Need help determining the treatment of 402(g) violations not returned by April 15th.

My office has been struggling with what health benefits,if any, we are legally required to offer to our part-time employees (we have one 20 hr./wk. employee and one 30 hr./wk. employee). We pay the full health insurance premium for our full-time employees (40 hr./wk.) but have not offered any health insurance to our part-time employees. I have searched ERISA, the IRS Code,etc. and cannot seem to find guidance with regard to this issue. I would appreciate any input you might have.

It seems that there is very little technical information out there on SEPs. Does anyone know of a comprehensive text or resource that can be used for SEP research? I've seen the BNA Portfolio on SEPs, IRS publication, limited exam guidelines, but nothing that gets very detailed.

Company A is considering purchasing substantially all of the assets of Company B. Company B is currently involved in liquidation proceedings under the bankruptcy laws. Following the asset purchase, Company A will terminate 10% of the employees formerly employed by Company B. Does Company A have any successor liability with respect to providing these individuals with COBRA coverage. Any thoughts? Thanks. Ed

Clearly, a plan that wishes to satisfy a safe harbor must amend the plan to include a plan provison setting forth the safe harbor the plan intends to use. Does anyone read section 401(k)(12) or Notice 98-52 to require a plan provision stating that participants will be given written notice of their rights and obligations within a reasonable period before the beginning of the plan year?

IRC 457(g) requires that governmental plans will not be treated as eligible deferred compensation plans unless all ""assets and income" of the plan ... are held in trust for the exclusive benefit of participants and their beneficiaries." Ms. Calhoun has written an excellent article on this topic that I recommend reading.

There seems to be a conflict as to the meaning of the term "assets and income". One of my colleagues has indicated that several commentators have indicated that the term assets only applies to amounts actually deferred from employees salary (similar to 402(g) deferrals) and to employer contributions that have previously been placed in a trust, a custodial account, or in an annuity policy. The contention is that employer sponsored 457 plans with no employee salary deferrals and only a promise to pay on the part of the employer are not subject to the trust requirement.Further, the contention is that the legislation adding 457(g) to the Code was never intended to require the funding of plans that previously had no "assets" and that the funding requirement for these plans was not changed by 457(g).

Unfortunately, I cannot find support for this position in either the statute, the Committee Reports or in Notice 98-8. However, Paragraph 19 of Notice 98-8 does refer to "amounts deferred" when discussing the trust requirement.

To what plans does the trust requirment apply? Does the trust requirement apply only to employee salary deferrals as "amounts deferred" or does it apply to all "book accounts" under 457 plans? If it only applies to salary deferrals , is there a pass through trust requirement when an individual is to receive a distribution because assets have been identified to pay the distribution?

I would appreciate any clarification which anyone could provide. References and citations would be fantastic.

Thank you for your assistance.

JDC

[Note: This message was edited by CVCalhoun]

Is there anyway for an employer to offer health insurance to early retirees (55 - 65 years old)? The emp would be responsible for the premium. Also the company does not want the liabilty for these emps (FASB). The group is self-funded and does not want to put these emps on the current SF plan.

Question:

A deceased's account in a money-purchase pension plan is transferred to the IRA of the surviving spouse. Is there any special creditor protection afforded these assets that may be an exception from the lack of creditor protection generally afforded IRA's?

Is there any difference if the only assets in the spouse's IRA are those incident to this transfer?

Thanks for any help!!

After TRA '97 employers are now permitted to pay parking benefits in lieu of compensation to employees. I have heard that the IRS prefers that the employee make an election at the beginning of the year based on how much he expects the month to month parking expenses to be. May the employee avoid making an election without violating any constructive receipt rules?

What if it is not feasible to make the election? One company has employees who park all over the city. The easiest way to administer under the new rules to have the employee first incur the expense, then have the EE turn in the receipt for a pretax deduction in the following month.

EX:

Jan. $100 expense incurred for parking.

Feb. EE turns in receipt for $100 to ER who then takes a pretax deduction for that amount from the EE's paycheck, and also a $100 reimbursement to net pay (since the EE has already paid his own money to pay for the parking).

ER cannot set up monthly parking with the garages for all of its EEs since there are so many EEs and so few large blocks of parking available within walking distance of the ER.

Also, the expenses for monthly parking may easily change from month to month. Can we cross over months to take the pretax deduction? We most likely cannot cross over years.

Any problems with this type of administration of the new "in lieu of" parking benefits?

