I have just heard a contention that HIPAA does not allow an employer to destroy medical records and reports of an employee. The employer contends that, under HIPAA, the company is obligated to maintain such records and reports indefinitely. My reaction is that such employment records (as opposed to medical records) are not subject to HIPAA and the treatment of such records is an appropriate subject for bargaining between the employees and the company. I'd appreciate hearing another opinion.

I have a takeover plan which previously used a DATAIR Volume Submitter Document. There are no age or service requirements. The Entry Date is defined as "The first day of the Plan Year coincident with or next following the date the eligiblity requirements are satisfied, but in no event later than six (6) months after satisfying the eligibilty requirements." What does this mean? When would an employee hired between January 1st and July 1st enter the plan?

Thanks a ton to anyone who can help.

I've seen the thread on this message board regarding the ADP/ACP tests and HCEs with no comp and no hours What do you do if you have an HCE/Owner who took no comp for cash flow reasons but worked over 1,000 hours??? The owner of the company took no compensation for the year because of cash flow issues.

$0 comp/$0 deferrals isn't equal to 100% IMHO. The goal is to include the owner as a 0 deferral and sole member of the HCE group by invoking the top paid group. Can this be done? Anyone?

Here's the situation. A new profit sharing plan is established for 2003, the 100% owner's 90 year old grandmother is a participant. The only money in her profit sharing account as of 12/31/2003 is her share of the receivable employer contribution for the 2003 plan year (let's say it was $2,000) which was not deposited during 2003.

So for distribution calendar year 2004, is her adjusted account balance as of 12/31/2003 zero, or $2,000?

I am beginning to think zero.

Here's why.

ASPA ASAP No. 02-10 says that "Contributions allocable as of the valuation date but not deposited until the following year need not be included."

The 1987 proposed regulations were very clear on this matter. F-2 A(b) "The account balance is increased by the amount of any contributions and forfeitures allocated to the account balance as of dates in the valuation calendar year after the valuation date. Contributions include contributions made after the close of the valuation calendar year which are allocated as of dates in the valuation calendar year."

The final 401(a)(9) regulations say: A-3. (a) In the case of an individual account, the benefit used in determining the required minimum distribution for a distribution calendar year is the account balance as of the last valuation date in the calendar year immediately preceding that distribution calendar year (valuation calendar year) adjusted in accordance with paragraphs (b) and © of this A-3.

(b) The account balance is increased by the amount of any contributions or forfeitures allocated to the account balance as of dates in the valuation calendar year after the valuation date. For this purpose, contributions that are allocated to the account balance as of dates in the valuation calendar year after the valuation date, but that are not actually made during the valuation calendar year, are permitted to be excluded.

This really doesn't seem to apply to an employer contribution allocated as of December 31 but deposited in the next calendar year.

And finally, the preambles to the final regulations say under Calculation Simplification: Contributions and distributions made after December 31 of a calendar year are disregarded for purposes of determining the minimum distribution for the following year.

I have a question regarding the allocation of NCP contributions where 2 owners (#1 & 2) want to receive $40,000 and are in the same group but do not have the same salary.

Example: Owner 1 - $200,000/Owner 2 - $100,000/Owner 3 - $75,000/Owner 4 - $75,000

In order for owner 2 to receive $40,000 a contribution of 40% of salary would need to be made to the plan. This would cause Owner 1 to exceed the 415 limit. Can owner 1 just be capped at $40,000 or does the excess he would have received if there were no 415 limit have to be reallocated to the remaining participants in the group?

My thinking is they need to determine the total dollar amount that would be required to get Owners 1 & 2 to $40,000 after the reallocation of any excess of Owner 1.

The plan uses a Corbel Volume Submitter which indicates that any amount in excess of the 415 limit "may" be allocated to other participants. My concern is that it does not indicate that the excess "must" be allocated.

Any thoughts would be appreciated.

Plan is top heavy. Safe harbor nonelective contribution is 3% times compensation since mid-year entry. No other contributions are made and there are no forfeitures. Under Rev Proc 2004-13, is the plan deemed to satisfy top heavy?

A plan is amended to provide for an early retirement window in 2004 ; those who opt for the window can also take their benefit as a lump sum - everyone takes a lump sum and is cashed out in 2004.

Utilizing Rev. Ruling 77-2 you decide to reflect the window amendment on the 1/1/2005 valuation.

Question : Assuming an immediate gain funding method, how would the amendment base be defined on 1/1/2005.

If an employer establishes a SIMPLE IRA on October 1, must it match salary deferrals (up to the 3% limit) for the whole year? Seen any IRS guidance on this?

Is anyone familiar with such plans. I'v been asked what the deferral limits are. I read the statute and it sounds like a 401(k) plan, including reference to IRC 402(g). According, I assume under EGTRRA the limit is $13,000 in 2004. Is this correct? I assume the plans are maintained by not-for-profits, but would appreciate more information.

