Any thoughts on designing the benefit of a MERP based on the number of hours worked per year (or expected to work)? For example, for employees working 1751-2000 hours would receive 100% of the benefit; 1501-1750 hours receive 75%; and 1251-1500 hours receive 50% of the benefit defined in the plan.

Realize that 105(h) would apply re: highly compensated employees - any other issues? Cites appreciated.

Anyone know of where I can get a list of states that have mandatory withholding on retirement plan distributions?

Can someone please provide a brief description of what a KSOP is and how it works?

Can you have a premium only plan for staff employees and still have the employer pay full premium for the owners/shareholders of the business?

After all this time, I'm still confused about plan language necessary for safe harbor 401(k) plans. We use a lot of Corbel docs and the plan doc says it's SH. yet we just took over a client with a Datair doc and that plan says that a resolution has to be done each year to make it SH. Is either way permitted?

A nursing home is owned 100% by father. Father also owned 51% of an assisted living facility. His adult son owned the other 49 %. Since father is deemed to have owned son's 49%, the two entities were a controlled group. The nursing home sponsored a 401k plan, which the al facility also adopted. The plan document is a standardized prototype. On 1/1/02 the father sold his interest in the al facility to his son, so no more controlled group, now a multiple employer situation. The protoype cannot be used for a multiple employer plan, so unless the two entities are now an affiliated service group, I have a document failure. Questions:

1.Can a nursing home or an assisted living facility be considered a "service organization"? I think the answer would be yes, because capital is not a material income producing factor. How much equipment is required to run a nursing home or an assisted living facility? I have no idea.

2.Significant portion of business? I don't know, trying to find out, but they do refer patients back and forth.

3.Common ownership? The B-Org must be owned at least 10% by persons who are HCEs in the FSO, using the attribution rules of 318. Under 318 there is no exception to parent-child attribution, so father and son are each deemed to be 100% owners of both entities. Am I runderstanding this requirement correctly?

4.The son is on both payrolls and effectively runs both facilities. Does this have any bearing on asg status?

Hi,

I participate in a defined benefit plan which allows me to accrue a benefit for the year after I work 1000 hours. If I terminate (assume fully vested) August 31, 2004 after working 1000 hours to be eligible for an accrual, I would receive 8/12 of my benefit for the year. If I take a leave of absence and return in 2005, I would receive 12/12ths (full) of my benefit. Is this an issue?

Thanks

Teddy

100% corporation owner and spouse participate in a DB Plan. Two other unrelated employees participate in DC Plan. Plans are aggregated for coverage and non discrimination.

There is concern that the DB plan is not covered by ERISA (and participants not afforded the antialienation protections of ERISA) since the plan doesn not benefit employees other than the 100% owner and spouse. Agreed?

If the child of the owner becomes a participant of the DB Plan (she is the only other employee of company besides owner, spouse and two unrelated employees), is the DB plan now covered by ERISA (and the participants afforded the antialienation protections of ERISA)?

A strict reading of ERISA Reg §2510.3-3 seems to indicate that only an individual owner and spouse are not considered employees for purposes of determining coverage under Title I of ERISA.

Can a roth ira be levied by the irs

Any thoughts on PLR 200430013? This seems to be a very strange ruling to me. Also, in the IRS Priority Guidance Plan for 2004-2005 it says one of the priorities is guidance under sections 457(b) and 501©(1) on plans established by federal credit unions.

Did anyone even know this was an issue? I didn't until yesterday.

I know of several federal credit unions with tax exempt 457(b) plans.

Does anyone know where I can get some type of due diligence checklist to use during the merger of two 401(k) plans to make sure we cover all the bases?

Plan has funding deficiency over many years being corrected with foregone earnings. Last time I looked at this, only the required contribution called for by the document was subject to the excise penalty, not interest or foregone earnings. Has anything changed?

a terminated participant has asked me to provide her with the exact funds that the ps plan is invested in. does anyone see a potential problem with me proving that info? i am the TPA...

thanks for any help...

I'm working on a plan which states, in the adoption agreement, that forfeitures will reduce the ER Match (stated formula in AA) in the year of the forfeiture. In addition, the core document states "If the Employer elects to allocate forfeitures to reduce nonelective or matching contributions and the forfeitures exceed the amount of the contribution to which the Plan Administrator will apply the forfeitures, the Plan Administrator will allocate the remaining forfeitures as an additional discretionary nonelevtive or discretionary matching contribution or the Plan Administrator will apply the forfeitures to the Employer's nonelective or matching contribution in the succeeding Plan Year."

This plan has not used any forfeitures for the past three years and the forfeiture account has steadily increased. Would I be able to go back and allocate each year's forfeiture even though the match actually exceeded the forfeiture amount in each year?

At this point, I'm not sure how to correct and any advice would be appreciated. I would like to give the administrator on the plan some options when I send the work back.

