Employee terminates employment with Company A. Employee elects COBRA continuation for medical coverage. Employee pays Company A monthly premium. Employee starts his/her own Company B. Can employee:

1. Continue with medical coverage of Company A through COBRA, subject to the maximum coverage period?

2. Can he/she deduct this premium from self-employment compensation earned through Company B?

Appreciate your responses.

The DOL claims procedure regulations set forth time frames for processing claims. Specifically, there are certain times frames in which an initial decision on a claim must be made, the initial decision must be appealed and a decision on appeal completed and communicated. Do you think, with respect to a self-insured, self-administered, single-employer health plan, that the claims procedures include actual payment of a claim or may a plan comply with the regulations in making its determination as to whether a claim is covered under the plan and then take whatever time it wishes to actually pay the claim?

The DOL claims procedure regulations specify certain time frames for processing claims, appealing claims and making decisions on appeal. With respect to a self-insured, self-administered, single-employer health plan, do you think that actual payment of a claim is part of this process or may a plan comply with the regulations when deciding if a claim is covered under the plan and then take whatever time it wants to actually pay the claim?

Has anyone determined whether the deadline for adopting a corrective amendment under 1.401a4-11g (10/15/03) is extended until 11/18/03 due to Hurricane Isabel?

I have a possible 410b and 401a26 failure in a 2002 calendar year DB plan.

Rev Proc 2002-71, Sec 5 item 15 extends the deadline for 401a failures due to disqualifying provisions but I am not sure if this is on point or if there is something else that extends my deadline.

We are dealing with a client who has not been complying with his plan document regarding the definition of compensation. Probably not a big issue in terms of dollars but what exposure does this client have by not complying with the terms/definitions of the document?

Employer previously maintained two plans -- one MPPP and one PSP. Employer terminated MPPP as of June 30, 2003. 5310 was filed for the MPPP and still waiting on IRS to review. MPPP assets were paid out shortly after June 30, 2003. Employer wants to know if it can pay remaining termination expenses from the PSP. Employer's reasoning appears to be that since same participants are/were in both plans there should be no problem. Technically, I would think that the MPPP and the PSP are two separate animals and that payment of the remaining termination expenses should come from the employer directly and not by way of the PSP. Any comments or suggestions?

A quick question.. is code 3B(Self Employed) used for partnerships or just sole proprietors? Thanks for you input.

TAG

Several not-for-profit organizations are contemplating a merger. One of the entities sponsors a 403(b) plan that is subject to ERISA (includes employer match), while two other entities sponsor non-ERISA 403(b) arrangements.

The entities sponsoring the non-ERISA plans will cease existence as part of the merger. Will employees of these former entities be able to transfer custodianship/trusteeship of their 403(b) accounts over to the surviving organization's ERISA 403(b) arrangement?

I'd appreciate anyone's take on what the distinction is under the proposed "deemed IRA" regs regarding two points (1) your "deemed IRA" trust must be a a separate trust from the 401(a) plan's trust, yet, (2) it's OK to commingle the assets of the IRA trust and the 401(a) plan trust assets (proposed regs explicitly states this is ok).

Logistically and legally, just how does one keep these trusts separate (Deemed IRA vs. Qualified Plan) yet commingle these trusts investments (if so desired) ? I'm struggling just what the distinction is and how to walk that fine line. Anyone ?

As the third party administrator, have just been notified that a payout to a former spouse has occured in a profit sharing plan without a QDRO (participant had an amendment to the judgement of divorce prepared by her attorney and VanGuard paid out of her segregated account based on this amendment--the plan trustee was unaware of the situation).

Our recommendation to the plan trustee was for the participant to go back to her attorney and have him draft a DRO for qualification. Even though the money has already transferred, we feel that having a QDRO in place after the fact is better than not having one at all, at least from the trustees perspective.

Does anyone have any thoughts on this thought process? Any comments would be appreciated.

Thanks,

Diane

A client received advice that its plan should consider having the PBCG take over as plan sponsor..is this something that is actually done or does this refer to PBGC taking over as Trustee upon termination?

Let’s say I have a DB plan with 4 HCE's and one NHCE. The DB Plan uses the 1000 hour rule for benefit accruals.

The NHCE previously satisfied eligibility and has an accrued benefit. The NHCE goes to “part time” and is working less than 1000 hours per year.

Do I fail 410(b) because the NHCE is not "excludable" and therefore my coverage percentage is 0%? Does the Plan need to provide the NHCE with some benefit?

What if the denominator in my accrual fraction is the sum of 1) the numerator and 2) expected future years of service, so that technically, the NHCE's accrued benefit IS increasing each year because I am reducing my denominator by one.

Whatever that means, it works. Go Pedro.

The answers to my last post convinced me that the trustee CAN use the participants cash funds associated with the ESOP to pay for certain closing costs. These include funding for a TPA, audit, and legal costs for the plan closing.

However I just found out that the trustee has been using the cash to fund his defense against two legal claims that are against him and the other fiduciarys. Several years ago when some participants "PUT" their stock they were issued a promissary note (not secured) issued by the company. Now that the company is in chapter 11, the past participants are discovering just how much that piece of paper is worth and want to know why adequate security was not provided for.

I don't see the trustee's use of funds in his legal defense in the above mater as in my best intrests. Is there any case law to back me up? Can I ask for a full, itemized accounting of where my money is going?

Help, my last ESOP meeting is tomorrow. Thanks

I have a profit sharing plan that runs from 6/1/02 through 5/31/03? Therefore, I think it would be safe to say, the 5500 is for 2002. When do the employer profit sharing contributions have to be deposited by?

What is the appropriate safe harbor compensation to use for an LLC taxed as a partnership? The plan uses W2 earning definitions but we want to include pass through corporate earnings since the owners include that income in determining employment taxes.

We have a prospect that has a non safe harbor 401k plan with a 50% of first 6% match with about 50% participation. They became top heavy for the first time in 2002 and had to make a 3% to all nonkeys. This cost them an extra $15,000.

It appears we can change the plan in 2004 to be a SIMPLE 401k with 100% match of first 3% and avoid the top heavy rules. TRUE?? Is there any reason you can't change back later if they become non top heavy??

The plan sponsor of a DB plan was rountinely writing a check from the pension trust to a non-interest bearing corporate account in order to write checks for the monthly benefit payments to retirees. According to the auditor, the exact amount of assets that came out of the trust were used to pay benefits each time. This practice was discontinued towards then end of 2002 when the sponsor (finally) opened up a checking account in the name of the pension trust.

Is there any way that this is not considered a prohibited transaction?

Otherwise, box 4(d) on the Sch. H is checked yes, a Schedule G is attached, and the plan probably ends up getting audited, and the sponsor pays a 15% excise tax. Does that about sum it up?

We have an Indian Tribal Plan in New Mexico we do the admin for. We consider it a governmental plan exempt form 5500 reporting. We are putting together an SAR for general information purposes only. My question now is the bonding issue. Do they need to obtain a bond? I review other threads and it said check with the state and an address was given via the computer; however, all I found out there were the asset size of the State's retirement plan. I think I missed something(?).

Anyone deal with tribal accounts and know. Even if it is not required, any thoughts about recommending one?

Thanks for your thoughts.

If a standardized plan does not amend their document for GUST until after 9/30, does it still have to file for determination letter along with the $250 user fee under RP 2003-72?