A participant terminated employment due to disability and died prior to receiving her distribution from a PS plan. She was not married and her beneficiary was her son. Is the lump sum distribution to the son subject to mandatory 20% withholding?? Thanks.

Has anyone heard of the term "defined benefit buyout"? Is it buying the accrued benefits with a terminal funded type of annuity?

We have a self-insured EAP. It is my understanding that the EAP provider requires a Business Associate Agreement. It is also my understanding that the HIPAA Privacy Notice should be mailed by us (the employer) since it is a self-insured plan. We are planning to mail it to all eligible employees. Is this what other employers are doing who have self-insured plans?

Oh, the fun you can have when you amend your plan without thinking about the consequences!

The situation: a DB plan historically used a definition of compensation other than W-2 (a narrower definition). Without fully appreciating the consequences of its actions, the plan sponsor amended the plan in 2002 to adopt the W-2 definition. The chickens have now come home to roost (i.e., they've figured out how much this little change is going to cost them), and the plan sponsor is trying to figure out a way to mitigate the effects of the amendment.

Rescinding the amendment outright does not appear to be an option at this point. The plan sponsor could obviously amend the plan to reinstate the prior definition of compensation, but the issue this raises in my mind is whether this might amount to an indirect cut-back of additional benefits accrued by virtue of the broader definition. On the other side of this issue, the additional compensation picked up by the W-2 definition has not actually been paid to anyone yet, so it may be hard to argue that the participants have "accrued" any additional benefits under the plan.

I have taken it as a given that a plan's definition of compensation is not a protected benefit on its face.

Anyone have any thoughts on this?

I first started a Roth in 1998(converted regular IRA's using 4 year Roth conversion plan) and recently due to job loss converted a 401K into a IRA and then into a Roth IRA.

My question is can I withdraw any amount from the Roth IRA penalty free?

Current value is around $20K and I hear I have to pay 10% penalty and also hear no penalty. Can anyone clarify

Thanks in advance,

Mark

Can an ESOP provide for in-service distributions upon attainment of age 59 1/2? If so, must the in-service distribution section be drafted to comply with 409(d) of the Code (i.e. age 59 1/2 with account balance credited for at least 84 months).

I'm not all that familiar with 401(k) plans funded by group annuity contracts. A client has such a plan, which is a prototype plan sponsored by the insurance company that issued the contract. The insurance company insists that the client appoint a "trustee" for a "loan trust." A few questions:

1. Why is a loan trust necessary? I thought that the purpose of the group annuity contract was to fund the plan, so why is a separate trust for loans necessary?

2. What would the typical role of a loan trustee be, and what type of fiduciary liability exposure would the trustee be taking on? Would it make sense for an officer of the company to take on this role, or would the company be better off appointing an institutional trustee?

An employee has contributed monthly to a flexible spending account and has not submitted any claims for the year. The employer goes out of business during the year. The employee pays out of pocket for expenses that he planned to pay with his FSA contributions. Does the employee get any tax deduciton for the amount lost other than the medical expense deduction subject to the 7.5% limitation?

The facts on this one are a little convoluted, but I would very appreciate anyone's help or insights.

Company A shuts down its only factory. All but a handful of employees are terminated. COBRA coverage has not been timely offered. Company A subsequently terminates its group health plan (after the employees are terminated but before any COBRA notice). Company B is now in Chapter 7 bankruptcy and its assets are being bought out of bankruptcy by an entity that is clearly not a successor employer because it will not employ any of the employees and will not continue the business in substantially the same way.

Company B is a member of Company A's controlled group and maintains a group health plan covering its employees.

It is clear to me that existing qualified beneficiaries who had elected COBRA coverage cannot have their coverage terminated due to the termination of Company A's group health plan because another member of the controlled group continues to sponsor one. Company B would have to provide COBRA coverage to those people.

What I don't know is this--does Company B have to offer COBRA coverage to the employees who lost their jobs and their coverage when the factory shut down? They and their covered dependents are "qualified beneficiaries" as defined in the regulations, but they have not elected COBRA nor even been offered it.

It doesn't seem logical to me that Company B would have to pick up those qualified beneficiaries who have already elected COBRA coverage, but that qualified beneficiaries who did not even have a chance to elect COBRA are out of luck. But I can find no authority indicating that Company B would have to do that.

Apologies for the length of the post. Any help will be much appreciated.

Plan Sponsor deposited a $200k contribution for the 2002 plan year in February of 2002, and then mistakenly made the same $200k deposit at the end of the year (December 27th, 2002).

The employer does not want to allocate the 2nd $200k deposit as a 2002 contribution (even though it would be fully deductible under 404).

Would this fit within the mistake of fact pursuant to 403©(2)(A)? The reason the deposit was made was due to their past history of making the deposit at the end of the year, and they failed to remember the early deposit they made in February, 2002.

Fully flexible Section 125 plan keys its opt-out benefit to the premium cost for group health coverage.

Group health coverage premiums are increasing 30% this month.

Employer wants to increase cash opt-out benefit accordingly.

Is this a basis for employees who have opted out of group health coverage, to make mid-year election changes to allocate the increase $$??

Is there a govt. mandated dollar amount that an employee can contribute to his medical expense reimbursement account on an annual basis? This is assuming the employer doesn't cap the benefit amount.

A client of mine is purchasing another company that has a qualified retirement plan. Can anyone lead me to a good due diligence checklist for checking the acquired company's plan?

Does this have to be in the ctp doc as an option of testing?

if i have 2 hces and 2 nhces, i have 1 hce and 1 nhce in each component plan, i pass coverage. .5/.5=1.0

when i look at the ebars for the benefit component plan, do i include the alloc rate component plan ee's as 0's or use their true ebars?

We aquired another company and merged their DB plan with ours on 12/31/2001. On 10/14/02, I was notified by a terminated vested employee of the merged plan, who turned 65 in September 2002, that he wanted to start receiving his benefit as of 10/1/2002. I informed him that the earliest he could draw his benefit was 1/1/2003 because of the joint and survivor rules. I received his j&s election form on 12/9/2002; his benefit payment began on 1/1/03. Should I have paid him a retroactive benefit back to 10/1/2002?

Do IRS reg. 1.104(a)(4)-5(B)(3) restriction on distributions apply to governmental and non-ERISA electing church plans?

I'm fairly certain that actuarial increases need not be provided while a participant is in suspension service (unless he/she has attained age 70-1/2), but I cannot find this in the regulations.

Any help out there?

401 k is top heavy; and employees may participate immediately in the salary deferral: but must wait for a year of service for the profit sharing; there is no match or safe harbor contribution.

Are the short time employees with less than a year of service entitled to the 3% top heavy minimum? I thought they were but am being challanged.

Thanks for your help.

ED

If the employer is a government agency (a city) and they have a cafeteria plan can the city manager participate? I would think that he would be considered a highly compensated employee as a result of his job responsibilities and duties, however, his wages are not in excess of $130,000. Are there other items I need to consider in determining whether he can particpate? Must he be excluded from participation altogether?

If the employer is a government agency (a city) and they have a cafeteria plan can the city manager participate? I would think that he would be considered a highly compensated employee as a result of his job responsibilities and duties, however, his wages are not in excess of $130,000. Are there other items I need to consider in determining whether he can particpate? Must he be excluded from participation altogether?