I have a new 401(k) plan with an effective date of 1/1/2001. The first date that participants could actually defer into the plan was September 2001. When calculating the ADR's for the participants, do I include only their compensation paid from September through December or the enitre plan year?

I was curious if anybody knew of a cite or reference on how to properly handle this. I would lean to the more conservative approach and use the full year compensation, but this seems unfair to the two HCE's in the plan. Particularly considering there were a few employees that would have been eligible to defer if they hadn't terminated before September 1st.

Thanks

Steve

I have a DB plan with three participants, who are also the only three employees (husband, wife, and 22-year-old daughter). The husband owns 90% of the business, and his wife owns 10%. The business is not a "professional service employer."

Under section 1563(e), the daughter is not attributed any ownership since she is 21 or older. However, the "substantial owner rules" in ERISA 1322(B)(5), it states that an individual will be treated as a substantial owner w/r/t a plan if he or she was a substantial owner within the 60 months preceding the determination date.

Since the daughter only turned 21 in late 2000 and would have been attributed her parents' ownership before then, does this mean that the plan is exempt from PBGC coverage until late 2005? I think yes, but I've never needed to use this rule before, and I'd appreciate an expert opinion.

Thanks.

Employer has an ineligible 457 plan for an employee. Plan provides for installment payments (monthly for 60 months)following termination of employment for any reason at any age. Plan has a no-compete clause (assume for argument sakes that this works) that runs for 36 months. No other risk of forfeiture clause following that. Is employee taxed on the balance (remaining 24 months) at the end of the 36 months?

Thanks.

I have seen several references to using the idea of simply sending

small account balances on participants unable to be located directly to the IRS for credit to the respective taxpayer's account.

The term "100% back-up witholding" is the phrase I've been hearing. This sure would simplify matters alot and who could complain?

Any thoughts on this are appreciated

Anyone know if government agencies are exempt from the written plan document requirement for cafeteria plans (125 plan). I believe that government agencies are required to have a written plan document, but someone tells me otherwise. Also, are government agencies required to file a form 5500 schedule F? I understand that governmental plans are exempt from filing a form 5500 for pension and welfare plans but not a form 5500 schedule f for fringe benefit plans. Thoughts anyone?

My understanding from Notice 2000-3 is that an existing 401(k) plan cannot convert to a safe harbor format in the middle of a plan year, but that the employer can create a "new plan" with a short plan year and institute safe harbor testing, SO LONG AS (a) the short plan year is at least 3 months long, and (B) the new plan is not a "successor plan" as defined in Notice 98-1.

Now, the definition of successor plan in Notice 98-1 is very broad. I thought I recalled a narrower definition of successor plan that required that the predecessor plan and the successor plan have the same plan year.

If this is the case then can't an existing plan with a CODA start a new plan, with a new plan year, and use safe harbor rules for a short plan year of at least 3 months?

Hello again...the question I have today is this:

When adjusting claims for daycare expenses, our policy has alway been the same as for medical expenses: Claims can only be reimbursed AFTER the expense has been incurred (dates-of-service NOT date-paid). HOW would you suggest handling pre-registration fees for summer daycare programs? Often the provider requires the registration fee over a month before the program begins. To complicate this more, most of our accounts have a July through June year...which means the pre-reg fee is required in one year and the dates-of-service fall within the following year. And to play devils-advocate...are registration fees even eligible since they are not the actual fee for care?

I look forward to all of your replies. Thanks!

Is it permissable to have separate plans or plan years for the premium conversion vs. unreimbursed medical/dep. care portions of a 125 plan? The employer's health plan renews in August and will require an adjustment to the premiums withdrawn pretax from employee salaries. They would, however, like to continue allowing employees to make changes to their flexible spending accounts on a calender year. Any information on what the regs say about this? Believe it or not, their current 125 administrator doesn't know the answer to this.

I received a request from an employee to cease Dependent Care FSA contributions because a relative will now be caring for her child and she will not be incurring day care fees.

Is this an eligible change? According to the final regs it may not be since the cost change was not "imposed by a dependent care provider who is not a relative of the employee"?

I'd appreciate your opinions on this.

I have had two employees now that are not getting in their required minimum of 30 hours per week to receive full time benefits. At what point do you reduce them to part time and revoke their benefits? Are there any legalities involved in this? This particular employee would lose paid vacation, holidays, and health insurance benefits. Thank you for your help.

A COLI policy on an executive is likely to generate more proceeds than needed to fund a rabbi trust being set up in connection with a NQDC plan for the executive. I would like to arrange to pay to the spouse of the executive any proceeds from the policy in excess of that needed to fund the plan. Can this be done by (i) irrevocably naming the trust as a beneficiary of the policy to the extent needed to fund the plan and (ii) also irrevocably naming the spouse as a beneficiary of the policy to the extent of any excess, so that the policy pays the proceeds as their interests may appear?

I am being told by an administrator of a health plan that an employee cannot "drop" their health coverage at any time. It must be done during open enrollment. If an employee participates in a voluntary health plan with employee contributions, can they waive out at any time?

Does anyone know anything about a concept being marketed as a "secured trust" From the little I know about it, it appears to be secondary plan or trust that only comes into play if the primary nonqualified plan/rabbi trust cannot pay the full benefit due to insolvency of the employer.

Please see attached

Can anyone confirm that IRS released final RMD regs today, 4/16? I heard they did, and I would like to get a copy.

We are in the process of converting to a 3% employer contribution plan (from an employee deferral plan only).

We have one management employee who is over 75, makes under the HCE limit, and adamantly does not want to participate. Is there any way around this?

Thank you

Construction Companies A and B are a control group. The owner receives compensation from both companies. In order to land a large contract, Company A has been unionized. The owner falls under the contract for work done with Company A. The current 401(k) excludes union employees. Can the owner still contribute based on compensation received from Company B, or is he excluded completely because he is part of a collectively bargained contract?

Does anybody have any idea how the regs treat a spouse who has been released from prison? Can the employee add the spouse to the health plan?To the Cafeteria Plan? Did the former inmate "lose" coverage, because the gov't is no longer paying for the medical expenses? Do the health insurance companies have to allow this person on to the plan? What about pre-ex. Medical records would be impossible to obtain. Thanks for any input.

Clarification on EBAR testing: I read somewhere that if the EBAR for any HCE is greater than the highest NHCE EBAR, the test will not be passed.

Is this a correct statement? If so, why?

I don't think there's any guidance in this area, so I would like to know what common practice is in the following area:

How do you treat money of an alternate payee for top-hevy purposes?

If the money is segregated from the participant to the alternate payee, for top-heavy purposes: do you treat the money as if it still belonged to the participant, as an in-service withdrawal, or how do you treat the segregated money for top-heavy purposes?

If the money is distributed to the alternate payee, for top-heavy purposes: do you treat the money as if had been distributed to the participant (in-service withdrawl if participant is still employed, "regular" distribution if participant has terminated employment), or how do you treat the distribution to the alternate payee for top-heavy purposes.

The prior threads I found on this topic were:

http://www.benefitslink.com/mbmirror/11195.html

http://www.benefitslink.com/mbmirror/9220.html

What are your practices regarding how alternate payees are treated for top-heavy purposes?