I am merging a 401(k) plan sponsored by one member of a controlled group (Plan #1) into another 401(k) plan within the group (Plan #2). The merger is occurring mid-year, and Plan #2 will be the plan surviving the merger. Certain participants in Plan #1 (which does not have a matching contribution) have already reached their 402(g) limit for the year. Can we provide in Plan #2 for matching contributions on deferrals made to Plan #1? Matching contributions in Plan #2 are made on an annual basis. The plans are not aggregated for ADP/ACP testing purposes. Regulations 1.401(m)-1(f)(12) appears to say that a match can be made with respect to deferrals made to another qualified plan maintained by the "employer." The two employers in this case are an "employer" for purposes of Code Section 414(b). Subparagraph (ii) of that regulation, by negative implication, supports this interpretation.

This question is not related to my previous post from earlier today...

FACTS:

Employer offers group medical plan coverage. Employer also has a 125 plan that allow employees to pay for medical via pre-tax salary reduction. One of the employees has a son that is no longer a full-time student, but is a dependent. COBRA is offered to the child, due to loss of coverage.

QUESTION:

Can the employee pay the COBRA premium with pre-tax dollars (thorugh the 125 plan)?

Are there code sections you can refer me to?

Thanks again.

I have a question regarding treatment of rollovers when doing top heavy testing. Now that EGTRRA permits greater portability, I'm not positive about the treatment of rollovers from certain plans as to whether they should be included as "related" or not. Assume you have a PS plan, and consider whether rollovers into that PS plan from each plan type below, maintained by the same employer should be included. Would appreciate any opinions.

1. A SEP. I would say yes, based upon 416(i)(6).

2. SIMPLES. I'm not positive on these. I would say no, but I can't find any definitive statutory treatment. Since I can't find any statutory or regulatory language similar to 416(i) for SEPS, (nor under 408(p)) I'd assume no.

3. 403(b). I'm a litle confused by this. I believe that if there are EMPLOYER contributions, as opposed to deferrals only, that the employer contribution portion would be included in the required aggregation group under 416(g), and therefore a rollover from this portion would be included. But deferral portions would not. This is moot on a personal level, since we never have plans where the same or related employer maintains a 403(b), but I'd still like to know the answer.

4. 457's. No.

Appreciate your thoughts!

A terminated plan adopts slap-on amendments for GUST, rather than a full document restatement. Does this plan have to be submitted on Form 5310 or can Form 5307 be used? The client is just looking to meet the requirements of being a timely amender for GUST, not for a full-on termination review.

I am not a health plan expert, so you might find this question to be very straightforward:

An employer provides medical coverage for its employees through a group medical contract. The employer pays 100% of the premium for its employees. All employees with the exception of one have employee only coverage. Would it be discriminatory to charge the employee that has elected family coverage? The charge would be based on the premium to cover the family members only. Would it make a difference if the employee was an HCE or a NHCE?

Thank you for your comments.

Are there any circumstances that would allow the IRA owner to pay the UBTI tax out of poket/ In other words, must this payment to the IRS always be take from the IRA?

Question # 2. What happens if the IRA transferred out before the payment was deducted from the account or if the IRA does not have sufficient balance to pay the tax?

PS. Same question duplicated on SEP board- just want to make sure I cover the bases

http://www.benefitslink.com/boards/index.php?showtopic=21107

Thanks in advance for your help

Are there any circumstances that would allow the SIMPLE IRA owner to pau the UBTI tax out of poket/ In other words, must this payment to the IRS always be take from the IRA?

Question # 2. What happens if the IRA transferred out before the payment was deducted from the account or if the IRA does not have sufficient balance to pay the tax?

If a multiple employer plan adopts a volume submitter word-for-word with no mondifications do they need to file for a determination letter just based on the fact that they are a multiple employer plan?

Can somene please explain what is "Safe harbor.. and hod does it work"?

Thank you.

A plan has a 6/30/03 fiscal year. Plan fails ADP test for year. Can excess contributions (plus earnings) remain in plan and be considered as deferrals for 6/30/04 plan year? HCEs would reduce deferrals for remaining 2003 pay periods to stay within 402(g) limit.

