Hi-

My original question is below, but the question can be stated simply as "How do you report an insurance contract that is longer than 12 months on Schedule A?"

Thanks.

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I have a client with the following situation:

Plan year 10/1/00 to 9/30/01

Insurance contract that has a term of 11/1/99 to 12/31/00.

So the insurance contract ends in the 2000 plan year. So the contract would be reflected on the 2000 5500. But the insurance contract is for more than 12 months. The instructions to Schedule A seem to say that you should not report data for more than 12 months.

What to do?

One option is report the 14 months anyway. Another option is to split the reporting into 2 Schedule A's, one for 12 months and one for 2 months.

Anyone else deal with this before?

Thanks as usual-

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We administer a number of plans that use group annuity products that hold units of mutual funds, such as Manulife and Nationwide's Best of America products. Some of these are large plans that require Schedule H and the related schedule of assets held for investment. The format for that schedule includes cost basis of the assets, which is generally not available to us in the case of these annuity-wrapped mutual funds. Is there any special rule relating to group annuity products, and if not, are we going to have a problem if the cost basis is not listed?

Buyer is purchasing substantially all the assets of seller, who sponsors a self-funded health plan that covers retirees. The seller is financially unstable. If the seller terminates its health plan and files for bankruptcy within one year, does the buyer have COBRA liability with respect to the retirees as a successor employer? Would appreciate anyone elses thoughts.

Is a forced lump-sum distribution for a plan, after it has been granted IRS approval to terminate, subject to the 10% early withdrawal penalty?

I have a client with many participants (all of whom have account balances >$5K) who think that this money should not be considered an early withdrawal on the grounds that the employer is terminating the plan.

I believe that this money is subject to the 10% penalty but have been unable to find any supporting documentation.

thanks,

Sean

When is a POP considered a welfare plan? I am trying to determine if we are required to file form 5500 for our POP.

Our written corporate policy states, "use of paid vacation days...is not considered hours worked" when calculating overtime.

Because of a back-log of work in "Dept X", our HR Director has authorized payroll to include vacation hours as hours worked when calculating overtime - for that department only and for a limited time.

I say that an overtime policy - or a temporary change to the policy - must be company wide to include ALL non-exempt employees. Am I right or is it really acceptable to change the policy "temporarily" for a select group of employees because their manager failed to consider work-flow when letting them all schedule their vacations at the same time?

Does anyone know roughly want piece of the pie diagnostic visits make up as far as total costs go for medical insurance? For example, Rx makes up roughly 20% of total costs. I have this information somewhere, but just can't locate it at the moment. Thanks in advance!

The situation I am dealing with is this . . . Will a qualified profit-sharing plan be "disqualified" if an owner (with a really substantial salary) waives participation in the profit-sharing plan after the close of the plan year (which is when the amount of the contribution is determined) and receives cash equal to the amount of his contribution at the time of his waiver?

Also, would the outcome of this situation be any different if this person were just an employee and not an owner?

My inclination is that this waiver could somehow violate the nondiscrimination rules, but I am not sure if this question should be looked at from a different angle.

I am working under tight time restraints so any quick responses would be greatly appreciated.

Hi,

IRS came out with the new refined procedure for the filing. However, it relates more to the procedure within the IRS rather than directing one as to how to go about preparing the request itself.

Can anyone please direct me to a checklists of sorts which can be referred to while preparing a request for the determination letter? Or an appropriate web link for that matter.

Thanks!!

Sonia Kapoor

I am looking for information on independence in terms of a large plan audits. Many CPA firms are branching out to provide brokerage and plan administrative services to compliment their accounting, tax and audit services. DOL reg 14370, sec. 2509.75-9 addresses the independence issue, but was written in 1975. I am uanble to find anything providing more up-to-date guidance in our new environment. Specifically, we are wondering if our CPA firm can maintain independence where a division of itself (a member per the reg) is providing third party administration and there is an outside recordkeeper (on a daily valuation platform) NOT utilizing our brokerage services. (It seems clear that the use of our staff investment advisor would preclude us from performing the audit.)

