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?

I need to calculate a PVAB for a fireman for an impending divorce. The plan doesn't offer lump sums, so I am curious if anyone has knowledge of a mortality table that exists for such a group. I understand their life expectancy to be much shorter than the general population, both because of the job risks, but also because of the impact of the job post-retirement.

Asset method is 5-year phase-in of gains and losses on market value described in Rev. Proc. 2000-40 Section 3, Approval 15.

Question is: what is the correct treatment of receivable contributions for the prior year (made during the year) for calculating the expected value of the assets at year-end:

1) Give them a full year's interest

2) Weight the interest depending on the timing

Ex.

1/1/03 MV = 100

2002 contribution made 7/1/03 = 10

Interest is 8%

What is the expected value of assets when we go to determine the gain/loss to smooth in to calculate our 1/1/04 AVA?

1) 110 * 1.08

2) 100*1.08 + 10*1.04

If the cafeteria plan document allows for termination of the plan, is there anything that would prohibit and employer from terminating the plan effective 8/31 and establishing a new cafeteria plan effective 9/1? The current plan year is a calendar year.

If the plan can be terminated, could the new plan also have a calendar year (short from 9/1 - 12/31)?

Can anyone briefly explain the purpose of the "deemed IRA"? When these were first introduced, I recall hearing the experts indicate that they didn't really see much use for them. But now I see a lot of guidance that I honestly haven't taken the time to read. Any thoughts?

If a 403(b) plan which is not subject to ERISA has a hardship provision, can a person who terminates service take a hardship distribution?

Employer has 3 percent safe-harbor plan with 401(k) deferrals. Employer wants to contribute an additional employer contribution 9 percent to doctors and 3 percent to staff. In cross testing each HCE doesn't meet the ratio percentage test. So the average benefits test is done, bringing in the salary deferral contributions. To the extent that the plan passes the average benefits test, does it matter what the ratio percentage of each HCE is?

Is anyone tracking a lawsuit challenging California Senate Bill 2 on the grounds of ERISA preemption? The Bill requires employers of 20 or more employees to provide group health coverage for employees, or pay into a state system that will subsidize employee health care.

Its my understanding that there is both an ERISA challenge, and state level litigation on the basis that the bill was not enacted with the 2/3 majority vote needed for measures that impose taxes or fees on Californians.

There is also a voter initiative on the Nov. '04 ballot to repeal the bill, but I am primarily interested in the ERISA preemption challenge.

An "insurance guy" has sold a client a DB plan and funded it with individual variable life policies. (No need to go into the wisdom of this decision.)

There is one HCE owner and 9 NHCE's. There are 10 policies in the plan all designed to provide 100 times death benefit.

The policies are all the same type and with the same carrier and have the same provisions for everyone. However, what is of note it that the policies for the NHCE's are only funded at the minimum levels necessary to keep them from lapsing. Therefore, extremely low cash values (if any) are building in the NHCE's policies. The owner's policy is being funded as much as possible, but just below the level that would cause the policies to become a MECs (modified endowment contract). Is there an issue with benefits right and feature here?

As a further thought on this issue, when benefits right and features are measured for discrimination purposes, how is this testing done? Do we assume that a person either has the benefit right or feature or they don't?

In some cases, it is possible to put a value of the benefit right and/or feature. Consider a case where the plan buys whole life policies on the owner and a couple of NHCE's. For the rest of the NHCE's however, the plan provides term insurance that is not renewable after age 65. The feature provided by the whole life insurance that is not included with the term is the ability to distribute and continue the policy beyond age 65. The value of being able to continue the policy beyond 65 can be measure the same way a guaranteed insurability rider is priced.

It seems to me that we can go through the testing process by valuing the feature and testing on the magnitude of that value.

Does anyone have any thoughts or knowledge regarding these issues?

I am working on a 01/01/2003 valuation of a DB plan for one participant. The plan was frozen and terminated effective 05/01/2003. For minimum funding purposes, I am simply running it as if the plan did not terminate, prorating the NC, and crediting interest for the entire year. For maximum funding purposes, I am completely disregarding the plan termination. How should the FFL calculations be handled? Should the current liability and entry age NC be prorated as well for the minimum? Should the FFL itself be prorated?

Can someone confirm that an employer with union employees covered under a union-sponsored health plan doesn't have to file a 5500 for that plan? I assume it would be the responsibility of the Union since they are the plan administrator.

Is this correct?