Can any other TPAs out there provide guidance to us to find the regulations that address the banking issues associated with COBRA and FSA Administration? For instance, is it necessary to maintain a separate checking account for each client for whom we accept and reconcile premium payments (or FSA deductions)? If not, can we have one interest bearing checking account? Thanks for your help.

I thought, where there was only 401k contributions EGTRA removed the TH requirement. I also thought that maybe the match wouldn't trigger the TH minimum anymore.

I can not find anything to support this in the ERISA outline book.

Will 401k contributions trigger the top heavy minimum?

I have a 12/31/02 401(k) plan and just did the testing and found the plan failed the ACP testing. The HCE need to have funds distributed. I will be sending checks to two HCE less losses and reporting the amounts as income for 2003. One of the three HCE is not vested. Questions:

For deduction purposes, for the 2002 year, can the employer write off the entire match contribution even though part will be refunded in 2003?

Second, they have to make a top heavy contribution, can I forfeit the non-vested highly's excess match and use it to help fund the top heavy? In other words, reallocate it just to the NHCE needing a top heavy contribution (some of the NHCE do not need a top heavy contribution due to the match amount they received.) I didn't see anything in the doc except that it is to be forfeited. My guess is it would have to be reallocated to all eligible participants.

Thanks for any input.

Pat

Can the maximum deductible contribution to a defined benefit plan for a sole proprietor exceeed the net schedule c or even create an NOL?

If not, is there a future year carryforward?

Can someone give me a link to see the Q&A 10 on 1.72(p)? Everywhere I look on Google gives me stuff that cites it, but I can't find the actual text of the Q&A

Any help would be MUCH appreciated.

I'm probably missing something here, but I thought the effect of "converting" a DB plan into a 401(k) plan results in a plan termination of the DB plan. Is this not right?

I have a new takeover situation, and plan sponsor maintains a DB plan, but wants to swtich to a safe-harbor 401(k) plan. They've been told that all that is necessary to do is to amend and restate the DB plan into the 401(k) plan using the same plan number, and then just obtain a determination letter on the "new" plan.

I think it's necessary to first cease benefit accruals and then terminate the DB plan, with vested accrued benefits being subject to normal distribution options.

What's the correct way to handle this?

I have a question about common ownership: I think I know the answer, but would like confirmation:

Corporation "B" is owned by: 50% Corporation A and 50% "Individual

Guy"

Corporation "B" owns 100% of Corporation "C" and Corporation "D"

Corporation "D" owns 50% of Corporation "E".

I believe all of the above are grouped together and have one retirement plan.

Corporation "C" is selling off part of their business new a new LLC which will be owned 50% by "Individual Guy" and 50% by three other unrelated people.

Question is: Can the new LLC set up their own 401(k) Plan, even though "Individual Guy" owns part of Corporation "B" I would think that the ownership is not common with Corporation "B".

I hate this stuff! Any input is greatly appreciated. Thanks.

Is there any rule preventing an ERISA governed EB plan from holding a portfolio exclusively made up of options and futures positions??

In January '02 converted about $12,000 of my IRA to a Roth; due to market decline (well, my stock picks!), value in Roth fell to roughly $5700 so in October '02, converted all back to IRA. Received 2 1099-r's from brokerage firm...one for initial IRA conversion of the $12,000 with Box 7 code 2 (early distribution); the second 1099-r for $5700, Box 7, code N (recharacterized IRA and de-characterized also in '02). On my prepared taxes, the accountant shows the difference of $6300 as taxable - why is that? I thought there would be no taxable event since, in essence, I did nothing taxable as all done within same year. Does anyone have a clue? Thanks in advance for your help!

If a company has self-funded medical, dental, vision and flexible spending plans (that have their own plan documents), is it possible to issue one Notice of Privacy Practices and have the other relevant privacy requirements apply to them as a unit? I know the topic of treating the plans as an OHCA has been discussed and would seem to apply. But, based on the regs, it appears that nothing formal is required to declare the plans as an OHCA, either in the plan document or in the Notice of Privacy Practices. Are there any specific requirements that must be performed to be an OHCA?

Does anyone have any thoughts? Thanks.

Chain Letter Removed by Moderator

I am curious if there is any new information on the NC Bar ruling regarding benefits practice that anyone is aware of.

