Can you currently amend a 12/31/01 profit sharing plan to remove the last day requirement to receive a contribution allocation?

The situation here is that a qualified beneficiary got divorced which left his ex without coverage. Qualified beneficiary did not notify the plan administrator so that the ex could receive proper notification. Subsequent to this (and several months later), the ex discovered the situation and wishes to have COBRA coverage retroactive to the date of the qualifying event (again, even though the plan administrator should have been notified but was not).

Question 1: Even though qualified beneficiary is the one who dropped the ball, is the plan administrator responsible for making coverage retroactive as though qualified beneficiary gave notification on a timely basis?

Question 2: If ex is eligible for retroactive coverage, does she receive continuation coverage for the entire 36 months beginning on the day of the divorce (or the day plan administrator received notification)?

Thank you for all help.

This is a question that was presented to me.

A participant in a 401(k) Plan dies. A church is the beneficiary. Do you withhold for federal income tax?

I have asked several people including an ERISA attorney. The votes were split down the middle.

Unfortunately, I am not an expert with H&W plans, so I am begging for a little assistance here.

I have a client who supplied me with the Schedule A information from their dental insurance provider. In Part III, 8© there are listed some "retention charges". My question is this:

Do the items listed as "Charges for risks or other contingencies" get reported on the Schedule C if the amount is >$5,000??

I would think that they would be, but just need some clarification.

What happens to any unused amounts in an employee's FSA if a company shuts down? For example, say I have contributed $500 to my FSA because for a dental procedure in December, however, my company shuts down today. What happens to that $500? Is it reimbursed back to me?

Employee terminates employment with a vested deferred benefit, and the DB plan distributes an annuity contract to her. The employee and spouse later divorce. Is this annuity contract subject to the QDRO rules (and the plan administrator determines the validity of the QDRO)? Or is it subject to state domestic relations laws, and the insurer determines the validity of the DRO?

If, instead, the plan purchased annuities using a group annuity contract, I assume it is clear the QDRO rules apply.

Thanks-

card

I am having trouble finding a reference in the regs which specifically states that participants cannot elect certain and life annuities for time periods longer than their life expectancy, or joint life expectancy with their elected CA.

I believe it has something to do with MDIB and maybe some old TEFRA language.....can anyone please point me in the right direction?

What are the cafeteria plan rules for including life insurance premiums?

I read in a previous post that an employer can only include the premiums for up to $50,000 of employee paid life insurance in a cafeteria plan - is that correct? What about spousal life premiums - are the rules any different.

Thanks!

Our ESOP loan has been paid off, so we are ready to start making distributions to terminated participants. The question is what to do for participants who are also entitled to diversification. Our plan document provides that distributions will be made over 5 years (20% each year). If, for example, a participant receives a 20% distribution of his account in the first year that he is eligible for diversification (but does not elect to diversify in this first year), and he elects to diversify all 25% in the second year, may he only diversify 5% (25% minus the 20% he received in the distribution), or may he diversify another full 25% on top of the 20% distribution he received in year one?

Any help would be much appreciated.

Can the owner of a Sub S Corp particpate in a Flexible Spending Account?

I have a person who wants to contribute to an IRA on behalf of his wife and himself...they are both over 50. How much can they put in for 2002?

I am attempting to do some research on the topic of ESOPs as majority owners of a corporation. Specifically, I am looking to address potential areas of risk for an ESOP that is in this situation and the resonsibilities of the ESOP. I am looking for any information or resources that might address this topic. A journal article would be most helpful. I have been to most of the ESOP-related web pages and am having problems finding anything this specific.

Any help would be most appreciated. TIA

I am having trouble thinking this through so any input would be appreciated.

As I see it:

If a Top Hat plan were found to be disqualified -

the choice would be to continue the arrangement with all of the expense and hassle of a QRP OR

cease operation.

I can not imagine "qualifying" the arrangement so what happens if the employer stops the plan? Please tell me those things I am missing.

Any vested accounts would be taxable to the executive and the employer (assuming reasonable comp) would get a deduction - right?

Executives who were not vested would lose their account balances but no tax - right?

