Is an Employee Assistance Program considered an ERISA plan? Is a plan document, SPD required. And, must an annual 5500 be filed each year?

There seem to be several questions regarding the conversion of a PEO (single-employer plan) to a multiple employer plan. I have not seen these issues addressed and am hopeful that other have found answers:

1) Can a PEO offer a Mulitiple Employer plan to the common law employees of its clients but exclude the PEO's own employees from participation? If so, how does the PEO meet the definition of Plan Sponsor?

2) May a PEO make a "mid-year" conversion to a multiple-employer plan and not wait intil the Compliance date of 12/31/03? The Rev. Proc seems in one place to indicate that the first effective date for a conversion is 12/31/2003. Other parts of the Rev. Proc seem to say that this is just the drop-dead date and a conversion can come earlier.

3) If a conversion can be made prior to 12/31/2003, assume the transitional relief for ADP/ACP testing (as a single employer plan and not a multiple employer plan) is lost and the testing must be done as a multiple employer plan for 2003?

4) Suppose the PEO will convert 12/31/03 to multiple employer. It sends notifications to COS April1 and they have to respond by June 1. What about new COs that the PEO takes on after April 1- do they add them as part of a single employer plan? How can they, as the notification date is missed? I assume they cannot add them as a participating employer in a multiple employer plan as the plan is not yet a mutiple employer plan. Would the PEO have to set up a separate mutliple employer plan for these new COs in 2003 and then merge that with the converted multiple employer plan after 12/31/03?

5) What if a CO misses the notification date and, according to the Rev Proc, are slated to be put into a Spinoff Plan and terminated later decides they want to make an affirmative election (either to join the PEO multiple employer , or set up their own plan)? Are they just out of luck? Is the missing of the date irrevocable?

Your input on these questions is appreciated.

On our previous 5500 forms, (our accountants filed them for us), they were filed as a DFE, using code G. Can someone explain to me exactly what that means? I read the sections in the 5500 form instruction booklet from the IRS, but I am just not understanding it. We have two companies and the plan includes them both, but filed under only one of their EIN. I don't know if that's where it comes from, since it isn't a single employer plan. And I still have yet to understand the difference between multiple employer plan and multiemployer plan.

Thank you.

In a cross-tested db/dc combo, 40% of the eligible participants (including NHCE's) are covered under the DB plan. The other 60% of eligibles are in a safe harbor 401k plan, providing a 3% non-elective sh contrib, and 4.5% employer contrib. Further the HCE's in the DB plan make maximum salary deferrals to the 401k plan.

Do the NHCE's in the DB plan get a sh contrib, in the 401k plan? If so, what is the effect on the tax deductibility of total er contribs. to both plans under 404(a)(7) due to overlapping plan membership? On the other hand, can the 3% sh be deemed to be satisfied in the DB plan, specifically through the top-heavy requirement? Finally, should these steps be included in the plan documents?

If permissable under the plan document, can the tax imposed under Section 4979 for excess deferrals/match refunded from a 401(k) plan after the 2 1/2 month deadline be paid from the plan's forfeiture account?

Are health benefits ever taxable? Especially supplemental plans that pay cash directly to the individual based on an indemnity benefit without coordination of benefits -- thereby leaving a possibility of someone receiving more than they paid toward the medical services. Thanks!

A client of mine provides retirement and investment services to companies and high-net-worth individuals. He asked me if they could set up a group health plan that could include some of these self-employed or retired individuals -- possibly under the guise of an "association" or some other collection of people. I told him that while this is not my area of expertise, it is my understanding that a group of people cannot form an alliance solely for the purpose of buying insurance.

Does anyone know if there is a way for a group of people to buy a group health plan. Especially if the group collectively has no major health problems. Can they enjoy the cost savings of "spreading the risk" by forming a group?

If not, what reasoning or regulations support the inability to do so?

Thanks!!!

A golfer is in a competitive match with a friend, who is ahead by a couple of strokes.

