First, let me say that I have searched the boards for messages about controlled groups and 5500's. I hope I have understood what I have read.

My client has two separate companies with separate, identical, plans. Companies are a controlled group.

The first plan had 146 participants at 1/1/2001 - therefore, clearly requires an audit.

The second plan only had 1 participant at 1/1/2001.

This is the way I understand things:

We file one combined 5500 for these two plans.

Since the first plan has filed a 5500 in the past (the other plan was new in 2001), I assume it is okay to use that company's EIN for the 5500?

The second company completes a separate Schedule T.

I guess my real question is about the audit. Does the audit cover the assets of both plans, or just the first plan?

Am I missing anything else?

Thanks for any help you can give.

IRC Section 410(B)(6)©(ii) provides for a "transition period" for the formation of new control groups during which qualified plans do not have to be tested together. Does anyone know whether this rule applies to nondiscrimination testing of cafeteria plans?

I'm wondering because Section 125(g)(4) specifically references the controlled group provisions of Section 414 and the Section 414 regulations reference the 410(B) transition rule.

Thank you in advance.

A newly hired employee failed to enroll in a Sec. 125 cafeteria medical benefit plan within 31-days. He now has reported that his ex-wife has lost her medical plan coverage which results in HIS dependent child losing coverage.

It is my opinion that he is not eligible to enroll at this time since he has not lost coverage. His child lost coverage but is not entitled to our plan coverage without an order from the court.

Anyone agree with this logic?

The plan requires 1,000 hours of service and last day employment to accrue a match, but prefunds the match per payroll period throughout the year, allocates to individual accounts in a source labeled "Suspense Match", the participants direct the investment of this source and see it on their quarterly statements. After the end of the year, if a participant has met the accrual requirements, the "Suspense Match" balance is moved to the regular match source. If he does not, the "Suspense Match" is "forfeited" and used to reduce future matching contributions. I'd like input from both sides of the fence on this one - is this an acceptable practice or not. The document is a prototype that doesn't address this at all. My position is that the amount "forfeited" isn't really a forfeiture at all because it is not really part of the "accrued" balance and because it is not accrued yet it probably shouldn't be allocated for participant direct investment. I think a better solution to an employer's wish to prefund the match while maintaining accrual requirements would be to allocate the match throughout the year to a separate account (invested at the direction of the employer, admittedly without 404© protection, whatever that's worth) and then allocate to the participants who have accrued a match benefit at year end. Am I being too rigid on this? I've been told that the practice described above is fairly common in the industry, so I'd like to hear what others think.

We have a cafeteria plan for 6 emergency room doctors. One of the doctors has terminated employment. He has inquired about paying his premium for 2 months out of pocket (since he will not have a paycheck). I understand they are exempt from offering COBRA. Provided the insurance company will allow this, do you know of any reason why this should not be allowed.

A participant terminates employment halfway through the plan year. Distribution forms are provided and the distribution of the entire account balance is made within the 30-90 day period after the notice was given. At the end of the year the participant receives an allocation of the employer contribution for that year. The plan wants to distribute this allocation to the participant. Do new distribution forms need to be provided if more than 90 days has expired since the original distribution form was provided to the participant or can the situation be interprested to fall within the exception for a "reasonsable administrative delay" referred to in Treas. Regs. §§1.401(a)-20, A-10(B)(3) and 1.411(a)-11©(2)(iv)?

This is a new one to me.

Participant dies and named beneficiary receives the account balance established within the plan in the beneficiary's name.

Apparently the beneficiary intends to leave the account balance in the qualified plan of her deceased spouse for awhile, but wants the account to be in the name of a trust rather than her own name. I have not run into this set of facts before and find nothing on point.

Any insight you all might provide as to whether this seems like an acceptable act will be appreciated.

Thanks, andmik

If an employer wants to provide health insurance coverage to retirees and their spouses until the retirees are entitled to Medicare, is there any way the employer can have the spouses' right to COBRA coverage run concurrently to the retiree coverage rather than be tacked onto the end of the retiree coverage? Assume that the coverage provided to retirees and their spouses is the same as that provided to active employees except that retirees and spouses pay 100% of the premium cost of the insurance, and the active employees pay none of the cost, and assume that the spouses are often younger than the employees. Could the employer give the spouse a COBRA notice when the employee retires and offer to the spouse both COBRA and the alternative retiree coverage, and then the spouse' election of retiree coverage (and non-election of COBRA) exhausts the spouse' right to COBRA?

