We have a client that has terminated there 401(k)/Profit Sharing Plan. They have $11,000 in their forfeiture account. The document is set up to use forfeitures to pay down plan expenses. All of th employees have been paid out and all plan expenses have been paid...leaving the forfeiture balance. What is the best thing to do with this money.

Thanks

In light of the difficulties stemming from the Supreme Court's decision in Knudson and other circuit's varying decisions in other cases when dealing with reimbursement from a 3rd party lawsuit, it has been suggested that the health plan intervene in the members' personal injury lawsuits. Has anyone done this? If so, does anyone know where I can obtain a sample motion and/or complaint where the health fund intervenes as a party plaintiff in New York and/or New Jersey courts?

Any help would be appreciated.

I have had a discrimation suit going with my employeer for over 5 years now. I have been out of work on LTD for the hostile work enviornment I was exposed to and have been in continually therapy for the unlawful actions I was expected to take against employees as a manager, I am 54 years old.

I recently went in for an ENE (Early Neutral Evulation) with my attorney, an attorney for my employeer and the lawyer at a firm that was handling the ENE.

My attorney broach the possiblity of my receiving my retirement now with a small settlement. I stated it did not want their money just my retirement.

Before I knew what was happening the opposing attorney was offering me LTD Benefits if I would agree never to work for the company again. I felt like I was the only one in the room sane and I am the one in therapy taking medications. I came right out and told him I already have that benefit now and why would I sign away my rights under the ADA Act (American with Disabilities)?

Well in all of this mess the mediator called my attorney into anothe room and made him and offer from my employeer of attorney fee's of $15,000.00 to settle the matter today. My attorney came back into the room and told me this offer of LTD benefits *(LOL) and he would get his fee's. I refused to settle and now we go to court. My question is? Was this offer to my attorney legal, since we had not even settled my case or were even close?

In a 401(k) Plan covering employees and persons who are partners, (i) are partners eligible to make catch-up contributions (i.e., are they considered to make "elective deferrals" where in fact they 100% pay their own contributions to the plan, in whole or in part, by writing a check to the plan no later than 4/15 following the close of the plan year in issue), and (ii) if the answer to (i) is yes, then can these partners pay in their catch up contribution along with their regular plan contribution by writing a check to the plan for that amount prior to 4/15 following close of the plan year (assuming that they made an irrevocable election to do so on or before 12/31 of the plan year)?

Has the IRS commented upon what Congress means by the phrase "a plan which consists solely of" in Code Sec. 416(g)(4)(H)?

It seems to me that the phrase might mean only plans including (1) a CODA meeting the requirements of Code Sec. 412(k)(12), (2) matching contributions meeting the requirements of Code Sec. 401(m)(11) and (3) nothing else.

Alternatively, it seems to me that the phrase might mean plans including (1) a CODA meeting the requirements of Code Sec. 412(k)(12), (2) matching contributions meeting the requirements of Code Sec. 401(m)(11) and (3) something else, so long as nothing is contributed under (3).

The first interpretation is related to the plan design itself, while the second is more concerned with the year-to-year operation of the plan.

Any assistance you can provide in helping me understand the phrase "a plan which consists solely of" will be greatly appreciated. Thanks.

Professional Corp has self-trusteed 401(k) Plan updated for GUST/EGTRRA last year. Owner and his wife were both employees and plan participants. Wife died in 2002. Owner wants to directly "rollover" his wife's plan assets into his plan account. Can this be accomplished now that the rollover rules have expanded? If so, I assume no 1099-R needs to be issued since the assets never leave the plan. If an inside rollover cannot be done, can the husband now roll his wife's plan assets to an IRA in his name, then roll it back into the plan as his rollover? Plan does allow receipt of rollovers for participants.

We sent the following scenario to a carrier we work with and the response I received was not what I expected and I'd like to know what you think…

SCENARIO:

Mr. Smith terminates 8/31. The employer outsources the COBRA to a TPA and a notice is sent to Mr. Smith on 9/27 (within 30 days). Mr. Smith elects on 10/24 (well within 60 days).

