I have had a medical Flexible Spending Account with my company all year. So far I have had about $750 deducted from my checks.

My company was sold 3 months ago with the note that our Flex plan would be transferred to the new company which took over on July 1. Today I received an email saying the transition and transfer did not work so the Flex plan has ended and we would not be able to be reimbursed.

1. Is this legal? they have my money...don't they have to pay me back once I send bills in?

2. There was no pre-notification that this was ending and therefore bills had to be submitted before June 30.

I need some help. Do I have any recourse? This is a large national company. We were a subsidiary of Staples, Inc.

Thanks a lot.

Andrea Rose

OK guys. I'm young amature and need a little help if you don't mind. I have a city-owned utility that wishes to terminate its DB plan which is over funded by about 66%. Their plan doc states that any excess funding must be proportionately distributed to employees upon plan termination. If they desire, can the city require employees to roll those all distributions to the new 457?

Also I've never terminated or started a new plan. Do I need to get an IRS approval letter to terminate and start-up? How involved is that process?

Thanks everyone!

:confused:

Client's plan using safe harbor language for both the "needs" and the "necessary" tests. Participant A received a hardship withdrawal for purchase of a principal residence approximately one year ago. The plan administrator knows that the money was not used for this purpose. This same participant is again requesting a hardship to purchase a primary residence. The plan administrator is asking for advice here. They do not believe that the withdrawal will be used for this purpose, but since this is a safe harbor hardship provision should they go ahead and approve and not concern themselves?

Thanks

Are there any laws or regulations to make employers have to offer you other Health Insurance options besides an HMO?

I have two questions on combining IRA accounts:

1. I have an existing IRA rollover account from a former employer's 401k. I just left my job so I plan to roll my 401k to an IRA rollover account again. Can I just roll it into my existing IRA Rollover account? I know that I should not blend two different accounts together if I plan to roll to my new employer's 401k. But does this rule apply if both of the accounts are 401k.

2. I have a Roth Rollover account which I have paid all the taxes. Can I combine it with my regular Roth account?

Thanks,

Lu

I have a new one-person DB plan client who has a VEBA plan. He is not happy with the current VEBA administrator and would prefer that I administer his VEBA along with the DB plan.

I have no VEBA experience, although I have nearly 20 years experience in retirement plan administration. What are the basic elements of VEBA administration? Is it feasible for me to administer the plan, given my experience? If this is not recommended, can anyone recommend someone offering VEBA administration services who does not provide retirement plan services that may compete with me?

Per The Pension Answer Book:

"an employee's elective contributions are treated as not having been made pursuant to a cash-or-deferred election if they are made pursuant to a one-time irrevocable election by the employee to have a specified amount or percentage of compensation (including no amount of compensation) contributed by the employer to the plan for the duration of the employee's employment."

How does this work?

1. Does the plan document have to address this? What if the plan is silent on the issue? Are there prototypes or volume submitter plans that address this?

2. How would an irrevocable election to contribute be handled by payroll? The same as elective deferral? What about W-2?

3. Can an otherwise safe-harbor PS or 401(k) do this?

4. If the plan is general tested I assume that the irrevocable election is tested as a non-elective contribution. Is this correct?

Here are some specifics: The plan is a safe harbor 401(k) that provides 3% non-elective. The person interested in doing this is a NHCE with compensation of $90,000 (20% election). He wants to make a $20,000 irrevocable annual contribution.

Any help on how to do this would be greatly appreciated. What other issues are there?

If a 401(k) plan uses a non-standardized prototype document, and the only reason for not using a standardized prototype is that the plan needed to be able to only benefit collectively bargained ee's, am I correct that this plan can rely on the determination letter issued to the prototype sponsor and that the plan need not file for its own determination letter? This plan does not have a "last day rule" for any contribution types. That is how I am interpreting Announcement 2001-77, can anyone verify?

Thank you!

We are a non-profit organization and are in the process of discontinuing a 457 Plan and switching to an IRA.

The Plan Administrator is saying that funds from the Plan are the property of the Organization and cannot be removed from the Plan until retirement. They are also saying that the funds in the individuals account are the property of the Organization and could be lost if the Organization files bankruptcy or goes out of business with outstanding debts. Most of the funds have been contributed by the employee with some matching funds by the Organization.

