I am trying to complete the 2002 Form 5500 for my client. I am up to the Schedule T and I have a problem. I know that certain parts of plans have to be disaggregated for coverage testing purposes, but my problem is how detailed do I need to go for testing. For example, suppose a plan has a 401(k) portion and a profit sharing portion. Both portions of the plan have statutory excluded employees which are tested separately. It is my opinion that on the Schedule T of the 5500 form, I need to show the test results for the four different portions of the test:

401(k) - nonexcludable

401(k)-excludable

nonelective - nonexcludable

nonelective – excludable

Does the above sound correct? If so, how are the above supposed to be filled in (verbage?) on the Schedule T? Should the nonelective just be split into “nonexcludable” and “excludable”? Any help would be appreciated.

Would it be a good idea to split this message board into 3 boards -- health plans generally, COBRA, and HIPAA?

Dave Baker

I remember reading something from the IRS describing the impact of not adopting the EGTRRA 401(a)(17) limit within the EGTRRA remedial amendment period. Specifically, it provided that although 401(a)(4) was not an issue if an the EGTRRA increase was adopted within the remedial amendment, it could be an issue if the limit was adopted in the future. Does anyone remember where this is set out?

An employee participates in a cafeteria plan for health insurance premiums where the employee pays for 20% of the premiums. The deductible is $1,000, but the employer wants to pay a portion of the deductible (80%). Can an employee use his/her medical reimbursement plan to pay for $200 of the deductible?

Can a payment from a deferred bonus arrangement qualify as "compensation" for purposes of a 401(k) profit sharing plan and therefore be deferred into a 401(k) and considered when determining profit sharing?

Facts: Employer pays a bonus to an executive at the end of 5 years if the executive does not terminate employment (other than due to death or retirement). At the end of the 5 years (but prior to the time the bonus becomes payable), the executive can elect to defer payment of the bonus for 5 years.

If the bonus is deferred for 5 years, I'm not sure whether the payment, once made, can be treated as "compensation." Clearly bonuses can be included in a plan's definition of compensation. However, the 415 regulations include this statement:

"...any distributions from a plan of deferred compensation are not considered as compensation for section 415 purposes regardless of whether such amounts are includible in the gross income of the employee when distributed. However, any amounts received by an employee pursuant to an unfunded non-qualified plan are permitted to be considered as compensation for section 415 purposes in the year the amounts are includible in the gross income of the employee." Treas. Reg. §1.415-2(d)(3).

I'm puzzled by a number of things, including: (1) what's the difference between a "distribution from a plan of deferred compensation" and amounts "received by an employee pursuant to an unfunded non-qualified plan" (and why the difference in treatment)? (2) whether the deferred bonus arrangement described above is a "plan of deferred compensation" (or an "unfunded non-qualified plan"), and (3) whether in the year it is paid a portion of the deferred bonus can be deferred into a 401(k) plan or considered when determining the amount of a profit sharing contribution, assuming the plan's definintion of compensation includes such amounts.

Perhaps I am reading too much into this? Is it possible to include the deferred bonus in the plan's definition of compensation, but the definition would have to be tested for discrimination (ie not a safe harbor definintion)?

Thanks in advance for any thoughts.

Under the old rules, Regional Prototype plans had to keep a master list and submit it to the IRS annually.

Now that there are no more regional plans, is there a procedure of notification if a client refuses to restate their document? We are sending the client a certified letter and dropping him from our master list. But somehow, that doesn't seem to be enough.

Hi all,

I used to work as full time employee and now i am going to start as consultant without any benefits that includes 401(k) match by my new employer.

My question is

Can I still roll over my 401(k) account to the new employer.

Any suggestion?

Thanks,

Kavitha

My understanding is that if a person has worked for a company for 15 years, he or she can make a "catch up" that is equal to the least of:

(1) $3,000;

(2) $15,000, reduced by amounts not included in gross income for prior taxable years by reason of this cap expansion option; or

(3) $5,000 multiplied by years of service, minus all amounts of prior years’ contributions that were due to prior elective deferrals.

The overall lifetime maximum is $15,000

Are participants taking advantage of this, i.e., how common is it?

Are providers of recordkeeping services calculating the catch up and do they store all of the historical data needed to make the calculation?

Are all trustees listed on a plan document (prototype) required to sign the document or can just one sign?

Page 2 of Form 8717 states that if a plan was "first effective" on or after December 9, 1989, then it will be exempt from the user fee. Thus, brand new plans put into place on or after that date are exempt. Accordingly, if I've got an employer who set up a PSP and a MPPP on July 1, 1970, there would be no exemption from the user fee, correct? I know it's only 125/each, but I want to be sure... Thanks.

