I have a self-funded self-administered health FSA. All claims are done in paper and sent to one person in the company to pay claims. Participants send claims information to the FSA administrator via interoffice mail or through the administrator's fax machine. No one other than the administrator has access to the information. Only the FSA administrator pays claims and discusses claims only with participants.

Does HIPPA Privacy apply?

Thanks.

Hi,

If a plan passes coverage on the ratio percentage test, can it exclude people by name? I am thinking the answer is yes since the reasonable classification test that requires the classification of employees covered be based on objective business criteria is not a requirement for the plans that can pass on the ratio percentage test.

As a second question. Could a plan exlude a class of employees that contains two of the oldest workers in the company, pass on the ratio test, and still be considered nondiscriminatory? I can't find anything that says a plan can't do this unless somehow age discrimination comes into play and preempts the coverage rules.

Can anyone offer any insight or experience in this regards?

Many thanks

I am having an argument with some coworkers, maybe I can find someone to settle this for me...

A is a 1% owner with comp in excess of 150k. A is a key employee.

A's wife, works for the company as well and earns 30K. She is a 1% owner by attribution, now, because her comp is under 150k, I do not consider her a key employee.

Am I missing something here?

Employer has DB plan that doesn't cover all the employees. It is Top Heavy.

One of the excluded employees participates in a second Safe Harbor 401(k) Plan.

Is the Top Heavy minimum for this employee bumped up from the 3%? (to 4% minimum?)

Thank you

A M&P plan has allowed participation by a foreign embassy. It turns out that many of the participants do not collect income taxable by the US. Is it permissible for the embassy to sponsor a 401(k) and, if so, is there any reason why those who do not collect taxable income cannot participate? The embassy is treating the plan like a savings plan for employees (there are no salary deferrals).

We have a large employer group that has union and non-union employees. If an employee switches jobs within this employer group that causes him to lose coverage under the non-union plan and he is not eligible to enroll in the union plan until he completes the waiting period, is his loss of coverage under the non-union plan a qualifying event? He is not terminating employment, nor is there a reduction in his work hours. There is no sale involved either. He just chose to move to a job that is under the union.

Thanks for your help!

Is it permissible to reimburse participants of forfeited $ on a per capita basis; e.g., if one participant has $1,000 of unreimbursed withholding and there are 10 participants, you can give them each $100.

Can the spouse of a more than 2% owner of an s-corp participate in a cafeteria plan? the spouse is an employee of the corp.

Plan Sponsors are required to provide notice to participants within 60 days of a missed quarterly contribution.

Is there any exemption from this notice for small plans (other than one life plans)?

If not, what is the feeling as to how well this requirement is being satisfied?

My wife has a Roth IRA. She donated into it while working for a previous employer a few years ago. In it she has less than $1000 dollars and is no longer contributing to it. She is charged a $35 annual maintenance fee. What is her best option? Should we keep it as is or should we roll it into something different and how do we go about doing this? She does not need this for retirement. She is 29 years old and is just looking to consolidate this or get out.

Thank you

Age weighted safe harbor plan, with 3% safe harbor contribution. 2 HCEs;

5 NHCEs, two of whom have terminated (one with <500 hrs). All seven participants get the 3% safe harbor, of course. Plan has 1000 hr and last day requirement. To pass P/S coverage, at least 4 of the NHCEs must be benefitting. Do I need to give one of the terminees P/S contribution beyond the 3% safe harbor, in order to pass coverage?

A plan effective 1987 with 100% of avg comp benefit formula (no reduction for service) and fractional accrued based on participation was frozen effective 12/31/1994. Owner employee’s data @ 12/31/1994 was:

YsOP = 8; Avg Comp well over 300k; Attained Age =NRA=65; Accrued Benefit = 7,920 (limited by 1994 $Max of 8/10*118,800/12).

In appears, his accrued benefit has been increased with the passing years to the $Max limit for the year. The accrued benefit in the 2002 valuation was $13,333!!

Q1 - Is this permissible now – with or without a plan provision to that effect?