Can anyone help with this issue.

Thanks

Ron

Some of the early analysis of the "catch-up contribution" in EGTRRA indicates participants must first hit the 402(g) limit ($11,000 in 2002) in order to be eligible. However, this would seem inconsistent with the spirit of the law which is to allow *all* employees who are nearing retirement to make additional deferrals.

Take for example an "average" participants who makes $60,000/yr and is deferring at his plan's maximum rate of 15%. If the early analysis is right, this participant will never be able to make the catch-up contributions. Can this be right? Are the catch-up provisions going to end up being a de facto bonus for the higher paid folks only? Or will a plan limit that results in the above circumstance serve as an alternate eligibility trigger?

Thanks in advance for all insights and inputs.

Cole Stevenson

I need to amend a DB plan that covers members of a USW local. The plan has a provision (that I understand is common among USW plans) that provides for a "special pension" as well as a regular pension.

The special pension is a lump-sum equal to 13 weeks of vacation pay less an offset for vacation pay received for the year.

Does anyone know a reason why this "special pension" would not be subject to the QJ&SA rules?

I am a DC/DB business analyst, and have several clients who are clamoring for estate help, as their sales representatives are not offering much help in this arena. What would you say are the biggest estate challenges and issues with owners of and participants in db/dc plans?Thanks!

A fund company requires us, as a condition for receiving revenue sharing, to upload to them monthly certain census data on Plans and/or participants detailing such data as name, address, plan balances, etc. They inturn mail out semi-annual reports and propoganda semi-annually. To generate this data requires a special report from Relius.

Has anyone developed reports for this purpose?

If an employer has multiple cafeteria plans, and an employee is changing jobs with the same employer thereby transferring plans, can the employee's flexible spending account follow the employee from one cafeteria plan to another cafeteria plan?

Can a foreign corporation sponsor a 401(k) plan in the United States without doing it through a U.S. subsidiary? Has anyone addressed this situation?

We have a plan that has been setup as a KSOP. The plan allows for contributions to be made in qualifying employer securities or cash. The plan is participant directed among employer stock and mutual funds and is intended for the Trust to hold more than 10% of plan assets in the form of qualifying employer securities.

The debate we are having is whether the KSOP plan must follow the rules of 409(e)(2) in regards to proxy voting. Do all defined contribution plans have to allow pass through voting because the company is publically traded, or only ESOPs?

Any insight would be helpful, thanks!

It is my understanding that for plan years beginning after 12/31/01 we will include participant deferrals as compensation. Does this also include cafeteria deferrals?

e.g for 404:

Compensation: 40,000

Deferrals: 2,000

Cafeteria: 3,000

Old way Comp: 35,000

New way Comp: 40,000

Generally, if you have an active DB plan and a DC plan the DC contributions are not deductible because of the 404(a)(7) 25% deduction limit. The non-deductible contributions are generally subject to an excise tax.

Under 4972©(6)(B), there is an exception to the excise tax for elective and matching 401(k) contributions, but the statute clearly states it applies only to plans with more than 100 participants. However, after pointing this out to a client with a small plan in this situation, I was told by the plan attorney that the excise tax doesn't apply. The attorney's position is that the intent of the 1997 law change that added this exception was to apply it to all plans, not just those with more than 100 participants, and he cites the legislative committee reports and Publication 560 which do not mention the 100 participant requirement. Who is right here? Does anyone know of any other citations from IRS material, or statements from IRS officials that confirm or deny?

May the plan forfeit account balances less than $1.00 for terminated participants?

I need a refresher... I know the plan document has to allow for adjustments in 415 in order to adjust existing retiree payments to the current limit or nonforfeitable benefits for terminated vesteds (not in pay status) that were limited by an earlier 415(B) limit.

Assuming the plan does not allow for 415(B) updates for former employees, would you say that a person terminating on 12/31/2001 with an ACD of 1/1/2002 is subject to year 2001's

415(B) limit (i.e. last working day in 2001)? The plan year and limitation year are calendar years.

Thanks