Took out 14,000 to buy a second home in March, it's august now, can I put back 14,000 or only the 3,000???

Mark

We have a client who has maintained two plans, a mp plan with a 10% contribution and a ps plan with no employer contribution. We merged the two plans 1/1/2003. Both plans had a plan year of 10/01-09/30. This has been changed with the merger to a calendar year plan.

I believe that we are obligated to make the 10% contribution for the short plan year from 10/01-12/31. We are using the compensation for 10/1-12/31 to determine the required contribution. The HC in this plan received the max. $17,000 for the 2001 plan year which ended 9/20/2002. If a 10% of this short period compensation is given to him, would that contribution be counted in the calendar year for the short plan year or would it have to be counted in the 2003 year when the two plans were merged. Would we base the contribution on what he actually earned in this quarter.

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The 10% contribution is continuing to be given in the profit sharing plan fso no loss of benefit occurred. We are just trying to determine if we would be letting the HC receive more than he should either in the year 2002 or 2003?

Also, since the eligible compensation went from 170,000 to 200,000. Should we use $200,000 to determine 10%. His reported income for that short period is over $70,000. I don't think we can use 10% of that.

Sorry if this is confusing

I am trying to locate the Qs and As from the ABA JCEB for 1999, 1998 and maybe 1997. They are not on the ABA website. The earliest that they have is 2000. Any ideas?

Thanks.

Does anyone have any reference to recent court cases involving cafeteria plan documents set up by accounting or TPA firms and how lawsuits have occurred due the presumed practice of law by such firms?

Co. A & Co. B are part of a controlled group. Each company however has set up their own plan. What is the rule in regards to coverage testing as well as ADP/ACP test?

Do you have to aggregate both the plans and do a combined coverage test as well as ADP/ACP test? What if each plan passes on its own coverage test and ADP/ACP test? In that case is it safe to argue that you would not need to aggregate the plans for ADP/ACP test or coverage test?

OR

Maybe in controlled groups since the companies are considered part of a single employer no matter whether they are all participating in one plan or separate plans you always have to do a combined coverage test and ADP/ACP test?

If the latter is true than what is the advantage of having separate plans in a controlled group situation since anyway one would have to do a combined coverage and ADP/ACP test?

Thank you for all your help and guidance.

Some employees are including an activity fee as part of their dependent care claims. It appears the fee is put toward supplies and other extra activities during the summer. Would this fee be reimbursable?

Does massage therpy need to be medically necessary in order to claim as an eligible expense under an FSA Plan? Thanks, Joe

I have 2 separate situations where employees are wanting to add coverage for dependents due to "events" that do not seem to be clearly defined as qualified status changes. If anyone has handled similar situations, would sure appreciate your viewpoints!

1. An employee/health plan participant's covered spouse has just learned that he has a biological 13 year old son and has received an order to provide health insurance. There is no QMCSO (and we aren't the father's employer, anyway). Our plan definition of dependent is very generous and includes stepchildren regardless of where they live, and even step children of spouses and of domestic partners. It seems that the determination of paternity is "equivalent" to "birth" or "adoption" and should allow for adding a dependent's coverage, but can't find anything about it. Ideas? There is a court order to provide health insurance, but as mentioned before, it isn't a QMCSO.

2. An employee/health plan participant has just received custody of his daughter. She has relocated to his state of residence to live with him. When she lived with her mother, she received medical care from a free clinic and was not covered under our employee's health care coverage or any other group plan. In the state where our employee lives, we only offer one health plan option--our national plan--so by moving to a new state, the dependent did not gain any new options for coverage. The child's relocation itself did not result in the loss of prior "group heath plan" coverage, but she did lose access to the services at the free clinic due to geographical relocation. Again, looking at this practically, it seems that there should be an eligible event here, but I can't find support for it. Any suggestions are most welcome!

THANKS!

I have a client who is a sole proprietor and employs his wife. They also have 9 employees.

They made a SIMPLE IRA contribution for wife, but end of year accounting records show that wife did not receive wages or compensation from employer. They closed SIMPLE IRA account after noticing mistake. The 1099R shows a premature distribution from SIMPLE IRA subject to 25% penalty.