A company recently amended its VEBA to add an offshore captive insurance arrangement as a new investment vehicle. In trying to determine whether a new Form 1024 must be filed, I came across this thread:

Thread

In the discussion, vebaguru and Kirk Maldonado believe that a new 1024 is required when a VEBA is amended, but I'm wondering what the authority for that position is. When I read Treas. Reg. section 1.505©-1T, Q&A-12, it doesn't appear that a VEBA that has received a determination ever has to file again.

Any thoughts?

Client maintains a combination cross-tested p/s and 401k plan. Prior to 2002, participants who either were not employed at year end or did not work 1,000 during the plan year were not eligible to receive any p/s (or forfeiture) allocation. All participants were, of course, eligible to make 401k deferrals.

Can these p/s allocation requirements be retained for 2002 and beyond in light of the new minimum allocation gateway requirement? In other words, can the plan continue to be cross-tested even though some NHCEs do not receive the gateway minimum (i.e., those who terminated or worked less than 1,000 hrs)?

The preamble to the gateway regs seems to provide that individuals who do not receive any benefit (i.e., no allocation of p/s or forfeitures) need not be given the gateway minimum. Yes/No? Does the fact that these NHCEs can make 404k deferrals and receive a match impact this result?

Thanks.

Employer with money purchase plan has funding deficiency for 2001. We looked into one of the correction program but this fell trhough the cracks because it wasn't participant contributions that weren't deposited, but employer contributions. So they are paying the 10% penalty on Form 5330. Does this mean they do or don't have to pay the accrued interest from the time that the money was out of the plan? I know the correction plans instruct you to do so but I haven't seen the same instructions anywhere for delinquent employer contributions. A citation would be helpful so that I could follow up.

Also, I am assuming that I need to have the client file amended returns for the deficient year (they had said they made the deposit of the employer contribution). Do they report they made the deposit in 2003?

Just when I understood the correction programs .... along comes this! Thanks in advance.

Kristen

Would sunglasses that clip on to regular prescription glasses be reimbursable under a FSA?

The participant would be saving money by purchasing the clip on instead of buying a whole new set of prescription sunglasses yet the clip-on's by themselves are not technically medically necessary.

Opinions??

Thanks,

Rachel

Can anyone provide statistics on the types of pre-retirement death benefits plans offer? In particular, the prevalence of pre-retirement death benefits by level of benefit: % of plans that provide minimum J&S 50, as well as % and types of other benefits.

Thank you!

A Participant terminates employment and takes a cash distribution of his vested portion. 20% is withheld as Federal Income Tax, and the participant receives a 1099 for the distribution. The participant is rehired, and wants to pay back the distribution to have the forfeiture reinstated. Since the participant has already been taxed on the distributed amount, is the repayment now considered after-tax money and has to be carried as a basis?

Someone just told me the IRS is coming out with a rev proc that will extend the GUST deadline beyond 9/30 for a $250 user fee. Has anyone heard anything about this?

Can a partner who receives a K-1 use this income to start their own Uni-k? Or does the partnership have to sponsor a plan?

Income is based on consulting services, not rental income or anything like that.... so partner does actually "do" something to earn the income.

We have two corporations that our attorneys are 'closing'. One had a SEP plan and one had a SIMPLE plan (mostly same ownership, all family). Are we required to give the employees any notification regarding their SEP or SIMPLE plans? A new corp is being created that will hire all the employees and they will start a new 401k.

if we're starting a new 401k, for a new sub-s corp, on 9-1-03 and plan to use short plan year through 12/31. Can we give our notice to employees regarding the safe harbor match as soon as the plan is setup? Or do we have to delay the effective date of the plan to allow for a 30 day advance notice?

Just got word from my VP/HR that we may need to do an AAP (Affirmative Action Plan) since we may be a govt contractor in the near future. I have done one in the past, about ten years ago, without software and it was a nightmare.

Now, I am looking for recommendations for the best (and also read: cheapest) software out there to help with all aspects of the plan so I don't have to figure out cab fare to the halfway point of the Golden Gate Bridge.

Any help or suggestions? Please?