After Anthem Insurance Company demutualized last year, we received a check from Anthem for the cash out option. The employer pays 100% of the premiums for each employee.

The employer now feels entitled to the money that each employee received from Anthem. (Some of the employees that received money no longer work for the employer) Also, the employer received the exact same paperwork as each employee, therefor having notification of what was happening.

Six weeks ago, the employer sent out a memo to the employees stating that "while Anthem considers this money yours, you should feel morally obligated to pay it back to me"

As of 4 weeks ago, the employer started taking a $50.00/week deduction from each employee's paycheck to "reimburse" herself for this money. This deduction was not granted permission by any of the employees, nor is it a court ordered garnishment-meaning she just started taking the money because she wanted it.

Each employee was required to include the money in the 2001 taxes, being issued a 1099misc. form. The employer has no intention of filing her "reimbursement" in taxes, nor is reimbursing each employee for the amount of taxes they paid on the money.

Legally speaking, we were told that the money belongs to us because there is no retirement fund offered. According to the letter sent by Anthem along with the check, the money was to go directly to the employee or to the employee's retirement plan. That's basically how we ended up with the money.

We were told that the deduction of the money from the paycheck

was a violation of the ERISA Act and that we would need to have a Declaratory Judgement entered.

Could anyone please explain this-and possibly offer any additional options to go back after this money? We are now finding additional employees willing to step forth and join the effort to stop the "illegal" garnishments.

PLEASE HELP!!!!

We have several participants with balances under $5000 that we are trying to cash-out. We have bad addresses and have already tried an address search firm to find them.

Do we have any other obligations to find them, or can we now turn the money over to the IRS?

Does the forced distribution have to be a part of the plan documents for under $5000?

The icon in this post is wearing shades, to protect the stupid!

I acquired a variety of nicknames from friends over the years. None did I ever want to lose more than "Doc" however.

No, it wasn't that I was in medical school, nor did I resemble anyone from the movies/other with that name. Instead, the horrible truth goes like this:

One of the very first people I knew to have a child was a friend of my sister's, one year younger than me and just married and out of high school. In sharing the news of her having discovered that the expected baby was a boy, I unfortunately announced in a group that "she had a mammogram and it's a boy!"

Only days later, this was followed by:

Somewhere right after high-school I developed an annoying inner ear sensation - much like water in your ear after swimming - that would come and go. Might've been my music preference, but my doctor has always attributed it to a dry inner ear. Regardless, again in a group setting, I was suffering from the annoyance of this sensation when I announced:

"I think I have water in my filopian (sp?) tube." Being of the male persuasion (which is also why I'm not sure I spelled "filopian" correctly), this of course is even funnier. I am quite sure I meant eustachian tube, the tube of the inner ear. And while I would like to claim they heard me incorrectly, everyone knows the horrible, horrible truth!

For an employer to offer a pre-tax dependent care plan and a pre-tax plan for employee parking costs, are formal plans required?

Also, are annual 5500 forms required, and should the employer hire an administrator to handle all of this? Thank you for any insight you can provide on these subjects.

I have family and friends in the car repair business - as well as the insurance aspect of the business - so I get my fair share of war stories. A couple favorites, in no particular order:

A gentleman with a very high-end car brought it in to be repaired, including some painting and therefore several hours in the extreme heat of the paint booth to cure the paint. The customer had forgotten his full trunk of that week's groceries he had just purchased and into the paint booth it went. Hours and several hundred degrees later, everybody in the shop knew what the customer had forgotten. Amazingly, the customer never did recall, until it came time to pick up his car, and by then there was no mistaking what had happened - not for blocks around.

There was another customer from out of state, who took his car on a "test drive" to be sure repairs were done to his satisfaction, and never did return to pay the bill. The shop staff attempted to track this guy down via family and friends, harassing (as much as is allowed) persons who would get word back to the customer just how angry they were and that they were "going to come after him." Well into this dispute, with threats and screaming phone calls between them, the local law enforcement showed up as they understood the shop to have a car belonging to this person. "We did, but he skipped out without paying" they told the police. "Well, if he ever comes back, don't confront him or make him angry, we're looking for him on homicide charges" they replied. To the best of my knowledge, they didn't collect on the debt - or ever call him again. I do believe the police in the other city eventually caught their man.