(incidentally, in 2002, the owner was 73 and his S415 $Max would have been about $25k – so I don’t know why his benefit was restricted to $13,333).

There are NHCEs in the plan, some with pre 1995 entry date. The accrued benefits of the NHCEs who have pre 1995 participation, are adjusted for change in their avg comp after 1994. Even with this adjustment, the current accrued benefits of most of the NHCEs’ are Top Heavy minimum.

Q2 - If the answer to Q1 is Yes, is there not a 401(a)(4) issue here?

Small medical practice, two docs, 3 staff. Practice started in 1969, existing DC plan started in 1985. New DB for 2004. 1 doc (AA61) & 1 staff in DB, other doc (AA41) & remaining 2 staff in DC (to avoid 404a7). Both participants in the DB no longer participate in the DC, but have frozen DC account balances. DC has 401l integrated allocation formula. DB accrues benefit fractionally using all years of service.

Older Doc was the only ee until 1989, when the younger doc came on board. First staff member was hired in 1993.

DB won't pass 410b alone, so I'm permissively aggregating both plans.

When calculating EBARs for the A4 testing using the Accrued-to-Date method (Testing on a benefits basis), what latitude do I have in defining the "Testing Years"? I've read 1.401(a)(4)-8(B)(2), but I'm still struggling. Must I calculate the DB portion of the EBAR using years of participation in the DB (which would currently be "1" as of 12/31/04), or can I use years of service since accruals are done on that basis? The DC portion would then be calculated using DC years of participation?

Could I instead use a common number for both portions of the EBAR - say, years of DC participation?

TIA!

I have a client who took out a $50,000 loan in June 1999 and never made a payment and a 1099r was never issued. Cure period is quarterly

My question is how much would the 1099R be? Would accrued interest be added on through now (2004) or just through the cure period?

I just had a comptroller yelling at me becasue my company processed an excess (adp) check on march 9. he said that unless the check was sent certified mail, the irs adds seven days to the check date as the date received. thus, he says, some participants rec'd their checks march 16 (7 days after mar 9).

has anyone ever heard of this? i always thought it was the "mailbox" rule, that is, the check date is the guiding factor.

I have a 3% safe harbor 401k plan with dual entry dates of Jan 1 and July 1.

The doctor puts in $12,000 salary deferral and gets 28,000 safe harbor/cross tested profit sharing allocation.

Another employee who started 3 years ago is in for the full year and gets the 3% safe harbor on full year compensation and 3.8% additional profit sharing to pass discrim testing.

The last employee started 6/1/02 and enters the plan on 7/1/03. Does she get the 3% safe harbor on the full year compensation or only on comp earned while a participant ? Same question for her 3.8% allocation for the cross tested profit sharing piece ( full year comp or from 7/1/ to 12/31 ) ??

Thanks

There is an ESOP company that's securities are traded on NASDAQ. The company wants to know if that gets them out of offering a put option. Under the ESOP regs 54.4975-8(B)(1)(iv), they use the term "publicly traded" to be exempt from the put option. However, IRC Section 409(h)(1)(B) exempts securities that are"readily tradeable" and that was added in 1978 so does that supercede the regs that were issued in 1977? If Section 409(h)(1)(B) supercedes the regs, does anyone know where I can find a definition of "readily tradeable?" The concern is that their securities are very thinly traded even though they are listed on NASDAQ.

We have a 12/31/2003 plan that failed the ADP test. A total of 10 HCE's require refunds. The client wished to issue 5 of them before the 2.5 months and the other 5 after the 2.5 months.

Is this possible?

A terminated ptp has an outstanding loan

Our plan basicalky requires the loan to be paid in full upon termination.

Ptp wants to leave her cash balance in the plan.

If she does not repay the loan (our plan has a cure period of quarter following date last payment made), can we deem the loan a distribution? If yes, do we add acrued interest from the date of last payment until end of cure period

Our recordkeeper is saying we cannot default a terminated ptp's loan, only an active employee

Can we allow her to leave loan in plan (accruing interest) until she takes final distributino of her cash account (this could be a year or more)?