I have a plan sponsor that is changing to fiscal year = calendar year. Previously the fye was 7/31. The accountant wants to deduct the 7/31/02 plan year end contribution on the 2003 tax return. Based on 1.404(a)-14©, I do not think this is allowed. Is there any way to do this?

I am working with a group which is currently in negotiations. Their 125 plan has a 2/1 anniversary but allows a 7/1 midyear change because their health/dental/life rates renew 7/1. They received a substantial increase this year effective 7/1. However, since they are still in negotiations, the employer will not be able to tell the employees what the employer contribution will be until after the enrollment period and effective date. Negotiations could drag on til August. Obviously, employees can't make an educated decision until they know the employer contribution. Whatever decision is made will be retroactive to 7/1. The employer wants to know what options the employees have. Can some employees drop or change prior to 7/1 and then can some employees make a later election, say for 9/1 after they know the contribution (even though the new contribution will take effect 7/1)?

Has anyone had to do a FASB 35? and if so, what is it and where can I get a detailed info or worksheet for it?

Andrew

DOES ANYONE OUT THERE KNOW MEDICAID PROGRAMS REGULATION/LAWS FEDERAL OR STATE OF UTAH.I AM A COLLECTOR FOR A HOSPITAL WHERE IT TAKES MONTHS FOR THEM TO PAY. HOW LONG DO THEY GET TO PAY CLAIMS ETC.

I have never known a clear answer on this and am hoping someone else knows. To avoid the need for the small plan audit, when does the bond have to be purchased by? Also, what is the determination date for the amount of the non-qualifying assets in which the bond needs to cover (i.e. BOY, EOY or each day of the year)?

Thanks.

Are plan document amendments in order, in light of the proposed regulations under 457 and EGTRRA?

I am thinking in particular of eligible governmental plans maintained in states that have conformed income tax laws to EGTRRA limits and provisions.

Can subchapter S owners count pass through income for plan compensation?

If a spouse inherited qualified plan assets from his/her spouse, can he/she roll those assets to an inherited IRA?

Or can he/she only roll those assets to his/her own IRA?

Employer overfunded SIMPLE IRA match for calendar year 2001 in 2001. Overfunding found out after employees filed 2001 income tax returns. I know excess must be withdrawn but not clear on several issues, specifically:

1. When excess returned who gets the money employee or employer?

2. Does the employee have to include excess contribution returned as income? If so what year 2001 or 2002? What form should this be reported on 1099R or W-2?

3. What are penalties for employee & employer?

Employer X maintains a qualified defined benefit plan and a qualified defined contribution plan. As part of the defined benefit plan, Employer X provides a voluntary deductible employee contributions ("VDEC") arrangement, under which up to $2,000 could be contributed on a tax-deductible basis between 1982 and 1986. In order to modernize the administrationv of the VDEC, Employer X proposes to transfer the VDEC from the defined benefit to the defined contribution plan. Are there any required filings or disclosures to the IRS, DOL or PBGC or participants with respect to the transfer of the VDEC from the defined benefit plan to the defined contribution plan?

We're evaluating our subscriptions and services and were curious about other TPAs' favorite ways to access the code and regs. It is available in lots of places, I know, some costly, some free, some easy to use, some hard. We want to find one great resource for this information and hopefully that will allow us to cull out some of our subscription services. We wondered which is the favorite out there in TV land. 99% of our work is 401(k) recordkeeping.

Does anyone have experience using the Delinquent Filer Volunary Compliance Program in the following situation:

A 403(B) plan recently discovered that it has a Form 5500 filing obligation because the employer makes contributions in addition to the employee deferrals. The plan administrator wants to bring the plan into compliance. It is contemplating using the DFVCP but the plan requires a complete return including all schedules and attachments for each year that relief is requested. The plan does not have the necessary information to make complete returns for all outstanding years.

Any idea how to approach this in a DFVCP? Any other ideas?