We are attempting to draft a subrogation/reimbursement provision for a self-funded health plan. Many commentators suggest that in drafting such a provision, the Plan explicitly EXCLUDE benefits for expenses caused by a third party, and the Plan Administrator, may, in its discretion, elect to ADVANCE payment for such expenses with the agreement that upon any recovery, the participant will reimburse the plan.

The question that has come up is this: isn't this really a prohibited transaction in that it could be considered a loan or an extension of credit under ERISA section 406(a)(1)(B), and is not excepted under ERISA section 408?

I am aware of a q&a wherein an IRS rep confirmed that an employer may not allow an employee to defer from severance pay. We have a situation where a company goes through some tough times and reduces officer compensation with a promise to make it up to them when things turn around. The officer subsequently terminates, but is still entitled to the promised make-ups. Can the officer defer from this? The compensation is attributable to a year in which he worked, so I'm not sure its treated the same as severance pay. Any thoughts?

mr

Would COBRA apply to a premium only plan? How much information regarding COBRA should be included in the Premium Only Plan plan document?

Any help is appreciated.

Does anyone know of any guidance regarding what compensation must be used for valuation of a defined benefit plan (i.e. for a 1/1/2002 valuation date, should we use 2001 plan compensation or 2002 plan compensation).

Please help clarify the Privacy standards for me. I have a couple of questions that I cannot convince myself of the answer in reviewing the regulations.

1. Would a self-funded governmental (municipality) be considered a covered entity, provided all other requirements are met? Simply stated, are governmental/municipalities subject to this provision?

2. If a governmental/municipality is not subject, would a third party that meets the requirements of a Business Associate be required to present a Business Associate Contract to the plan?

3. Who has the responsibility to initiate Business Associate Contracts, the third party or the Covered Entity?

Thanks!

I have a plan that adopted the basic match formula to be safe harbor. At the end of the year, the sponsor decided to add a discretionary match such that the total match for the year was 100% of the first 5% deferred. Does this match satisfy the ACP safe harbor?

Some could say "no" on the basis that the discretionary match on its own (50% of deferrals between 3-5%) does not meet the non-increasing rate rule. If we can view the match in total, and since the discretionary match does not exceed 4% of pay, the answer is "yes".

Anyone else confronted this issue?

What are the effects of an employer paying COBRA premiums to an unrelated plan on behalf of a current common law employee? Taxable to the employee ( Assume payments made directly to avoid issues of constructive receipt... or, I guess comment on that as well) or not? Any MEWA concerns?

A client is terminating his 2 life MP plan termination and filing form 5310. He insists on doing it himself. He printed the forms from the IRS website. Can he simply file fr determination letter using these forms, or does he have to use those special forms with "pink" or "red" type that are scanned? I normally use software for these filings but but I recall that years ago, the first page would be scanned and hence, the special forms are needed. Any ideas? Thanks.

The University of South Alabama began sponsoring a 457(B) effective 1/1/02. The State of Alabama has sponsored a 457(B) plan since 1986. University employees may contribute to either or both plans, and have been contributing to the State's plan on a voluntary deferral basis since 1986. The University's plan has more investment options, so in the future it is likely that more employees will choose it rather than the State's plan.

The vendor that supplied us with our 457 plan is saying that for purposes of the 457(B)(3) three-year catch-up calculation, the years during which an employee could have contributed to the State's plan (back to 1986) may be counted as years for our plan (even though our plan has only been in existence for one year). Are they correct? The University is considered a "public body corporate" and is able to issue tax-exempt bonds as a political subdivision of the State, if that helps.

If they are correct, must our plan's normal retirement age of 65 be changed to agree with the State plan's NRA of 60?

Thanks,

Ken Davis

Univ. of South Alabama

My question is whether or not I'm keying Term inels properly, or if there's a better way.

We have six fields that we use to set up a matrix for status overrides data entry at year end for plans. Entry Date Overide, Stat Date, Emp Stat, Plan Cat, Reason Inel, and Term Date.

