How do you handle DCAP reimbursements after termination?

I found an FAQ that said "DCAP expenses continue to be eligible after your termination date, under the "spenddown provision" (spenddown is applicable only to the Dependent Care FSA). However, you may be reimbursed only for the amount fo Dependent Carew that has been taken out of your check. So if your last day of work is Aug 15th, you can file for child care reimbursement until the end of the plan year, but cannot be reimbursed more than the amount that was taken out of your check."

I am pretty sure that I researched that and found that it was IRS regulation, but now I can't find it of course.

Now I have a termed ee trying to get reimbursed but the TPA says the claims need to have been in within 90 days of termination. So I check the plan doc and SPD. And it is contradictory to me. First it says "You will still be able to request reimbursement for qualifying dependent care expenses for the remainder of the plan year from the balance remaining in your dependent care account at the time of termination of employment." Ok, to me that jibes with the above quote. Then a sentence later it says "You must submit all claims within 90 days of termination of employment." Well if you only have 90 days, then you don't have the rest of the plan year.

So I believe we need to make an exception in this case, as I was confused and wrongly informed the employee, but I think we also need to clarify the plan doc so it doesn't seem contradictory, so I am just curious on how others handle this. Does the DCAP have the rest of the plan year, or just a runout from the term date?

Thanks

I need to know how to roll over my 401(a) into 401(k)

A participant-directed 401k has a publicly traded Eer Stock investment option. The Eer Stk option is and will remain a frozen option. Some Eer Stock is employer contribution; some purchased. Company wants to go semi-private via reverse split by which all shareholders of less than XX shares will be cashed out. The Company proposes to treat each participant in the Eer Stk option as an separate shareholder of number of shares equal to his proportionate beneficial interest in the Eer Stk option. This results in most rank & file participants being cashed out while HCE’s that have large investments in the Eer Stk option retaining their post-split ownership. Two questions:

1. Are there any rulings that explicitly permit/prohibit treating each participants as a discreet shareholder (as opposed to treating the Plan a the single shareholder) for this type of transaction?

2. If one uses the Company approach, does the transaction result in a discriminatory benefit for the HCE’s?

THANKS

My client was told that they did not need an audit by an independent qualified public accountant because they had less than 100 participants. Then, the client was told that because they are filing a Form 11-K with SEC an audit might be necessary. I looked at the Form 11-K and it states that "plans subject to ERISA may file plan financial statements and schedules prepared in accordance with the financial reporting requirements of ERISA. To the extent required by ERISA, the plan financial statements shall be examined by an independent accountant, except that the "limited scope exemption" contained in Section 103(a)(3)© of ERISA shall not be available."

Does this mean that because ERISA does not require the plan to be audited for annual reporting purposes, the Plan does not need to submit audited financial statements with their 11-K filing? Granted it will still have to submit financial information, but no audit opinion is necessary.

Has anyone dealt with this situation before? Any thoughts? Opinions? Advice?

Thank you!

I have a plan where, in previous years, a Schedule A was filed.

This insurance still exists within the plan - I assume that it was, and is, an "asset of the plan" since the Schedule A was filed.

When I look at the Schedule I though, the balance in this insurance is not reflected within the balances in the Schedule I.

I was always under the impression that if it's an asset of the plan, then the balance would need to be included in the Schedule I.

Should this insurance balance have been included with the other mutual fund balances in the Schedule I?

Thank you.

What is meant by an Independent School District or ISD? I've seen 403(b)s listed as xxx school district and another as xxx ISD. Although the xxxs refer to the same city, town, etc. there are different addresses for the SD and ISD.

I was reviewing this rule which had been posted on Corbel's website recently and wanted to know how the order of nondiscrimination testing works.

A calendar year profit sharing plan that has a 401(k) feature has two eligibilty provisions. For 401(k) elective deferrals, first of the month following 3 months of service. For profit sharing contributions, 01/01 and 07/01 following the completion of 1 year of service (hours of service method).

The plan is NOT top heavy. The highest percent of pay to a rate group that consists of HCEs is 20%. No greater than 5% owners were hired in the current plan year.

Is the "Otherwise Excludible Employee" rule performed prior to allocating the minimum gateway 5% contribution? Or, is the minimum gateway 5% contribution provided followed by the "Otherwise Excludible Employee" rule?

The reason for this question is that in this plan's case, the intention is to maximize certain HCEs, provide the minimum amount to NHCEs, while at the same time providing no contribution to certain other HCEs.

Anyone know where I can get a copy (preferably pdf) of IRS Notice 89-23 and IRS Announcement 95-48?

