Another question on taking deductions.....in the case of a health or dependent care FSA which is elected by an employee during the latter part of their grace period (31 days from eligibility date), do most companies:

(a) amortize the goal based on the effective date and retroactively collect (pre-tax) deductions

(b) amortize the goal based on the next subsequent paycheck and begin taking those deductions with that paycheck

Example. Employee is eligible on March 1 but does not enroll in FSA until March 30 for 1000. In (a) the employee owes $100 per month and an extra $100 is collected on the April 15 payroll. In (b) the employee owes 111 per month with no retro.

In both cases, the participant would be able to claim expenses going back to thier effective date (or at least that is how we do it). However, have any of you heard of companies only allowing employees to begin participating when the first deduction gets taken? In other words, the employee in the example would not be able to claim expenses until April 1?

Sorry this is so complex!!

If an employer has an open enrollment period which is not based on the plan year, is there any reason the employer would have to either (a) file more than one 5500 for the year or (b) make any filings in addition to the 5500? It does not make sense to us that they would, but something in the back of our client's mind makes them think that if the enrollment period does not match the plan year, then two filings need to be made. This does not sound right to us. Any thoughts?

I'm wondering how the best way to structure retro deductions for new hires and change in status. Right now, we offer a 31 day period for the initial enrollment in our cafeteria plan. If an employee enrolls on the last day of that grace period, we take a retro deduction (pre-tax) back to the effective date of coverage. Do others handle it that way. I've heard the IRS frowns on retro deductions for new hires, but I wonder how many plans don't take retros.

That is the same way we work it for change in status. Do most others take retros in this situation with after-tax dollars?

Our Section 125 plan currently offers a 31 day period following the date someone is first eligible to participate for that person to enroll. Someone could submit an election and then revise it (not subject to change in status) within that period of time. Do any of your plans work that way? If not, how are they structured? (I believe it is OK to offer the 31 day grace period, but I believe we should end that period as soon as a participant makes an election.)

A client had the old MPP and P/S combination. When they came to us in 2003 we froze the MPP contribution and merged the MPP into the PS Plan. We intended to do the final 5500 for the MPP for 2003 since all of the assets of the MPP were transferred to the PS in 2003.

Now, in 2004, the prior TPA/Custodian sent is a small check for some trailing earnings attributable to the MPP plan. I assume that they received this shortly after the plans left their service but did not forward the money as timely as they should have.

Can I still do the final 5500 for 2003 and just apply these additional earnings to the PS plan? Or should I hold the MPP open until the final earnings were deposited and show the final being 2004?

Assume A's vested balance in PSP account is 50K and A takes out a loan for 25K. Can A then apply for a hardship distribution for the remaining 25K? ERISA Outline Book has an example in the discussion regarding how subsequent distributions don't affect 50% loan limit which would imply that it could be done. However, it doesn't seem prudent from a Plan standpoint b/c the remaining 1/2 of the account is generally held as security for the loan.... Any suggestions? Thanks in advance.

We have a LLC wanting to set up a 401(k) plan. Employees have W2 income, owners K1. I know k1 income cannot be considered in a partnership, but what about an LLC? What type of plan would be best for a profitable llc? Any thoughts would be appreciated.

Thanks.

Although 5 years is the maximum time period for repayment of a participant loan (other than for purchase of a residence), can the length of time be shortened? We have participants who choose the five year option for loans as small as $1,000, resulting in 24, 26, or even 52 very small payments over the maximum loan period. Can we limit the repayment to, for instance, 18 months for each $1,000 loan amount, with a maximum of five years?

Thanks!

I'm graduating Seton Hall Law School this May and considering going for my L.L.M. in Employee Benefits at John Marshall Law School in Chicago (the only L.L.M. program for Employee Benefits in the country). However, I would like to know whether an L.L.M. from this program is going to be meaningful or just another abbreviation on my resume. More specifically, I want to know how much an L.L.M. from this program really increases my marketability in this legal niche. Any insight would be greatly appreciated.

