In a collateral split-dollar arrangement, does a change in insurance carriers trigger the three year transfer rule for estate planning purposes for the insured?

Background: Corporation A sells all of its assets to Buyer. After the asset sale, Corporation A continues to maintain one GHP for 3 employees left in the corporation to wind up its affairs (it is a national Corporation and will cancel all of its other regional GHP's in locations where it had employees). According to Example 8 in the the 1999 Proposed Regs, 54.4980B-9, Q&A 8(d), it looks as if Corporation A maintains COBRA liability for any M&A qualified benficiaries as long as it maintains the one GHP for the employees winding up the affairs of the Corporation.

Question: If the one GHP maintained by Corporation A after the asset sale is a purely regional health plan, but the M&A qualified beneficiaries are in other regions/states (and could't benefit under the GHP), what does Corporation A need to do in order to fulfill its COBRA obligations?

Thanks for your thoughts.

[This message has been edited by EMC (edited 05-01-2000).]

Has anybody got any good data on the comparison of the Rockwell (BNA) retirement plan that was recently folded into the Boeing PVP? I think early retirees are being taken advantage of. I would like to share data with other former Rockwell areospace employees who are now covered by the Boeing PVP.

I work for a TPA in Central IL processing managed care self insured and fully insured health and short term disability claims. I want learn more (i.e. fraud prevention, state mandates, ect) but have no idea were to start. Does anyone have any suggestions?

CAN A PARTICIPANT IN A NONQUALIFIED DEFERRED

COMPENSATION PLAN IN ONE COMPANY TRANSFER HIS PORTION OF THE ASSETS WHEN THE PARTICIPANT LEAVES THAT COMPANY TO A SIMILAR NONQUALIFIED DEFERRED COMPENSATION OF ANOTHER COMPANY WITHOUT TRIGGERING AN IMMEDIATE TAXABLE EVENT.

A client sponsors a medical insurance plan for its employees. The employees pay for a portion of the medical insurance with pre-tax contributions. For example,

Example 1.

Compensation $3,000.00 per month

Medical Insur. 200.00

Net Compensation $2,800.00

FICA 173.60

Medicare Tax 40.60

Federal Withholding 560.00

State Withholding 140.00

Local Withholding 52.50

Total Tax and W/H 966.70

Net Compensation $1,833.30

Take Home Pay $1,833.30

The client has been approached by a consulting firm that claims that the company can shift more of the cost for the medical insurance to the employees by asking the employees to use more of their pre-tax dollars to purchase the insurance while, at the same time, reimbursing the employees (tax-free) for the increase. This is the example the consulting firm uses:

Example 2.

Compensation $3,000.00 per month

Medical Insur. 500.00

Net Compensation $2,500.00

FICA 155.00

Medicare Tax 36.25

Federal Withholding 500.00

State Withholding 125.00

Local Withholding 52.50

Total Tax and W/H 868.75

Net Compensation $1,631.25

Reimbursement 202.05 (tax-free)

Take Home Pay $1,833.30

The employee takes home the same income in Example 1 as she does in Example 2. The consulting firm "pitching" this "scheme" further claims that the employer, incurs the following savings:

Example 3.

FICA/Medicare $45.90

Workers Compensation 3.00

Federal Tax 60.00

State Tax 15.00

Total Savings $123.90/month

Annualized Savings/Employee $1,486.80

Annualized Savings for 100 employees is $148,679.74 (i.e., $1,486.80 times 100).

While this scheme appears to me to be a double-dip not generally authorized by the tax-code, i.e., the first dip is the pre-tax contribution made by the employee and the second dip is the reimbursement of a portion of that pre-tax contribution by the employer (again tax-free), the consulting firm claims that it has set-up this program for a wide-range of clients including a Fortune 500 company.

I have two questions: (1) Has anyone every heard of a program like this and (2) Does anyone else question whether such a scheme is permissible under the tax code?

Thank you for your responses.

A client sponsors a medical insurance plan for its employees. The employees pay for a portion of the medical insurance with pre-tax contributions. For example,

Example 1.