"Boy, I'd give anything to sink this putt," the golfer mumbles to himself. Just then, a stranger walks up beside him and whispers,

"Would you be willing to give up one-fourth of your sex life?" Thinking that the man is crazy and his answer will be meaningless, the golfer also feels that maybe this is a good omen so he says, "Sure," and_ sinks the putt.

Two holes later, he mumbles to himself again, "Gee, I sure would like to get an eagle on this one." The same stranger is at his side again and whispers, "Would it be worth giving up another fourth of your sex life?"

Shrugging, the golfer replies, "Okay," and makes an eagle.

On the final hole, the golfer needs another eagle to win. Without waiting for him to say anything, the stranger quickly moves to his side and says, "Would winning this match be worth giving up the rest of your sex life?"

"Definitely," the golfer replies, and he makes the eagle.

As the golfer is walking to the club house, the stranger walks alongside him and says, "I haven't really been fair with you because you don't know who I am. I'm the devil, and from this day forward you will have no sex life."

"Nice to meet you," the golfer replies, "I'm Father O'Malley."

What is the 402(g) limit for an off calendar year end? Plan year end is 1/31/2003.

Company Z owns 72% of Company A.

Wife owns 3.75% of Company A.

Husband owns .03% of Company A, 1% of of Company Z.

Kids owns 99% of Company Z, but no direct ownership in Company A.

The kids are attributed 71.28% of Company A (72%*99%), is this ownership further attirbuted to Parents. I'm thinking that this is not considered double attribution, but I'm not positive.

I'm trying to determine HCE status.

Ok - got a question from an auditor. They're doing a full-scope audit, and have to review "reportable transactions," even though a Schedule of Reportable Transactions is not required (all investments are participant-directed).

Neither the client nor its recordkeeper has this information, and act like the auditor is crazy for requesting it.

My question (on behalf of the auditor) is this - when the new rules came out for what goes on the Schedule of Reportable transactions, was there also some guidance on retaining the information on the transactions (even though it doesn't get reported?) I can't seem to find anything on point.

Thanks!

If the IRA participant dies & was the co-trustee of his family trust, which is the beneficiary, does the trust use the co-trustees social security number, or should she obtain a tax identification number?

An employer has a prototype plan document. In order to receive a matching contribution, a participant must be employed on the last day of the plan year. The plan does not pass the 410(B) test for the plan year. The plan document does not address what to do if the plan does not pass the ratio percentage test. Usually, one can bring in terminated participants until you pass the test or run the average benefits test. Is there a problem with doing this if the plan document doesn't have any provisions regarding this?

Union members were mistakenly included in 403(B) plan. Can the plan be amended retroactively to correct the error and exclude the union members making it as if they had never been in the plan? What of the IRS?

When a participant rolls their balance to a new employer plan and it includes a loan balance, how is that loan transfer balance reported? I didn't think you could prepare a 1099-R showing a loan as a rollover, or do you show the entire balance as a rollover, code "H"? Thoughts??

What amendments must be made to a cafeteria plan document if we just had it restated in 2001?

Mike, age 72, (non owner) made $13,000 in 2002. He deferred 11,000 plus the $1,000 catch-up contribution. The employer has now decided to make a hefty ps contribution for the 2002 year. Many participants are upset because had they known . . .

What is the maximum ps contribution Mike can receive?

A father owns 100% of the company. His two sons also work for the company. Does attribution apply to both children or just one?

Can I create an Owner class for the father and an Other Highly Compensated category for the sons?

Are the sons required to get the same % contribution as the father?

What testing is done and how is it passed in this situation?

And if there are other non-family highly compensated employees, can I put them in a separate class and have an "all other employees" class as well? I'm feeling a bit over my head at the moment.

Can anyone point me to a resource that outlines the process for calculating a partner's compensation / dc retirement plan contribution.

A company has a profit sharing plan and added a 401k plan. At the beginning of the plan year there were 12 active participants and then 3 employees were layed off this month. Our plan administrator has informed us that this much of a reduction may have caused a partial termination of the plan causing us to have to vest these 3 employees at 100% whereas they would not have been vested at that level. They also informed us that we were on the bubble at a more than 20% reduction in active participants and that we may only need an opinion that the plan is ok. Does anyone have knowledge of this situation?