I have a multiplemployer plan sponsored by a PEO. The PEO handles most of the employee benefits for all participating companies. Some of the sponsoring companies have the cafeteria deductions come straight to them and other have the cafeteria deductions go straight to the insurance companies. Is it okay to file one form 5500 for this plan or does this issue cause multiple 5500s to be filed?

Employee with a green card was working here in the U.S. and was a participant in his employer’s retirement plan. He terminated employment and is back in the UK. His account balance is less than $5,000 and he plans on taking a lump sum distribution. He claims that the 20% mandatory withholding does not apply since he lives in the UK. Is this correct?

An employer makes an excess matching contribution to employee who has been terminated.

The contribution is subject to 10 % penalty for non-deductible contribution.

Is the employee subject to a 6% penalty on an excess IRA contribution and how is the contribution returned to the employer as all SIMPLE IRA contributions vest 100% to employee.

My opinion is that the employer reports the contribution as income to the employee and deals with the employee directly and the employee is the only one that can request the distribution from the plan.

Am I on the right track?

Thanks

The regs state that a multiple employer plan has to have the same eligibility and vesting requirements for each participating employer. Does anyone know of a design or loophole or other reg that would allow participating employers to have different eligibility and/or vesting requirements?

I have a plan that is going to replace their DB plan with a DC plan. They are going to freeze benefit accruals in the DB plan. Is it possible to freeze the accruals at different dates for different employees. I have combed through the regs. and found nothing that says they can't do it (other than a possible 401(a)(26) problem).

Also, I assume they can design the freeze where new employees will participate in the DC plan only and the current DB plan participants can opt-out of the DB plan to participate in the DC plan. Any design issues here? Does anyone have Code sites that can direct me to any opt-out rules?

Thanks!

We have been manually filling out 8109-B coupons for our clients when they have 945 tax deposits due, but the IRS will no longer provide the blank coupons. They want our clients to order the pre-printed coupons.

The problem is, if we can get our clients to request the coupons, then they eventually (if they're lucky) get what looks like payroll tax coupons addressed just to the corp., and of course they would discard them because someone else handles they payroll taxes or they transmit electronically.

We are thinking about setting up our non interest-bearing trust account, with its own EIN and processing all deposits and 1099-Rs through it, similar to what the institutional custodians do. Of course, this may raise issues with funds flowing through an account that is not part of original retirement plan trust, and being commingled with other funds. However, if this is just a conduit and there is no interest paid, the feds may not be too concerned about it.

Does anyone have any experience or advice with doing what I have described?

Thanks

I have a client who is wondering if her shoe inserts that she has had specially made for her rotating heel are eligible for reimbursement. She has a doctor's note to back it up showing that he has prescribed them for her to help correct her heel from rotating when she walks.

Is this an eligible expense for reimbursement???

Here is the scenario:

2003 is the first year of a new defined benefit and profit sharing for the plan sponsor (plan effective dates are 1/1/2003).

The defined benefit plan credits a maximum of 5 years of service prior to 1/1/2003 to calculate accrued and projected benefits.

The PS plan only covers 3 HCEs and the DB plan covers 3 different HCEs and 10 NHCEs. Both plans have safe harbor formulas under 401(a)(4). No one participants in both plans.

My questions are:

1. Is there any need to test the combined accruals and allocation under the general test of 401(a)(4)? I don't think there is since each plan is a safe harbor plan.

2. When testing the aggregated plans for coverage under the Average Benefit Percentage test of 410(b) for 2003 (using 2003 as the measurement period) what do I use as the increase in accrued benefit in the DB plan since everyone enters with an accrued benefit as of 1/1/2003 (as a result of counting pre-participation service)?

It makes sense to me to use the total DB accrued benefit as of 12/31/2003 instead of just the increment from 1/1/2003 to 12/31/2003. This especially makes sense to me since accruals to the HCEs in the DB plan are limited to 1/10 of the 415 dollar limit at 1/1/2003 and 12/31/2003 and would have no increment during 2003.

Thanks.

We are about to launch a web site to allow participants to access data about their benefits. Does anyone have a consent form they have used to document that the plan sponsor agrees to its data being posted on the Web? We know that they have asked for this service, and are paying a premium for it, but are concerned that if there should be some unforseen consequences to the data being on the Web, we want written authorization from the plan sponsors.

We just acquired a takeover plan where I'm questioning how the match had been calculated. This is a 401k plan with a 100% match up to 5% of compensation. The definition of comp used in the plan is W-2 wages.

One employee gets two checks each pay period. One is for her regular salary of $999.35 and the other check is $99.29 for office cleaning. Both checks are subject to taxes and will appear as W-2 wages. This employee has elected for a 7% deferral ($69.95) to come out of her regular check only.

When I calculate her deferral percentage I get a total deferral of 6.37% ($69.95 / total comp of $1,098.64). I figured the Match as $54.93 or 5% of $1,098.64.

