We have a participant who has submitted a claim for reimbursement for the services of a Doula who assisted his wife during delivery. This doula is a woman who assists the mother during labor (providing physical support during delivery) and supplemented nursing care at the hospital. This doula is not a registered nurse.

The doula services are provided to women who do not want to use anesthesia during childbirth. I am leaning towards reimbursement as either nursing care not performed by nurses discussed in IRS Publication 502 or as medical care under 213 as "amounts paid for the " ... mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body."

Has anyone seen this before? Any thoughts would be welcome. Thanks.

Two companies were incorrectly considered to be a controlled group (Plan X) and therefore one plan was established. The plan was established in 1998. The plan is being split in 2002, Plan X and Plan Y, and was wondering if amended 5500s for Plan X and late 5500s for Plan Y are necessary, or what is the proper way to handle this?

If a Sch H or I has misreported total assets for filing years 1996 through 2001, should all of the plan years be amended? The amount is less than 10% of the total plan assets. Not sure if the amount makes a difference.

Plan sponsor is on a prototype document that is a 1990 version. Therefore, it was not amended for the the previous tax laws, let alone GUST and EGTRRA.

Do they need to go through the CAP program to amend for the first period before we amend for GUST, or does amending for GUST the only thing that needs to be done?

Thanks,

Ronnie

What is the due date for making the contribution to a calendar year profit sharing plan sponsored by a tax-exempt entity?

A DC plan participant signed retirement distribution paperwork before retirement. The plan administrator put the paperwork into the participant’s file until his retirement date. The plan administrator forgot to send in the retirement paperwork to the record keeper upon the retirement date. The distribution was finally made after 90 days and the investment funds lost over $30,000. The participant wants the loss put into his plan account because he wants to use favorable tax treatment. The employer would like to make a contribution to the plan to make the participant whole.

1. I assume the distribution was impermissible since it was paid after the 90 days. If the payment is reversed and reprocessed with new paperwork, the loss is even greater. I think the plan administrator can use the SCP program..

2. Can the employer make a non-deductible contribution to the plan to make the participant whole (i.e., replace the lost funds so the participant can use favorable tax treatment). I don’t think so unless the participant brings a fiduciary breach lawsuit against the plan administrator.

Please let me know your thoughts. Thanks!

Have there been further developments on the interaction of Sec. 83 and Sec. 457(f), now that the public hearing on the new regs has taken place (was scheduled for Aug. 28, 2002)?

My understanding was that the 457(f) reg, if finalized, would prevent nonprofit employers from using options on mutual funds and other property to compensate executives.

Any comments appreciated.

I swear I heard a very high authority at the DOL say that a "duly authorized agent" of a bank, trust or insurance company could issue a certification that could be relied upon for the audit.

I have recently obtained such a certification from a pretty major investment firm, where the investment company certfied as "agent for the trust company."

From reviewing the regs, I cannot find any mention of a duly authorized agent.

Anyone dealt with this before?

Working on a messy takeover plan. Company has deferral and match, and then funds a 10% contribution to all employees on the last day of the year.

For 12/31/01, they funded the 10% to everybody, but now that we have all of the data, we know that there is a 404 violation. Because the money was funded in 2002, the excess can be allocated as a 2002 cont.

However, company claims that they have always funded 10% to everybody and have never had any problems before. Putnam did their administration for prior years. When I look at Putnam's 415 test, the average annual addition for everybody is 15.27%, thus there was an obvious 404 violation. Also, this 15.27% does not include any contributions to a 125 plan.

How would the 2000 violation be corrected? Company claims that because it was funded in 2001, then why couldn't the excess just be claimed as a 2001 cont? If possible, this would then reduce the contribution previously allocated for 2001, and then create an even greater excess to be allocated in 2002.

What's the easiest solution at this point????

hi, i wonder if anyone can tell me whether i can have a roth ira if i live abroad? tia!

I have a client corporation who has a retired executive receiving $50,000 p.a. under a non-qualified deferred compensation plan (nonaccount balance). The company wants to buy out this "expense stream" with a lump sum calculated at a discount rate of, say, 6%. The problem is that for FICA taxes when the compensation was earned, they used a discount rate of 12% (which was reasonable at the time).

Question: by using a different interest rate now, does the "additional" deferred comp become subject to FICA taxes?

I am thinking that it does not because there would be no FICA taxes if the income stream was continued at $50k pa (assuming the 12% was not considered unreasonable), and the company is now just paying out the current PV. Any thoughts?

