "improper" exclusion for people rehired after 12/31/2004.

Rev Proc 2003-44 would imply that the rehired employee must be given a contribution equal to the ADP + ACP for their class. Since the plan is a safe harbor, it does not run the ADP / ACP test.

Are the options for correction methodology:

(1) perform the ADP and ACP tests and then credit the employee with both a deferral and match (plus earnings) based on the results;

(2) provide the match only (since he had not been excluded from making deferrals):

2a) calculate the match based on the ACP test results;

2b) calculate the match based on the deferral elected at rehire by the participant (noting that the employee may have elected a different level upon becoming match eligible) but only with IRS blessing through VCP;

(3) some other option

Any suggestions are welcome.

can an employer exclude employees from plan based on duration of service. for example the employer wants to allow only lawyers with the firm for 5 years to participate in the plan. the eligibility will not be 5 years. just for this class they cant participate unless they have a certain seniority.

i am trying to determine a method to value a serp benefit subject to a floor. this is a plan under 457f such that a minimum benefit will be paid each month to the retiree. however, the benefit is subject to upwartd adjustment depending upon the investment performance of the investment media. the benfit is reset at the beginning of each year following retirement. we are trying to determine how much to plan for in terms of income tax liability at time of vesting.

Are employee deferrals and/or vested employer contributions made to a 457(f) plan subject to FICA withholding at the time made (prior to a non-forfeitable right)? I thought not, since the money does not belong to the employee. However, my boss said that the money is subject to FICA as made and as it vests (for employer contributions).

Also, where can I get some basic information for 457(f) plans? I seem to be able to get all the information I ever wanted on eligible 457(b) plans, but I can't seem to find guidance on non-qualified arrangements.

Thanks!

Is it possible to apply the statutory exclusion rules to participant counts? (participants with less than 1 year of service, age 21)