Earlier this year the IRS or DOL issued some sort of statement implying that if a pension plan gave an ad hoc benefit increase to retired participants, that a new benefit election (ie: spousal consent) must be obtained. This was debated at the EA meeting and most people felt it was a ludicrous position for the gov. to take.

Has anyone heard anything recently?

Under Section 1372 of the Internal Revenue Code, 2% shareholders of S corps. are treated as partners in a partnership for fringe benefit purposes. What if the individual is a 2% shareholder solely because of stock owned in an ESOP plan? Are they considered a 2% owner for Section 1372 purposes?

I am currently working with a highly compensated school superintendent. In november he will be receiving a large severence pay of $58,000. My question is how do I maximize contributions (or shelter additional dollars) to his 403 (B) plan in lieu of $365 per pay current salary reduction? He does not have 15 years with this employer. I believe this severence pay is derived from contract with the employer and not connected with sick pay, accrued benifit, or termination pay.

The next part of my question is how do I determine how much this individual could shelter from income? This calculation does not seem to appear on the current MEA worksheet that I am using.

Thank you,

Brian

Can a county government not allow a disibility as a distributable event? In drafting their 401(a) plan they have removed disability from their plan document It has been marked N/A in the definition section of their adoption agreement.

A cover letter sent with the draft asked them to define disability in the distribution section of their document. They did not respond and even deleted disability from the definition section of the adoption agreement.

We have a client who plans to sign a contract with a "professional employer organization" under which they will become "co-employers" of their employees. The PEO has a cafeteria plan that claims to be a "multiple employer cafeteria plan" so that nondiscrimination testing is done separately for each adopting employer. Is there any authority in the law and regs for a multiple employer cafeteria plan? Any insight on IRS/DOL attitudes toward PEO arrangements? Any help is appreciated.

Can "compensation" for purposes of qualified plan contributions include compensation received from an employer during a period of disability, where employer provides full salary for first 90 days of disability, and provides difference between salary and disability benefits thereafter?

Applicable def. of comp. refers only to all earned income, wages, salary etc. rec'd. for personal services actually rendered in course of employment. Does it matter that disiability is expected to last less than 6 months?

Company A maintains a FSA. Company A sells assets of Division B to Company C. All employees of Division B terminate employment with Company A and become employees of Company C. Many of these employees have unused benefits (i.e., the employee's salary reduction contributions to the FSA have been greater than the amount of eligible expenses the employee has incurred and been reimbursed) under Company A's FSA. The affected employees would, of course, like to continue submitting claims for reimbursement. Company A, however, is telling them that these unused benefits will be forfeited because the employees have terminated employment. What rights do the affected employees have to the unused benefits? Thanks.

On Schedule H, If the auditors are preparing a limited scope audit, do you also mark the opinion box?

Can anyone share their experience with how vendors deal with the company stock confidentiality limits placed on the plan administator offering a company stock fund as an employee dircted investent in their plan? The plan administator cannot view participant level account positions in a company stock fund but must retain an independent fiduciary. Given valuation reports, statements, and sponsor level Internet access all provide Particpant level account positions, how have you seen vendors deal with this?

My sense is sponsor/plan adminstartor notifcation of the rule by the vendor as well as indemnification language in an agreement with the Vendor.

Thoughts?

Thanks. Frank.

is the income subject to the 6% penalty for excess roth contributions?

Hello,

I have a practical, procedure question regarding a 401(k)/Non-Qual Deferred comp. Wrap plan.

In a Wrap scenario, an HCE can defer into the non-qual plan, and then can decide how much of the non-qual deferral the HCE can place into his/her 401(k) account. The problem is that by the time ADP testing is complete for a year end, the HCE's W-2 for the year of deferrals has usually been completed (by Jan. 31).

So, if the HCE decides to go ahead and execute the "pour-over" from the non-qual to the 401(k), how would this be reported on the W-2? Where on the W-2 would one list the amount that has gone from the non-qual into the 401(k)? I guess an amended W-2 is required?

Any thoughts would be greatly appreciated. Thanks in advance.

