Our client has a Cafeteria Plan which includes a Dependent Care Reimbursement Account. (I only work with retirement plans, so I am unfamiliar with the ins and outs of Caf Plans).

An employee's position is being phased out, and she will be terminated as of June 30, 2002.

In the meantime, not knowing that her job would be non-existent halfway through the year, this employee elected to have the maximum allowable withheld from her pay for Dependent Care Reimbursement, with the knowledge that she is going to have spent every penny by the end of the year.

The TPA has informed this employee that once her employment has ended with the employer, she will no longer be allowed (by law) to submit child care receipts to recover any additional child care expenses withheld, and still sitting in the account.

In other words, although she will still have child care expenses related to the plan year, and there is still money sitting in that reimbursement account in her name, she is not permitted to access that money once her employment ends, regardless of any ongoing child care expenses during the plan year . . .

Is this correct?

Are there any legal mechanisms for bypassing the loss of this money, for instance, just putting any remaining amounts back into her paycheck, and taxing it as part of her ordinary income for the plan year?

Any thoughts?

Client has a PSP and MP Plan. He is terminating his MP plan effective 1/02....no benefits will accrue after this date. Per plan provisions, forfeitures reduce future contribution.

There is a participant that terminated in 2000 with no vesting. Her forfeitures were never used to reduce the 2000 or 2001 contribution. Now what do we do with the forfeitures left in her account? I would think we could reallocate among remaining participants and then terminate and distribute the assets. That's probably too easy.

Any suggestions? Thanks!

Are employers required to contribute to the benefits under a cafeteria plan?

Is there a problem with only employees paying premiums for benefits under a cafeteria plan?

We have a client, whose insurance agent indicated that the employee only funding was not legal? Any idea about this?

Ok, without going into the arguments about whether or not its even possible to meet all the requirements of 404© and whther or not its worth it to try, etc. lets look at this scenario.

Bank A sponsors 401k and MP plans. They will continue to sponsor both plans for reasons that don't matter here) 401(K) plan is in a daily valued environment. MP is balance forwward, valued annually and invested solely in bank CD. Current TPA says both plans are 404© compliant. Anyone want to chime in on this?

Are they lookign at the aggregate plans to try to show 404c complaince? Doesn't sound right to me but they insist the Bank does not have any issue to worry about. Any thought are appreciated.

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I have been working with an individual who has their own company, an S-Corp. We are trying to maximize his contributions to a 401(k) Profit Sharing plan and based on my analysis, in order for this person to contribute the maximum of $40,000 ($11,000 deferral and $29,000 profit sharing contribution), he has to take a salary of $116,000. Does that seem right or is there a way for him to take a lower salary and still reach the $40,000 contribution level?

Thanks.

Is anyone aware of a prototype plan document that can support a multiple employer plan? From what I have heard, this looks like a job for a Volume Submitter or a Custom document.

In determining the value of assets for GAS27 purposes, is there any (reasonably) definitive statement whether accrued contributions should be excluded?

I have looked in the EA meeting outlines back to 1998. Found no discussion. Also, I cannot find any explict comment in GAS27 itself.

Points to consider (that I don't wish to overlook):

1. In what year does the plan sponsor record the accrued contribution?

2. Does the auditor have an opinion?

3. In order to avoid "apples and oranges", the contribution(s) in the NPO "roll-forward" should be consistent with whether included in the assets.

Any thoughts?

What has been the reaction (yours, IRS, DOL) to plans using a straight line amortization method (level principal and interest) for the repayment of participant loans?

Has anyone had any success implementing a global life/disability plan that covers employees in multiple countries outside the U.S.? Many carriers I talk to will not write one plan to cover all, and want to write individual, country-specific plans.

Thanks!

In running the average benefits test to determine if the plan passes coverage, I know there are three options: use the current year benefit percentage, the current and prior year's average of the benefit percentages or the current and prior 2 years' average of the benefit percentages.

My question is in determining the last two options, do you use the participants in each year or only the participants in the current year. I would suspect the later since coverage is a plan year thing.

In the context of a defined benefit plan termination, is there any guidance regarding how many insurers can be identified in the notice to participants regarding annuity information? We have the possible insurers (that will issue annuity contracts) narrowed to six, is that too many?

I have a question I am hoping the benefits experts out there can help me with. My company gives all of its full time employees Group Term Life Insurance at twice their annual salaries. This benefit is 100% employer paid for, with the GTL value added to their paychecks based on age and coverage amounts per the IRS. Recently, we hired an employee who, because of religious reasons, did not want to be enrolled in the GTL policy. He consulted with his spiritual advisor and determined he didn't want to sign any beneficiary paperwork, or be enrolled in the plan at all. One individual in HR had the employee write up a letter indicating he was waiving this benefit for personal reasons. The note was then put into his HR file. Last week, the Comp & Benefits Mgr indicated that he spoke with the insurance company when he became aware of the situation, and was told that the employee HAD to be enrolled in the plan, whether he wanted to or not. I am very uneasy about this since the employee made it clear that because of religious reasons he didn't want to participate. Now HR has decided to enroll him in the plan to comply with what the insurance company said, but not say anything to the employee. Has anyone else out there had to deal with this? Can someone shed light onto whether or not we can legally enroll this employee against his wishes? All comments/responses/insights are welcome!

