By October our plans will be required under the EDI regulations

to receive contributions and remittance information

electronically. A question that has recently arisen concerns

the interplay of the collective bargaining agreement with

the EDI regs.

Suppose the CBA says an employer must send all contributions

and reports in paper form to the custodian. Must the

plan still have the ability to receive this information

electronically? If the employer asks to send the information

electronically (in violation of the CBA) is the plan's only

recourse a grievance or 301 action? Can an employer

violate the CBA and still exercise its rights under the

EDI regs??

Any thoughts are appreciated.

An overcontribution for tax year 2001 is made to a SEP on April 15, 2002. Taxpayer's return is filed that day also. The mistake is discovered four days later and withdrawal of the excess sum made. Reading the Code literally - that we have until the due date of the return for the taxable year to which the excess contribution relates to make the withdrawal - we seem to have had until April 15, 2002 to make the withdrawal for that excess contribution. After that time the withdrawal is treated as a distribution. However, for Roth elections we have until October 15 to act. Would a similar rule apply here because Section 408(d)(4) allows withdrawals of excess contributions until the due date of the return "including extensions"? Or does that only apply to elections not withdrawals?

Are there any real good up to date 403(b) training manuals (specifically for plans sponsored by 501©(3) tax exempt entities) worth purchasing that would have calculation examples for compliance testing?

Prior actuary changed the funding method from Ind Agg to FIL and for amortizing the new base under S412 used an amortization period of 30 minus # of yrs the plan has been in effect.

Apparently the actuary is way behind the times and has not read the Rev. Proc 2000-40 (or 95-51, which came out over 7 years ago), under which amortization period for new base is 10 yrs (Charge or Credit base)!

The client funded the minimum required contribution computed by the prior actuary - which was grossly understated if one was to follow Rev Proc 2000-40.

What is the new actuary to do?

Redoing the prior yr FSA using the correct amortizaion period would produce a deficiency?

Invalidating the funding mehtod change (because it did not satisfiy the conditions for an automatic approval of Rev Proc 2000-40) and reverting back to the Ind Agg cots method would make the situation worse!

What can /should be done to go forward [other than not taking the case ] !?

It sounds like, based on other posts, that fail safe language can be limiting. In the document I am using, if I choose fail safe, then the Plan must pass 410(b) by the ratio percentage test. If I do not choose fail safe, then the Plan does not seem to contain any language about how to fix a failed 410b or 401(a)(4) test. Would I just use the corrective amendment route? Is it OK that the Plan does not specify that I should use the corrective amendment option? This is all theoretical, I am doing the GUST amendment and trying to pick out the best language.

I work for a company with about 10,000 employees. The company sponsors 3 self-insured medical plan options for employee to select from. The ER pays 92% of cost for the lowest coverage plan (Plan C), 85% on the middle plan (Plan B) and 78% of cost on the highest coverage (benefit wise) plan (Plan A).

The relative benefit value of the plans are:

Plan A = 112%

Plan B = 108%

plan C = 100%

A recent underwriting analysis showed that the current pricing for plans B & C are not in any means related to their relative benefit value. Plan A (this is a new plan) is priced correctly. However, Plan B is price 60% above its expected cost and Plan C in 20% below its expected cost. I am new to this company. But what has happened is these plans have only had minor benefits changes over a several year period. Each time the renewal period came up management decided to increase both plans premium equivalent rates by the same percentage.

My two questions are: does the pricing need to be changes to put the plans back inline with their true cost from any legal (compliance) stand point?

What would you recommend to correct this situation?

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!