The previous TPA calculated the match as $49.97 or 5% of $999.35.

Which is correct?

Thanks.

In designing a cash balance plan for a professional partnership, one challenge is accommodating the desire of some partners for substantial contributions and the desire of other partners for smaller or no contributions without creating an impermissible cash or deferred arrangement. The two techniques that I have seen advanced to solve this problem are (1) to allow partners to make a nonbinding expression of their individual preferences that the employer "just happens" to incorporate into the design of the plan; or (2) to require after-tax contributions of varying amounts as a condition of participating at various contribution levels, thereby in effect letting partners control their contribution level by agreeing to the appropriate level of voluntary contribution.

Does anyone have an opinion as to just how aggessive these approaches are, or, better still, actual experience with the IRS regarding either of these approaches?

Also, any better ideas of how to skin this cat are most welcome. Thanks for your input.

First Question: If a plan allows rollovers and an employee rolls into the plan assets formerly in a deductible IRA, this would be considered just a plain old rollover -- not a "deemed IRA" -- correct? My understanding is that owner-trustees must have a custodian to hold a "deemed IRA" but that has not been the case for rollovers. Do rollovers from IRA's need to be looked at differently than other non-related rollovers from qualified plans?

Second Question: Employees who are not 5% owners may be exempted from the RMD rules under qualified plans. What if that individual rolls his deductible IRA's into the plan -- are they now also exempt from the RMD rules until the individual retires?

Can a FICA plan allow inservice distributions? Can QDROs apply to FICA money?

My wife is employed at a not for profit health care employer. Her retirement plan is a "profit sharing plan"

I would like to know upon tremination of employment can she roll 100% of the profit sharing plan fund balance into a roll over IRA? Can her employer "hold back" part of the balance? My wife was told, by her employer, that she could roll over 70% of her balance with the remaining 30% to be roll over at a unspecified later date. Thank you for your responce.

I have a client with a fully self-funded medical and dental plan and whose health premiums are deducted on a pre-tax basis that presently the following scenario.

They have an employee who currently has employee only coverage and has just presented a QMSCO on two dependent children. The children are currently covered under individual medical policies. The employee wants to drop the individual policies and add the dependents to the group plan. (fyi, there are no significant cost difference or benefit difference between both plans).

Am I correct in stating that this employer does not have to accept the QMCSO because the children already have coverage (that they are not losing) and therefore there is not qualifying event to make the change eligible under Section 125 rules?

Situation:

Company A and Company B both owned by Mr. X.

Company A maintained a 401(k) plan with ees of Co A and Co B participating.

As of 1/1/03, ownership of Co B changed so it was no longer part of controlled group.

Since they were located in the same building and trying to help each other during the transition, Co B's payrolls were run on Co A's software. Guess what? Co A's payroll system already had 401(k) deductions loaded, so deferrals were taken from Co B ee's checks until late February. Deferral $$ were deposited in single pooled Schwab account that was used for both companies in 2002.

I want to get the ineligible deferrals out of the plan, but am not sure of the mechanics of the process. Would I distribute the ineligible deferrals using code 2 (early, but exception applies) on the 1099R? I know the exceptions under code 2 do not fit this situation, but am trying to figure out a way to refund the $$ and not have the ineligible participants pay 10% early dist penalty.

Thanks.

I am preparing the SAR for a small money purchase pension plan. Most the plan assets are held in an insurance company variable annuity product. However, one of the participants has his assets in two brokerage firms. I was listing the assets on the SAR and then realized that the participants have a right to ask for statements from the brokerage accounts, even though they personally are not invested in them.

Is this correct? And, if it is, do they actually get to see an asset statement showing this one participant's balance in those accounts?

A company pays its employees in two phases for each month. The first check is on the 5th of the month and is in the nature of an advance, a set amount each pay period based on a minimum number of trips for which the employee will be paid, taxes are withheld from this amount.

The second check is paid on the 20th of the following month and is a reconciliation of the advance amount with trips actually made. It is from this check that the salary deferral amount for the 401(k) plan and other amounts, such as the employee's share of insurance premiums, are deducted.

The issue is what should happen when, for unexpected reasons, the amount available in this check, after taxes are withheld, is insufficient to cover the 401(k) deferral amount.

Is the risk of such an event solely on the employee? Is there any obligation on the employer to assure that the 401(k) deferral is taken out? For example, should the employer front the deferral amount and then deduct that amount from the next advance check?

I welcome your thoughts. Thanks.

I have a multiplemployer plan sponsored by a PEO. The PEO handles most of the employee benefits for all participating companies. Some of the sponsoring companies have the cafeteria deductions come straight to them and other have the cafeteria deductions go straight to the insurance companies. Is it okay to file one form 5500 for this plan or does this issue cause multiple 5500s to be filed?

Is a long-term care plan covered by ERISA? I have found information stating that long term care programs are not subject to HIPAA and COBRA - if provided as a separate plan. However, are such plans covered by ERISA?