Can an employee work full time hours and sign some sort of waiver saying they do NOT want benefits? I have an employee now that is desperate for hours but we cannot afford to give her the fulltime hours and benefits...she begged me to let her work the hours and sign something saying she refused the benefits...anyone know if this is legal in the state of North Carolina?

A safe harbor plan is removing the safe harbor provisions as of the next plan year. Assuming the five-year requirement is met and no discretionary match provisions are available, is there any reason why the plan cannot use prior year testing method

I've seen threads about having two plans (a DB and a 401kPS) where there are no participants receiving employer contributions from both plans, but all participants eligible to defer. From what I've seen, the deductible limit would be limited to 25% of comp (combined plan limit). What if there were three plans (a DB, a deferral only 401k and a PS) with no common participants in the DB and PS?? How would that effect the deductible limit?? Thanks.

Employer allows employees to make elective deferrals to a 401(k) plan prior to becoming eligible.

I have read every post I have been able to come up with on this but I am still not certain of the correction.

I understand that the plan may be retroactively amended to change the eligiblity requirements. That is one correction.

I have read that it may be appropriate to return the deferrals to the participants (thank goodness there are no matching contributions to be concerned with). On the other hand, I have also read that you may not return the funds because there is no distributable event. If it is appropriate to return the funds to the employee, how is that reported on the 1099? Is an amended W-2 required?

I think the final option I have read about is to transfer the ineligible deferrals to the forfeiture account and have the employer make up the amount to the employee through their paycheck.

The plan document states that "If any person made Elective Deferrals erroneously, the Elective Deferrals and the associated earnings shall be distributed to that individual in the Plan Year in which the discovery was made. Alternatively, the Employer may determine if an alternative correction method may be avaiable and use said method to make the correction."

I suppose it is obvious that we should follow the plan document, but I guess I just need reassurance that the money may be distributed to the participants, and how to report such distribtuion.

Thank you.

Does anyone know of a plan design whereby a governmental employee can take the value of unused vacation and sick pay to pay for their health insurance premiums? Can this be done on a pre-tax basis. Thanks -

The Union that I belong to is thinking of joining a 403(b) pension plan.

If the body agrees to join everyone most participate. They will all pay the same %, or dollar amount per shift. Is there any way to opt out of this plan? I heard that there is a form to fill out. If so what is it called?

I have a Roth for myself and my wife, I contribute to a 401, and a company retirement account. plus I save on my own. Help I don't want this as I want to retire early. When I do they will only give me my money back, NO INTEREST.

My employer, during our Merger Agreement, eliminated the Lump Sum (LS) feature of our retirement plan for all employees being hired after January 1, 2001. All pre January 1,2001 members were "frozen" on December 31, 2000 in their ability to accrue additional annuity value which could be converted to a LS. To wit : all future benefits after 01/01/01 under the plan would only be paid in the form of a monthly Annuity check.

The question is thus: Can an employer once "locking in" and /or negotiating to allow, as in our case, employees to receive a portion of their benefit at Normal Retirement Commencement in the form of a Lump Sum (the annuity amount frozen thru 12/31/00) could they later, upon converting to a cash balance plan, take away the Lump Sum feature entirely?

This is a Utility Company and I am a Union Represented employee. Thx.

I understand that in order to aggregate two plans for top heavy testing, the plans need to be aggregated for 401(a)(4). Law firm has two plans, one for assocaties (no employer contribtions) and one for staff and partners (cross-tested). If the plans are aggregated for top heavy, the group as a whole is not top heavy.

I'm not sure what we need to do to aggregate these plans for 401(a)(4). The ADP passes on an aggregated basis. No problem. The cross-test is where I get confused. Due to the mechanics of the cross-test, basically, all nonexcludable employees of the employer are considered. In the NDCT, we include eligible associates who do not benefit. They are zeros in the test and are in the rate group denominators. As required, we aggregate the plans for the ABT and coverage. The cross-test passes.

Have we therefore aggregated the plans for 401(a)(4) and can thus aggregate for top heavy? Am I oversimplifying this? Do we have to provide the minimum allocaton gateway to the associates in the other plan in order to satisfy 401(a)(4)? Not sure. If anyone has thoughts, please let me know.

Many thanks!!

Lori

Could anyone out there who knows pic up on this question. Appreciated. If my Company converts to a Cash Balance or similar type of plan what happens to my current 34 years of Service. I am 51 years old and my concern is that the Company will freeze my current "Value" by NOT allowing my age to continue in my current plan till I can receive a full unreduced Annuity which would be available to me at 57. With current age reduction factors I'm only currently eligible for about 35 - 40 % of my annuity (or Lump Sum if I choose). My understanding is that at Retirement commencement, if converted to cash balance, I would "choose" either the 34 years earned under my current plan WITH THE AGE CARRYING ON or the Cash Balance value amount for all Years of Service whichever would be greater. This creates the effect of a wearing away of my current plan (a freeze) if the cash balance plan turns out a lower total value at retirement commencement. Am I correct? Or, would I be "frozen in time" in my current plan with the 35 -40 % value of which then surely the cash balance plan would surpass albeit coming in much lower in value than if allowed to CARRY ON MY AGE WITH MY 34 YEARS IN MY CURRENT PLAN. Thx. Charlie.

Sorry -- this is a cross post from a couple other message boards, but I wasn't sure which one was the right one on which to post it.

What is a "Qualified Sick Pay Plan" and why might a company need one in order to properly deduct disability benefits payable to an employee per his/her employment agreement (the payment comes directly from the employer, not from insurance)? Some websites indicate that a company must have a QSPP in order to deduct this type of disability pay.

