Does the Puerto Rico Code permit the enforcement of QDROs against accounts in Puerto Rico qualified plans? The Puerto Rico Code prohibits the diversion of assets from the trust for purposes other than the exclusive benefit of participants, but also requires that plans comply with the provisions of ERISA, which permits QDROs.

I did search and didn't see any posts re: if that is based on the number of ee's of the er in the aggregate or based on the number in each plan(2 plans same yr end)?

plan 1 has 20 ee's

plan 2 has 10 ee's

plan 1 has 5 owners comp >200k(no other ee's >85k)

plan 2 no owners --3 ee's $185-$190 in comp

would ther be 1 or 2 hce's in plan 2

Often times temp agencies will provide an employee on a temp-to-hire basis. The idea is, see if you like the employee, if you do, go ahead and hire them.

The question is, what is the date of hire and when do you start tracking eligibility? Vesting Service? Is it the day the payroll transfer? Or the date the employee first performs an hour service?

Any references to court cases or official documents would be great, although I'm curious to know what everyone's thoughts are.

Are after tax dollars allowed in a SIMPLE IRA?

Company has an ERISA 403b that is administered by NY Life. NY Life enters annuity contracts with individuals and administered all aspects of the plan, approves loans, etc. However, Company handles funds to the extent they pass from participant compensation to NY Life.

Company is concerned about fiduciary liability and bonding. How much success have people had with getting indemnification provisions in contracts with insurers for fiduciary liability and are they enforceable to help absolve company liability?For example, indemnification of Company in loan contracts between participant and insurer?

Any other thoughts?

With the Safe Harbor election why is there a 3 month requirement for having the plan in place? The HCE’s who establishes a plan may benefit during the initial plan year by allowing them to with hold the maximum allowable amount. However the alternative is often employers electing a traditional plan with no matching benefit,, therefore, limiting the total benefit of all employees. The overall logic seems counterintuitive since a safe harbor plans still requires a mandatory contribution on behalf of the employee.

I am not asking anyone to agree with me or make a statement regarding the truth or untruth of my question. I however need opinions and possible direction.

My wife and I are seeing a marriage counselor. We've had individual sessions and joint sessions.

During one of the joint sessions the counselor actually got annoyed with me. I actually was asking some questions and he didn't like it. It meant I was controlling the sessions, blah blah blah....

But to get me to shut up he pulled something out of a private session that he and I had and dumped it into the couple session.

I challenged him on it. And in our next "private" session he apologized and indicated it was inappropriate.

Okay fine. But this a serious privacy violoation and I was wondering if HIPAA covers such things too?

Jim

Does the Puerto Rico Code permit the enforcement of QDROs against accounts in Puerto Rico qualified plans? The Puerto Rico Code prohibits the diversion of assets from the trust for purposes other than the exclusive benefit of participants, but also requires that plans comply with the provisions of ERISA, which permits QDROs.

The Texas legislature enacted legislation in 2003 providing a Health Reimbursement Account (HRA) for every public school teacher beginning 9/1/2004. The Attorney General just ruled that the legislation was flawed and the HRAs will not be set up this year. Many participants in FSAs in 125 plans enrolling last spring and earlier this school year made their FSA elections assuming that the HRA would be provided.

We are trying to determine if this change in benefits (the withdrawal of the promised HRA) qualifies as a change in status under the final regs 1.125-4. Many teachers now want to increase their FSA deductions.

It appears to us that it would be an allowable change in status since the HRA was a form of employer-provided medical plan, albeit a defined contribution plan rather than a traditional medical plan.

There is also a reference in 1.125-4(d)(5) to a loss of coverage "under any group health coverage sponsored by a governmental or educational institution” including a "State health benefits risk pool" as constituting a valid change of status. We believe that the structure of the trust/HRA program comes close to this definition. The preamble to the regulations also appears to say that the examples under 1.125-4(d)(5) are simply illustrations and that other similar state group health programs could be included.

Please share your view on whether this would be an allowable change. Thanks.

If a partner of a corperation holds 51% to 49% of a two person corperation. Can he demand money from the corperation to sell his shares, even if he cant account for any investment to allow this golden parachute. Can there be anything done to not allow for this kind of action.

Pension plan is making a distribution, the first in approx 10 years. The client and I contacted the IRS to verify the trust tax ID number. The number the client thought was the pension trust tax ID number turned out to be a old number for the C-Corp (they changed to S-Corp status 10 years ago).

The IRS ee told us to use the current employer ID number with a "P" appended to the end, and she indicated that such a number is in the IRS database. It appears the IRS at one point issued these numbers with "P" appended to the end of the employer ID number. Or perhaps they never really issued the numbers and it was just a convention for dealing with the often mistakenly blurred separation between the plan and the employer.

Is anyone aware of any problems using such a tax ID number, eg, 10 characters rather than 9, or other issues?

I will need to file 8109, 945, 1096, 1099, etc. It seems to be an outmoded practice since new trust tax ID numbers are not handled that way.

