We have company AB, PC and BD, PC (individuals) who each own 50% of EF, LLC. AB's husband owns 100% of GI.

2 employees split their time between AB and GI. GI has a plan and EF has a plan. Which plan do these 2 employees belong to? GI is an eye doctor and EF is plastic surgery. (AB and BD are also plastic surgery)

In addition, AB has $75,000 in compensation from EF, LLC and $100,000 from AB, PC. For EF, LLC's plan, do AB, PC and BC, PC need to adopt the plan in order to use compensation related to the individual entities?

July 2003, an ER cut a manual check for a participant's commission and the ER held $270.02 for his 401K... but somehow it did not get transmitted and sent in to the plan's trust.

The participant's 401k earnings on his W-2 includes this amount, but it is not included in plan's trust statements as an amount contributed because it was not.

Late deposit of a 401k deferral is a fiduciary breach that may be corrected under the VFCP by having the ER contribute the amount delinquent plus earnings (greater of plan's actual earnings or the interest rate under Code 6621(a)(2) [currently 6%]).

Late deposits are also prohibited transactions which, to correct, require a filing of Form 5330 and payment of a 15% excise tax.

My question is that since the late amount was segregated from the ER's assets, is this still a prohibited transaction requiring the above corrective measures? Is the PT itself the late deposit or the failure to segregate the deferral/assets or both?

Part 1: Participant divorces, ex-spouse receives QDRO but leaves amount in the Plan. Participant and spouse remarry while participant is still active and not eligible for distribution. What, if any, impact on the QDRO?

Part 2: If the Participant in #1 was an executive of Plan/Sponsor and possibly subject to claims of fiduciary liability, should/could the plan trustee freeze the plan assets currently subject to that QDRO?

Toss-up: Is there a duty on the trustee to investigate the "purpose/validity" of the divorce which resulted in the QDRO?

Thanks for any opinions.

An employer determined the employee contribution for health insurance to be 5% of premium. The employer notified employees, and set out the per check dollar amount for each benefit option. Then the employer realized that the insurer had reconsidered the rate, and slightly lowered the premium. Based on the new premium, employees would be paying 5.09%, instead of 5%.

I know this raises alot of issues. Potential breach of fiduciary duty if the employer doesn't somehow "correct" this: potential prohibited transaction, potential loss of trust exemption, section 125 change rules, etc etc etc.

On the other hand, the cost to correct might exceed the dollars involved.

The employer would like to use the actual rate for COBRA purposes, but leave the active employee population alone.

Has anyone confronted this in the past? I don't think I can recommend doing nothing, given that the employee contribution was communicated as a percent of premium. I'm thinking perhaps the easiest approach is a premium holiday if refunding to individual employees is not practical.

Any suggestions are appreciated.

card

At http://www.plansponsor.com/pi_type10/?RECORD_ID=24311 (free registration required) addresses a question that has been asked quite often on this board. In a nutshell not receiving your quarterly statements is no excuse for not making your loan payments

When a participant chooses to repay a deemed loan, do they have to repay the 1099-R amount (which included accrued interest through the cure period) as well as all accrued interest from the end of the cure period to the date of payment?

hello. There are numerous topics pertaining to this problem but I could not find one that exactly fit mine.

In 2002, I made a Roth IRA contribution of $2000, but I was only allowed $1300 (due to unexpected rise in income). So I withdrew the excess ($700) from my roth account on time (only received $515 though from the losses).

My question is: Do I need to fill out any additional forms such as 8606, or should I just attach a note along with my 1040 explaining the situation?

Thank you ahead for your advice.

Does PERS reduce wage base and cause a reduced benefit formula because of contributions to 457b in Govt's plans reduced taxable gross income?

Hi I'm new here. I am wondering if I can still contribute to a ROTH for 2003 tax years. I have no other retirement funds for 2003.

Thanks

Terry

Here's the scenario...Employee was laid off and elected COBRA. A few months later employee is rehired, and he wants to elect coverage under the employer's health plan as an active employee. (Coverage is totally voluntary, and paid completely by the employee.)

I need to know what happens to the COBRA coverage when the employee elects coverage as an employee. We are facing situations where sometimes the preexisting condition limitation period is satisfied, and sometimes there's a remaining limitation period.

One of the conditions under which COBRA coverage will end (according to the federal regs) is the first date after the date of the election upon which the QB is covered under any group health plan THAT IS NOT MAINTAINED BY THE EMPLOYER. This condition appears to prevent termination of COBRA coverage if the group health plan election is made through the same employer that provides COBRA coverage.

The subject group health plan pays stated dollar amounts for health care services and does not contain a COB provision, so we are concerned about double coverage. We do, however, have a provision in the eligibility section of the policy that states that no one may be covered more than once under the policy. If we can't force the employee to drop COBRA coverage, this may be our "out" for not providing both COBRA coverage and coverage as an active employee.

Any insight would be most appreciated! (And sorry to be so long-winded!)

Most are familiar with email acronyms such as LOL, IMO, BTW, FYI, etc.

I got to thinking that BenefitsLink posters could save a lot of typing (and possible carpal tunnel syndrome) if some BenefitsLink acronyms were adopted. For example:

CPP - This topic has already been discussed ad nauseum. Use the forums search capabilities and check prior posts.