A participant who is over age 50 has an excess annual addition in the amount of $1,050 and had the following contributions:

401(k) $10,478.00

Match $10,478.00

ESOP $20,094.00

Would it be permissible for $1,000.00 of the excess to be considered as a catch-up contribution and therefore only $50.00 would need to be deducted from the plan? Or must the full excess amount be returned in accordance with the provisions in the plan document? (This is for the 2002 plan year)

An ESOP obtained stock from 2 shareholders in a 1042 transaction in 2001. The sponsor company has recently hit hard times and is contemplating the termination of the ESOP. Participants would become 100% vested upon termination and distributions would be made in cash. My question is whether termination of the ESOP and distribution to Participants in cash would be a "disposition" under section 1042 , such that the sponsor company would incur an excise tax on the original 1042 transaction (because the stock will not have been held for the required 3 year period)? I would appreciate any input anyone has on this issue. Thanks.

Before fiiling my taxes I discocovered I'm inelgible for a 2003 ROTH contribution. I've requested the excess cointribution and earnings be reoved. Where do I report the approx. $750 earnings from that excess contribution on my 2003 tax return? The gain resulted from an increase in value of the mutual fund shares. Would I simply report this as if it had nothing to do with an IRA; or is there some special method or form? Because this is being done just before filing the corrected contribution forms etc won't be submitted until after the tax filing date. Thanks

As an employer with many plans (it has already been determined that the plans are "affiliated entities" and members of an "organized health care arrangement"), does the privacy notice for the plans have to list the specific plan names? I have reviewed the regs and there doesn't appear to be a specific requirement to list the plan names.

Thanks for any guidance!

to establish a mid-year qualifying event has occurred our health plan requires documentation of the underlying reason behind a loss of other health coverage. we've been told other cafeteria plans accept HIPAA creditable coverage certs as the only required documentation to establish a qualifying event. we wonder if we've gotten out of sync with other plans and/or the IRS. any thoughts regarding either approach are welcome.

I've read that EGTRRA sunset language may be advisable in 457(b) plans. The IRS has indicated with respect to qualified db plans that there is no need to take the sunset provisions into account currently. Is anyone currently including sunset language in their 457(b) plans?

I am surprised to see an arbitration clause for participants in the NQDC plan I'm reviewing.

As a ERISA Part 5 jurisdiction plan I would think DCP participants could file directly into federal court after the 503 procedures and ignore the arbitration language entirely.

Anyone use similar clauses and what's the result you think you'll get? Thanks.

I would like to open a Roth for both my husband and myself. We both contribute to our company's 401(k) plans. Can we both contribute $3,000 if our AGI is less than $150,000? We can't open traditional IRAs right?

Does anyone know if the IRS has decided upon a formula for a new rate for 1/1/2004, or what the lead time might be? Might there be a temporary notice to give us something to work with if there is need for a period of public comment?

My supervisor told us today that under HIPAA, we are no longer allowed to discuss amongst ourselves our illnesses, aches, and pains, etc. We were told that speaking of our illnesses may even lead to our termination. I have been doing some research on the web, but most things are over my head. From what I can gather, the privacy act applies mainly to medical offices, and our personell records, not our personal conversations about my snotty nose. Can someone please set me straight? Can you explain it in laymans terms? I am not sure how I go t to this message board. Please e-mail me directly at emcapwell@nc.rr.com.

Hi,

Just wondering if anyone has experience with a terminated DB plan that hasn't filed premiums in a very long time. We have been advised to terminate through the PBGC and not risk the plan being treated as an on-going plan. I was thinking about just filing the Form 500 package normally, check the box "no" that asks if all PBGC premium have been paid to date and wait for an inquiry from the PBGC. Since I'm not aware of a voluntary compliance program for unpaid PBGC premiums I'm not sure the best way to proceed. The plan has only had 2 or 4 participants since it's inception and many years just one. Assets are sufficient to pay all benefits for employees. The owner is waiving unfunded amounts.

If anyone has encountered this or can offer some insight, it would be greatly appreciated.

Thanks