I would appreciate any advice that someone could offer on my situation. I had to be hospitalized last November and required on going medical care thereafter. My employer had a partially self-funded health plan and discontinued it July 1, 1998. Now they have a plan where they just pay premiums, they are no longer self-funded. Due to the nature of my position at this company I had knowledge that their financial status is precarious. They are not paying my health claims and the third party provider won't even talk with the insureds any longer. They are referring us to the Treasurer of the Board of Directors. He has told me that paying the claims is not a priority. Some of my bills date back to February, 1998. The third party provider cut the checks, but the company has not funded the check runs. I have contacted the Dept. of Labor. They recommended that I speak with an attorney. She won't take my case on a contingency basis. I am on disability and cannot afford to run up a lot of legal bills. I pay my COBRA every month, but I wonder what good it is really doing me. Now the providers are starting to threaten me with collections. Please offer me any advice you might have. Thanks!

Does anyone have experience with a "phased retirement" design in a DB plan (i.e., retiring with a partial benefit while continuing to work on a reduced hours basis)?

I would agree with LCARUSI - it's not entirely the employer's fault.

You are correct with the issue of taxable income. Unless it's done with income from this year it can't count. As for the deferrals, your option is limited by the Document language. Don't simply allow that participant to increase at any point. You'll need to adhear to the language or you may create other problems.

Good luck....

Two C Corps (A&B) are in the same controlled group under 414. Each maintains a separate health care spending account with different maximum contribution elections defined by the respective plan terms. Per 125(g)(4) ees of A and B are treated as under a single employer. What happens if an ee in B elects $2000 contributions to health care, and then moves to A which only has a maximum $1500 election? EE can still seek reimbursement for expenses incurred while at B, but what if ee wants to continue to use the $2000 maximum from previous employment? Any other issues or problems?

What exactly does a Simple 401(k) have to file with the IRS annually?

A little background:

1. In Jan, my employer stoped the 401k program. This was done without any prior notice to the workers.

2. By February 1 the plan had be fuly liquidated, and informed us that the fund were had been placed in a money market account.

3. We were not asked or given any options or information.The excuse given was tat we had change payroll companies which meant we could not keep the 401k. (this we discoved was untrue.

4. The new plan didnt start until Sept. 1 (despite our understanding that it had already been done).

5. No interest appeared on the statement recieved in October.

Concerns:

a. Can they do this?

b. Where my interest?

c. What can I do?

d. Where was my money all that time?

Thank you

4. Our statement shows only a 9 cent increase, I do not believe the funds were actually reinvested for months.

5.

Would it violate 411(d)(6) to amend a DB plan to cease future benefit accrual for individuals currently on LTD, where plan provides that individuals on LTD continue to accrue benefits until NRA or the date on which they elect to commence receipt of early retirement benefits?

I am caught between a rock and a hard place, and I am looking for some advice/guidance. The Taxpayer Relief Act of 1997 amended the Current Liability Full Funding Limitation, and changed the amortization period for the FFL bases to 20 years from 10 years. The Conference Report for TRA '97 states that existing amortization bases will use the 20 year period reduced by the number of years since the base was established (to also get the existing bases on a 20 year schedule). The Conference Report also states that no amortization is required with respect to funding methods that do not provide for amortization bases. Our firm uses the Aggregate Method and we have many plans which have been maintaining FFL amortization bases. We also use a beginning of year valuation date, and so we will begin to process 1/1/99 valuations in January. Assuming the IRS does not come out with any guidance between now and then, here is my conundrum: Do we continue to set up amortization bases and maintain existing amortization bases, since what is in the Conference Report did not make it into the IRS Code yet? If that reasoning is followed, then we should not be using a 20 year period for the existing bases, since that change was also in the Conference Report. Or do we follow the Conference Report and get rid of the FFL amortization bases? Or do we just not set up new FFL amortization bases, but continue to maintain the existing bases? Is anyone else in this predicament? I am desperately trying to find out how others are interpreting this regulation.

My client's primary goal is to allow his non spouse beneficary to continue to defer as long as possible at his death. Second goal is to take out as little as possible to meet RMD. This is the first distribution for this client. I have been told that we should use a joint life expectancy, utiling the max 10 yr spread. We should recalculate during his life, and at time of his death, the beneficary should use nonrecalculation. Thoughts, comments, input?

We are revamping our vacation/absence policy. I am in favor of no distinction between vacation, personal and sick days. I believe this is becoming more popular but do not have much evidence to support. Is this a trend that is increasing? If your company does it how was the transition?

Are there regs requiring insurance companies to provide information for completion of Schedule A? Many insurance companies I request info from are not even aware of Shedule A. If I had copy of regs that list the info they are required to provide, I could fax it to them.