Does anyone have a comment on the eligibility of a hearing aid remote control being eligible for reimbursement under a Medical Care spending account? We think no, on the basis that it appears to be a convenience item, rather than a necessity item. Should we request a doctors note, or request the claim be submitted to insurance first (they have an HMO)?

Can an employer pay the income tax for the HCEs when they receive a corrective distribution as a result of the correction of an ADP test without violating an nondiscrimination rules? The employer plans to do a true up to pay for the additional tax on the payment of the tax, etc.

I want to amend a plan to a new comp effective 1/1/03. The plan has a last day requirement but no service requirement. Can they do it? I thought the last day requirement would allow for a change in the allocation.

I am trying to look for resources that would give me some information on some of the choices a PSponsor has when they choose to allow a EE to opt out of their medical plan. Can the ER in turn make a contribution to the 401k Profit sharing plan in return? How is this type of contribution typically identified? QNEC, Discretionary....help

Q&A 11(a)(4)(ii) of the final 204(h) Notice regulations says that illustrative examples are required for any change that results in a wear-away period. I'm taking "illustrative" to mean numerical. But Example 2 only gives a verbal description which is deemed to satisfy the requirements of Q&A 11(a). Is there a conflict between the two sections?

One of our clients is 100% owned by a Non-Profit Trade Association. The association consists of approximately 280 member companies. Would the controlled group rules apply to this type of organization? If so, how would the rules be applied?

Does anyone have a link to IRC 416(g)(4)(H) ? When I use the IRC link, it is not there.

The questions I am trying to answer in regards to non top heavy safe harbor 401(k) plans are as follows:

1) if the Plan document has a discretionary P/S formula, but ER does not ever intend to make a contribution, does that qualify as a Plan consisting solely of a safe harbor 401(k) arrangement?

2) Can the matching contribution be discretionary, and therefore can there be zero matching for some years?

It appears to me that health reimbursement arrangements (or employer-funded flex plans) are subject to HIPAA. This is inconvenient, especially to those flex plan administrators who are used to not having to provide a certificate of creditable coverage to terminating employees relative to their participation in the employer's flex plan.

The relief granted under DOL's Technical Release No. 97-01 clearly does not apply.

1. Is there another way out of this requirement?

2. Is one certificate of creditable coverage (from the primary health plan) sufficient to meet HIPAA's requirement, or must each plan provide such a certificate?

3. Can the certificate be provided on request only, since the HRA (or flex arrangement) is secondary coverage?

4. Can such a certificate of coverage be used to trick a subsequent employer or insurance company into waiving pre-existing conditions even though the employee wasn't really covered under a group-health plan but merely given an allowance to cover OOP medical expenses up to a certain level?

[Note: I am also posting this under health plans - HIPAA.]

It appears to me that health reimbursement arrangements (or employer-funded flex plans) are subject to HIPAA. This is inconvenient, especially to those flex plan administrators who are used to not having to provide a certificate of creditable coverage to terminating employees relative to their participation in the employer's flex plan.

The relief granted under DOL's Technical Release No. 97-01 clearly does not apply.

1. Is there another way out of this requirement?

2. Is one certificate of creditable coverage (from the primary health plan) sufficient to meet HIPAA's requirement, or must each plan provide such a certificate?

3. Can the certificate be provided on request only, since the HRA (or flex arrangement) is secondary coverage?

4. Can such a certificate of coverage be used to trick a subsequent employer or insurance company into waiving pre-existing conditions even though the employee wasn't really covered under a group-health plan but merely given an allowance to cover OOP medical expenses up to a certain level?

[Note: I am also posting this under flex plans as it seems to have a wider audience.]

A calendar year plan that terminated in 2002 obviously needs to be amended for both GUST and EGTRRA. This plan has a timely signed certification of intent to adopt a VS plan.

For ongoing plans yet to have their document restated, they would have to either adopt a word-for-word document or apply for a determination letter. That much I know.

But for this terminating plan, can they simply do "slap-on" amendments and not a document restatement at this time? Would they have to apply for a determination letter to get the extended time to adopt the GUST amendments? I feel comfortable that a terminating plan that did a complete document restatement would be in the same boat as the ongoing plan I described in the second paragraph, so my focus is on a terminating plan that just does a "slap-on".

I think the answers to my own questions are yes and no. I believe the "slap-on" amendments are acceptable and since they are standard amendments without a need to modify them, it's as if they are "word-for-word" amendments and the determination letter need is avoided.

I am less than sure, so please respond.

Employee terminated on 4/28/03

Benefits being covered until 5/30/03

Employee turns 65 on 5/2/03

Has spouse who turns 65 on 7/19/03

Spouse has a QE on the day husband turns 65?

Employee has a QE on the last day of coverage?

Then spouse becomes a multiple qualifyer on that last day of coverage?

--- does that make her eligible for extended months?

--- what about when she turns 65 two months later?

I'm not quite sure how to handle this one, I'm confused.

If a plan is using, say, a 6% valuation rate for funding purposes, can one justify using, say, 7.5% for determining the vested benefit liability for withdrawal liability purposes?

How could one justify using a higher rate for the latter purpose? One possible argument may be that there is built in conservatism in the funding val rate.

Any thoughts would be helpful.

ABC Plan has a fiscal year 5/1-4/30. Plan entry requires 21 & 1. Currently entry dates for all contribution sources are 5/1 & 11/1. ABC Co. wants to keep entry dates for profit sharing at 5/1 & 11/1, but wants to change the entry dates for 401(k) to 7/1 & 1/1. I don't see any reason they can't do this, but for some reason I gotta feeling that this will create a problem that I am just missing.

Does anybody see any issue with this?

Thanks in advance for any guidance.

A cafeteria plan excludes changes in employment status from qualifying events for purposes of mid-year election changes.

Is the exclusion of changes in employment status from qualifying events for purposes of mid-year election changes permitted? I think it is.

A participant terminates employment, then marries, then is rehired by the employer.

The participant maintians that the marriage is a qualifying event for an election change.

I tend to agree, as the change is being made on account of the marriage, not the rehiring.

Any comments would be appreciated.

For tax year 2003, are we required to generate a Form 5498 for Immediate Annuities that are Individual Retirement Annuities?

Thanks

We have to do some '02 year end "true-ups" to participants that did not receive the full company match. Because we changed vendors in mid-year, I am getting 2 different opinions are how these should be calculated and then reported.

1. says we should look at ALL the payrolls for the year, figure out when the match may have been "underpaid" (because a participant had maxed out their deferrals or had significantly changed their deferral percentage) and calculate earnings and interest from this time through the end of the year.

2nd vendor feels we should only calculate the "true-up" and credit interest from 1/1 of this year until the time we pay this true-up back into the participant's account.

What has been others experience? Also, what is the proper form (and timing) for reporting these?

Thanks!

My understanding of New Comp testing is that I can "410b" the HCE Ebar rates, or I can take the average EBARS for HCE's, and the NHCE's must be greater than 70% of the HCE's average EBAR.

Is this correct?

I am finding that my 410b'd rate groups fail while the average Ebar is pretty easy to pass.

Do you have to file a 5500 for a first year plan which ended up making no contributions what-so-ever because they set up the plan late in the plan year?

Please help. I swear in the last two weeks there was a message about someone trying to merge a 403(b) plan into a 401(k) plan, not the assets, but maintaining both types of plans in one document. I'm not having any luck with my search. Thanks.

Michele

For what state should the taxes be paid upon distribution to a participant in a qualified plan: a) to the state the participant lived in when the money was deferred b) the state the participant lives in now when the funds are distributed c) the state the sponsor is headquartered in, d) other?