PD - What does the plan document say? OR You must follow the plan document? OR Have you read/referred to the plan document? OR It depends on the plan document? etc.

LC - You should obtain competent legal counsel on this matter. OR Sorry, you're going to have to pay for this advice. OR You may already be in a lot of trouble!

These seem to be the three most popular responses. Any other suggestions?

(P.S. Please do not take this post too seriously. It is all in good fun.)

I seem to recall a previous thread that discussed this but I need someone to point me in the right direction. When a company that offers health insurance to its employees changes insurance companies, are there any certificate of creditable coverage obligations by any party? I say no cert of creditable coverage, because coverage is not lost. The new insurance company is requesting for pre-ex purposes. Can't they get this information from the employer without a cert?

I am cross-testing a profit sharing contribution to a plan that has a 401(k) safe harbor match. There are employees (nonexcludible) that terminated during the plan year that did not meet the 1000 hour requirement for an allocation and they did not defer any compensation (ie no match). Do these employees have to receive a gateway contribution?

My understanding is that they did not benefit under the plan and no gateway is required. If the safe-harbor was a nonelective 3% and they were eligible to defer, then the gateway would be required.

A plan excludes OT, Bonus, Comm. The plan is 401(k) and pay period match only. I ran compensation ratio test - plan fails - NHCE inclusion % = 80%

HCE inclusion % = 100%

I tried testing 401(k) and match contributions under 401(a)(4) but plan does not pass ABPT - only 67%.

What can I do for this plan? Does the employer have to do a QNEC to pass 401(a)(4)?

Can I amend the plan to not exclude these compensation items within 9 1/2 months after plan year end? If I amend, plan do I just run ADP / ACP on gross compensation or does the employer have to still make some sort of employer contribution becuase NHCE's did not get to contribute or receive match on gross pay in 2003?

Any thoughts would be helpful.

Our current document provides that:

The Employer may make Qualified Nonelective Employer Contributions. The Employer shall contribute on behalf of all eligible Non-Highly Compensated Participants eligible for an allocation, a contribution equal to the amount, if any, as necessary to satisfy the Actual Deferral Percentage limitation and/or Contribution Percentage limitation. Such contribution shall be allocated first to the lowest paid Non-Highly Compensated Participant up to 25% of Section 415 Compensation, then to the next lowest paid Non-Highly Compensated Participant until the Actual Deferral Percentage limitation and/or Contribution Percentage limitation is satisfied.

Is it possible to amend the document to provide that "such contribution shall be allocated first to the lowest paid Non-Highly Compensated Participant up to 100% of Section 415 Compensation..." or would that exceed the overall deduction contribution limit?

For someone who wishes to make up missed deferrals while on a 6 month leave in 2003, are those deferrals reported on his 2004 w2 along with his "regular" deferrals made in 2004? Or would he have to file an amended 2003 return? In our case, he would end up with a total of about $19k total deferred. Still working with our recordkeeper on how they will account for the made up deferrals, given the limits built into their system.

I just want to confirm what I believe to be true.

A plan is a SH 401(k) plan that is top heavy. For the plan year, the only contribution made is the 3% NEC, however, DOP compensation is used so that several participants do not get 3% of full-year pay (required if the plan were considered for top heavy). I presume this is okay since the plan is treated as not top heavy.

However, if additional contribuitons were made, then the new entrants would need to get the 3% full top heavy contribution.

Can someone please confirm that this is how they understand it as well.

Many thank

If we have a POP plan, can we also pre-tax contributions to employee HSA accounts? We're in the process of setting up the POP.

Do we need to upgrade to a different type of Cafeteria plan to include the HSA? We don't want the dependent care and FSA.

We have an employee who had a child on 12/31/03. On 1/12/04, the employee contacted us to make a change to the Health FSA based on the status change.

We make the increase he requested for the 2004 FSA election, but he is now arguing the point that he should be allowed to make an increased FSA contribution for 2003, even though payroll for the 2003 year was over and one with by the time he made his status change election.

His opinion is that the tax benefit to the employee (salary reductions) and source of funding need not occur within the same year.

In practical terms, any status change after Dec 15 could never be made, since payroll withholding of an additional amount could not be accomplished before the end of the year. He is stating that this does not agree with the intent of IRC 125 and TR 1.125-4.

Any thoughts on this?

Thanks.

Plan year = 08/01/02 - 07/31/03

Plan allows salary deferrals up to 20% of compensation

Compensation is measured on a PY basis

Plan allows for catch up contributions

My ADP test is failing and I have two participants over age 50 with the following contribution amounts:

A - compensation = $117,000

contributions = $15,139

contributions deposited 01/01/02 - 12/31/02 = $11,000 of which $7,040 was contributed from 08/01/02 - 12/31/02. $8,099 was contributed from 01/01/03 - 07/31/03.

B - compensation = $109,418

contributions = $14,025.35

contributions deposited 01/01/02 - 12/31/02 = $12,000 of which $1,068.97 was contributed from 08/01/02 - 12/31/02. $12,956.38 was contributed from 01/01/03 - 07/31/03.

For the plan year, can you please help me determine if any of the contributions included above can be treated as catch up contributions?

I will admit up front that I have probably left out some important information, so please be kind with your analysis and I will provide any additional information that is required. Thanks.