Is a 5500 filing required for a prepaid legal services plan (assuming the benefit is not incorporated in another ERISA-covered plan)?

We are trying to increase our organ transplant lifetime maximum amount, however, the increase will not apply to participants who have been advised to have or are in the process of having a transplant. Those individuals will remain at the lower lifetime maximum. (We do have particpants who fall into this catagory.) It seems to me that this would be a violation of HIPAA, however I cannot pinpoint a specific prohibitation in HIPAA to support this. Can anyone help me? Would this violate HIPAA's PCE or nondiscrimination provisions?

We have a client, presently a citizen of Venezuela. He has applied for

U.S./Puerto Rico citizenship, and is waiting and working on that process.

He resides in Puerto Rico (over 2 years), and is treated as a Puerto Rico

resident for tax purposes. He is the sole owner of an LLC (disregarded

entity, he files Sch C) that is a member of a Fl LLC, located in florida. He

does work for business in its Puerto Rico office. The LLC is profitable,

and he draws a salary from the LLC as well. Thus, I believe he is paying

Puerto Rico taxes on his salary, and U.S. taxes on his share of the LLC

profits.

I would like to transfer my Roth IRA ($10K) into an offshore retirement savings account in the UK (Isle of Man). Is this possible? If so, are there penalties?

PLR 200430013 takes the position that federal credit unions are instrumentalities of the US government, and that their deferred compensation programs are accordingly not regulated by IRC 457.

IRS takes the position in the PLR that it will not take a position on applicable law. (It is apparently troubled by the "loophole.")

So, what's going on, and what do you do if you represent a federal credit union ? The last item on the list of employee benefit projects for IRS "priority guidance" is "guidance under Code Sec. 457(b) and Code Sec. 501©(1) on plans established by federal credit unions."

Unless legislation is enacted, it seems pretty clear (to me, at least) that 457 does not apply to federal credit unions and that 409A (issued after the PLR) probably does, although I suspect that Congress probably did not intend 409A to apply to federal instrumentalities, so even that is iffy.

Is it possible that federal credit unions simply need to operate deferred compensation plans according to pre-409A and pre-457 law?

George Chimento

I know this is a dead horse but can someone give me guidance on when elective deferrals need to be deposited after they have been witheld. I'm confused considering the 15th of the following month guidance and more recent things saying if you are audited it's a 7 day time period to be considered administratively feasable.

If a "safe harbor" profit sharing plan provides that a lump sum is the normal form of benefit, but also provides that a joint and survivor annuity is an optional form of benefit, are the spousal consent rules in effect? Or is spousal consent only required when the normal form of distribution is an annuity?

Thanks!

We all need to get together and come up with somehting like a "Darwin" or "Stella" award for the worst proposed pension law in House or Senate. Got to thinking we should award those folks like Tom Harkin (who truly needs a hobby).

Senator Harkin proposed S.607. This bill provides that in the event of a sale of a corporation or division, liquidation, merger, consolidation, or other similar transaction, an employee who continues employment in the same trade or business with the employer that acquires the trade or business and who participated in a pension before such transaction must, solely for the purpose of determining eligibility for any subsidized early retirement benefit provided by such plan, receive credit for any periods of service with the successor employer that would have been taken into account had such transaction no occurred. This provision would apply only if the successor employer did not continue to maintain the plan in which the employee participated before such transaction.

This one is giving me hives. Can just see my department 10 or 15 years from now trying to verify that someone continued working in a Plant we sold years ago. Of course we all know facilities never change hands, and all HR folks have employee files going back to when Noah built the Arc, and of course those folks the facility we sold to will drop everything to provide us with the proper data. And lest not forget, the verification and data will have suffer the scritiny of the new SOX requirements, the internal auditors, the external auditors and of course me the department head.

Did I mention, most of our plants are in rural non unionized locations. Can just imagine plant mgr and HR person "verifing" that 99% of the county continued to work at the plant after it was sold to new owner. Then every one gets to draw pension early and subsidized.

AndyH please feel free to join me in my vent. Guess the new SSA regs weren't enough for me today.

A plan was recently referred to us that combines a 401(k) and an ESOP under the same plan document.

The 401(k) is participant directed and employer securities are an investment option. And, of course, there are the employer securities that are in the plan due to the ESOP.