A safe harbor plan provides for a true-up of the match at the end of each year. The employer would like to true-up only for the employees who are employed on the last day of the year. Is this doable? Does this approach violate the requirement that an HCE's rate of match cannot be greater than a nonHCEs rate of match? Some HCEs will obviously get the true-up while some HCEs who terminated will not.

Put another way, does the plan comply with Code section 401(m)(1)(B)(iii) that provides that the matching contribution with respect to any highly compensated employee at any rate of elective deferrals can not be greater than that with respect to any employee who is not a highly compensated employee.

Company A and Company B both participate in the same MEP. Company A purchases Company B in Feb 04. Company A added the predecessor employment verbiage in the Adoption Agreement for YOS to count for eligibility.

1. Do we test Company B for nondiscrim and coverage (and file Schedule T) from 01/01 up to the sell date?

2. If yes to the above question, is a 'short plan year' indicated on the Schedule T for this client organization (CO)? If so, is this due 7 months after the merger date?

I know this has been answered before either in this site or the Gray Book but I can't get hold of the answer. And if I remember right, the IRS has flipped-flopped on the answer.

Here is the case: Husband and wife (Owners) participate in a DB; all others (including their kids) participate in a DC with a 401(k) feature. Can the owners contribute to the 401(k) without triggering the 25% 404 limit? Thanks.

The company I work for has over 100 employees. We have a 401(k) and use the prior year method. According to the ADP/ACP report for the year 2002, we failed the test and refunded money to the owners. As I understand it, the ADP for 2002(4%) will be used to determine whether we pass the ADP test for 2003.

Our TPA now says the ADP for the employees is 6% because the law allows us to exclude those employees who have not been with the company for at least 1 year.

Based on the 6% we would pass in 2003. It does not seem right to me. Our 2002 report says the ADP is 4% and now he says its 6%. I am confused.

I think this is probably stretching the rules but thought I would ask anyway.

A plan that uses prior year testing for the 2003 plan year and also wants to include a QNEC as part of the prior year ADP must contribute that QNEC to the plan no later than 12/31/03 (assuming calendar year plan). Does that QNEC actually have to be allocated to the account(s) of the participant(s) prior to 12/31/03? For example, if the plan has a forfeiture balance at the end of the 2003 plan year, are those forfeitures considered deposited prior to 12/31/03 and can then be allocated as a QNEC (assuming document provides for) in 2004 (at time the 2003 testing done)?

If a 401(k) plan offers a full menu of mutual funds, representing all of the major asset classes, but limits a participant's INITIAL enrollment choices to five asset allocation funds (conservative to aggressive) and a fixed option, with the ability to make investment changes on-line or by VRU after enrollment, does this create any potential 404c or fiduciary liability problems?

I don't see that it does but I am interested in a fresh perspective.

I have a new plan which covers 5 companies that are considered members of a controlled group. Last year, the prior TPA performed separate testing for each "division". Am I missing something which would allow for this?

I did not think that you could restructure a plan and test separately with respect to related employers, when they are covered under the same plan. I know that as long as each member maintains a separate plan and is not aggregated for 410(b) purposes, they are tested separately.

Does anyone know of any reason as to how they could be tested separately under the same plan?

Does the employer need to include amounts paid to the Dependent Care FSA after-tax while on LOA, in Box 10 on the W-2?

Hi-

An earlier thread (from 2002, below) discussed noncompete provisions as a SRF under section 457(f), and some members expressed concern about whether they work. Has anything happened in the meantime to change your mind?

I have seen some suggestions that the Service's failure to address this issue in the recent 457 regs is a "tacit acknowledgment" that these provisions work. I am still concerned however that, at best, the guidance in section 83 applies.

I have heard some of the major consulting firms say that use of noncompetes as a section 457(f) SRF is now very common. (For example, a 2 year/ 50 mile radius noncompete.) Is this your experience as well?

Obviously legal advice shouldn't be based on the herd concept, but sometimes there is safety in numbers, and I would assume this is another area where any adverse guidance from the Service might be applied prospectively.

thanks.

card

http://benefitslink.com/boards/index.php?s...2&hl=noncompete

I am looking to update my file on the SEC communication requirements for a plan with Employer stock. I know that the SEC issued Release No. 33-6867/34-28094 (June 11, 1990 Federal Register #23909) back in the early 1990's. Has that been updated? Does anyone know where I can get a link/copy to this? I have general information regarding what we are required to distribute but would like to look at some of the source documentation to make sure we are still meeting requirements.

Thanks in advance for your help.

PAL

I have about $4500 in a Roth, I was thinking about using it as a down payment to my first home. It would be around 5% down. Can I use it without being taxed and penalized? Any help on this would be greatly appreicated.