A participant terminated in Ocotober 2004 and received a distribution in 2004. It was just discovered that her last deferral had not been remitted to the plan. When this was communicated to the plan sponsor, he issued a check to her rollover IRA instead of depositing it into the trust.

Can this be construed as a 2004 contribution and a 2005 distribution?

A client wants to amend their Eligibility Service Requirement from 3 months to 12 months while still keeping quarterly Plan Entry Dates. The next Plan Entry Date is April 1, 2005. Am I correct in assuming the Amendment must be effective and Resolutions executed no later than March 31, 2005? Thanx.

Would coverage of family planning services (oral contraceptives, IUD, Norplant) fall under the preventive care safe harbor for HDHPs? Notice 2004-50 Q&A 27 states that "drugs or medications are preventive care when taken by a person who has developed risk factors for a disease that has not yet manifested itself or not yet become clinically apparent (i.e., asymptomatic), or to prevent the reoccurrence of a disease from which a person has recovered." Also, Notice 2004-23 allows obstetric and gynocologic screenings as preventive care, but makes no mention of preventing pregnancy. My thought is that these drugs and devices would not fall under the preventive care safe harbor and must be subject to the plan deductible. Any thoughts?

Is the cash out of 2 weeks leave for a terminated employee the same as crediting them an additional two weeks service for vesting purposes.

If an employee receives cash for unused vacation is this "COMPENSATION" for purposes of 415©(3)? The regulations 1.415-2(d)(2) - states for "services ACTUALLY RENDERED" does this assume that if you worked to accrue the vacation that your employment was in fact the "service" that was rendered?

Part time employee hits NRA but does not accrue because hours are below 1000 needed and average comp does not increase. Plan proides that late retirement calculation is greater of formula benefit or actuarial equivalent of prior year's accrued benefit.

The participant's accrued benefit increases on account of the actuarial increase for late retirement. Is this benefitting under 410(b)? Reg 1.410(b)-(3) does not seem to have anything that says no, but logically one might think the answer should be no. Opinions?

Plan has first of plan year and 7th month entry dates. Participant completed 1 yos after 7/1 but was allowed to make deferrals for the remaining part of the year. The document says to distribute the deferrals, plus earnings, back to the participant. Question is how is this treated for tax purposes? Should they receive a 1099 for this amount? When do they include this in income? It's not a rollover eligible distribution, so should it just be done in the same manner as an excess deferral?

This is my first post on these boards! Thank you for the wealth of information.

Here's a thought I wanted to run by my fellow benefit professionals:

I have clients who want an HDHP and HSA for their companies, but they renew mid-year and don't like the limited HSA contributions for the partial calendar year.

For instance, an employer renews 7/1/05 and wants to fully fund the employee deductible in an HSA and doesn't like the risk presented to the employees because he can only fund 50% of the deductible or 50% of the maximum HSA contribution limit.

Can we implement an FSA where the employer will fully fund the amount of the deductible (NOT implementing a company sponsored HSA for the employees) through the end of 2005? Then, the employer will end the FSA 12/31/05 and open HSA's 1/1/06 to be fully funded for 2006?

Basically, I want to start an FSA with a short plan year and then end it to start the HSA. The goal is to have the employer start the HSA concept by lowering premiums and funding employee's deductibles for 2005 and then funding the HSA's for 2006 and onward.

Do any of you forsee any problems in doing this?

Thanks,

Josh in Alaska

How should we go about correcting a situation where there was a double-transmission of an employee deferral file when the error is not found until months later? The money was never actually deferred by a participant, but was posted to the participants account? If we do not use a "negative contribution", would it be acceptable to use an excess contribution transaction? Would it be okay that a trust statement shows more deferral contributions than those that were actually deferred by participants as long as there was a part of the trust statement that showed "corrective contributions" under the appropriate heading?

Participant exceeds 2004 415 limit for DC plans by $2,000. They are catch-up eligible and have the entire excess recharacterized as a catchup contribution. Their compensation is $205,000 and deferrals, prior to catchup, is $13,000.

Employer does not match on catch-up contributions and their formula is 75% up to first 6%.

Question: The match allocated to this participant was $9,225. Since the employer does not match catch-up contributions, is the attributable match on the recharacterized catchup contributions "forfeited" pursuant to correction under 401(a)(4)? If so, are they included/excluded from acp testing?