I have a few questions on Form 5500 filing requirements for Master Trusts.

1.) If I have a plan sponsor that has more than one plan and the assets of all the plans are all in a directed trust at a bank,that trust is considered a master trust. Yes/No

2.) Master trusts are now required to file Form 5500. The master trust will file as a DFE. Yes/No

3.) If a bank holds, as a directed master trust, assets for many plan sponsors with multiple plans (e.g., the bank holds assets for plan sponsor A (that has 3 plans), plan sponsor B (that has 6 plans), plan sponsor C (has 2 plans), does the DFE file one form 5500 for all the plans (i.e., Schedule D will show a total of 11 plans) or three separate Schedule Ds.

4.) Do the instructions require that the master trust files all ten plans of the three plan sponsors on one Form 5500 Schedule D, where the master trust will only need one nine-digit EIN and one three-digit plan number. [Example - Bank EIN 12-3456789, Plan Number 001) Yes/No

5.) Do the instructions require that the master trust must file three separate Form 5500 Schedule Ds for the three plan sponsors, where the master trust will need one nine-digit EIN and three three-digit plan numbers for each plan sponsor. [Example - Bank EIN 12-3456789 (for Plan Sponsor A - Plan Number 004), (for Plan Sponsor B - Plan Number 007), (for Plan Sponsor C - Plan Number 003)] Yes/No

6.) Do the instructions require that the master trust must file three separate Form 5500 Schedule Ds for the three plan sponsors, where the master trust will need three separate nine-digit EINs and separate one three-digit plan number for each of the three EINs. [Example - (For plan sponsor A - Bank EIN 12-3456789, Plan Number 001), (Plan Sponsor B - Bank EIN 12-3456790, Plan Number 001), (Plan Sponsor C - Bank EIN 12-3456791 Plan Number 001)] Yes/No

7.) It appears that the plan sponsor can elect the three-digit plan number? Yes/No

7.) It appears from the DFE Filing Requirements on page 10 for the 2001 Form 5500 instructions, that the plan administrator is responsible to ensure Form 5500 is filed for the MTIA.

"Master Trust Investment Account (MTIA)

The administrator filing a Form 5500 for an employee benefit plan is required to file or have a designee file a Form 5500 for each MTIA in which the plan participated at any time during the plan year."

Who can the designee be?

8.) According to the instructions on Page 6 for Form 5500 a representative can sign on behalf of the DFE.

"A representative authorized to sign on behalf of the DFE must sign the Form 5500 submitted for the DFE."

What type of authorization is acceptable (e.g., is verbal authorization acceptable?) If the DFE does not authorize anyone to sign, what should the plan administrator do since it is the plan administrators ultimate responsibility to ensure the Form 5500 is files for the DFE????

Thanks

We have a 401(k) plan that failed the ADP test and is correcting the failure by refunding excess contributions to the affected HCEs. However, one of the affected HCEs terminated employment through the spinoff of a division and rolled 100% of his account balance to a new 401(k) plan. Does the refund of excess contributions and related earnings for this HCE have to come from the new plan to the HCE at the direction of the old plan's administrator? What if the new plan's administrator (or the HCE) refuses to allow for the distribution from the new plan?

Any guidance or comments would greatly be appreciated.

I have a client who has a 401k PSP (profit sharing plan). The Plan document is silent regarding how participant loan repayments are to be applied to the participants investment options. The Plan document allows participants to borrow up to 50% of the participants elective deferral balance.

Currently, the loan repayments are applied to the participants investment accounts from which the loan was taken. I do not necessarily think that this is incorrect.

I am looking for guidance for when a 401k PSP is silent regarding loan repayments.

- Are the loan repayments suppose to be applied to the investment account from which it was borrowed?

- Are the loan repayments suppose to be applied in accordance with the participants current investment allocation election form?

- Or, should the Plan specifically address this item? And since it doesn't, and until the Plan document is amended to address this, what or who determines the application of the loan repayments.

Thank you in advance for any assistance!

Does anyone know where can I get a copy of survey results for end-of-year 2001 discount rates used for FAS disclosures? I would also be interested in a survey of expected rates of return on assets.

Thanks in advance.

I'm trying to find out the maximum amount divorced parents can claim on an FSA - is it $2500 or $5000 each?

Additional information includes:

- parents are both custodial

- each parent claims one child on their taxes

- there is nothing written in their child support agreement

that states CS is covering heath or dependent care.

Our TPA wasn't sure. Any help would be appreciated.

A participant has submitted a claim for a Tempur-pedic pillow. He has numerous visits to a spine center. There is no other info in the file. I know that every chiropractic office sells them, and that you can also order them on tv. No prescription is required. Would you reimburse this expense? Thanks.

I have a client who was a corporation and started a 401(k) plan 1/1/2002 with a short plan year ending 6/30/2002. He now decided to become an S-corp and will now have a short financial year of 7/1/2002 to 12/31/2002. I think it would make sense for him to have the financial year and 401(k) year-end be the same but is there any restrictions to have two short plan years? Thank you for any help.