I am working with a plan that filed the Form 5500 as a multiple employer plan in prior years. Therefore, the plan's ID number was the 333 number. For the current year, however, the plan is no longer a multiple employer plan and probably should file the Form 5500 as a single employer plan. Does the plan's ID number need to be changed to reflect that it is a single employer plan by having an ID number of 001?

I have two roth ira's, one for myself and one for my wife. I contributed in 2002 but have not been able to do so since as my income is over the limit. I want to take the money out and put it in my kids 529 plan. It is my impression that the earnings will be subject to tax and the 10% penalty. Is this correct? The second parf of the question has to do with the 10% penalty. Is the penalty on the earnings or the amount of the account? Each account is valued at about 4,000, so there is about 1000 in earnings.

Thanks for your help.

Jim

A 401k plan uses prior year testing. No NHCEs deferred in the prior year. The owner's daughter deferred in 2003. There were no other contributions to the plan, and the plan is top heavy. As the plan fails the ADP test, the HCE deferrals will be refunded as excess contributions. Are these excess contributions included in determining the highest allocation rate for any key employee? In other words, is a top heavy contribution required?

Line 4b asks about aggregating plans to pass 410b or 401a. I am combining plans to pass ADP/ACP tests. (I am combining for top heavy b/c of that). By default does combining plans for adp test mean i MUST combine for 410b? then i would need to check that box. if i don't need to combine for 410b, then i don't need to check the box?

I administer several FSA plans. I'm looking to see what other administrators are using for term dates in an FSA plan. In the past we have used the employment term date, but are finding that many employers are still taking the regular FSA deductions on the final paycheck. Example: term employment on 9/30/04 regular final deduction taken on 10/8/04. Hence the problem, employees are paying for a benefit they may possibly never use.

Our plan documents seem to indicate that the termination date is the date the participant terms from the plan, not necessarily the date the employment ceases. The EBIA "green bible" doesn't seem to give a definite answer and I would like to form a recommendation to all of our employers and apply it consistantly. Any suggestions would be helpful.

Thanks!

Is it acceptable to change the plan year of a cafeteria plan? We currently have a calendar year plan year but would like to change it. Are there any regulations on this?

Thanks

I've been filing 5500 forms for years for a sole propritor's Keogh. The sole proprietorship no longer exists. In fact, the former sole proprietor closed his business years ago and disbursed funds to all participants except two of them. Those two have balances of only $600 & $400. They have moved and cannot be found, but still I have to prepare the annual 5500 because the plan still has assets.

The former sole proprietor is my client. He has resided in a nursing home for the past three years. Before moving to the nursing home he married a young sweet thing 40 years younger tham him. She is in charge of all his business affairs. She hates to have to pay me each year to prepare the 5500. I hate dealing with her. Now she expects me to hire a private detective to find the two former participants so she can pay them their measly benefits. I'll do anything to get her off my back but I'm not footing the bill for a Dick Tracey. She is rude and mean (I'm scared to death of her). I guess I could tell her to find someone else to prepare the 5500 but she thinks that I have to solve this problem for her. I guess she thinks it's my fault that these two people left town without a trace.

Are there any IRS rules that simply let us to stop filing the 5500 each year and just sit back and wait untill we hear form the two former participants by chance?

I have a client who makes the 3% annual QNEC to satisfy the safe harbor feature of his 401k plan.

The client also is considering (and the document permits) paying a match that doesn't exceed 4% of pay and doesn't match deferrals in excess of 6% of pay.

Notice 98-52 states that the annual notice must be written such that it is sufficiently clear to a participant the circumstances under which contributions other than the 3% QNEC (for this particular employer) will be made.

This client is using a prototype document that provided a sample safe harbor annual notice. The sample notice simply states "your employer may be permitted to make additional contributions to the plan - refer to your SPD." Of course it also directly addresses the 3% QNEC.

In my opinion, it is not "clear" in the sample notice that the employer intends to make the match. The employer won't decide until year end whether or not he actually makes the match, and the document is drafted such that the matching contribution is not required.

This client has three people eligible to participate. Himself, his wife, and one NHCE employee. "Himself" is the sole owner. He would like to avoid giving the NHCE a match. The NHCE has indicated she doesn't want to defer. She has been provided w/ the SPD. I don't think she really understands though the benefit of the match, should she change her mind and choose to defer.

Is the language in the sample notice sufficient - e.g. would it pass muster on audit or would the gov't say that the notice was insufficient and thus did not meet the requirements to be a safe harbor plan? Obviously I'd like to follow the wishes of the client, but I also want to make sure he's sufficiently protected upon audit.

Curious as to any opinions. Thank you!

When an employer is running the 55% average benefits percentage test, does the employer consider all non-excludible employees or only those employees participating in the DCAP? For example, assume that an employer has 100 employees, of which 10 are HCEs and 90 are NHCEs. However, only one HCE and one NHCE are participating in the DCAP. The HCE contributes $5,000, while the NHCE contributes $2,750 (55% of $5,000). Does the DCAP satisfy the 55% test? It would if the employer only considers participating employees. It wouldn't if the employer must consider all non-excludible employees. Thanks in advance. Ed