Is there a deadline for submitting a Volume Submitter plan using form 5307?

The plan in question was adopted in 2004 with a 1/1/04 effective date. This is a volume submitter defined benefit plan that is being aggregated with a DC plan for 401(a)(4) testing. The filing will include Sch. Q with Demo 6. Thanks

Is there any situation in which a non-governmental 501©(3) would sponsor a 403(b) that includes employer contributions and the plan would not be subject to ERISA?

This has probably been suggested before, but here goes.

After reading some posts in various forums, I'd like to propose Today, February 23, as a "Blanket Amnesty Day."

This means that as of today, everyone starts with a clean slate. All prior posts, indiscretions, rude or obnoxious statements, grievances, whether real OR imagined, will hereby be forgotten, forgiven, and everyone will start with a clean slate, and do their darndest to stay civil from this day forward.

I know it would make these boards more pleasant from my viewpoint. I've learned a whole lot from the discussions that take place here, and I'd like to think that we could move forward on a purely professional level without the sniping that sometimes takes place.

If this sounds too sanctimonious, I apologize - it isn't meant to be - just my humble suggestion for more positive and professional discourse. So I'm going to start today - as of right now, everyone posting on these boards is perfect, and I hope others feel the same way - if not, then as always, feel free to ignore my suggestion!

An informative article regarding HSAs and employees of the State of Florida.

Florida HSA - Article Link

Since the HSA allows tax-deferred investing, much like a 401k, but has the added benefit of being used to cover retiree medical costs, if an employee could only fund one vehicle, wouldn't it make sense for them to fund the HSA?

When calculating the "benefit compensation" for self employed or partnerships with employees, at the start, do the employees' salary deferrals get subtracted from the self employed or partner's net income along with the employer contribution to the employees??? Any help is appreciated. Thanks.

We have several HIPAA and non-HIPAA welfare benefit policies and want to wrap them into one ERISA compliant plan document to satisfy the law and avoid multiple 5500 filings. Do you think that HIPAA is enough reason to maintain two wrap docuents going forward?

Also, of course some 5500s "cant be located" (weren't filed) for several of the past years. Assuming that the policies going back several years don't satisfy ERISA, is there any beneift to creating a wrap document now that has a retroactive effective date? Does anyone think that this would give us sufficient basis for filing a single 5500 under DFVC for several of the past years?

Will the IRS let us fix a problem with the HCE Top-Paid Group Election Consistency Rule by plan amendment?

I know it is pretty obscure, but here goes:

Employer sponsors two 401(k) plans for different groups. Demographically, they need to make the top-paid group election to pass testing. The plan that wiould pass without the election has specifically incorporated the election in the document. The plan that needs the election does not mention the top-paid group election. We understand that all plans of the employer need to make the election and we want to amend the non-electing document to correct the problem, but can't get our hands around what the IRS would do with a VCP filing requesting apporval of a retroactive amendment. The problem goes back to the GUST restatement.

Do we file anonymously requesting plan amendment adding the election, hide out and bury the problem in the EGTRRA round of changes, or something in between?

Please excuse the cross-board posting, I wasn't sure which board was most relevant.

I'm hoping someone may be able to guide me to the correct answer.

I contribute to a University sponsored 401(a). These are mandatory contributions in the amount of 7.5% of my gross with 6% employer contribution.

I also participate in an optional 403(b) plan via the University.

Now, I've opened up a self-employed 401(k) for my consulting business.

I've received conflicting responses on the max I can contribute to the SE 401(K).

Answer 1: 14,000 - my 403b contribution - my 401a contribution

Answer 2: 14,000 - my 403b contribtion

Can anyone help clarify this matter or point me to the relevant sections of the IRS code?

Thanks

Hello. I'm hoping someone may be able to guide me to the correct answer.

I contribute to a University sponsored 401(a). These are mandatory contributions in the amount of 7.5% of my gross with 6% employer contribution.

I also participate in an optional 403(b) plan via the University.

Now, I've opened up a self-employed 401(k) for my consulting business.

I've received conflicting responses on the max I can contribute to the SE 401(K).

Answer 1: 14,000 - my 403b contribution - my 401a contribution

Answer 2: 14,000 - my 403b contribtion

Can anyone help clarify this matter or point me to the relevant sections of the IRS code?

Thanks