Client called and asked us to "fix" this... they contend the contribution was not based upon compensation, thus the SIMPLE IRA was not valid. Therefore we should treat the distribution as a closing of account/ mistake of fact and not a premature distribution from a SIMPLE IRA.

I am interested in your thoughts on these points:

1) The distribution was correctly reported on 1099r. Perhaps the client can utilize Form 5329 to explain why they are not subject to the 25% penalty (my guess is that they would have to apply FICA w/h in this correction).

2) Can they self correct under EPCRS? Or should they apply for ruling from IRS as to correction?

In light of the new proposed regs, am I correct that a Safe harbor plan and a Nonsafe harbor plan sponsored by two companies of a controlled group do not have to be aggregated for top heavy determination?

I've never seen anything like this, and wondered if anyone had, and has an opinion of the likely outcome.

The prior TPA had someone who was either inexperienced or insane prepare the 5500. On the Schedule H, line 3(a)(1), they checked that there was an unqualified opinion attached (although one was never done) and simply attached some statements from the various financial institutions! And the client, apparently not knowing any better, filed the forms as prepared.

Needless to say, the DOL kicked it back and is proposing penalties of mega-thousands or something like that. Client is asking what they can do?

I've never seen such a situation, and wondered if anyone had, or had a feeling as to the likelihood of some successful penalty reduction if they beg for mercy? (and there's the obvious step of a suit against the TPA, which I presume wouldn't be necessary, because I suspect any TPA in this situation will simply ultimately pay any penalty. But maybe not, once the attorneys get involved.)

Any opinions or ideas?

Has anyone seen anything out there that analyzes whether a dependent care ESA is more valuable if an employee is also eligible for the dependent care credit, the child credit (which was just increased to $1,000 for 2003) and the earned income credit?

I do not have much experience with Tiered Matches, but have a relatively simple question. Client wants to implement a tiered match based on length of service. If it is only going to be offered to NHCE's, then do I have to worry about any type of non-discrimination testing? Seems like the admin. would be very straight forward. Any input appreciated

Current medical leave policy includes FMLA language but there is no mention of the "counting method" to be used. The policy is undergoing revision and will include a counting method, the rolling 12-month period (measured backward). Since we are going from no method to a method, must we provide the 60-day notice to employees?

I understand that one can hold RE in their IRA. I have found a guy that will loan me money for the transaction (downpayment will come from my IRA), but the terms are harsh. The reason, he says, is that under ERISA, I cannot be qualified for the loan personally. I am having trouble finding this ruling, any help out there?

Can an employer in September of 2003 decide to make a discretionary profit sharing contribution for the plan year that ended December 31, 2002? The employer has filed for an extension for their corporate tax return.

Is their anything wrong with using an interest rate outside the 7.5% to 8.5% range used for Safe Harbor Target Benefit Plans in an Age Weighted Profit-Sharing Plan? Employer likes Age Weighting, but wants a little bigger allocation for the employees. A lower interest rate would work.

I'm curious how often 401(k) administrators are sending statements to their Plan participants these days, quarterly or annually? If it's annually, do the participants have access to their daily balance either by phone or online? We do quarterly statements and I was just wondering if, with online access and all that, the trend was going toward annual statements only...

Participant is requesting a lump sum withdrawal from a Money Purchase Pension Plan. He indicates he is not married as he cannot find his spouse. Obviously he is still married and clearly the participant's word that he cannot locate his spouse is not enough to enable the fund to distribute the lump sum to the participant.

Are there any guidelines as to what the participant is required to do in order for the Fund to safely distribute the lump sum to the participant?

Is the Fund required to take any steps to locate the "missing spouse"?

Participant is requesting a lump sum withdrawal from a Money Purchase Pension Plan. He indicates he is not married as he cannot find his spouse. Obviously he is still married and clearly the participant's word is not enough to enable the fund to distribute the lump sum to the participant.

Are there any guidelines as to what the participant is required to do in order for the Fund to safely distribute the lump sum to the participant?

Is the Fund required to take any steps to locate the "missing spouse"?