We have a participant who has submitted a request to us to determie the eligibility of a portable 'whirl pool' bath for Plantar Safciitis. We think a foot bath could possibly pass, but believe he is attempting to get a hot tub passed by us. He does have a doctors note saying that the purchase of a 'whirl pool' is medically necessary to treat his condition. NO other details. Anyone want to comment??

Can anyone help or refer me to the proper sources for the following:

We are a company of 130 employees and we have a self funded plan.

Due to costs, we are looking at different plans of action relating to dependent coverage.

Can we terminate the spouse of an active employee when they reach age 65?

Plan is top heavy for 2003. Eligibility for 401k is immediate but a two year wait for PS.

Top heavy was given to all ee's who were eligible for 401k. This resulted in minimum gateway allocations above the 3% top heavy minimum. Can a plan at this point carve out the otherwise statutorily exclused ee's (i.e.-age 21 and 1 yos) and only provide minimum gateway increases to those who would have met the 1 year and age 21 during the plan year? If so, does the plan document need to contain language to limit top heavy minimums to only those who meet IRC 410(a)(1)?

A Single employee corporation wants to adopt a new DB. The sole shareholder and participant previousely sponsored a DB under which he accrued a benefit of $5,000. Under the new plan his salary will be $10,000/mo and his projected benefit will be $10,000.

Under the new plan we must adjust for his accrued benefit under the prior plan for the 415 100% of pay limit.

Question: suppose they terminated the prior plan in 2003 with insufficient assets (i.e. the shareholder participant accepted a major reduction in benefits). For purposes of adjusting his benefit under the new plan, must we use $5,000 or the reduced equivalent of his benefit.

Thanks much.

We just picked up a client and discovered that April 1, 2004 was the required begining date for the owner. When we told him about this last week it was the first he had heard of it.

We also recently discovered that he accidentially transfered about $40,000 from the defined benefit plan trust to a joint account with his and his wife's name on it in January 2004.

It looks like this $40,000 transfer is enough to meet his first RMD.

Since the transfer was a mistake at the time, there was no benefit election made at the time.

Obviously everyone would like to treat this $40,000 transfer as the owner's first RMD. Can we do this?

Company adopted a SIMPLE plan with Custodian A in 1999. May 2003 plan was transferred to Custodian B. Does the 2-year rule regrading the 25% penalty for early withdrawals start with the employee's first date of participation with Custodian A or does it re-set when the plan moved to Custodian B?

For an IRS submission, the IRS agent is telling us that the plan submitted was not timely amended for the Taxpayer Relief Act of 1986. When was the amendment to be signed to comply with TRA '86? I know the year was 1994 but I need a specific cite.

I am researching what incentives are permissible to build into our contracts with our TPA vendors that administer our self-funded health plan. We have recently undertaken disease management and wellness programs. However, we need to ensure that our vendors are using/promoting them appropriately. At the same time, we are concerned that if we build in a utilization rate or incentive, the vendor may, as it approaches that target, start to deny participant claims simply so its numbers look good and it fits the metrics established. has anyone had any experience with this? your thoughts would be appreciated.

Are excess deferrals subtracted from gross compensation to arrive at taxable compensation in box 1 of Form W-2? Or is only the deferral limitation subtracted?

Thanks,

Ken Davis

Section 79(d) of the Code provides that a group term life plan may not discriminate in favor of HCEs. Prior to 1989, 79(d)(7) provided that the controlled group rules of 414(b), © & (m) were in effect. However, 79(d)(7) was amended out. Now I can find nothing that brings in the controlled group rules. So if owners of a company set up a management company and are the only employees of a management company can they set up a group term life for the management company and effectively circumvent the nondiscrimination requirement.

This does not seem to make sense. Why have nondiscrimination if I can just set up another company and circumvent. However, I can not find anything in 79(d) that gets me to 414(b). And lending even more weight, the prior reference to 414 was amended out of 79(d).

I just am having a hard time believeing this result. Am I right that controlled group rules do not apply to 79(d) or am I misssing something?

Thanks for your help in advance.

We have a beneficiary who is due benefits under the plan. The beneficiary is incarcerated. I just wanted to double check that there isn't anything that would prohibit us from distribution the benefit to the incarcerated beneficiary. The beneficiary is incarcerated for something completely unrelated to why she is due benefits.

Need some assistance. We have a situation where a sole proprietor setup a 401(k) plan for herself. During 2003 she hired 2 part-time employees, (one quit during the year, the other was hired in fall and still with the company as of 12/31/2003) in which the position will never exceed 500 hours per year. This position will never be eligible for 401(k) deferrals due to the requirements the owner has placed on the plan.

