I have a plan that was new for 2003. All employees were hired in late 2002. Whoever drafted the orginal document did not think to allow immediate entry and the plan operated as if this was the case. I am going to file for a determination letter and I am wondering if I need to file the sch Q along with the 5307?

An employer is adopting a prototype SEP plan so that he can set it up on his fiscal year. Can he use fiscal year compensation when calculating contributions?

Are health FSAs subject to the group health plan rules (urgent care, etc.) in the claims procedures regulations? Does all of that detail need to be in our SPD?

Hi,

I am researching the dedutible limit when an employer has both a DB and DC plan and at least one participant is covered by both plans. There seems to be a special rule that if the total DB and DC contribution is greater than 25% of pay, the excess amount can not be deducted. The problem is the the DB minimum funding requirement is greater than 25% of pay, and the DC plan is a safe harbor plan that has to make the safe harbor contribution. As I understand the special rule, the safe harbor contribution would not be deductible and an excise tax would apply for that year and EACH year thereafter until it is able to be deducted.

Does anyone know if there is some way around this? HELP.

Many thanks

Anyone know when the form is going to be available. It's a little late in the year already.

Hi,

New plan established 4/1/03. Can the employer consider compensation paid prior to 4/1/03 in determining the 25% deductible limit? The definition of plan compensation excludes compensation prior to the effective date of the plan, but for deduciton purposes, I was hoping to use full year pay.

Any help would be greatly appreciated.

Thanks!!!

I inherited an employer that, when the group health plan was discontinued, began simply paying employees a few hundred each month to "use" for premiums or medical expenses. The amount is subject to all taxes; the employer includes a line on the pay stub that says something like "medical". They have asked me to add this "benefit" to the existing cafeteria plan, which, currently, only provides a medical expense reimbursement plan.

I don't see how (or why) I would want to add this to the cafeteria plan and keep it an after-tax benefit. (Let me know if I am missing something!) It would appear to benefit both the employee and employer if this was a pre-tax benefit (no income or fica/futa withholding).

As a result, I have considered the following options: an HRA (limited to premiums or unlimited), an employer contribution to the MERP (understand can't reimburse for insurance), or a premium reimbursement plan (Rev. Rul. 61-146).

In addition to various other concerns that I have, I am hung up on how and whether COBRA and HIPAA apply. (Employer has 24 employees) I have tried reading the rules several times, as well as whatever commentary I can get my hands on, but am very confused.

Am I correct that no matter how much the employer contributes, COBRA and HIPAA will apply because the employer does not offer a group health plan that is subject to HIPAA? Are they already subject because they only offer a salary-reduction MERP currently?

If I am not, could I avoid COBRA by having the employer contribute $500 to an HRA for insurance premiums or reimbursements and an additional $500 to the FSA for reimbursements only? Would I need separate plan documents?

Any comments or suggestions would be greatly appreciated!!

I recall that a DB plan can not allow a participant to elect an optional form of distribution with guaranteed payments beyond his or her life expectancy.

For example, can an 80 year old retiree elect a 20 C&C?

Anybody have a code section for this? Does it exist or have I finally lost my mind?

How do you complete the Schedule T for Cross Tested Plan. If everyone is benefiting do you check 3(d) or do you not check any exception, complete Item 4, and mark Average Benefit Test? In our plan all employees benefit but we have to do the Avr Ben Test. Do we have to show less than 70% on line 4(d) to be able to check Ave Benefit Test in 4(f)2?

We just acquired a plan that is age-based. The determination of the Allocation Points requires us to, first, multiply comp by the annuity purchase rate, and then, second, to discount step one by 8.5% from the participant's normal retirement age (age 65). THe result is the Allocation Points.

I have a participant over age 65. Am I correct that her allocation points are simply the product of step one because no discounting is possible? Or does table "Adjustment to Actuarial Factor for Normal Retirement Age Other Than 65" somehow come into play?

Thanks.

If you were in the business of approving hardships, what kind of supporting documentation would you request to approval a hardship for medical expenses? Would an Explanation of Benefits suffice? How about a letter from a collection agency? Would you always require a bill stating the type of service rendered and date service was performed?

Thanks!

Can the non-taxable portion of a distribution from a terminating defined benefit plan which consists solely of previously reported PS-58 costs be rolled over under the same rules that apply to distributions of after-tax employee contributions? These distributions are post EGTRRA and the insurance contracts were surrendered by the Trustee and cash values invested in the plan trust Are the rules any different if the plan is not terminating and the distribution is being paid to a terminated employee?

Situation: existing cross-tested PS plan. Has required 5% NHCE allocation to meet gateway.

Client wants to add a stand alone 3% safe harbor 401k prototype.

Question: Can the 3% be used as part of the 5% gateway?

I'm sure this is a basic question, but I'm not fairly familiar with QMCSOs. Does the law require a plan to add a child regardless if the employee completes an enrollment form?

Target benefit plan is a prototype document. ONe portion of the adoption agreement entitled "Target Benefit Formula" states that " A participant's monthly retirement benefit shall be equal to 12% of such participant's average monthly compensation." E/er wants to terminate the plan as of 12/31. E/er will fund this year. My thinking is that in order to terminate the plan not only would the e/er need to do a consent of directors re termination, but that the adoption agreement regarding the e/er providing funding to give a participant 12%...needs to be amended such that it reads 0%... That way even if there is a problem with the termination, eg, assets not distributed in a timely fashion, etc...., then the e/er will still not be obligated to fund.....? Any suggestions? Thanks in advance.

ERISA Section 4045 authorizes the PBGC to recover the portion of lump sum amounts distributed in the 3 year period prior to distress termination that are greater than the life annuity that would have been paid if elected instead of the lump sum.

Does the PBGC frequently use this authorization?

The plan in question is a small plan (13 monthly retirees and 6 vested terms) that has offered lump sums for a long period of time.

The vested term wanting a lump sum is not a decision maker with the plan sponsor (not an hce, owner, key, etc.). The lump sum is not being asked for in anticipation of a distress termination which may or may not occur in the next year.

Any thoughts or experience would be appreciated.

The current thought is to pay the lump sum but caveat it with a cite of ERISA Section 4045 indicated the PBGC ability to recover certain amounts.

A broker I work with has a client that just terminated the company 401(k) plan and will start a SIMPLE 1/01/04. The client was told by its TPA that balances could not be rolled over from the terminated 401(k) plan into the SIMPLE. I disagree, but respect this particular TPA, so thought I would ask if I'm missing something. Thanks.

Under the modified regs that came are you still required to give 90 days notice when removing this benefit?

I am looking for a sample form for RMD that incorporates any spousal consent, options. etc.

Thanks, Sue

I am looking for a source (web site or other) that I can pull some 401(k) statistical data from. What I am looking for is avg. account balance, avg. deferral rate, avg. deferral contributions, and avg. participation. I am hoping to get this information broken out by HCE vs. NHCE and if we can get by age as well I would be grateful.

I have the PSCA 45th annual survey and the Deloitte & Touche 2002 annual but neither of these has this breakdown.

Any help would be appreciated.