As you probably know, someone who elects COBRA has 45 days to get himself to get his COBRA premiums current from the date of election. Mr. Smith paid for September's premium when he elected on 10/24, but then never made another premium payment. The 45 days ended 12/8.

In this particular situation (which happened in another state and is not one of our clients), the carrier would not permit the employer to terminate coverage back to the 10/1 citing that the requested termination date was beyond 60 days.

I believe the standard contract with your company is also the 60 days to retroactively terminate someone. As you can see from the above example, this is not always possible. How can an employer avoid this situation here? The employer is required to follow COBRA regulations, but if they leave the plan open for the former employee, they are exposing themselves to a month's loss of premium.

THE CARRIER'S REPLY:

After a qualifying event, the employer has 30 days to notify the COBRA TPA of the QE. Thereafter, the TPA has 14 days to send the COBRA notification to the ex-employee. From the time the ex-employee receives the notification, he has 60 days to elect coverage. He can change his mind daily with his election until the 60th day. From the day he elects coverage, he has 45 days to make all past premium payments and get himself caught up to date. If he elected coverage on 10-24-02, he had 45 days to make the September and October premiums. Since he made his September premium payment, the October premium was now due by October 31, 2002. The employee does not receive another 45 days to make the October premium. On November 1, 2002, the November premium is due (he does have a 30 day grace period).

The person who received his COBRA election form and September payment should have placed a call or sent a notification to the ex-employee stating that his October premium was also due by October 31, 2002. With no payment being received by October 31, 2002, termination should have occurred. Whoever is responsible for notification to the carrier - the TPA or the employer - should have done so on November 1.

Employers can be "nice" and give the ex-employees time to make their payments late but they will run into situations where the ex-employee does not make the payments and the carriers will not make a retroactive termination date (like the situation you have right now).

MY THOUGHTS:

It appears to me that this carrier is taking an extremely conservative view that may not be permissible.

The limited materials that I have access to and what I've been told in COBRA seminars is different. What I do have states that "many employers choose (emphasis added) to have all monthly premiums which come due within the 60 day election period and 45 day grace period due by the 45th day." and "The COBRA law prohibits employers from requiring the payment of ANY premium before the 45th day (from the election date.) The employer may require that all retroactive (emphasis added) premiums be due by the 45th day to bring the Qualified Beneficiary current. The IRS advises that employers outline a procedure for collecting the retroactive premium, inform the beneficiaries of the procedure and apply it consistently." Since in this situation, if he elected 10/24 and paid a retroactive September premium, would the October premium be considered retro-active. Even if the October would be retroactive, what about November?

Which leads me to wonder, could this carrier be right (with albeit a very conservative opinion) in their take of my scenario? Have you ever heard of this extreme interpretation before?

I've checked past questions but none exactly like this, We have a Qualifying Trust named as the beneficiary of a qualified plan with a sole spouse beneficiary of the trust. I can see in the final regulations where the spouse in this instance may be used for determining the life expectancy of the living participant but no where do I find a direct authority for this spouse to Rollover the funds to an IRA or other qualified retirement plan. There is an implication in the preamble regarding IRA plans but nothing specific for QPs..

Any thoughts? Citations would be appreciated if any.

Thanks

JEVD

This may be a dumb question, but I can't put my finger on anything.

A client adopts a 14.5% PS plan and a 10.5% Cash Balance Plan. Year 1 is not a problem, but due to asset losses, the year 2 Cash Balance contribution equals 12% of compensation. Normally this wouldn't be a problem, since the PS contribution is flexible, but the client (contrary to my advice) pre-funded the PS plan and put the14.5% in before the year was over. Since 12 + 14.5 > 25% I think they have a problem.

Is this a problem? Why can't the CB deduction be split between 2002 and 2003? Could they deduct the 14.5% PS and 10.5% of the CB for 2002 and then deduct the other 1.5% of the CB in 2003, along with the 2003 CB & PS (not > 25% of compensation)?

Can an employee change elections made during open enrollment because their children have become eligible for our state sponsored health plan?

I remember reading that this is not allowable because it would violate something in the Social Security Act???

Any insight?