Compensation $3,000.00 per month

Medical Insur. 200.00

Net Compensation $2,800.00

FICA 173.60

Medicare Tax 40.60

Federal Withholding 560.00

State Withholding 140.00

Local Withholding 52.50

Total Tax and W/H 966.70

Net Compensation $1,833.30

Take Home Pay $1,833.30

The client has been approached by a consulting firm that claims that the company can shift more of the cost for the medical insurance to the employees by asking the employees to use more of their pre-tax dollars to purchase the insurance while, at the same time, reimbursing the employees (tax-free) for the increase. This is the example the consulting firm uses:

Example 2.

Compensation $3,000.00 per month

Medical Insur. 500.00

Net Compensation $2,500.00

FICA 155.00

Medicare Tax 36.25

Federal Withholding 500.00

State Withholding 125.00

Local Withholding 52.50

Total Tax and W/H 868.75

Net Compensation $1,631.25

Reimbursement 202.05 (tax-free)

Take Home Pay $1,833.30

The employee takes home the same income in Example 1 as she does in Example 2. The consulting firm "pitching" this "scheme" further claims that the employer, incurs the following savings:

Example 3.

FICA/Medicare $45.90

Workers Compensation 3.00

Federal Tax 60.00

State Tax 15.00

Total Savings $123.90/month

Annualized Savings/Employee $1,486.80

Annualized Savings for 100 employees is $148,679.74 (i.e., $1,486.80 times 100).

While this scheme appears to me to be a double-dip not generally authorized by the tax-code, i.e., the first dip is the pre-tax contribution made by the employee and the second dip is the reimbursement of a portion of that pre-tax contribution by the employer (again tax-free), the consulting firm claims that it has set-up this program for a wide-range of clients including a Fortune 500 company.

I have two questions: (1) Has anyone every heard of a program like this and (2) Does anyone else question whether such a scheme is permissible under the tax code?

Thank you for your responses.

A client sponsors a medical insurance plan for its employees. The employees pay for a portion of the medical insurance with pre-tax contributions. For example,

Example 1.

Compensation $3,000.00 per month

Medical Insur. 200.00

Net Compensation $2,800.00

FICA 173.60

Medicare Tax 40.60

Federal Withholding 560.00

State Withholding 140.00

Local Withholding 52.50

Total Tax and W/H 966.70

Net Compensation $1,833.30

Take Home Pay $1,833.30

The client has been approached by a consulting firm that claims that the company can shift more of the cost for the medical insurance to the employees by asking the employees to use more of their pre-tax dollars to purchase the insurance while, at the same time, reimbursing the employees (tax-free) for the increase. This is the example the consulting firm uses:

Example 2.

Compensation $3,000.00 per month

Medical Insur. 500.00

Net Compensation $2,500.00

FICA 155.00

Medicare Tax 36.25

Federal Withholding 500.00

State Withholding 125.00

Local Withholding 52.50

Total Tax and W/H 868.75

Net Compensation $1,631.25

Reimbursement 202.05 (tax-free)

Take Home Pay $1,833.30

The employee takes home the same income in Example 1 as she does in Example 2. The consulting firm "pitching" this "scheme" further claims that the employer, incurs the following savings:

Example 3.

FICA/Medicare $45.90

Workers Compensation 3.00

Federal Tax 60.00

State Tax 15.00

Total Savings $123.90/month

Annualized Savings/Employee $1,486.80

Annualized Savings for 100 employees is $148,679.74 (i.e., $1,486.80 times 100).

While this scheme appears to me to be a double-dip not generally authorized by the tax-code, i.e., the first dip is the pre-tax contribution made by the employee and the second dip is the reimbursement of a portion of that pre-tax contribution by the employer (again tax-free), the consulting firm claims that it has set-up this program for a wide-range of clients including a Fortune 500 company.

I have two questions: (1) Has anyone every heard of a program like this and (2) Does anyone else question whether such a scheme is permissible under the tax code?

Thank you for your responses.

A client sponsors a medical insurance plan for its employees. The employees pay for a portion of the medical insurance with pre-tax contributions. For example,

Example 1.

