If both the employer and the employee contribute to an AD&D plan, are the employee's contributions made pre-tax or post-tax?

Thanks.

I have been asked by a plan sponsor if the Summary Annual Report can be posted on their company's bulletin board. I would think not. It is my understanding that each participant must be given a "hard copy" of the Summary Annual Report. Any thoughts?

We're considering offering group LTC but most of our employees are under age 40. Question, on LTC when someone leaves the company do they get to continue the LTC policy on an individual basis at the same group rates or do the rates change to an individual policy.

I thought financially it didn't make sense to take LTC until you were around age 55 unless you were concerned about needing it before age 55 (i.e., disability related need).

We have an employer who entered into an agreement with an unrelated company to transfer employees from a specific department to the unrelated company. The new (unrelated) company told them prior to the agreement that it would be acceptable to transfer FSA balances on those affected participants immediately to the new company's cafeteria plan. (The "old" employer's plan year is calendar, so the participants were halfway through the plan year at the time of the transition on July 1.)

The new company says they transfer balances mid-year when they buy employees like this "all the time". To us, it seems those employees would be treated as any other terminated participant and only services rendered through their date of termination would be eligible for reimbursement. The employer did not intend to cause a hardship to those participants. The participants were, in fact, told by the employer that the balances would transfer and there would be no adverse consequences to them concerning their cafeteria accounts due to this transition to the new company.

Does anyone know of a way to justify the balance transfers?

Thanks,

Sheila P.

We're putting together <$5,000 letters for a terminated plan. Prior to composing the letter I've been going through material to see what notice and consent rules apply.

I came across something referencing a requirement that "the default method for involuntary distributions exceeding $1,000 is a rollover, unless a participant elects to receive cash instead."

This publication is dated 2001. Has a final regulation come out on this since then, or are we still in lump-sum land?

For purposes of determining when the Participant's "earliest retirement date" is, one step in the process is to determine the later of (i) the date on which the Participant reaches age 50, and (ii) the date that is "the earliest date on which the Participant could begin receiving benefits under the plan if the Participant separated from service with the employer"?

Does (ii) mean "separates from service" with the employer today?

I read something recently that says because a participant could terminate employment at anytime and thereby be able to receive distributions under the plan's terms, that the later of the 2 dates will always be the date the participant reaches age 50.

What if the Participant is 56 when the QDRO is entered and the plan is an ESOP that doesn't allow distributions upon separation from service until the valuation date that follows the Participant's second consecutive break-in-service. That Participant's distribution commencement date seems like it would be later than the date that he/she turns age 50.

Is the exclusive benefit rule of 457(g) violated if a governmental sponsor reimburses itself from 457 plan assets for amounts it paid out to participants from its own general assets because of a long delay from the insurance company who held the plan assets? Contributions to the Plan are made solely by the participants--thus, future employer contributions to the plan cannot be offset. Since the participants were paid the distributions that they were entitled to, can the employer simply be reimbursed from the plan once the funds are released by the insurance company without violating the exclusive benefit rule, or does all of the money have to stay within the Plan? Also, if the money does have to stay in the Plan, does it have to stay in the accounts of the participants who received the distributions, or can it offset administrative expenses associated with the Plan? The employer was only trying to accomodate the distribution requests to the participants in a timely manner. The plan documents do not address the issue. Any comments would be greatly appreciated.

We have an active employee with dependent coverage for medical and dental. His dependent will be offered COBRA shortly. The employee wants to have the dependents premiums deducted from his paycheck on a pre-tax basis. Can this be done?

employer has deposits automated to be ACHed or wired out of their checking on the day of payroll. This is triggered by the investment company when they receive the list bill. However, somehow one got missed in Feb and one in Mar of 2003. They discovered in Apr and immediately sent it in.

I am reviewing what needs to be done, and from what i can see, the VFCP is an application process that has no forms. Apparently it is up to the fiduciary to 'submit' this...

Does anyone have any sample documents we could review to see the format that could be used?

Also, if we do the 5330 and the VFC application, do we still indicate on the 5500 that funds were deposited late?

If an employer establishes a VEBA to allow their employees to contribute post tax contributions for the purpose of funding the premiums for retiree medical upon retirement, would there be restrictions on the types of investments that would be available under the VEBA? Do employees get to 'pick' the investments, or would the employer pick them for everyone?

Thanks!

I have a client who currently sponsors a target benefit plan. His financial planner has asked for a proposal to replace it with a db plan. If I start the db plan anew I have to start the 10-year 415 phase-in at the same time. But if I convert the tb plan into a db (as permitted by the Corbel db volume submitter document), it would seem that I could count prior participation toward the phase-in. Anyone agree or disagree?

Are there any other issues to be concerned about? What about non-discrimination? Would I now have a db/dc combo that must pass the general test? Or would the conversion date be a fresh-start date and I can look at just the db plan going forward as either a safe harbor or subject to the general test on a stand-alone basis?