Just when you thought your customer service experience was a challenge?

An investor recently distributed 100% of his Roth assets (a Roth Conversion IRA invested in internet stocks) in order to claim the "miscellaneous itemized deduction subject to the 2% floor" (subject to AMT). Assume the investor's loss exceeds $150k and his AGI is 75k.

The investor specifically instructed the IRA custodian that the shares in his Roth Conversion IRA be distributed as share certificates (as opposed to taking cash). These two types of IRA distributions should not make a difference on his 1099 or his REGULAR income tax calculation (its still an early distribution subject to the 10% penalty as the assets are less than 5yrs old).

If the investor's "miscellaneous itemized deductions" are large enough to create an AMT, would these stocks have a "DUAL BASIS FOR AMT PURPOSES" similar to that of Incentive Stock Options? Could the dual basis (upon the future sale of the distributed stocks) help the investor reduce future AMT (or increase the investor's AMT Credit in any given year)?

My client is spinning-off two companies, one in a stock deal and one in an asset deal. Both the spun-off companies want to transfer the balances over to the new organization. How is this legitimately done? I cannot find anything in the Internal Revenue Code which permits this. In addition, how would discrimination testing be done?

Does anybody know any details about the proposal being developed by ASPA for a "DB-K" plan?

Craig Hoffman mentioned it in his written statement provided today at a House Subcommittee on Oversight of the Committee on Ways and Means ...

"[The Enron situation] highlights the need to expand and reform the private pension system. This need is especially acute with respect to encouraging plan sponsors to adopt and provide defined benefit pension plans.... ASPA is developing a proposal that combines the best features of 401(k) plans-- participant choice-- with the best features of defined benefit plans-- a guaranteed benefit. We call it the DB-K and we would happy to discuss it more with you."

(Full statement is here:)

http://www.aspa.org/archivepages/gac/2002/...n_testimony.htm

In the SPD or initial notice to participants, is an employer required to inform employees of their right to be notified of their COBRA rights within 14 days?

Employee has a dependent child on his health insurance. The child is over 19 and is covered only why she is a full-time student. The child was a full-time student in during the first term of 2001. In the second term of 2001 the child dropped below full-time status. The child registered for the first term in 2002 but, due to the child’s academic performance in the last term of 2001, was placed on academic dismissal. The dependent child appealed and lost; this process took the better part of January 2002. Per the University, the dependant is treated as though he/she was never a student of any classification for the first term of 2002.

The plan year is the calendar year. OE was in November of 2001. The employee elected family coverage for 2001 and 2002. The employee now wants to change the election to employee & spouse. Since the change in status actually occurred when the dependant stopped being a full-time student in the spring of 2001, can the change in election be made now?

Business sold in asset sale this week. All employees were terminated (and rehired by new employer) 2 officers now working for new ER also remain employed by old corporation to close it out. Profit Sharing Plan (standardized) is currently scheduled to be terminated at the end of this fiscal and plan year (9/30). Employer wants to make a profit sharing contribution for this plan year. All participants with over 500 HOS in this plan year will receive allocation then will become 100% vested once the plan terminates. Currently, the plan requires employees to wait until end of plan year after termination to receive distribution.

Questions: 1) As long as corporation stays in existence, any problem waiting until 9/30 to terminate the plan then make the final PS contribution and begin distribution of terminated employees accounts? or 2) is this a partial termination because the majority of employees were terminated upon sale of assets? and if so, must we allow immediate distribution and vesting for those terminated employees? 3) the two remaining officers will receive large bonuses in this year: since plan uses W-2 wages, any problem with allocating contribution based upon wages including these bonuses?

I have a situation where an HCE ( Age 51) completed a distribution form and took a distribution from the company's MPP and did a direct rollover to the same company's PSP. The participant had not met a distributable event under the MPP and the form was never signed by a plan trustee, however the financial institution still processed the distribution and a Form 1099-R was issued for 2001.

The company has since changed financial institutions and all of the plan assets are with a new carrier. I am trying to think of the simplist way to correct the defect in an acceptable manner. We are getting ready to merge the MPP into the PSP.