If a company shares individual employee health plan selection and cost data with their managers for budgeting purposes. Would this be viewed as sharing PHI as an "employer function" and not require HIPAA privacy training for all managers that have budgeting responsibilities.

We administer an 80 participant 401(k) Profit Sharing Plan. All assets are pooled except participant loans. The plan has a June 30 year end. In October 2001, the trustee decided to pool all loans. An amendment and corporate resolution changing loans to pooled investments were prepared and sent to be executed. A few days later the trustee (a company employee) was fired. Action was taken but the amendment was not executed.

The company hired a new CFO who subsequently became the new trustee. Even though earmarked loan accounts had already been liquidated and moved to the pooled account, we prepared a new resolution and amendment for him and corporate officers to sign. He acknowledged receipt of the new amendment and assured us it had been executed.

Just prior to completing the June 30, 2002 valuation, we again asked him for a copy of the amendment. He mentioned he would send a copy but never did.

The pooled account had -13% earnings and 9 participants who had loans of course wished they still had earmarked loan accounts. In February 2003 the trustee was fired. Apparently, the trustee misplaced the amendment and resolution which were never executed.

Question: Can a plan be amended by virtue of action taken on an earlier date?

The best solution for this employer (if possible) would be to amend the plan now with a retroactive effective date. The corporate resolution would contain language indicating agreement that the plan was amended by vitue of action taken on an earlier date.

Anyone have any comments on this?

Thanks!

Can a C-Corp with two 50% owners and no other employees file a Form 5500-EZ?? Pursuant to instructions of line 7b, I'm having doubts. Thanks.

Several years ago, my client established an ESOP purchasing 35% of company's stock from one shareholder. Selling shareholder elected 1042 treatment. Seller's son works for company and has and will not receive allocations due to attributed ownership of his father's shares. Several years later, when all shares in purchase #1 have been allocated, ESOP is purchasing additional shares from a person unrelated to first selling shareholder (and also unrelated to the son).

Is the son still considered a 25% shareholder? 409(n)(3)(B)(i) seems to say yes, if you measure the one year pre-sale period by looking at both purchase #1 and purchase #2. This strikes me as an unintended result and it seems more equitable to apply the 25% shareholder definition on a transaction by transaction basis. Under that approach, the son would be a 25% shareholder for purchase #1 but not for purchase #2.

Is anyone aware of IRS interpretations of 409(n)(1)(B) supporting either approach?

A participant had a 401k loan with a previous employer and wants to roll it over into the new employer's plan. Does the participant need to rollover enough cash to collateralize the loan?

Example: Account balance is $30,000 ($15,000 in cash and $15,000 loan) Can the participant rollover the $15,000 loan balance to the new plan and then only rollover $5,000 in cash?

Any thoughts, ideas, cites are appreciated.

Here is my situation. Client is a family owned S corp with only two family member employees, both of whom are highly compensated. Goal is to provide an ESOP, but the ESOP would be subject to the 50% excise tax under Code Section 4979A. This is a shot in the dark, but is there anything out there that would exempt this ESOP from the excise tax given that ALL employees are highly compensated? TIA

Is there any prohibition that prevents an erisa plan from having a portfolio based solely on the purchase and sale of options and futures?

extension of credit issue?

leverage risk issue?

loan isse?

its totally ok?

We administer COBRA for a large national client and we receive the QE information via an electronic file.

Originally, the plan was set up that all employees are covered through the end of the month in which the qualifying event occurs. We recently discovered that the benefit term date as an active employee can be different between participants. Some participants' active coverage is starts mid month. Unfortunately, we set our administration system up based on the original logic (everyone covered through the end of the month).

The good news is that we discovered it. The bad news is that some Qualified Beneficiaries were notified in the Election Notice that they were covered through the end of the month, when in fact the coverage terminated the day after their qualifying event. Some of these participants incurred expenses between their QE date and the date printed on the election notice (i.e., last day of the month in which the qualifying event occurred).

I need to determine how we should handle this situation. We start by making sure that all future dates are accurate. However, I cannot find any guidance in the regulations or in the publications we subscribe to that addresses how to handle this situation.

Does anyone have any suggestions? Thanks for your help