If an employer participates in a Multiple Employer Plan with a PEO and withdraws from the multiple employer plan, is this considered a plan termination to the employer withdrawing participation?

Also, if the employer that withdraws sets up a new plan that they alone sponsor, do the succesor plan rules apply in this situation or is this considered a new plan?

We have a takeover that was originally a profit sharing plan. The prior plan administrator was in the process of converting to a Safe Harbor 401(k). Safe Harbor notices were provided to employees just 2 weeks ago. All eligible employees signed Safe Harbor notices. The employer now has cold feet and wishes to not go forward with the Safe Harbor 401(k). Can they withdraw the safe harbor aspect of the plan and just remain as a PSP?

Thanks much.

Anyone have any comments about IRS Notice 2005-42? Isn't this important news? Doesn't it help FSAs quite a bit in comparison to HRAs and HSAs?

Hello -- we have a health plan that currently does not impose a lifetime maximum. We want to start imposing a lifetime maximum. I know that we will avoid any nondiscrimination issues if we make the effective date the first day of the first plan year after the amendment is adopted. But can we then include expenses in prior years to determine when the participant hits the lifetime maximum? Or do we have to start everyone at $0 next plan year for determining when the lifetime maximum is hit?

Thanks.

Under a bona fide wellness program, an employer provides a group health plan premium discount to employees for either not smoking or, as a reasonable alternative, attending a smoking cessation program. If an employee reports that they are a non-smoker and then subsequently begins smoking, lets say that the plan provides that the discount can be removed prospectively. Alternatively, lets say that someone begins the plan year as a smoker, but subsequently participates in the smoking cessation program and the plan provides that the discount will apply prospectively for that person. Also assume that the cafeteria plan used to pay premiums provides for automatic cost changes to elections under the cafeteria plan. Would this kind of increase or decrease in the premiums be considered to fall within the automatic cost changes as contemplated by the regulations. It seems that it could apply and I have not seen any authority to the contrary. Does anyone have any thoughts on this?

If an employer sponsoring a group health plan sets up a non-smoker premium discount under the proposed HIPAA regs on BFWPs, the employer must also provide a "reasonable alternative standard" for those participants who cannot stop smoking due to an addiction to nicotine. This requirement is can presumably be met by the employer allowing such participants to complete a smoking cessation program as an alternative way of qualifying for the discount. The regulations themselves do not explicitly require that the employer provide such a reaonable alternative at the employer's expense, indeed it seems as though the language only requires that the employer provide the standard. However, the preambles, to the proposed regulations imply that the employer will incur the expense for the reasonable alternatives. The EBSA FAQs on BFWPs do not suggest that the employer must bear the cost of the alternatives, but only that the employer must provide the standard. I have seen others on this message board suggest that they have utilized a "modest subsidy" for employee participation in a smoking cessation program. What does everyone think? Must the employer pay for the smoking cessation course? If it is inexpensive for participants, does that make it a reasonable alternative?

On a side note, if someone declares themselves a non-smoker at open enrollment and then takes up smoking during the year, and the employer's program requires that the employee loses the discount, does that premium cost increase trigger, assuming the plan terms provide for it, the ability to make a corresponding change in the participants 125 election under the cafeteria plan regulations? what do you think?

Employee takes a hardship dist in 9/04 to purchase primary residence. ER does not suspend deferrals. I believe that you are to distribute the deferrals plus interest back to the employee.

1. How do you code the 1099-R?

2. Do you have to reduce deferrals?

I will add a third question. Told client that they may have to return money to ee. Client doesn't want to return money to ee. Suggestions?

Thanks

The IRS EZ Instructions say to file a final form upon termination/distribution of assets, even if a 5500 has never been required for a plan during its lifetime... Does anyone know the reasoning behind this, and if anyone is actually doing it??

I'm shopping for a good COBRA/FSA administrator who can handle a company in start-up mode (200 employees w/5-10 hires/week). Any suggestions for a) good nationwide vendors and b) local (greater Boston) vendors. Our systems are non-existent and we use ADP as our payroll vendor.