Can anyone point me to information on where we stand with the SEC's proposed 4 p.m. "hard close" and the redemption fee issues? I was under the impression that the 4 p.m. "hard" close was not really an option anymore, and they are pursuing other alternatives, but I can't really find an update anywhere. Also, when are they expected to give us something solid?

Thanks!

lets say an irs auditor is scheduled to walk in your door in order to audit a plan and while reviewing the files you notice an operational error. if you bring it to the attention to the auditor can you take advantage of SCP or even VCP or do you have to resolve the situation in audit cap because the plan is under examination?

I have a fully-funded health plan that covers NCEs, Key-EEs, and NHCEs. There are no employee contributions made to this health plan. Going forward new employees will need to pay for a portion of the premium with pre-tax dollars through a cafeteria plan.

Are we subject to nondiscrimination testing? I assume yes. If we limit the cafeteria plan to just NHCEs are we subject to nondiscrimination testing?

Thanks.

A participant who has been receiving RMDs has terminated employment and would like to be paid out the remaining amount of her benefit. As the benefit is very large, she is considering taking parts of it on an "as needed" basis. If erratic amounts are taken on an irregular basis, would the participant have to complete election forms prior to each distribution, or is there a way to have her just complete one set of forms in the beginning?

Also, if she rolls over half of the benefit into an IRA now and then begins taking erratic taxable payouts from the remaining half "as needed", would the IRA rollover not be considered an eligible rollover distribution if the remaining half is not completely distributed before the end of the calendar year in which the IRA rollover occurred (resulting in an additional tax liability)?

Thanks for all help.

What is the timing obligation of the employer to notify a terminated participant of his / her vested accrued benefit under various scenarios:

In a 401(k), PS or MP plan - individual accounts - where document says "as soon as administratively feasible at Participant's election";

In a 401(k), PS or MP plan - pooled accounts - where document says "as soon as administratively feasible after Plan Year coincident with or next following termination of employment";

In a DB plan - where document says "as soon as administratively feasible following separation of service";

Basically - must the employer as plan administrator be proactive regarding notifying the terminating participant of this entitlement or can the employer wait for the employee to come forth and ask for the distribution?

There was a recently discovered and corrected operational defect in the 401k plan.

I am looking for any sample letters others may have used to notify plan participants of plan defects / corrective action taken.

I would be insterested in any suggestions/advice from others who have had similar experience sending notices to particpants. Thank you!

Employer adopted a prototype 401(k) plan and did not check the

right box on the adoption agreement so as to exclude from participation

foreign nationals with no US-source income. The employer was unaware that a subsidiary it had recently acquired employs about 4 or 5 French citizens residing in France.

Would it be possible to justify excluding the French nationals if, for instance, the plan defined compensation as W-2 compensation, and the adopting employer did not provide W-2 compensation to the French nationals?

If the employer were ultimately required to retroactively include the French citizens in the plan by contributing the equivalent of average salary deferrals and matching contributions on their behalf, exactly how would this be accomplished?

Where would the money go and how would it be reported? Its my understanding

that, absent a tax treaty provision to the contrary, the money would be

taxed to the French citizens upon contribution to the Plan, and upon

withdrawal, as well.

Just want to cover my bases. Your thoughts are appreciated.

Many thanks in advance.

is everyone disclosing all the fees participants pay in the spd as a result of the dol guidance that came out last year?

If a participants in a qualified plan are responsible for paying quarterly investment management fees, why type of legal requirements must the plan meet regarding disclosure of those fees?

Thanks

Is anybody doing these or seeing any demand in the marketplace for them?

Thanks,

Elmer Rich

312-553-2117

Two participants took "loans." NHCE took $4,000 in calendar year 2000 and intended to pay it back, but a promissory note, security agreement, etc. was never signed. The NHCE is in bad financial shape and cannot pay back. We are trying to decide if we should treat this as an in service distribution (which will require a plan amendment), or a default. If a default, what year.

The plan document permits loans, but does not permit in service distributions.

HCE (who is the owner) took a $50,000 loan in 2001, but again, there is no promissory note, etc., and no payments have been made. HCE wants to make all the payments to date instead of taking it as a distribution.

Looking at EPCRS, I don't see any way to deal with this via SCP. It looks like a VCP submission. I think we could amend the plan to add an In Service Distribution provision, but the NHCE distribution would have been in 2000, a closed year.

If we went to VCP, when would IRS make us require us to 1099R the NHCE? Would they let the HCE bring all the payments current, execute the loan documents now, and then complete the 5 year amortization of the loan.

Any thoughts would be appreciated.