Thanks for any thoughts.

Say an individual leaves company 12/31/02. Employee is going to paid severence over 3 years and will be issued a W-2. This makes sense, since the severence is in essence compensation for services past rendered.

However, could this individual participant in the 401k feature of their 401k plan? I know that there would be no eligibility for match, simply due to the hours worked being none....

Facts:

Prototype document has the following provisions:

Early Retirement Age is 62.

Normal Retirement Age is 65.

In-service distribution is allowed upon reaching normal retirement age.

Person A reaches early retirement age and is still employed. Person A requests for his distribution because he has reached early retirement age. However he is still actively employed. Can he take a distribution and roll over all his money out of the 401(k) plan?

My feeling says no because he has not terminated service. He has basically just reached the early retirement age and the plan document does not allow in-service distribution until age 65. Am I on the right track or am I making this too complicated?

Thank you for your help.

Where in the regs does it state that a participants balance is not assignable,assignable, alienable, or subject to garnishment, attachments, executions, or levy of any kind.

Thanks for your answer

I keep reading about severance pay being paid over several years after separation of service. I thought that taxes are due when earned not when recieved however many schools are paying teachers via a W2 after seperation of service and then taking taxes at that time. The Arizona Republic wrote:

"Employees who worked for the district for 10 or more years were eligible. In exchange for leaving July 1, employees will get one year's salary, up to $60,000, spread out over the next eight years. Employees older than age 60 will get their money in fewer years."

http://www.azcentral.com/news/education/07...erretire06.html

Now in that example aren't taxes due on the $60,000 at separation of service?

I know that this isn't quite 403(b) material but you all seem to know so much I thought I give it a try. Thanks for any info.

Rev. Rul. 75-539 states that sick leave accumulated at retirement that may not be received in cash but is used to purchase medical insurance is excluded from application of the constructive receipt doctrine. PLR

9840006 expands this concept to exclude from income excess annual sick leave used to increase the employee's account in a cash balance DB plan (again, the sick leave could not have been received in cash).

Any reason why this concept won't work for excess annual vacation? For example, a state university currently allows an employee to have up to two times annual vacation in the bank. For vacation earned in excess of that amount, the employee must either "use it or lose it." The idea would be that on an annual basis, vacation that would be lost would be automatically converted to sick leave, which would then be converted to additional State Teacher's Retirement System benefits at retirement. Sick leave may be accumulated without limit and under our state laws is automatically used to "buy" more service credits under our TRS.

Thanks,

Ken Davis

Univ. of South Alabama

Hello List,

I just had someone from another listserv tell me that a cafeteria plan is

not needed to avoid constructive receipt of income in the following

circumstance. The individual seems to always give good advice, but this

answer took me totally by surprise as it implies that the reimbursement

account type of cafeteria plan is unnecessary. I'd like to get some

opinions from this listserv.

""Are you saying that it is not necessary to use a cafeteria plan to avoid

constructive receipt of income when an employee has a choice between

receiving compensation in the form of cash or an otherwise tax-free fringe

benefit? For example, an employer agrees to pay for its employees

dependent care costs up to $2,000 per employee (in a program satisfying

section 129) BUT ONLY if the employee agrees to reduce his/her salary by

that amount. The employee elects to defer $2,000 at the beginning of the

year. Is the use of a cafeteria plan required to avoid constructive

receipt of $2,000 of compensation income?""

Thanks,

Ken Davis

Univ. of South Alabama

I have a 401k plan where forfeitures reduce the employer contribution. The only thing is, there was no ER contribution made. There was no match or discretionary contribution and the forfeitures were not reallocated to any participants. I dont want to put a negativie amount on sch I for ER contributions. Has anyone had this problem?

If they had contributed a match, for example, I would reduce the match by the FF amt and put the net amt as ER contribution.....any help would be appreciated

Can a GHP require a disabled retiree who is eligible for Medicare due to disability to enroll in Medicare as a condition to coverage? The GHP would pay secondary to Medicare.

I have a client in his late 80's that set up a DB plan for his professional corporation many years ago. He has been taking regular distributions under the original plan since he retired. His wife is in her late 70's and they have 4 children. The PC has been inactive for several years. The DB plan is quite overfunded (and with fairly substantial assets - around $3 million) and we are looking for options.

Among the ones that I have considered are employeeing one child (same profession as client) by PC or all children if possible and include them in the plan. Also, amending the plan so that we can minimize the penalties on a distribution to the PC. The distribution would be held by the PC until client's and spouses death then liquidate PC. Any other ideas or recommendations for sources to look at for ideas?

My fear is that if no changes are made that upon client's and spouse's death the DB will terminate and the combined penalties and income taxes (federal and state applicable here) will exceed the value of the DB.

Thanks for any and all suggestions.