The hitch is that the person doing the input seems to have to determine whether or not an employee that terminated is in fact ineligible. It seems like Relius should be making that decision.

A complicating factor is that internally, one of the requirements that we have tried to adhere to is that input has to be done the same way in the case of a plan that is running for the first time on Relius, as in subsequent plan years. In other words, the matrix used for data entry at year end has to remain the same for takeover plans, versus _ongoing_ plans.

Description Term Ineligible *

Entry Date ORide - Not applicable

Status Date - 07/01/2002

Employee Stat - 'T'

Plan Cat - Inel

Reason Code - B

Term Date - 07/01/2002

*Example uses an employee Hired 01/01/2002, Term Inel 07/01/2002, 1 yr svc requir't assumed

I set hours for entry as follows:

init 0 0 0 0 0

cred 1k 1k 1k 1k

vest 1k 1k 1k 1k

Does that look right? The term date won't show unless it's keyed.

Thanks in advance,

Bill

How would you correct this situation: employee becomes eligible for the 125 (calendar year) plan on 6/1/02. For some reason, no deductions were ever made. The employee never notifies the employer that no deductions are being made and never submits any expenses for reimbursement. It is now after the end of the plan year and employee notifies employer that no deductions were made (but has not yet submitted reimbursements or even mentioned them). Employee does however, want the tax benefit of his election, presumably all at the marginal rate.

One of my clients paid out 2 lump sum distributions early in 2002 directly to the participants (brokerage accounts liquidated and paid out) without witholding the 20%. Without going into specifics, let's assume that the money is irretrievably gone.

Do I now simply file the 1099 showing no money withheld and hope that the plan doesn't get audited? This surely has to be a red flag for administrative deficiencies.

Does anyone know where I could find a good data collection "questionnaire" for DB 410(B) testing ?

I have a non-profit entity and a for-profit entity that are considered under common control. If the non-profit entity employees are participating in a 403(B) and the for-profit entity employees are participating in a 401(k), do I need to consider the non-profit employees in any of the testing (401(k),401(m), or 410(B)) of the 401(k) plan?

Thanks in advance.

Please can someone advise who I should write to to claim any assets available on my father's policy with GM. I know there was an amount due to his wife, my mother, but she did not claim it as they had seperated. Can I claim it?

DOL recently audited ABC, Inc. Plan. DOL concluded that were late deposits in each of the last 3 years. We are filing the 5330. Per the instructions I assume that I must file 3 separate 5330's, since the original filing due dates would have been different for each year. Is this correct?

Also, in one of these years we actually did file a 5330, but the DOL has concluded that were additional late deposits. How do I handle this situation? Do I file an amended 5330 remitting the difference between the total due and the amount originally submitted? That appears to be correct since there is actually a box for amended returns, but I am not positive.

Thanks in advance for any guidance.

I remember reading something recently regarding the IRS not being too happy about using the bottom up QNEC but I can't put my hands on it. Anyone know where I can find this info?

I am an individual over 591/2 years. My Roth IRA has been in effect over 5 years. Can I withdraw earned dividends without causing any tax problems? What if the Roth has not been in effect for five years?

My accountant says that I need an audit and I'm not seeing thinngs her way. My plan invests heavily in a limited partnership, 100% of the assets of the limited partnership are held by a bank, which is the general partner. The general partner hires an investment manager to decide how the pool of assets are invested and they invest in lots of things, mostly stocks, but maybe some other things. Since the assets are all held at a bank, doesn't that satisfy 2520.104-46biiC1?

At any given time there might be some investments, held by the Bank, which if I bought them on my own woulddefinitely not be qualifying assets. For my question please assume that if my plan owned these assets directly my plan would have more than 5% in assets other than qualifying assets.

TIA

Me2

Can an employee elect an annual dependent care salary reduction amount to be withheld for the year, e.g., $5,000, and request that the $5,000 be withheld over a period shorter than the 12 month plan year?

Similarly, can an employer, by the terms of the plan, require that annual salary reductions for the health care reimbursement account be paid by employees over the first 6 months of the plan year?