I know this has probably been asked before, but I have searched the boards and looked through the Pension Answer Book and Sal's ERISA outline book and can't seem to find this exact Q&A...If a profit sharing 401(k) plan has a discretionary profit share, can the partner's elect to contribute different (lessor) amounts? Here's the example. Doctor plan where the Doctors are too young and the staff too old to make crosstesting work. However, the highest allocation percentage to any one doctor is only 16.3%. If I give the staff 16.3% and the one Doctor 16.3%, can the other 4 partner Doctors contribute less than 16.3% for their discretionary profit sharing piece? It seems as thought they could, but......Thank you in advance.

I have a client who added a 401k feature to the reitrement plan in 2003. The employer accidently sent in the full $40k for 2003 as a profit sharing contribution. The employer foregot to designate $12k as salary deferral. The issue is the PS is not self directed and the 401k is self directed.

Can $12k be reclassifed as a deferral? ( Assuming the W-2 is changed. ) If there was a gain/loss on the funds in the PS how would that be handled?

Would this better handled as an excess addtion?

The TPA firm is telling him that the money cannot be re-classified and it cannot be returned to the employer with or without a penalty. The TPA is telling him that the funds must be allocated to all other eligible particpants.

Thoughts???

Are the dividends from employer stock held in a 401(k) qualified? The employer shares were originally rolled into the 401(k) from an ESOP and the dividends are distributed directly to the acount holder. When I asked the 401(k) custodian about this, I was told that the company decided whether the dividends were qualified or not. Obviously I'm no expert, but that doesn't sound right.

To the extent that San Francisco, CA and Sandoval County, NM have begun issuing marriage licenses to same sex couples, does anyone have thoughts about the options for a plan that allows employees to enroll their "legal spouse."

(1) Are the couples "legally married"?

(2) Does a plan now need to have a procedure to track the gender of spouses (or whether they are dependents for federal tax purposes) to determine whether the benefits are taxable or non-taxable?

(3) To accomplish (2) does a plan have to ask for information about all employees or just couples with at least one gender-ambiguous name.

Any opinions (other than whether or not such licenses should be granted in the first place) would be appreciated.

Does anyone have or know where I can get a COBRA notice for a multiemployer plan?

the plan is cross tested safe harbor 401(k) and top heavy. the participants in question are terminees that have not satisified the plans allocation conditions (1000 hours and last day rule). do the terminated participants receive the gateway contribution?

Can an employer allow employees working past age 65 the option of electing Medicare A&B or a Medicare HMO instead of the employer sponsored health care plan and provide an employer contribution toward the premium for the HMO and/or the Medicare Part B premium

Just wanted to see other TPAs opinion on this....

I have a participant who wants to submit a heating pad through their Flex Plan. I think it might fall under the "Dual Purpose" as long as they have a specific medical condition requiring a treatment with the pad.

What is eveyone else doing regarding this?

A plan participant was allowed to take a $5,000 distribution on the mistaken belief that a 401(k) profit sharing plan allowed participant loans. This is not the case and the participant is not otherwise entitled to take a distribution. We expect that the easiest (only?) way to resolve this is to report this to the Service (through EPCRS) or to self-correct, have him pay the tax on the distribution and any penalties, including early withdrawal, that apply. In other words, we should treat this as a deemed distribution under Section 72(p) of the Code. Has anyone encountered similar circumstances? Does self-correction cover this?

Hi Folks,

I hope you can help me out with this...

I have a person that wishes to claim the COBRA premiums from a former employer through the current employer's flexplan.

Can this be done?

TIA

Kevin

Has anyone looked at the issue of whether PHI may be disclosed to the sponsor's independent auditor for FAS 106 purposes?

My initial though is that this disclosure of PHI is not covered by any of the exemptions and would not be permitted under the HIPAA privacy rules. Also, not being an auditor, I don't know why summary or de-identified health information would not be sufficient for this purpose.

Any thoughts?

papogi:

I've heard of employers trying to design eligibility conditions for health plans that being covered or not being covered under your spouse's employer's health plan affects your ability to participate in your employer's health plan. The inclusion or exclusion rule might have been designed to only apply to dependents, my memory is very fuzzy on this point. In fact, I honestly don't remember precisely what the configuration was or what objetive the employer was trying to achieve.

Have you heard of any such arrangements? Do you have an opinion as to whether they are legally permissible? Do they achieve their desired results?

Actually, I would like to hear from anybody that has any experience and/or insight regarding the legality and/or efficacy of such plan design features.

My financial advisor is trying to get me to invest in a plan from Wachovia call "FundSource." Minimum investment is $25,000. It allows switching mutual funds without front or back-end fees anytime you want. But there is a 1.5% fee. Is it a good deal and what else can I do with that $25,000. I already have an IRA.

Is a DB plan maintained by a non-profit corporation (501©(3)) covered under PBGC? I can't find anything that says it isn't.

Is there anything wrong with defining rate groups as follows:

Rate Group 1: owners

Rate Group 2: non-owner HCE who defer statutory max deferrals

Rate Group 3: non-owner HCE who do not defer statutory max deferrals

Rate Group 4: All others

The owners have agreed to fund non-owner HCE up to $30k per year ONLY if they make max deferrals

They do not want to give it to a HCE that does not defer the max each year

My colleague insists that the IRS "busted" someone who took a 60-day rollover and temporarily used the $ for a down payment on a home, but still completed the process within the 60-days. Have you heard of such a case? I have been unable to find anything more about the issue, but I think that Pub 590 is pretty clear:

"You can withdraw, tax free, all or part of the assets from one traditional IRA if you reinvest them within 60 days in the same or another traditional IRA. (2002 590 p. 23).

Am I missing something, or is my friend up in the night?

An employee works for both company A and B, members of the same affiliated service group. The only plan in the ASG is a DB plan that has a 1,000 hr. requirement for accruals. The employee had over 1,000 hrs. with co. A and less than 500 hrs. for co. B. The plan defines compensation as using the 415 safe harbor definition. Is it correct to only use co. A's compensation for plan purposes?

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info@usmwf.org http://www.usmwf.org

Thank you

My nonprofit employer has a 403(b) with employer matching contributions. Is bond insurance required under ERISA? One of the questions on the form 5500 prep. sheet we received from our preparer asks "Did a fidelity bond cover this plan during the plan year?" Thank you.

Is anyone familiar with the following scenario:

U.S. employer sponsors a 401(k)/profit sharing plan. Presently, none of the U.S. employer's wholly-owned foreign subsidiaries have adopted the plan. May the plan be amended to provide that only employees of adopting employers who are citizens or permanent residents of the U.S. will be covered by the 401(k)/profit sharing plan? In other words, could the plan exclude nonresident alien employees from coverage?

Thank you for any comments.

D.L.