Thanks!

Company is considering Freezing and or Terminating its DB plan. If the Co. Freezes the plan, can the DB be merged into a new DC Plan?

Second, if the Co. Terminates the DB Plan, can it force the assets to be rolled over to a new DC Plan? In other words mandatory rollover to the DC plan. Not being able to take the money and spend it?

Thanks

As many of you know, if employers meet basic safe harbor requirements, HSAs are not considered an employee welfare benefit plan even when employers contribute to the accounts. The HSA is not part of the health plan. Rather the HSA is a freestanding, individual financial trust that is used to fund health plan expenses.

The insurers' involvement in making sure the insured pays the "approved" amount from his HSA slows down the convenience of payment at the time of service.

Is this insurer involvement one that is customarily done, rather than legally mandated? Is this insurer "control" codified in any state or federal law?

Because the HSA does not need to be under the auspices of the insurer, maybe some of this insurer involvement in covered expenses under the deductible is unwarranted. What do you think?

Don Levit

Do Local Government Agencies need to file a form 5500 for their pension plans?

The only deferrals not deposited were those of the HCE. Anyone know if DOL looks "more favorably" on this type of late deferral than one where all deferrals are not deposited timely?

May a sole proprietor who no longer operates his business, but intends to receive self employment income from consulting, continue to contribute to his SEP-IRA that was established in connection with former business?

I have a plan failing coverage. The adoption agreement does provide for Discretionary Non-Elective and does not provide for a Discretionary QNEC (only a QNEC to pass adp/acp testing). If I want to make a QNEC, as an employer contribution to increase the total benefit to pass the average benefits test, can you make the QNEC even though the document does not allow for a QNEC? Also, if I wanted to make a profit sharing contribution istead of a QNEC to assist the average benefit test, can I do a retroactive amendment to add a profit sharing option to the plan or does the option already have to exist in the plan and I can only do a retroactive amendment (permissible for a demographic failure within 9 1/2 months after plan year end) to INCREASE the profit sharing to get the AVB to pass?

This question is skirted around in a few older threads. Thanks in advance for any opinions.

A new LLC w/ 4 partners is looking at adopting an SEP. Longest service w/ company is one year (prior plus current year), shortest is zero (current year only). Is there any mechanism (such as a prototype plan?) than can effectively establish different eligility requirements for current versus future employees? The intent would be for any and all employees on date of adoption to be immediately eligible but going forward require 2 or 3 years of service.

If no mechanism to accomplish this, what is legal exposure if adopt SEP w/ zero service requirement this year and change to one year on next January 1st (assume no employees other than partners until after January 1st)?

Does your Welfare Plan provide Domestic Partner Benefits? What is your eligible population count and industry?

Is a change in status from union to non-union a qualifying event, if both employee groups are covered by the same cafeteria plan with the same eligiblity requirements? The non-union group has one additional health plan option, but employee would not lose the plan in which currently enrolled as a union employee. The employee contribution is not signficantly different.

A public employer allows employees with accrued sick leave to

donate up to 3 days per year to a "sick leave bank." The bank is

used to help fellow employees who may have run out of paid

leave and are facing a serious or lengthy health problem.

A question arose concerning the effect of the HIPAA privacy

regulations. In order to apply for leave, the person must submit

a letter from a physician explaining (in general terms) the health

condition and likely duration of incapacity. The letter is sent to

an employee committee that administers the bank. This has some

concerned about the potential ramifications under HIPAA.

My view is that the committee need not be concerned since

they are not a "covered entity" as defined by the law. (Health

Plan; Health Clearinghouse; Provider) While

they certainly want to use common sense, I do not believe

HIPAA applies to this type of arrangement. Additionally, the

bank is wholly voluntary and no employee is compelled to

use the bank or turn over PHI to the committee.

Thoughts???

Is an accountant's opinion required for an ESOP that must file Form 11-K and is not getting its financial statements audited for 5500 purposes because it has a short plan year of seven or fewer months? It's the initial plan year.