The employer would do some accounting and log the NQDC funds back onto the books as cash and extinguish a liability - right?

Is there any penalty to the employer if IRS/DOL rule the Top Hat plan is not qualified?

Any and all inputs will be much appreciated.

This is a fairly fundamental question, but I will asks it anyway. We have a Doc and his spouse in a Profit Sharing plan. Doc makes about $350K and spouse makes $40K. We are converting the plan to a 401k safe harbor with a comparability ps formula.

Since we no longer have to worry about family aggregation, I assume the spouse is an HCE due to ownership attribution, but the spouse is tested totally separately for 401k and 401a4 as a separate HCE. The spouse will defer $11,000 of salary and we could, but have chosen not to, include her in the comparability additional amount.

The interesting thing is the spouse actually helps with the a4 testing since (1) she was not getting the extra comparability contribution; (2) she is one of the older employees; and (3) she was at the bottom of the ABRs as an HCE. Seems to good to be right?

We are attempting to self correct the failure to make RMDs for multiple years. According to ECPRS, the correction method is to essentially get the RMDs out of the plan. Under ECPRS, RMDs are calculated by dividing the adjusted account balance by the applicable divisor. I understand that the adjusted account balance is reduced by the amount of total missed distributions, but I can't tell how earning and losses are factored in.

Could someone please tell me how earnings or losses are factored into calculatiing RMDs under ECPRS? For example, is a correction made if the RMD is distributed, but the gains on the RMD for the period in which those amounts were suppose to be out of the plan are not?

We provide employer paid group life up to $50,000. We also offer supplemental life, 100% employee paid.

My understanding is that there would be no imputed income issues under this scenario, since the employer does not provide over $50,000 in life insurance.

I am being told by my payroll dept. that imputed income should also be calculated on the employee paid supplemental and spouse supplemental.

Can anyone offer any guidance?

Form 5330 questions/verification of understanding:

1-A small plan (Schedule I) with late employer contributions is required to file a Form 5330 but not Schedule G

2-Form 5330, Section VII requires that the amount involved in the transaction be input ($50,000.00) and Relius automatically calculates a penalty of $7,000.00. Is this correct? Prior threads have discussed the penalty appling to interest on the late contribution amount. Can anyone site a clear resource for either?

3-Plan files on an accural basis. Late contributions are for 2001, due 1/15 but not sent until 1/18. Therefore, the 2001 filing needs the 5330 (and Schedule G, if a large plan).

Thanks!

Laura

As of 7/1/02, we are setting up a 401(k) plan for a company which currently sponsors a 403(B) plan. [There is no change in the status of the employer, only a desire to use a 401(k) vs. a 403(B) and a different investment company.] This (403(B)) plan includes an employer discretionary contribution and pre-tax deferrals. The employer would like to terminate the plan, but my understanding is that there is no basis for termination. Given that the 403(B) will continue to exist, it would appear that an amendment should be made to the 403(B) to take the contribution to 0%. With respect to the deferrals, the adoption agreement simply states that deferrals are limited to statutory levels [402(g) and 403(B)(2) are listed]. So, there is no way to modify the adoption agreement to discontinue deferrals. May deferrals be prohibited by including a paragraph in the resolution to amend the employer contribution, or must employees be permitted to make deferrals to the 403(B)? Thanks.

A provider of administrative services has stated that a 403(B) plan sponsor's public school plan might be discriminatory because the Plan will not allow life insurance as an investment of the 403(B) plan

1. What are the plan sponsors rights in setting investment policy?

The plan sponsor's payroll system is not geared to handling incidental reporting of income, etc. and will be forced to incur substantial expense if required to include life insurance.

2. Has anyone seen this approach simply as a method to sell life insurance product previously?

To determine whether a cafeteria plan is exempt from filing, one of the "tests" is to find out if the plan is funded. That is if the plan assets have been deposited in the name of the "Plan" rather than remain as part of the general assets of the company.

I have a situation where the client is self funded and deposits into an account in the name of the medical plan NOT the cafeteria plan. (Example: ABC Employee Benefit Plan--name of medical plan. The cafeteria plan name is ABC Cafeteria Plan)

Does this constitute funding in the name of the "Plan"?