Does "Short Term" health insurance coverage qualify as "credible coverage" under the HIPAA portability definition? I have a client who has a 90 day waiting period in his new job. Rather than electing Cobra coverage, he wishes to secure 90 days of "Short Term" coverage to save money. Does this threaten his portability of credible coverage?

Has anyone upgraded from the DOS version of your administration software to the Windows or internet versions? If so, did you feeel that the cost was worth the difference in the program? in the service provided? Do you mind telling me which software and how many employees you have actually administering the plans?

I have been looking at 2, and the hardware improvements that we would have to make are incredible, forget the software expenditures. But if client service is significantly improved, or anything else, I would appreciate any input. Thanks.

Husband owner, wife primary benficiary, 4 Children contingent beneficiaries. On a recommendation from his lawyer, the owner wants to set up 5 seperate IRA's, with each child named a beneficiary in a respective IRA. Does anyone know of the tax advantages on this? I do not see any. If the owner and then the wife die, the IRA would be split up for the 4 children anyway. Am I missing something?

A client feels they may be discriminating against their Hourly, non-exempt workers since they and their Salaried workers "run" their payroll deductions through a Sec. 125 Premium-Only Plan but their Salaried workers enjoy a shorter Waiting Period (30 days)versus their Hourly workers (90 days).

I'm confident they are not discriminating but would like some direction to prove my point. Any help is appreciated!

Employer is looking to write a Plan which excludes all Key Employees and Employees in certain job clasifications. I've been told that the IRS office in Ohio has been rejecting this approach claiming that you are imposing a defacto eligiblity requirement under 401(a). Does anyone have any thoughts on this or persoanl experience.

As mwyatt pointed out in the thread started 4-09-99, the appropriate regulation is DOL Regulation 2530.203-2©. However, I disagree with mwyatt's analysis.

Here is the DOL regulation in question:

© Amendments to change the vesting computation period.

(1) A plan may be amended to change the vesting computation period to a different 12-consecutive-month period provided that as a result of such change no employee's vested percentage of the accrued benefit derived from employer contributions is less on any date after such change than such vested percentage would be in the absence of such change. A plan amendment changing the vesting computation period shall be deemed to comply with the requirements of this subparagraph if the first vesting computation period established under such amendment begins before the last day of the preceding vesting computation period and an employee who is credited with 1,000 hours of service in both the vesting computation period under the plan before the amendment and the first vesting computation period under the plan as amended is credited with 2 years of service for those vesting computation periods. For example, a plan which has been using a calendar year vesting computation period is amended to provide for a July 1-June 30 vesting computation period starting in 1977. Employees who complete more than 1,000 hours of service in both of the 12-month periods extending from January 1, 1977 to December 31, 1977 and from July 1, 1977 to June 30, 1978 are advanced two years on the plan's vesting schedule. The plan is deemed to meet the requirements of this subparagraph.

The question concerned a short plan year of 10/1/98 - 12/31/98 with the prior plan year being 10/1/97 - 9/30/98. In Journal of Pension Benefits Volume 4 Issue 3 from Spring 1997, J. Michael Pruett writes "The determination of vesting with respect to a short plan year is based on the 12-month period ending on the last day of the short plan year." I agree with J. Michael Pruett. My reasoning is that the "preceding vesting computation period" prior to the amendment changing the plan year has to be the 12 month period (10/1/97 - 9/30/98 in the example being questioned) ending prior to the short plan year. The "first vesting computation period established under such amendment" then "begins before the last day of the preceding vesting computation period." So the "first vesting computation period established under such amendment" should be 1/1/98 - 12/31/98. I could possibly see an argument that either method is acceptable (that is, either A) vesting computation periods of 10/1/97-9/30/98,1/1/98-12/31/98, and 1/1/99-12/31/99, or b) vesting computation periods of 10/1/97-9/30/98,10/1/98-9/30/99, and 1/1/99-12/31/99). Since the regulation above does not even mention changing the plan year, only changing the "vesting computation period to a different 12-consecutive month period", it would seem to be possible under the above regulation to keep using 10/1-9/30 for as many years after the change in plan year as you would like and to change to any different period provided credit is given for overlapping periods. Is anyone aware of additional guidance that would tie the above regulation to a change in plan year?

I am looking for clarification of who to send Summary Annual Reports to. Everything I see says to send them to "plan participants and beneficiaries." Does this mean current plan participants, or participants as of 12/31/98? I assume as of 12/31/98, but can't find absolute verification of this. Also, what about someone who joined the Plan in April '98 and left the company in Sept '98. Should they get an SAR? These sounds like trivial questions but we have a large plan with hundreds of new enrollees and hundreds of terms each quarter...currently the plan is at least double the size it was as of 12/31/98. So the issue of who to send SARs to will affect hundreds and hundreds of people, and we want to be sure we know the correct procedure.

We are in the process of changing our 401(k) vendor. Our new vendor does not want to recieve beneficiary forms. What requirements are there for maintaining beneficiary forms. Do I have to review them? or will state law apply if an ineligible beneficiary is selected?

Any comments are appreciated.

A Doctor's office has a calendar year PS and MP plan (about 25 participants), with a 1000 hours/last day employment required for contributions. Both plans have immediate entry after satisfying 21 & 1.