A couple of thoughts in correcting the issue would be to issue a corrected 2001 Form 1099-R showing the amount as zero and then transferring the money back to the MPP to restore the account and then do the merger. Because the MPP is going to be merged into the PSP anyway, the other thought I have would be to do a retroactive amendment to the MPP to amend the NRA to age 50, thereby creating a distributable event under the MPP, but I'm not sure that would be acceptable. I have been reviewing the Employee Plans Compliance Resolution System but nothing seems to address this exact situation. Any thoughts would be helpful.

Thanks,

Brian

My boss just brought back a proposal from a brokerage firm contrasting several different types of profit sharing plans for a potential client, including an "Age Neutral" plan. I presume that this is a class-based profit sharing plan ala New Comp, except that you do your General Testing on contributions, rather than accrual rates. Could I get a confirm on this?

(As an aside, I think that the proposal demonstrated the danger of proposal software falling into the wrong hands. Their proposal had the 4 sons of the owner in their own group getting 25% of comp, a second group of NHCEs at 23.5%, and a third group including the owner HCE and remaining NHCEs at 3%. I thought that the 5% threshold should apply - right or wrong if not testing on accruals but benefits? Second off, I have a hard time figuring out how you would pass a General Test with 4 of your 5 HCE rate groups having 0% ratio percentages - since no NHCE had an equal or higher rate.)

I have just noticed that the Plan Administrator of one of our clients has failed to deduct and remit loan repayments for one of their participants. Loan repayments should have begun 6/01 and the loan was for 2 years. I know that according to the regulations a 1099-R should be issued for the participant and they should begin to make loan repayments. I have 2 questions:

1) Does loan have to be repaid by the end of the 2 years or can it be extended because it is less than the 5 year maximum?

2) Is there any way around having to issue the 1099?

Our client, a medical practice, has a Profit Sharing Plan which will give their doctors the maximum $40,000 contribution for 2002. Several of the doctors also receive 1099 income from making speeches, etc. These doctors want to establish individual SEP's on their own and contribute another $40,000 to the SEP based on their 1099 income.

Is this allowable for them to receive $40,000 in PS from their employer, and also contribute another $40,000 to their own SEP? Can they use Form 5305-SEP or does it have to be a prototype SEP? Thanks.

It is my understanding that unless a plan sponsor has reason to believe they will be sued, restorative payments must be considered a contribution to the plan. Following are 3 examples of different restorative payments. In all situations, we assume that the payments would be considered contributions. How do you justify allocating these payments as contributions, since the plan document does not allow for a contribution allocation of this type? Do the payments have to go in as 100% vested? It is my understanding that they would be included as an annual addition - is this correct? Are there any situations where you would also include them in your ADP or ACP testing? How do you treat them for other testing, such as coverage testing?

Situation 1: A participant requests a transfer among investment funds. Due to a TPA error, the transfer is done incorrectly and there is a loss. The TPA makes a deposit to the plan to make up the loss.

Situation 2: A participant requests a transfer. The plan sponsor failed to notify the TPA of the request, so the transfer is not done. The plan sponsor makes a deposit to the plan to make up the loss.

Situation 3: A participant requests a distribution in June 2001. The plan is in the process of being converted from one TPA to another. For various reasons, the distribution cannot take place until February 2002. There has been a large drop in the market value so the participant receives considerably less than he would have had the distribution taken place in June or July, 2001. The plan sponsor would like to make up the difference. Can the difference be deposited into the plan so that the employee can roll it over? If so, how is it handled?

I currently contribute $2000 (non-deductible) to an IRA. I've been doing this for about 6 yrs.

The question I have is: If I convert to a Roth IRA will I have to pay taxes?

The IRA account is actually worth less than what I put into it.

Thanks!

I am looking for information on Premium only Plans. Unfortunately, most of the information posted is for FSAs or full flex plans. I also need information on how to report the POP.

Thanks!

Is 401(m) testing necessary for a 403(B) plan maintained a a church organization? Deferral and match are the only contributions.

Thanks

My agency is finally beginning to consider utilizing the internet as a promotional resource. I’m trying to find some companies that are able to effectively target diverse demographics in a relatively short amount of time. I’ve encountered some difficulty in finding information on anything other than spam and banner placements. Would anyone know of any companies having success with other means of internet marketing?