A participant is questioning whether she can be reimbursed for Hypnosis, which she underwent for the purpose of becoming comfortable giving herself medically necessary daily injections.

I can't find Hypnosis mentioned at all in the EBIA guide, does anyone have an opinion? I believe she underwent hypnosis three times before she became able to give herself the injections.

Thanks,

Carolynn

New Hampshire's 'Old Man' Falls from the Mountain

New Hampshire's famous landmark, the Old Man of the Mountain, collapses in a landslide. The series of granite ledges resembled a human face in profile. The image was used on state road signs and even the back of the New Hampshire quarter. Hear NPR's Lynn Neary and museum volunteer Cathy Nelson. (May 3, 2003)

http://www.npr.org/dmg/dmg.php?prgCode=ATC...y-2003&segNum=6

(audio file)

I have a client who currently sponsors a POP Plan for employees eligible to participate in the company's group health Plan. The company is a staffing agency that employs around 500 W-2 employees. Under the POP, some how only 12 employees are eligible to participate in the company's group health plan. Instead of amending this Plan to add the Dep. Care Reimbursement, could the employer establish a separate Plan only for Dep Care expenses which would cover all 500 employees ?

Thanks, Joe

It is my understanding that if an employee who chooses to participate in a dependent care FSA and the spouse is a full-time student, then the annual limit is based on deemed income: $2400 per year for one child and $4800 per year for two or more children. I am seeking clarification about the number of children: does "two or more children" mean the number of children the person claims as dependents for tax purposes OR the number of children that the employee is actually paying for to receive day care?

Here is the scenario:

The employee has 2 kids...one is 3 1/2 yrs. old and goes to a daycare center; the other is 1 year old and is babysat by the grandparents who do not charge for their babysitting services. Can this couple claim the $4800 DDC FSA amount if they are only paying for 1 child to receive daycare? Must the reimbursement requests/receipts show expenses for each child or can they incur the full $4800 for one child's expenses?

Thanks!

Do you like the thought of working on plan restatements every day for the rest of your life? If not, then you should let the IRS know how you feel. Because, in a nutshell, the IRS' current idea would mean that every year you would have to restate 1/5 of your plans.

The IRS is serious about implementing some type of change. Therefore, it is imperative that the pension community let the IRS know how it feels.

white_paper2.pdf

We currently administer a DB and PSP for a group with 15 participants. The DB plan has two tiers-one for owners and one for employees. None of the owners participate in the PSP, but all other employees receive (and will continue to receive) contibutions of 10% of pay. The plans easily pass 401(a)(4), however, we are concerned that the DB may not pass 401(a)(26) as employee benefits in the DB are small (and perhaps not considered meaningful).

To correct the problem, we are thinking about providing higher benefits to employees in the DB and converting it to a floor offset. The result will be $0 benefits for EE's in the DB but at least 10% of pay each year in the PSP.

Question: are we required to provide a 204(h) notice to EE's in the DB prior to converting it to a floor offset?

Also, even though EE's currently have small benefits in the DB, do their benefits go to $0 once the offset is in place or are their accrued benefits grandfathered?

Thanks.

Is a benefits summary that lists an employee's medical coverage, premiums, effective date and covered dependents considered PHI?

I have a former employee and child on COBRA. The child resides with the mother rather than our former employee. The mother wants to know that paid-thru date of her child's coverage. Am I allowed to release this information?

Thanks.

Company offers a group health plan and a medical reimbursement plan (health FSA). Must a terminated employee elect COBRA coverage in the health plan to be eligible to elect COBRA coverage in the health FSA?

This is what I'm finding:

The 1987 proposed regs indicated that you had to elect core benefits (group health plan) to be able to elect coverage for noncore benefits (medical reimbursement). But the final 1999 regs eliminated that provision.

I'm thinking they could elect COBRA coverage for their health FSA without electing COBRA coverage for their group health plan. Am I on the right track or way off base? Appreciate the help.

Michele

We are trying to determine by what date we as the Plan Administrator are required to provide benefit statements to our separated, deferred vested employees in our Defined Benefit Plans. We have located information indicating the deadline date for furnishing the individual statement is on or before the date by which Schedule SSA is filed with the Secretary of Treasury. We usually ask for a 5500 extension and file our 5500s in October. Our initial interpretation is that if we have a plan participant separate employment at any time between January 1, 2002 and December 31, 2002, we have until October 31, 2003 to provide the participant a statement of benefit. Is this a correct interpretation?