Now a large hospital will be buying the office, on 9/30. After that date, all non-doc's will no longer be working for the office, while the doc's will still be considered ee's of the office until 12/31.

A couple questions that I see are:

1. Can/Should the 9/30 be taken as the last day of the plan year for allocation purposes? Otherwise, only the doc's will share in the 1999 contributions.

2. One of the doc's is expected to enter the plan on 12/15/99. Unfortunately, the plan uses full year compensation for allocation purposes. Would this doctor be eligible for a contribution in either plan for 1999?

3. If 9/30 is viewed as the last day of the PY for allocation purposes, should hours/415 limits be prorated for 9 months?

4. Since most of the employees/participants are non-doctors, it would seem that we have a partial termination after 9/30, agreed?

5. Are there good reasons to initiate a short plan year, plan termination, MP accrual freeze right away?

Thanks for any and all comments!!

Mike

Is anyone aware of anything that requires the vesting computation period to be changed when a plan year is changed? DOL Reg 2530.203-2© allows amendments that change the vesting computation period, but I have not seen anything that requires the change, even if the plan year is changed.

Plan has a 5 year vesting schedule. Plan partially terminates and participants from that date are fully vested. May plan be more generous by fully vesting a handful of people before the partial termination date? Violations of any rules?

I've just reviewed last year's 5500 filing for a cafeteria plan. They files a 5500C/R and Schedule F. However, they had 119 employees eligible and 82 employees participating. Oops. (I'll presume they have similar numbers this year.)

1. Should they have filed a 5500, complete with audit, since the 100 participant test is based on eligible participants (like 401k's)?

2. While I forget the specifics of the corridor rule (where under certain circumstances, if you are slightly over 100 participants, you are allowed to file 5500C/R, does this corridor rule apply to cafeteria plans as well as pension plans? (I can check to see if the head counts work for us here).

3. If they blew it, does anyone have experience with this type of amended filing for cafeteria plans?

Any other ideas ...

Does an employer with 50 or less employees

fall under the ERISA guidelines?

An oldie but a goodie. My client hired a new benefits administrator and she's looking to make her mark.

Her concern is there may be discrimination within their Sec. 125 premium-only plan because their Salaried employees enjoy a shorter eligibility period (30 days) than their Hourly workers (90 days). While I've dealt with this issue over and over again, I'm now on my own and until I get my "Spencers'" or "Thompson Publishing" ERISA guide books, I don't have readily-available resources. Can anyone help me out?

Thanks to anyone in advance!!

Would an amendment to eliminate provisions in a 401(k) PSP allowing voluntary employee (after-tax) contributions be a violation of the anti-cutback rules under 411(d)(6) and regs? Attorney says he thinks its okay to eliminate voluntary contributions, but can't point to definitive section in regs . . .

Any help?

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LKP

The Taxpayer Refund and Relief Act of 1999 (TRRA '99)(recently vetoed, but pension provisions expected to be passed in future legislation) contained a repeal of the 403(B)(2) "exclusion allowance". I was informed at a recent conference on employee benefit plans of tax-exempt employers that the legislation would similarly repeal the "A", "B" and "C" elections under 415©(4) but would leave intact the 15-year catch-up election under 402(g)(8). Is this correct? And, if so, could the 402(g)(8) 15-year catch-up be used in conjunction with the catch-up for employees who are age 50 or older that was also contained in TRRA '99? If so, employees who are 50 or older and who have at least 15 years of service at a "qualified organization" will be able to defer large amounts (402(g) limit potentially increased to $25,500 in the year 2005, for example, if the pension legislation survives in some form and my math is correct!) into a 403(B) arrangement.

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Mike W.

I know that transfers are statutorily permitted from one 403(B) arrangement to another, via Revenue Ruling 90-24, and that plan documents and annuity contracts/custodial agreements can restrict such transfers. However, I am confused as to whether such transfers can be made from a 403(B) ERISA plan to a 403(B) program that is not subject to ERISA. If such transfers are permissible on their face, couldn't an employee circumvent the spousal consent rules that may apply to his/her ERISA plan by simply transferring the assets under 90-24 to a Non-ERISA arrangement (spousal consent would not be required for this transaction, since 90-24 indicates that such a transfer is not a distribution), and subsequently receive a distribution (when permissible) from the Non-ERISA account where no spousal consent is required?

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Mike W.

What are the estate plannign benefits of starting an esop for a company? Also, are there any income tax beenfits to starting an esop and giving up approxiamtely 20% of corporate securities to key employees by an owner who owns 100% of the corp? Will it lower taxabel income?

Can partners participate in a dependent care assistance program? If so, how would this work? Can the partner elect to have a certain dollar amount set aside in a reimbursement account with the partnership reimbursing him/her when expenses are incurred, similar to common law employees? Are there any tax disadvantages to the partner?

A 401(k)plan currently under audit has been asked to correct an error in which a matching contribution was made to a HCE based on total comp., not comp. limited by 401(a)(17). The IRS has not identified two similar occurences that took place in the year under audit. Due to the size of the plan (over 200 participants) and the small amount involved (total overage is less than $3K), the two combined errors probably constitute an insignificant error which could be corrected under APRSC, despite the audit. Presuming the employer corrects under APRSC, shouldn't the employer disclose the two additional, corrected errors to the IRS?

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