Health Reimbursement Accounts

We are thinking about restructuring our benefit arrangements to include a health reimbursement account - HRAs (all employer money per 2002-45 and 2002-41 - rather than FSAs).

I've been reviewing the recent IRS guidance regarding HRAs and was wondering what the general thought is on having a funded aspect to the arrangement.

For instance, the guidance mainly centers on amounts held in the employer's general assets - but I have a few providers/administrators trying to sell me on a "funded" product - where amounts are put in each year and follow the VEBA concept.

Has anyone looked into this issue or have any thoughts or concerns? Thanks!

I have a client that put $2,000 into a Roth IRA. The Roth is now worth $500. Can they close the Roth and take a loss? Would you tell me where you found your answer?

Calendar year flex plan. Employee elects $50 month for medical reimbursement. January 17th her husband who was unemployed at the time of enrollment (Dec 2002) now gets a job. Employee wants to increase from $50 to $300 using the "change in spouse's employment" reason which is a valid change of status. My thinking is no because the employment change doesn't directly impact the medical reimbursement category.

Is there ANY scenario where this change would be allowable? :confused: :confused: :confused:

Do any plan sponsors or providers have any experience with participants being charged asset-based fees for investments within their 401k plan? How does the arrangement work, and how has it been received by sponsors, participants, and providers?

Assuming that the compliance end of the arrangement is taken care of (e.g., participants are aware of the 'separate' fees that they will be charged for their assets in certain investments), are there any specific things from an administrative or participant communication perspective that I need to be aware of?

Thanks for any information...

Let's say our Master Plan guarantees the top-heavy minimum to non-terminated, non-key employees. Can the Employer also make the top-heavy minimum to key employees at their discretion? What if there are non-key employees that terminated with over 500 hours in a standardized Plan who did not receive the top-heavy minimum? In such a situation, would we then have to say it is a "regular" Profit Sharing contribution if the key employees get anything. I guess the non-keys would then get the larger of the "regular" contribution or the top-heavy minimum. My main question-Does the Plan have to specify that key employees definitely will also get the top-heavy minimum in order for them to receive it?

For all the 401k providers out there...do any DC providers currently offer plans the ability to have plan-level Company Stock trades performed throughout the day instead of only at day's end?

From what I understand, most providers accumulate participant stock buys and sells until about 2pm (likely to help reduce the number of trades performed on behalf of the plan each day), and then go to market with the net trade for the plan; each participant receives the share price as executed between 2pm and the market's close, and use those proceeds to purchase another investment in the 401k.

What I'm interested to know is if any providers would go to the market to have 'interim' plan-level trades performed at other times (in addition to the 2pm 'run'); this would theoretically provide participants with an execution price closer to the actual market at the time the trade was executed.

For all the 401k providers out there...do any DC providers currently offer plans the ability to have plan-level Company Stock trades performed throughout the day instead of only at day's end?

From what I understand, most providers accumulate participant stock buys and sells until about 2pm (likely to help reduce the number of trades performed on behalf of the plan each day), and then go to market with the net trade for the plan; each participant receives the share price as executed between 2pm and the market's close, and use those proceeds to purchase another investment in the 401k.

What I'm interested to know is if any providers would go to the market to have 'interim' plan-level trades performed at other times (in addition to the 2pm 'run'); this would theoretically provide participants with an execution price closer to the actual market at the time the trade was executed.

I sometimes have clients ask how low they can go for a Normal Retirement Age when they complete their adoption agreements. So far, the lowest we've gone is age 55. Has anyone seen an NRA lower than that?

We are thinking about restructuring our benefit arrangements to include a health reimbursement account - HRAs (all employer money per 2002-45 and 2002-41 - rather than FSAs).

I've been reviewing the recent IRS guidance regarding HRAs and was wondering what the general thought is on having a funded aspect to the arrangement.

For instance, the guidance mainly centers on amounts held in the employer's general assets - but I have a few providers/administrators trying to sell me on a "funded" product - where amounts are put in each year and follow the VEBA concept.

Has anyone looked into this issue or have any thoughts or concerns? Thanks!

Can you have (start) more than one IRA account? Ex, could you put $1,500 into a bank's CD-type IRA and $1,500 into a mutual fund?