This is addressed to companies that have (or had) retiree medical and the impact that FAS106 had on the coverage. What kind of changes did you make to your retiree coverage? Increase the retiree paid portion? Freeze the company-paid portion? If you eliminated retiree medical, how did you do it? A phased approach? All at once? Did you give employees any subsidy to make up for the loss of retiree medical (e.g., an additional contribution to a defined contribution plan or lump sum payment)? How was that subsidy calculated?

Employee contributed the maximum $10,500 to a 403(B). He terminates, and is hired by a company that has a 401(k) plan in the same calendar year. Do the 402(g) limits apply to both plans which would prevent him from contributing to the 401(k) plan?

I requested an electronic signature using the recently-released form two months ago. I sent the request certified, so I know it was received; however, I have heard nothing back. Has anyone received a response to their request for an EFAST electonic signature?

Someone told me that Blaze has/had an internal rate of return calculator built in to it. I don't seem to be able to find it anywhere. Can anyone tell me if it still exists and if so, where is it on the system?

Thanks for your help.

John

We have a plan participant who wants to take a hardship distribution due to medical expenses that were incurred this year. This is allowed under the terms of the plan. The problem, however, is that he has already paid for a portion of the medical bill. He would like to take a distribution that covers the entire amount. Can we pay him the entire amount or only the amount that he has not already paid for?

I have been unable to find anything that says one way or the other whether you can reimburse expenses that have already been paid.

Has anyone seen an analysis of the application of Gramm-Leach-Bliley ("GLB") to 403(B) plans. In brief, GLB requires protection of "consumer's" and "customer's" "nonpublic personal information." These are all defined terms found in GLB and in several different sets of regulations from various regulators.

I've seen a single short article that concludes, without analysis, that participants in qualified plans are not consumers under GLB. I've not seen any specific mention of 403(B) plans and would be interested in any articles or comments. Thanks.

Does anyone know the location (hopefully on-line) of a thorough discussion on the rules governing contribution limitations to VEBAs - particularly as they apply to pre-funding post-retirement medical and life insurance benefits? . My client is a privately=owned utility that is being required to pre-fund welfare benefits by their tae-making approval board. Also what are the filing requirements (if any) for a VEBA of this type?

Does anyone have experience/citations as to amortization of participant loans when there is a change in payroll frequency?

We have a large client who will be switching from weekly to bi-weekly payroll. The many existing loans were documented and repayments calculated based on weekly payroll. The client would like to just double the weekly deduction to determine the bi-weekly deduction, and to leave the amortization schedule alone. In the past, we have usually instructed our clients to reamortize the loan based on the new payment frequency; however this client is balking due to the large number of loans and the related recordkeeping costs for reamortization.

Several years ago, the IRS (or Joint Board, I forgot who) pronounced that an actuary must have verification that a contribution was actually made in order to sign a Schedule B reflecting that contribution. That essentially prohibited the then popular "to be made before September 15" on Schedule B's, and often leads to timing difficulties approaching the filing deadline.

First of all, who made the pronouncement, and what is the cite?

Second of all, which of the following would, by itself, be considered as acceptable verification?

1. Copy of cancelled check

2. Copy of investment or bank statement showing the posting of the contribution.

3. Signed statement by the plan sponsor stating that "a contribution of $X was made on ________.

4. Signed statement by the plan sponsor stating that "a contribution of $x will be made on _____.

5. Oral statement by the plan sponsor stating that "a contribution of $X was made on ______.

6. Oral statement by the plan sponsor stating that "

a contribution of $X will be made on ____.

7-10. Items 3-6 provided by the plan sponsor's accountant.

11-14. Items 3-6 provided by the plan sponsor's investment advisor/stock broker.

I feel comfortable with accepting #1, and not accepting any of the oral statements (by either the plan sponsor, the accountant, or the investment advisor/stock broker.

I'm also not comfortable with any of the signed statements by the accountant or investment advisor/stock broker.

What is everyone out there comfortable with?

Third of all, does anyone know whether the Joint Board or IRS disciplined any actuary for failure to comply with this pronouncement?