Code s. 162 seems to permit the deduction of accident or sickness payments (i.e., disability pay) as a business expense as long as it's reasonable.

Am I missing something? Thanks for your thoughts.

Sorry -- this is a cross post from a couple other message boards, but I wasn't sure which one was the right one on which to post it.

What is a "Qualified Sick Pay Plan" and why might a company need one in order to properly deduct disability benefits payable to an employee per his/her employment agreement (the payment comes directly from the employer, not from insurance)? Some websites indicate that a company must have a QSPP in order to deduct this type of disability pay.

Code s. 162 seems to permit the deduction of accident or sickness payments (i.e., disability pay) as a business expense as long as it's reasonable.

Am I missing something? Thanks for your thoughts.

What is a "Qualified Sick Pay Plan" and why might a company need one in order to properly deduct disability benefits payable to an employee per his/her employment agreement (the payment comes directly from the employer, not from insurance)? Some websites indicate that a company must have a QSPP in order to deduct this type of disability pay.

Code s. 162 seems to permit the deduction of accident or sickness payments (i.e., disability pay) as a business expense as long as it's reasonable.

Am I missing something? Thanks for your thoughts.

I am filing Form 5500 for a single employer 401(k) plan with only 4 employees. The instructions state to file Schedule T if the plan "is intended to be qualified under Code section 401(a) or 403(a)".

Would a 401(k) plan automatically be qualifying under the above named sections? Or is it qualifying under section 401(k)?

I wasn't sure which Board to put this question on--so I'll try it here. It has to do with the controlled group regulations at 1.414©. There is a provision in those regulations that says that you excluded from the calculation stock owned by employees of the subsidiary if that stock is subject to a substantial restriction on disposition that runs in favor of the subsidiary or the partent. (1.414©-3(b)(5)).

Assume that Company A is in the controlled group of Company B because lots of stock is held by the employees of Company B and is subject to restrictions on disposition in Company B's favor. Without the exclusion for this type of stock, Company A would not be in the controlled group.

Company B files for bankruptcy. Certain employees of Company B who owned stock are terminated in connection with the bankruptcy but still own their stock.

Does that Company B stock become "un-excluded" and is now included in the controlled group calculation? If it is, Company A is no longer in the controlled group.

I could find no guidance or authority interpreting this provision and wondered if anyone had any thoughts. Some aspect of it just seems too tricky.

Any thoughts are greatly appreciated.

Can an employer require its employees to participate in a long-term disability plan if the employer pays the premiums, but then imputes the premium amount as income to employees on a taxable basis? In other words, the employees will have to pay income tax on the value of the premiums.

I have mostly small plans with one owner that we try to maximize, while minimizing the other participants. It's late in the day and I may be loopy, but I am wondering when a safe harbor flat benefit formula using fractional accrual can be worse for this type of client versus a unit accrual plan.

A benefit formula is designed to get the owner at a certain benefit level. Mathematically, each person who would have less than 25 YOP at NRD would have the same benefit under a flat benefit formula as if the plan were designed with a unit accrual formula. However, those with greater than 25 YOP at NRD would accrue LESS of a benefit under a flat benefit formula.

Simple math but this example might illustrate it better.

Flat benefit: 150% of FAP reduced for YOP at NRD < 25. Assume owner would have 15 YOP at NRD and comp is $100,000.

Proj Benefit = $100,000 * 150% * 15/25 = $90,000

AB 5 years into the plan = $90,000 * 5/15 = $30,000

Unit Accrual = 6% of compensation (designed to produce same benefit at retirement as above)

AB 5 years into the plan = $100,000 * 0.06 * 5 = $30,000

Say a person has 30 YOP at NRD:

Flat:

Proj Benefit = $100,000 * 150% * 25/25 = $150,000

AB 5 years into the plan = $150,000 * 5/30 = $25,000 (thus, less than the 30K produced by the unit accrual formula)

So, again, in a situation with a certain benefit being targeted to a person or persons who would have less than 25 YOP at NRD, it would seem a plan in which there are other employees with potential for YOP > 25 at NRD would be best designed with a fractional accrual formula such as above. Thoughts? Calling Mike Preston....

I notice that the IP address appears only on some forums. For instnace, it appears on IRAs, but not on SEPs and SIMPLEs.

How can I prevent my IP address from being shown on my posts?

If an entity if a covered entity under HIPAA and has an known operational error that results in violations of HIPAA so that criminal penalties are appropriate, who in the entity would be subject to serving prison time? For example, assume a health plan has an automated system that sends claims information to participants but this system is somehow flawed so that a number of claims are sent to the wrong address. The managment of the entity knows about this problem, but doesn't fit it because of a high cost. Who is going to be subject to the prison time if that penalty is applied?

Company A (daily plan) buys company B (periodic plan). The final valuation date for the Co. B periodic plan is 6/30/03. However, the final valuation won't be complete until some date in August probably.

1) Should the assets be transferred on 6/30 and held in a money market account until the valuation is done, and then transfer the assets into individual accounts?

2) Or is it better to keep the assets where they are until the valuation is done, and transfer the assets in the middle of the quarter?

It looks like there will be a black-out period for those assets in either case. Is there any way around that?

Fact set:

Plan Year July 1 - June 30.

Distribution to terminated EE occurs in August.

ER decides to terminate plan on February 28.

Forfeitures are added to ER contributions and allocated as of the next valuation date. Plan has annual valuations.

Does the EE become 100% vested because the plan termination is in the same Plan Year during which the participant received a distribution? Or, is the forfeiture reallocated to other participants because the EE received the vested portion of his/her plan balance before the decision to terminate the plan was made?