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?

With the addition of the MRD proposed regulations to our Gust II documents (with amendment), do we automatically receive a waiver for participants that have attained 70 1/2 but have not yet retired. Provided they are not 5% owners.

Can anyone cite a reference regarding withdrawal liability payments considered as employer contributions?

Are there situations where the present value of future liability payments are considered an asset?

If a life insurance company asks a health plan to disclose medical claims information about a decedent for the purpose of providing death benefits, must the health plan require the life insurance company to obtain an authorization under HIPAA from the next of kin, executor of the estate or from a person responsible for the decedent via a durable power of attorney?

How do I calculate quarterly contibutions for a short plan year as well as the interest penalty and the due dates?

Can you also give me references?

Thanks, Sue

Is there any reason not to permit matching contributions on catch up contributions. For example, is it possible that the plan could pass the ADP, but fail the ACP due to matching contribution on the catch up? I can't really find anything that talks about how matching contributions are treated with respect to catch ups. (I assume that catch-ups are subject to ADP testing.) Thanks for any and all input.

Our company is researching options to conduct annual enrollments via the Internet. We have approximately 8,000 employees that would need to use the system for health, basic life, supplemental life, LTD, STD, Flexible Spending Accounts, and Long Term Care.

Our main objectives include:

1. Decreasing the significant amount of paper required to communicate options to the employee population;

2. Improving the method of tracking responses and supporting documentation;

3. Transmitting data to the benefits and payroll system.

I have several questions:

What vendors are you using for these services?

What is a realistic time frame for implementation of the system following selection of a vendor?

What pitfalls or problems did you run into trying to implement a solution?

What other options are out there that may solve our problem?

Thanks for the help.

Does the anti-cutback rule bar HCs from quitting a discretionary profit sharing plan if they've been in the plan for years & have met the plan's eligibility requirements for receiving an allocation for the plan year?

Or does the anti-cutback rule apply only to NHCs? I'd really appreciate some advice on how to proceed with this matter. Thanks.

What are other CPA firms doing to establish the proper payee is receiving funds from distributions from retirement plans?

For example, as a CPA, how would you ensure that if the trustee says John Doe received a $10,000 distribution, how do you know that the trustee sent it to John Doe and not the Administrator who set up a bogus bank account to steal John Doe's money?

Are you sending out confirms? How do you know you have the right address?

I don't believe the question changes if the distribution elections are done paperless on the Internet or via paper forms (which can easily be forged)

Please advise

My client has an IPS in place. If the retirement committee places a fund on their "watch list" because it has violated a performance measurement criteria (shows up in the lower 50th percentile for a rolling three year period) - do they have a duty to inform participants?

To broaden this question - do they have a duty to share any, or all, of their findings from their semi-annual evaluation meeting?

Thanks!

Now that we've all merged our tandem plans into one and made our MPP plans go away, I'm wondering if we need them back! We have many 401(k)cross-test plans that were designed to exclude a group of employees (i.e. dental hygienists or associate attorneys). Now we are being required to fund not only the 3% contribution top heavy or safe harbor contribution, but possibly an additional 2% to satisfy gateway. I'm thinking that if we placed the SH or THM contributions in a separate plan, we could get around gateway. Am I missing something? Of course, the costs of establishing a separate plan and maintaining it might make the point moot, but wish I had thought of it before we terminated our MPP's! Any thoughts?

EGTRRA 613© Look Back for Distributions

For plan years beginning after 2001, any distribution processed after the determination year to be included in the top heavy calculation are In-service distributions only in which the 5 year look back will apply...

So this means if there were distributions processed for the year 2000 and prior years for Key and Non-Key employees that were due to separation of service, death and disability these distributions can "not" be included in the Top Heavy calculation for the 2002 Plan Year????

I prepared a 5500 for a self-directed 401(k) large plan invested with an insurance company. On Schedule H item 4(i), I answered "no" to this question. Did the plan have assets held for investment?

I guess I thought because it was self directed, the answer was no, but now I think the answer should have been yes.

What is the correct answer? Has this changed in recent years?

Is this one of those questions that causes the PWBA to send out a letter requesting clarification?

Thanks

The gatweay is only applicable to NHCE's, right?

I can give HCE's only the 3% TH min, right?

Just want to confirm this. Plan year is 4/1/02 - 3/31/03. In doing the ADP testing, the HCE compensation threshold is ee's with comp. of 85K in the prior plan year. The 90k threshold will not be until 3/31/04?

Thanks