I have previously informed participants that received an involuntary payout from a 401(k) plan but really wanted to rollover to an IRA/new plan that they must make up the 20% withheld in taxes. I was told that the participant can then deduct what they paid in taxes when they file their return. Does anyone know if this rule has changed at all recently?

Thanks for any help.

Is there any violations to rules and regulations if an employer wants to "bump" or increase and employees gross pay and then take that amount and pre-tax it for the purpose of contributing it into a FSA (section 125 plan)? For example; employer increases gross monthly salary by $100.00 for employee. Employee already has committed to having a $50.00 contribution per month to the FSA. Can that $100.00 that was a gross salary increase, now become pre-taxed and contributed to FSA? Thus also making a total contribution $150.00. This employer who is considering doing this, does not have any type of FSA set up already and insurance is not an option. (small doctors office with 3 employees excluding the doctor, whom will not be a participant).

Notice 98-52 states that a safe harbor nonelective contribution used to satisfy the 3% nonelective contribution requirement may also be taken into account for purposes of determining whether a plan satisfies the nondiscrimination requirements.

The final regs affecting cross-tested plans and requiring minimum allocation gateways came out in 2001.

Assume a cross-tested safe harbor 401(k) plan has at least 1 HCE with a PS allocation of over 15%.

Thus, Notice 98-52 didn't have a chance to address whether a safe harbor nonelective contribution used to satisfy the 3% nonelective contribution requirement can also be taken into account for purposes of whether the plan satisfies the 5% minimum allocation gateway, but the general rule stated in the first paragraph above suggests that a 3% (100% vested) safe harbor nonelective contribution plus a 2% (2-20 vested) contribution together could satsify the 5% minimum allocation gateway.

Conversely, if the safe harbor 401(k) uses a safe harbor matching contribution to avoid the ADP/ACP tests, it appears that if at least one eligible NHCE defers 0%, an additional 5% (2-20 vested) contribution needs to be made to all benefitting NHCEs in order to meet the gateway.

Comments?

Has there been any guidance on point since?

Dave Peckham

An employee suffered a workplace injury that led to a blood spill, and coworkers cleaned up the blood (we don't yet know what, if any precautions were taken by the coworkers).

Employer has a self-insured group health plan and, in its capacity as sponsor of the health plan, learned after the accident that the injured employee is HIV positive and has advanced stage AIDS. Employer has asked whether it can disclose to the exposed coworkers the fact that the blood to which they were exposed contained the AIDS virus, assuming the employee does not authorize the disclosure. The coworkers know whose blood it was.

45 CFR §164.512(j)(1)(i) allows disclosure of PHI without authorization if the covered entity, in good faith, believes that the disclosure "is necessary to prevent or lessen a serious and imminent threat to the health or safety of a person or the public" and "the disclosure is to a person or persons reasonably able to prevent or lessen the threat, including the target of the threat."

The preamble to the regulations focus on physical threats to others (e.g. violence), and note that the exception would apply in "rare circumstances." However, the preamble also notes that "it would be impossible to enumerate all of the scenarios that may warrant disclosure of PHI pursuant to this section."

In the discusion of the benefits and costs of the Privacy Rule, the preamble notes that "Early detection is essential for the survival of a person with HIV." Assuming that a person exposed to the blood of a person with AIDS could himself contract the disease (through a wound or contact with the eyes or mucous membranes), and that early detection is important to prolonging life, it would seem that notification (and subsequent testing of those who were exposed) would be necessary to lessen the "threat" posed by the exposure.

The HIPAA hotline was not helpful, and there are no HHS Q&A's explaining this exception.

Thanks in advance for any thoughts.

A company residing in the Cayman Islands owns all of ABC Corp., a California corp.

ABC has only one employee who is the president/secretary etc of ABC but not a shareholder of ABC or the parent company.

ABC sponsor's a DB plan. This is a one-person plan covering a non-owner employee.

1. Does one file 5500-EZ or 5500?

2. Is the plan covered by the PBGC (assume ABC is not a Professional service employer) since the covered employee is not a substantial owner?

This is a case I hae to do for my Tax class. I could really use some help. Here's the scenario. Mary Jane Sevens father, Earl Stevens, passed away last year. He was 85 years old. During the last years of his life, Mary Jane a hired an attendant, Martha Simms, who cared for Earl on a daily basis. They became good friends. Three months before his death, Earl changed the beneficiary on his IRA account, naming Martha as the sole beneficiary. The account balance was about $75,000. Most of the rest of his estate was spread equally among Mary Jane and her brothers and sisters. Mary Jane was upset that her father would change the beneficiary and, through her attorney, was able to get Martha to equally split the IRA account, without going to court and was able to avoid attorney fees. How was Mary Jane able to reach a settlement without going to court and also avoiding costly attorney fees?