Can an owner who is over the age of 50 make the catch-up contribution if he is not going to make the minimum Top Heavy contribution for the year?

Employer X with rank & file employees had a DB plan. Employer sold the business to Y on November 7, 2003, say, and also terminated the DB plan effective Nov 7, 03. Plan assets will be distributed to the participants asap.

The rank and file employees have continued working with Y. Y now wants to adopt a DB plan.

Is the new DB plan required to recognize service for vesting/eligibility etc prior to the business purchase date?

If you have a small plan (fewer than 10 lives), not covered by PBGC, can the owner waive benefits in order to terminate? I seem to remember that the IRS only allowed this when there was coverage under PBGC. Is the answer any different if the employer is in bankruptcy proceedings?

Participant went out on disability 2 years ago. ER has been withholding loan payments but never sent them to the recordkeeper. Just discovered this. Would you deem the loan and have the ER return the loan payments to the participant? Would you apply the loan payments and then deem the loan?

I know the regs are very clear on the fact that a loan needs to be deemed or offset after the cure period has expired. How are you handling administrative errors such as this?

Is there any reason why a participant should not be able to get a hardship distribution during a pending termination. essentially a 5310 has been filed with the IRS and the plan is being reviewed. I dont see any reason why not but i was curious if you all shared my view.

I have a plan that is top heavy for the 2003 plan year. The plan eliminates commission as a form of compensation for the plan year. The participant in question is a HCE.

He earns 13,000 in salary and 90,000 in commission. Deferrals and the safe harbor non elective are based on the 13,000.00. I have been told that the top-heavy contribution is based on total compensation(salary & commission). Can anyone give me their opinion on this.

A health plan previously offered both individual and dependent coverage. As of 1/1/04, dependents are no longer covered.

1. If there are qualified beneficiaries who were already receiving COBRA and are dependents, are they still entitled to coverage?

2. Am I correct in my understanding that dependents who are not yet receiving COBRA are not eligible for COBRA because dependents of active employees are not eligible and the COBRA coverage mirrors that of active employee coverage or am I mistaken?

Please advise.

For purposes of the ACP test, is a non employee owner, who participates in the active day to day mangement, considered an HCE?

What if they are NOT actively participating in the day to day management of the company?

What if they are married to a paid HCE employee?

What if they are married to a non paid HCE actively participating in the day to day management of the company?

Thanks.

Has anyone seen any guidance on reimbursing dualla expenses through a medical reimbursement account?

From my understanding on the claim - their insurance is not covering it, and they are not medically required to have a dualla present. She's there to help through the labor.

Sorry for any misuse of the dualla terms. This ones new to me.

Thanks for the help.

Is there a standard federal withholding amount that should be applied towards distributions from NQ deferred compensation plans?

We have an employee who was covered under her husband's military health care plan. He has been discharged AND the couple has decided to divorce. The question is, does anyone know what type of continuation of coverage is available through the government in a situation like this? Our employee is having difficulty getting answers from the husabnd and the military.

Thank you.

Using Relius 8.3.7. Trying to allocate a QMAC. Relius allocates QMAC pro-rata to compensation. Is there anyway to allocate pro-rata to deferral? Relius support says no, but I'm hoping I got a new or less than stellar analyst.

Does anyone know how to handle the 1099R's for those benefits sent to the PBGC on behalf of lost-unlocatable participants?

Q-7, A-7 of Notice 2004-2 indicates that a self-insured medical reimbursement plan sponsored by an employer can be a high-deductible health plan. How does this work? Is it enough for the participant to pay the deductible and out-of-pocket expenses using the medical reimbursement plan for insurance offered by the employer? Can anyone who has set something up explain what they did?

Need some clarification. I have a company with 10 full time EE's all eligible to participate in a 401(k). 7 of the 10 have comp. last year over 90k. of the 7, one is an officer by definition and one is more than 5% owner. If the Top paid group election is made, I am trying to calculate how many HCE's to use in the ADP test.

20% gives me 2. So is it 2 EE's with the highest comp. plus the officer and the 5% owner that will be used in the ADP test as HCE's?

Thanks

Section 223, which governs Health Savings Accounts (HSAs) is silent as to whether a discrimination test applies when an employer makes a contribution to the HSA of an employee. Notice 2004-2 provides that if "an employer makes HSA contributions, the employer must make available comparable contributions on behalf of 'all comparable participating employees' (i.e., eligible employees with comparable coverage) during the same period." Notice 2004-2 is silent as to how to apply this test in an affiliated service group setting. Is there any further guidance out there at this time on discrimination testing for employer contributions to HSAs? I assume that the discrimination rules contained in section 105(h) do not apply here.

A client based outside of North Carolina withheld federal tax but not state tax for North Carolina distributions. When told they should have withheld state taxes, their response was that they are not liscensed to withhold taxes in North Carolina so they did not. They assumed the participant would pay any required taxes when they filed their state income taxes.

Is there a penalty for not withholding? If yes, what is the penalty?

How could they withhold for distributions in the future?

I have a client who has said that they have an ERISA bond, not a fidelity bond. My questions are:

1) Are they the same thing? (The client does not think so.)

2) If not, what is the difference?

3) The client also states that the fidelity bond is not required. I believe it is. Please confirm that the fidelity bond is required.

Any help would be greatly appreciated.

Help! The IRS has revised its website and removed one of my favorite links. I'm looking for electronic versions of the proposed cafeteria plan regulations (1.125-1 and 1.125-2), and the final regulations (1.125-3 and 1.125-4). Does anyone know where I can find these now?

Would a fertility monitor be considered a reimbursable expense under a cafeteria plan.