Clinic X, an employer maintaining a self-insured group health plan, has received numerous threats from the estranged husband of a Clinic employee. The husband receives medical treatment at Clinic X, as the spouse of an employee.

The husband's highly volatile behavior has raised safety concerns at the Clinic. The employee has asked to terminate the husband's coverage, due to legal separation. Can the Clinic deny COBRA coverage on the basis of the husband's gross misconduct?

If not, can the CLinic simply refuse to treat the husband and pay for his coverage at another medical facility, for the COBRA period?

Frozen, small employer plan is $1,000,000 underfunded. Plan is subject to PBGC and substantial owner would bear the reduction in allocation if standard termination.

Owner's intention is to keep Plan open and fund over 3-4 years (250,000 - 300,000 a year).

The plan does not have a death benefit other than PVAB.

Can plan purchase life insurance on owner's life? The intention would be that the life insurance would fully fund the plan if owner dies before plan is fully funded. The intention is for the life insurance to be just an asset of the plan and not used to provide additional death benefits.

Does the 100 times monthly benefit rule apply? Does life insurance have to be offered to the other participants? Any other concerns?

Thanks.

Scott

I am trying to determine whether an Audit is needed for a Profit Sharing Plan. Plan Year is calendar year and has one entry date (01/01). Plan document provides that generally, rehired former Participants become Participants immediately upon rehire.

Assume former Participants are rehired during 2001; such Participants did not have account balances at 01/01/01. Are such Participants considred participating at the beginning of the year for Audit purposes. I am hoping that since they weren't employed at 01/01 that the answer is no, however, I am bothered by the fact that the Plan has only one entry date. Are such participants deemed to have retroactively entered as of the first day of Plan Year?

Am I supposed to include interest bearing cash as a reportable transaction (>5% of plan assets)?

We are looking to set up a VEBA for a client and I have a few questions that I have not been able to locate in all of my research.

First, is a trust required in setting up this type of plan? Some information states that it is, others do not.

Second, is a plan document required when setting up a VEBA?

Finally, is a separate account required for key employees?

Thank you in advance for the information.

I have an S corporation and a C corporation that are wholly owned by the same individual. The S corporation has a profit sharing plan for its non union employees. The C corporation does not. Is the S corp required to cover the non union employees of the C corp?

Note: This question was also posted in the DB section.

A DB plan terminates effective 12/31/2000 but does not distribute all assets until 3/2002.

Because the plan terminated in 2000, Schedule B is not required for 2001 or 2002 5500 filings, but it was required for 2000.

Will EFAST automatically issue a rejection notice if Schedule B is omitted? How does the system know whether it was correctly or incorrectly omitted?

The only questions about termination appear to be (1) whether the plan teminated in the current or prior year and if so what was the amount of the reversion; (2) and whether at the end of the year the plan still exists for PBGC purposes.

Am I missing something or is a rejection notice automatic in the year after a DB plan terminates?

I just came across an article drafted by a local attorney regarding IRS Notice 2002-24. The brief article indicated that the suspension applies only to POP plans. That if an employer has a medical or dependent care reimbursement component, they must still file Form 5500. I was under the impression the Notice suspended filing for all Section 125 plans.

Any comments would be welcome.

Our firm opted to utilize the document services offered by Relius to assist us in the GUST restatment process for many of our retirement plan clients. This past week we found out that the cost of the volume submitter document was increasing. The new pricing was not detailed. Also, we had to spend time trying to obtain information as to whether the cost of their prototype document (one we use often) was to increase as well.

We have finally obtained the cost increases. But, what has us a little miffed is that the increases are retroactive to May 15, 2002. And, if I read their material correctly, they plan to return any unprocessed plans they have received back to us so that we can put the adoption agreement information on their new checklist (more time and cost on our part).

I don't like price increases, but I understand they are a part of business. What I don't understand is what the reasoning is to make the increase retroactive. And, why was there no advance, offical correspondence announcing this (hard copy, website or otherwise)?

Perhaps the notices got lost in the mail???

Any thoughts on this would be appreciated.

Let's say that a self-insured (medical reimbursement plan) meets the non-discrimination "ELIGIBILITY TEST" .... because the plan benefits 70% or more of all nonexcludable employees.

However, according to the plan document -- the "length of service" requirement to become a participant in the plan is as follows:

** Highly compensated employees must perform only 30 days of employment before they can enter the plan ...... while non-highly compensated employees must perform "12 months" of service" before they can enter the plan.