Thanks

Rod

Can an union sponsor a cafeteria plan, or may only employers sponsor such arrangements?

How are net depreciation in investments shown on the statement of changes of net assets available for benefits when depreciation in investments is large enough to causes net additions to be negative? Especially when this happens for both years in comparative statements. Do you move only the depreciation in investments to deductions?

Scenario: An employee's hire date is 5/1/02 and they elect to put $500 into their medical FSA. They terminate on 8/31/02 and submit $500 in eligible medical receipts incurred during the time they were active. The employee was reimbursed for only the amount they actually contributed because the TPA stated that they termed so they cannot get the full amount out. Is this correct? I was under the impression that you must reimburse the amount elected in a Medical FSA unless otherwise stated in the Plan Document.

Please offer feedback on this. Thanks for your help!!

I know this issue has come up before, but I'm curious how others are handling it. For 2002, plans consisting "solely of contributions under 401(k)(12)" which is the safe harbor match and safe harbor non-elective are not considered top heavy . The question everyone has is - what if the safe harbor plan originated as a profit sharing plan and there is profit sharing money in the plan? Do we still get out of our top heavy requirements? I haven't found a definitive answer and am wondering what stance others in the business are doing.

thanks,

mike

I need to determine my PIA or as the plan calls it PSSB (Primary Social Security Benefit). This integrated defined pension fund defines PSSB in this case as "your age 65 Social Security Benefit projected as of 12/31/1988".

Social Security has not been able to help. I would appreciate any ideas you might have.

The term "best practices" relative to 401(k) plans often appears in "compliance reports," conference presentations, industry articles, etc. What is really meant by "best practices?" Are they merely the author's term for what he/she believes represent "best practices" or os there a published list of "best practices" that has been accepted by the defined contribution community, or by a portion of the defined contribution community? Any insight would be most appreciated.

The term "best practices" relative to 401(k) plans often is included in "compliance reports," conference presentations, articles, etc. What is really meant by "best practices?" Are they merely the author's term for what he/she believe represent "best practices" or is there a published list of "best practices" that has been accepted by the defined contribuion plan community?Any insight would be most appreciated.

Our Plan offers Medical & Dependent Care reimbursement accounts that must be actively elected during annual enrollment. We also offer a pre-tax Vacation Buy Benefit. But this election carries over from year to year, unless the employee actively election a different tier (no coverage or additional days). Does Section 125 cover this benefit? I assume it does since it is pre-tax. Should we be requiring employees to actively elect this benefit each year? In administering the vakay buy, employees must use all regular paid time-off )PTO) first, then vakay buy in the same year as the election. Thus, employees who buy vacation days cannot roll over PTO. Can you provide a good reference for your answer. Thanks!

In an earlier post I concluded that aggregation would not occur in the following setting (repeated here for ease of reference):

Two employees are each exactly fifty percent owners of a professional service corporation, which maintains a 401(k) profit sharing plan. Each employee will receive a contribution equal to the 415© maximum for 2002, $40,000. None of this amount is attributable to a 401(k) elective deferral. Both individuals are also highly-compensated employees of a non-profit organization, which provides a voluntary 403(B) Retirement Plan for the benefit of its employees. Under this particular plan, employees may elect to defer all or some portion of a yearly bonus of $16,000 into the 403(B) Plan. Neither employee has an ownership interest in the not-for-profit.

My earlier reasoning was as follows. Treas. Reg. Section 1.415-8(d)(2), which provides that if the employee owns or controls more than 50% of another business that maintains another plan, the contributions to the Section 403(B) Plan must be "aggregated" with the contributions to the outside plan or the 403(B) employer's other plans. Given that neither employee owns more than 50% of the professional corporation, I concluded that aggregation under Section 415 will not be an issue under these circumstances or otherwise.

I am now uncertain as to whether or not 1.415-8 has been superceded. I have been alerted to the existence of Section 415(k)(4), which was added by EGTRRA. 415(k)(4) appears to reiterate some but not all of the guidance provided by Treas. Reg. Section 1.415-8(d)(2), which described special rules under which the employer is deemed to maintain the annuity contract. So, I'm not sure the underlying rule has changed much.

Reading Section 415(k)(4) and notwithstanding Treas. Reg. Section 1.415-8(d), I still maintain that, unless an employee has "more than 50%" control of the for- profit employer, the 403(B) plan will not be treated as being owned by the for-profit employer. Thus, no aggregation. Correct?