Are there special rules or pitfalls that I should be aware of relating to the employer securities since the two plans are combined?

The employer would like to eliminate any distinction between the 401(k) employer securities and the ESOP employer securities. He would prefer to treat them all as ESOP shares. Is that do-able? Recommended?

Your thoughts would be greatly appreciated.

My multi-employer client consists of numerous small employers, a few of which have had their accrual rates changed in 2004. The funding method is immediate gain, and the base for this amendment is less than 0.1% of liabilities.

Must I amortize a de minimis base for 30 years as a plan amendment? Or is it okay that I 'lump' it with the gain/loss of the plan and amortize it for 15 years? Any citations will be appreciated if it is okay to lump it with my gain/loss base.

Thanks.

I am looking for an easy to use source of quotes by highly-rated insurers. Anyone have suggestions for an easy way to get several quotes - short of spending a half an hour on the phone with 3 vendors? Thanks for all help!

Company 'A' was purchased by Company 'B'. Company 'B' does not have a pension plan. Of the 90 members in Company 'A' 88 will now work for 'B'. The 2 remaining will be the owners from 'A'. They will leave the plan an roll into an IRA.

'B' would like the transition to be invisible in that they like the vendor where the plan currently presides and hopefully the TPA.

1.) Does the TPA terminate and file a final 5500 for A?

2.) Does the vendor need to open a new contract or can the new 'B' assume the the 'A' contract?

3.) Are all the employees considered 100% vested?

These 88 people will be doing the same job. If a new contract is needed does the money type of EEDEF and Matching get recharacterized as ROLLOVER with the new plan.

Any advice or points of interest would be greatly appreciated.

I am trying to determine if my client has to file a 5500. They have a Premium only Section 125 Plan. They have >100 employees eligible to participate in the health insurance coverage but less than 100 actually take advantage of the coverage.

I think this means that they have an unfunded welfare plan because the employee money via the Section 125 plan is treated as employer money.

My question is what is the definition of participant? Is it the eligible employees or the ones who actually elect coverage?

Concerning Catch Up Contributions. I have two HC's (one owner and one not) both over the age of 50. The owner would like to defer the maximum percentage allowed for the HC group even if it means the 2nd HC can defer nothing. If the 2nd HC defers nothing is he allowed to do the catchup of $4000.

I contend that the HC deferring nothing has not met any limit.

Your opinions please

My client gives their employees $350 each month to "shop" for benefits under the Section 125 Plan. A participant elected to use her money for health benefits for her family. Effective May 1st she will be covered under her spouses insurance, so she will drop her coverage through her employer. Now there is the employer money left, can she put that money towards the Medical FSA even though she did not elect that account at the beginning of the year, or does the employer money go unused?

I broker of mine had a client contribute to a Roth IRA for 2004. It has been determined that they are over the AGI allowed limits. 1) what penalties may be associated?, 2) What should next steps be to reverse this contribution?

Any help would be greatly appreciated.

RR

Are you aware of any limitation that when you have a multiple employer 401(k) plan - that would preclude one of the employer's from electing safe harbor status [when the others do not] .

President Bush says that if we don't fix social security, there will be 30% cuts in benefits because the fund is inadequate. Yet, under the Bush proposal, the cuts will be approximately 27% for the middle class and all but the very poor. The wealthy already are capped, so they probably would not be affected. So, perhaps my background as a math teacher, a CFP certificant and tax lawyer is inadequate....could someone explain why this is a FIX?

I don't follow the logic.

Thanks!

Theresa Lynn

Single Employer sponsors 2 plans, a 401(k) and an ESOP. Each has distributions with withholdings for the 2004 Plan Year.

1) When preparing 1096's for the 1099's should one or two 1096's be prepared (ie., one for the taxpayer/employer as a whole, or one for each Plan).

2) Same question for the 945.

3) So in summary is all of this reporting (1099, 1096, 945) performed at the Plan Level or the employer level?

Any thoughts are greatly appreciated.

Taking over a DB case with term insurance. Plan had no contribution as developed under prior actuary, so plan has been paying insurance premiums from trust. Since the valuation was performed @ EOY, with EOY asset value reflecting payment of these premiums during the year, I think it would be consistent to modify the EOY asset value by adding back the amount of premiums paid during the year for the year in question.