Help! Can anyone point me in the direction of some good, easy to understand explanation of the HIPAA administrative simplification requirements? I would prefer a seminar, but printed material is OK too.

I have been asked to do an overview of this and set up a plan for one division of our organization. However, the structure of this organization leads to many difficulties. I work for a TPA that is under the corporate umbrella of a health care foundation. Other entities beside the TPA are a hospital, 2 licensed insurance companies, an HMO, a federal HMO, a Medicare plus choice program, provider network, etc. I'm pretty sure some divisions of the foundation have started their own independent analysis and corporate culture does little to encourage coordination among the departments.

An ee receives a lump sum. plan provides for a COLA tied to the increase in CPI. What is a reasonable future COLA assumption when determining a lump sum. At this point it seems an employer can exclude the COLA on the groiunds that there is no way to say if the COLA will be positive or negative.

Curious to hear any comments.

One suggestion is to take a long term avg of past annual changes in the CPI.

Is the compensation limit for 3/31/00 $160000 or $170000?

I'm trying to correctly calculate the exclusion allowance for a person who only will work a partial year. Is the formula supposed to be calculated with an annualized salary, or the pro-rated salary that the person will actually receive?

I am new to this position and I don't think this qualifies as a status change. I believe the participant is still an employee while she's out on STD.

A friend of mine who works for a small local TPA was told by an IRS representative that separate TIN's for retirement plans and trusts were no longer needed and that plans should, instead, use the plan sponsor's EIN to report withheld taxes and distributions.

The reasons given were (a) form 945 identifies withheld taxes as coming from a qualified plan, thus eliminating the need for a separate EIN for the trust, and (B) TIN's that are not used for an (unspecified) number of years become inactive and are purged from IRS records. The IRS representative also asked my friend why she thought TIN's were ever needed for retirement plans and/or trusts.

The IRS representative refused to give more specific information (Rev Proc, PLR, form instructions, etc.) stating that she was "too busy" and that my friend should "look it up herself". It sounds to me like my friend has run into a representative who does not have a very good understanding of retirement plans.

Since I work primarily in the small plan area, the IRS representative's second point concerns me a bit. It is not unusual for some of my clients to go several years without making a distribution. If their TIN is purged because they haven't used it to report distributions, I would expect problems when they attempt to use it.

Anyone else been told that separate TIN's are no longer needed or that some TIN's are purged?

Has there been a recent IRS ruling or document on plan term fees being paid from the plan for DC plans?? My understanding was that settlement fees could not be paid from the plan. Thanks.

I have been hearing a few rumors. The last thing I hear was that they may require a "safe harbor" contribution of approx 3% which would be fully vested immediately. I realize no decision has been made but want have some of you been hearing. I appreciate the information! Thank you!

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Cathy,

Look at lines 4d and 4e of the Schedule T and the blank lines provided, then refer to the instructions. Does this answer your question? (I believe that there is no need for attachments as long as there are 4 or fewer disaggregated parts of the plan).

I've read that a 503©(3) nonprofit cannot establish a SIMPLE IRA but can a SIMPLE 401(k). Does anyone have a reason for this? Thanks.

We are looking for practical feedback on how other independent TPA firms may handle the following situation.

Plan Background: Standardized 401(k) plan (Corbel) with forfeitures used to reduce contributions (match only). Match is 25% of first 6% with discretionary match above 25%. Many participants terminated during the year, so there were significant forfeitures. The employer contributes the match each payroll along with the deferrals. By the time the forfeiture amount was determined, it was well into the following plan year.

Question 1: Since forfeitures were not calculated until late the following year, can the forfeitures be used to offset employer contributions from the following year rather than the actual year of the forfeitures?

Question 2: Since the forfeitures were not known until late in the following year and the company had been contributing the match all along, the available forfeitures exceeded the amount of the required match for the remainder of the year. If the employer has not yet filed the corporate tax return, can he take the employer contribution back (a mistake in fact) and claim a $0 employer contribution on the corporate tax return?

Question 3: If the employer can not get the money back, can the excess forfeitures be carried over to the next plan year?

Question 4: In general, if due to the preference of either the employer or the investment company, can forfeiture money be sent back to the employer so it can write a check for an employer contribution rather than directing the money be taken from the forfeiture account each month?

I thought I read last week (on BenefitsLink?) that there was a web site where you could pay to look at archived Form 5500, even one person plans. Did I make this up? HELP!!

I thought I read last week (on BenefitsLink?) that there was a web site where you could pay to look at archived Form 5500, even one person plans. Did I make this up? HELP!!

Form 5500 and 5500EZ have now added for the first time the identification of a "paid preparer" (line 5). Instructions say that completion is optional. I'd be curious to know what other TPAs and actuaries think about the completion/noncompletion of this item and any potential ramifications.

Is this a mistake on the form? For a Profit Sharing plan you need to indicate the payor ID# in box 2. Right under box two it says skip line 3. But the instructions seem to indicate you DO fill in the number paid?

Are you putting in the number on line 3 or leaving it blank. THANKS!

Plan has safe harbor hardship withdrawal language. Issue: participant who desires hardship withdrawal has vested but unexercised stock options. Options are currently above water, and participant may take advantage of cashless exercise. Administrator's question: Does Reg. 1.401k-1(d)(2)(iv)(B) mean that the administrator must require the participant exercise his vested options (using the cashless exercise process, not cash) before the participant qualifies for a hardship distribution?

Has anyone encountered this situation before? If so, what did your plan administrator do?

I'm conservative and feel that the participant must be able to revoke his consent prior to the payment and I feel the amount should be on the form. However, we have a client that wants the consent to be irrevocable and does not want to have to enter the amount. They say the participant can look on the prior statement.

Are there some cites out there that specifically address this? The regs say the form must explain the "relative values" of optional forms of distribution. Anything else? I'm also particularly interested in the "irrevocable" aspect the client desires.

Thanks.

Two questions regarding hardship withdrawals under the safe harbor withdrawal provisions.

One: Can the administrator, in his sole discretion allow a hardship withdrawal without requiring the participant to first exhaust his plan loan options? Any precedent?

Two: If the plan forgot to stop employee voluntary payroll deductions when the hardship check was issued how should this be rectified? The participant received the distribution in December 1999, the end of the 99 plan year, and is still contributing. Can we stop contributions now and start the 12-month period? Any precedent?

Does anyone know the status of this aspect of HIPPA? As I recall, some members of Congress have been delaying funding for any system of National identification of individuals.

If the assets of a defined benefit plan exceed the liabilities, can one freeze the plan and take the excess as seed capital for an ESOP ?