Compensation $3,000.00 per month

Medical Insur. 200.00

Net Compensation $2,800.00

FICA 173.60

Medicare Tax 40.60

Federal Withholding 560.00

State Withholding 140.00

Local Withholding 52.50

Total Tax and W/H 966.70

Net Compensation $1,833.30

Take Home Pay $1,833.30

The client has been approached by a consulting firm that claims that the company can shift more of the cost for the medical insurance to the employees by asking the employees to use more of their pre-tax dollars to purchase the insurance while, at the same time, reimbursing the employees (tax-free) for the increase. This is the example the consulting firm uses:

Example 2.

Compensation $3,000.00 per month

Medical Insur. 500.00

Net Compensation $2,500.00

FICA 155.00

Medicare Tax 36.25

Federal Withholding 500.00

State Withholding 125.00

Local Withholding 52.50

Total Tax and W/H 868.75

Net Compensation $1,631.25

Reimbursement 202.05 (tax-free)

Take Home Pay $1,833.30

The employee takes home the same income in Example 1 as she does in Example 2. The consulting firm "pitching" this "scheme" further claims that the employer, incurs the following savings:

Example 3.

FICA/Medicare $45.90

Workers Compensation 3.00

Federal Tax 60.00

State Tax 15.00

Total Savings $123.90/month

Annualized Savings/Employee $1,486.80

Annualized Savings for 100 employees is $148,679.74 (i.e., $1,486.80 times 100).

While this scheme appears to me to be a double-dip not generally authorized by the tax-code, i.e., the first dip is the pre-tax contribution made by the employee and the second dip is the reimbursement of a portion of that pre-tax contribution by the employer (again tax-free), the consulting firm claims that it has set-up this program for a wide-range of clients including a Fortune 500 company.

I have two questions: (1) Has anyone every heard of a program like this and (2) Does anyone else question whether such a scheme is permissible under the tax code?

Thank you for your responses.

Can an IRA which named the beneficiary as the person's trust qualify under the new provisions even though the beneficiary designation was made in 1990? If so, if the individual has deceased, can I still provide the required documentation to the plan administrator within 9 months of the date of death?

Does the 30-day timing apply to a long-existing company that wants to establish a brand new safe-harbor 401(k) plan, or what is the timing requirement for the notice? I'm confused when I read Notice 98-52 as to whether the exception to the 30-day requirement applies to all brand new plans or only to plans of new entities. Thanks.

If an employer fails to terminate health coverage when an employee goes from full- to part-time, and later discovers the oversight, is it okay to cancel coverage retroactively and allow the employee to pay COBRA premiums for the retroactively terminated months? Or would the COBRA notice be deemed late, since not within the statutory period from the retroactively cancelled coverage?

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I know that stocks are not an allowable investment in a 403(B)(7) plan. What are the ramifications if someone buys them in the plan? What about if it's an ERISA plan vs. a non-ERISA plan?

I have a client who has cashed out a tax-deferred annuity. He would like to invest in an IRA. Can he roll the entire balance (basis + earnings)? Are there any time restrictions for this?

Determination date for top-heavy test is 12/31/99.

Participant terminated 10/31/94.

Participant received a distribtuion 3/31/95.

Is this distribution included in the top-heavy test in accordance with Code Sec. 416(g)(3)or excluded from the test in accordance with Code Sec. 416(g)(4)(E)?

An employer terminated its defined benefit plan and allowed employees a full range of distribution options, including rolling over the money into the employer's 401(k) plan. Is this a related rollover? Is the rollover included in top-heavy testing as part of the 401(k) plan indefinitely? Can the amount be ignored after 5 years since it was part of a distribution to the participant?

A participant with an outstanding loan files for bankruptcy and the plan has received a proof of claim. how do we treat the loan this point?

An employer with a 2-week payroll period had a payroll begin December 27, 1999 and end January 7, 2000. Do the deferrals associated with that payroll get attributed to 1999, 2000, or split between the years for 402(g) and ADP test purposes? Does the employer get to choose? If the employer can choose, can the decision be changed each year?

Michael is exactly right under current law. Many of us believe we will get new legislation (eventually) that will permit rollover of eligible r/o distributions interchangably, even including the ability to rollover 457 eligible deferred compensation assets to an IRA. Watch for that new pension portability which is a popular "item" with most.

What is the deadline date for over 70 1/2 mandatory distribution from an IRA. Thanks for your help.