If an employees terminates service as of 7/31/02 but continues to receive a W-2 for deferred compensation for several years, is he/she eligble to defer into the 401(k). There are actually no services being performed. Also, if they attain age 70 1/2 should mininum distributions begin?

I am new to the 457 area. What determines if a plan is "eligible" - 457(B) or "ineligible" - Sec 457(f)?

Prior 5500 had pension code of 2C under question 8a but no schedule R was prepared. Are there any exceptions for not filing a schedule R for a collectively bargained plan? Is a collectively bargained plan subject to the same minimum funding requirements as a regular money purchase plan?

The U.S. Chamber of Commerce is currently seeking volunteers to participate in its survey of employee benefit expenditures. The 2002 Employee Benefits Study provides valuable information on the total cost of employee compensation, including average costs by company size, industry, and geographic region. The survey is only five pages and is simple to complete with your 2001 year-end figures at hand.

Each participating company will receive as a “thank you” a FREE copy (a $75.00 value) of the published survey results, which can be used to evaluate your company’s benefit offerings. Companies may volunteer to participate in the survey by visiting www.benefitstudy.com to download the survey form or by calling toll-free 1-877-212-4535 to receive the survey automatically via fax.

The deadline for participation is July 31, 2002. Thank you for your support!

A while back I remember the DOL issuing guidance on fees that could be deducted from participant accounts and fees that could not. Can anyone tell me how and where to find this?

How do you handle determination of eligibility and service for vesting for a participant who works less than 1,000 hours during the plan year in which they are hired?

EXAMPLE: Plan year is calendar year; EE hired 8/15/01 and works 950 hours in 2001, then 2080 hours in 2002. First year of service for both eligility and vesting is 8/15/01-8/14/02, during which he worked over 1,000 hours; second year of service is the 2002 plan year.

He should end 2002 with 2 years of service but our system does not give him credit for a year of service for his first 12 months. Does any system handle this properly?

I would like to find out in regards to distributing money from an IRA , will the participant still have to pay taxes if they have lost principle?

I realize that IRA's are tax-deferred accounts, but the money that went in was aprox $ 40,000 and now the account is worth $26,000 and I thought maybe there was some sort of special handling/taxe issue for losses when the money gets distributed to the participant.

Is a welfare plan (health or disability) allowed to require participants to file claims through e-mail? The electronic distribution regs don't seem to address this and I would think there must be some kind of protection for employees who don't have access to e-mail, but I can't find such a protection in the law.

Employer, pursuant to a collective bargaining agreement, agrees to pay each employee who terminates employment on or after age 65, $250 per month in cash. The reason this was implemented was to give the retiree cash to help pay for health insurance premiums, though there is no requirement that the cash be used for such purpose.

It seems to me that this may well be an ERISA pension plan as it is a program that provides retirement income to employees and does not meet the safe harbor exceptions under DOL Reg. 2510.3-2(B). Does the character of this arrangement as a pension plan change if the employer requires the payments to be used for the payment of individual health insurance premiums? I don' think this changes the character as a pension plan, but I could be missing something.

If it is a pension plan, could we add these payments to their existing defined benefit plan by amending said plan and stating that each retiree will receive, in addition the the regular pension benefit, an additional $250 per month as a severance type benefit? If we can/should put this in the pension plan, I assume that we cannot require the $250 to be paid in a lump sum and that we would have to annuitize the payments, with an option to waive the annuity and take a lump sum.

Any comments would be greatly appreciated.

Under the May 8, 2002 proposed 457 regulations I am a little unclear on two issues and would welcome any insight anyone may have.

1. If a tax-exempt eligible employer becomes a for-profit employer and does not terminate their plan how does that affect the taxation on amounts previously deferred by plan participants.

2. If a tax-exempt eligible employer becomes a governmental employer and does not terminate their plan how does that affect the taxation on amounts previously deferred by plan participants.