Does the plan still fall under the "One-Participant" plan exemption? Or by having one employee on the books who is not a spouse or an owner force the plan into filing a regular 5500? The definitions given on the 5500 for "Participant" include, Active, Retired or separated receiving benefits, Other retired or separated or Deceased individuals with beneficiaries receiving benefits. None of these definitions fit the case of an employee who will never become eligible. If the instructions stated "Employee count" vs. "Participant count" I feel it would be justified to file the 5500.

The plan does not have over $100,000 in assets, so this is a question of whether or not a filing is required.

Thank you!

Question: Does Treas. Reg. 1.401(a)-20, Q&A-27 require the legal separation be by court order? Would it require payment of benefits to the children or the legally separated surviving spouse given these facts?

A North Carolina participant designated her children as beneficiaries and represented that she was legally separated (so no spousal consent). Under NC law parties can enter into legal separation but not take the final step of getting divorced (so they can keep health benefits, etc.). The legal separation is not by court order; it is a contract the parties enter and file in the recorder's office. Treas. Reg. sec. 1.401(a)-20, Q&A-27 states that if the participant is legally separated or has been abandoned and the participant has a court order to such effect, spousal consent is not required unless a QDRO provides otherwise. Not clear whether the court order requirement applies to "abondonment" or "legal separation" or both here.

As I understand NC law, the parties could not remarry unless they proceeded with a divorce. The parties were legally separated for 15 years and now the participant has died.

Anybody have experience with this or have an opinion on the answer to the question above?

little rusty on the DC side ; currently an employer with a K plan that only allows deferrals can also have a DB with a required contribution that exceeds 25% of gross compensation.

Question : since this implies that the employer can take a deduction for the deferrals, does he in fact take it as a pension deduction or is it as a business expense in the payroll category for example ??

Iv'e read that the IRS released final regs on catch-up contributions on 07/07/03.

I've also read that those regs say that if the employer wants to set a plan limit on elective deferrals.... then such limits must be expressly provided for in the "PLAN DOCUMENT" and or adoption agreement.

Here's the situation:

1) The adoption agreement says that elective deferrals are limited to 10%.

2) The adoption agreement says that catch-up contributions are allowed, but makes no mention of any $amount limitation or % limitation for such catch-up.

Let's say a participant's gross annual compensation is $25,000. He elects the max 10% deferral = $2,500. He is age 53.

My Question:

Can the employer prevent him from deferring an additional $3,000 and calling it "catch-up contribution" ?

Could I sneak in a question as to what actuarial table IRC 7520 uses for private annuity calculations (estate tax planning) ? I apologize for the blatant misuse of this forum for non-DB plan purposes and accept my 20 lashes (or more !!).

Our retirement paperwork is set up so that if a participant should waive the QJSA, not only does he need to sign the waiver form but his signature must be witnessed. I know if there is a spouse, that the spouse would have to consent to waiving the QJSA and the spouse's signature would need to be witnessed by the plan representative or notary public. Can anyone witness the participant's signature- or must that be a plan rep or notary too?

If the person is not married and waiving the QJSA (single life), then would you agree that the same rules on "witnessed" signature would apply to the unmarried participant as would the married participant? That is, would need the plan rep or notary to witness the participant's signature. I can't find anything definitive in the regs on who must witness the participant's signature--just who must witness the spouse.

Thanks

Subsidiary A (which is in the process of winding down its operations) maintains a 401(k) plan that it intends to terminate 6/30/04. As of 6/30/03 the Plan had approximately 150 active participants. Due to a cutback in workforce, as of 1/1/04 the Plan had approximately 5 active participants. In January, 2 of the 5 transferred employment to Subsidiary B, and began to participate in Sub B's 401(k) plan. By June, there were only 2 employees left at Sub A- and both of them will be transferred to Subsidiary B, and will participate in B's 401(k) plan, by 6/15. As of 6/30/04, the Plan's termination date, there will be no employees left at Sub A.

Is Plan B a successor Plan?

When is the 2% threshold measured? If read literally under the regs., it is measured based upon based upon eligible employees as of the date of the plan's termination. In this scenario, there are no eligible employees as of the date of plan termination.

If not measured as of the date of plan termination, at what earlier point? In total (based upon participants over the last 12 months) 4 of the 150 participants are participating in Sub B's plan, which is 2% or greater. Does this fact make it a successor plan?

Thanks for any help.

Can anyone confirm the following annuity purchase rate?

5% interest

1983 Individual Annuity Mortality (Male) Projected to 2000 with Scale G

At Age 62 = 155.9645 (monthly)

Any response would be appreciated.

Under this decision (issued today by the Supreme Court), would it violate 411(d)(6) to amend a db plan to suspend actuarial increases on previously accrued benefits while working for the employer and not receiving benefits after normal retirement age, as to benefits accrued before the amendment, where these actuarial increases have been provided pursuant to ERISA and not pursuant to the plan document? My first reading of the decision is this would violate 411(d)(6). I would like to get others' thoughts.