Common sense tells me that since there is such a huge difference between the "length of service" requirements, which clearly is in favor or the highly compensated employees, then this plan must obviously fail some type of eligibility test .... which will cuase the highly comps to have to report their plan-paid medical claims as taxable income. But Nope! ... my common sense logic is wrong, Simply because the ELIGIBILITY TEST for non-discrimination (IRC 105-h) makes no mention of differences in "length of service for eligibility", no matter how bazaar the difference might be.

So what am I failing to understand ? Can a medical reimbursement plan really have such a favorable lenghth of service requirement for only the highly comps ?

I have a government client interested in converting a DB plan to a DC plan (Despite current environment). The client would like to know about and possibly contact other government entities that have already done this. I would appreciate hearing from anyone about specific governments that have been through this process. Please post the name of the government entity and any other information that you could share. Thank you.

A profit sharing plan is adding a 401(k) feature as of 8/1/02, and we want to add safe harbor provisions effective on that date.

My question is can we make safe harbor contributions for only the period during which the 401(k) is active? For example, can we exclude people who terminated at the beginning of the year from the safe harbor contribution?

We have a self-insured plan with stop loss coverage. We are changing our contractual plan year so that everything is on a calendar year. Our current stop loss contract expires 8-31-02. Our TPA/Broker has secured OK from the stop loss carrier to write a 16-month contract, effective September 1, 2002 through December 31, 2003. This is in contrast to doing a four month contract, then coming back January 1, 2003 with another contract. The carrier is not willing to extend our current contract for an additional four months.

It is my understanding that the advantage to doing this 16-month contract is that the reinsurers are working off the "old manuals" at this point to determine rates. Our broker states that inflationary trends are being figured currently at about 1.12% per month, 12% - 14%. There is every reason to believe this trend will increase. So that might be a second advantage to doing the 16-month contract.

I cannot at this point see any reason not to do the 16 month contract. Is there anything that I might be missing? Any additional important questions I should be asking?

This post may belong in the 5500 section but I thought I'd try here first.

I have a calendar plan with a termination date of 12/31/2000 which paid out the final assets 3/2002. I'm doing a 5500 filing for 2001.

As I understand it, no Schedule B is required for 2001 since the plan terminated effective 12/31/2000.

Yet, I see no question on any of the 5500 filings that would lead a reviewer, scanner, or computer to determine that the Schedule B was correctly omitted. There's one box on Form 5500 that lets you indicate if the plan still exists at EOY for PBGC purposes. There's another question somewhere about whether a termination has occurred in this or a prior year, and if so, whether a reversion occurred.

It looks like a rejection notice will be automatic. Am I missing anything?

I am a little confused as to what the best way to set up a section 125 for a company who renews their medical plan midyear as opposed to January 1.

If a company renews their medical plan as of July 1st, should I set up their section 125 July 1st to June 30th (since the premiums will most likely increase yearly) or should I set it up on a calendar year?

I also realize that I could set up the premium conversion based on their medical insurance plan year (july 1st to june 30th) and set up their flex spending (for medical and dependent) on a calendar year (jan 1st to dec 31st)...are their any drawbacks to that?

I seem to be running into this issue a lot. thanks!

I'm looking for some help on whether anyone has seen any writing (authoratative or otherwise) on the subject of when a "qualifying event" occurs in the context of a taft-hartley program with an "hours bank" or contribution reserve. In a nutshell, the plan in question maintains eligibility for coverage period during which employer contributions are insufficient to buy coverage by "drawing" from an hours/dollars bank, until exhausted, and THEN allows the employee to voluntarily contribute for 18 months to maintain coverage. It would appear that the qualifying event could OPTIONALLY, from the group health plan's perspective, be (1) the initial reduction in hours causing loss of eligibility, from which date, the plan could measure the COBRA period and consider the hours bank draw "alternative coverage" or (2) the date when coverage is (or might be) lost if voluntary contributions of the hours deficiency are not paid, or (3) the end of the 18 non-COBRA "self pay."

Since this approach is fairly common, I would hope someone could point me in the direction of some official or quasi-official authority on such a case.

Thanks

What is the difference between a "Thrift" 401(k) Plan and a regular 401(k) Plan?

Is a summary annual report required for a cafeteria plan that includes dependent care and medical reimbursement accounts for an employer with more than 100 employees?

What is the difference between a "Thrift" 401(k) Plan and a regular 401(k) Plan?

Can a small employer establishing a PSP claim the small employer startup tax credit if the only plan they have maintained in the last five years is a SIMPLE?