Hi - my first post.

I apologize if this isn't the right forum.

I've had a long day of internet research & phone calls after discovering $2000 of new medical charges today that I wasn't expecting for 2013.

Background:

I work as a professional engineer for a small company with 11 employees.

Our HR department & medical plans are through some other company.

Our health plans are Aetna.

In late-August every year, we have an "opt-in" to one of about eight medical benefit plans including:

*6 PPO plans (which operate Oct 1 - Sept 30)

*2 HDHP plans (which operate Jan 1 - Dec 31)

Regardless of the plan selected, it becomes effective on October 1st.

Myself & a few others have switched plans a few times... and it seems we get penalized for the switch:

Case 1: A person has a PPO plan and decides to switch to a HDHP plan.

On October 1st, the new HDHP plan starts with a deductible at $0. A person may pay $400 towards their $1000 deductible.

On January 1st, the HDHP plan year re-starts with the deductible back at $0.

Essentially, it appears that the employee had to incur a "mini-year" of three months.

This does not seem fair as the first months of most plan years will be full pay into the deductible.

Case 2: A person has a HDHP plan and decides to switch to a PPO.

On October 1st, the new PPO plan starts with a deductible at $0.

Thus, the HDHP plan only lasted 9 months... not 12.

In Case 1, a person could seemingly be paying into three plans over two calendar years. PPO for 9 months, HDHP for 3 months, HDHP for 12 months.

In Case 2, a person could seemingly be paying into two plans over one calendar year. HDHP for 9 months, PPO for 3 months.

If this logic is correct, an employee loses out every time they wish to switch between plans.

Additionally, the set-up seems to usher people towards the PPO plans (which have much higher premiums).

Questions:

1. Do these conditions actually exist? Are my cases possible?

2. Does this seem fair that an employee should have 9-month and 3-month "mini-years" where they are paying straight into deductibles, every time they switch plans?

3. Is there anything I can do about this? (My pregnant wife is a stay-at-a-home mom and is partially-paralyzed... we've had a rough year and $2000 more in charges is not something we want right now.)

Thanks to anybody that could move this to the right forum and/or answer questions.

Mike in Atlanta, Georgia

Just for the 100% of average annual comp limit, under 1.415(b)-1(a)(5).

Say you have an employer (1-person corporation) that hs been in business for 3 years. Further suppose that W-2 income has been exactly $100,000 each year.

For 2014 and onward, employer anticipates large increase in compensation - far above maximum comp level.

When calculating a 415 maximum benefit, I read the regs as requiring use of pre-participation income when determining the high 3-year average. So in the first year, (2014) average comp would be (100,000 + 100,000 + 260,000 = 460,000/3 = 153,333) rather than simply using the higher 260,000 figure. Have I got that right?

The QACA regulations in 1.401(k)-3(j)(2)(iii) lists 4 "exceptions" to the uniformity rule. I know that these exceptions also apply to EACA plans - because it says as much in 1.414(w)-1(b)(2)(ii).

But the QACA regulations also address the "treatement of periods without default contributions" in 1.401(k)-(j)(2)(iv) and allows the plan to "reset" the intial period if default contributions have not been made for 1 plan year.

Can the reset option in 1.401(k)-(j)(2)(iv) also apply to EACA plans? Or is it just 1.401(k)-3(j)(2)(iii) that applies to EACA?

Company's DB Plan currently uses a traditional final-average-pay formula. Company is switching to a cash-balance formula for new hires and rehires only (i.e., no conversion of prior traditional accruals and no switch for continuously employed participants). Vested terminated employees with traditional benefits who are rehired after the switch will have a frozen traditional benefit and a new cash-balance benefit. Is there any need for the plan to provide that compensation from the period reemployment will be taken into account when calculating payment of the frozen traditional benefit? The regs suggest that this would be necessary if the traditional benefit were converted to an opening account balance, but I don't see any requirement that later comp be counted if you don't convert.

Any thoughts appreciated. Cheers.

i know there are quite a few threads but we have some confusion in my office. in the case of a family plan. 4 employees, two parents and two adult kids. the kids have no ownership interest. would there be attribution of the parents stock to them or not? they clearly do not meet the 10% substantial owner test without attribution.

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403b Plan effective 12/1/2013, with a pye of 12/31/2013. My concern is that the 415 limit would have to be prorated down to $4,250 plus catch-ups of $5,500. OK, I can generally avoid by making the plan effective 1/1/2013, but is that possible in a 403b plan (i.e., a retroactive effective date)?

I have a plan (actually two) where the prior actuary designed the plan so that the interest crediting rate was initially equal to one of the safe harbor indices (plus margin where applicable).

In the case of those Plans, as interest rates dropped, the prior actuary put in a fixed floor rate in the plans so that no violation of the 133 1/3rd rule would occur if the interest rates dropped.

Fast forward to today, the regulations for rates provide a similar or same list of safe harbor rates, and under 1.411(b)(5)-1(d)(6) describes that a plan violates the safe harbor if it uses any combination of the greater of rates in the safe harbor (which are those bond indices, 3rd segment rate, and a fixed rate that has the comment [RESERVED] after it).

The rules about acceptable combinations of interest rates in 1.411(b)(5)-1(d)(6)(ii) describe acceptable combinations of bond rates with an annual floor, and the comment after it is again [RESERVED], and no guidance is provided.

The past couple of years, the fixed rate specified due to the 133 1/3rd rule is higher than the t-bill and short t-bond rates plus their margins (it is about 2% - the floor in each case for the interest credit rate).

Does anyone know when the powers that be are going to specify an acceptable annual floor, or if they will, under 1.411(b)(5)-1(d)(6)(ii)?

Plan has brokerage account setup where each participant works with his / her own broker (approx. 30 some different brokers working with about 50 participants) -

Non-terminated participant (a 30-something) - requested directly from his broker a distribution from his 4 plan - no distribution election forms were made, no other forms of distribution can be taken (hardship, loans, etc.) - so the participant was ineligible altogether from taking the distribution - never let the TPA or his company's HR know he was taking the distribution which was discovered on receipt of monthly brokerage statement cc'd to the TPA -

how do you correct under EPCRS - it's 1 person, $200k account in a $15MM plan - so relatively speaking it's insignificant... SCP and just get the money back? VCP and just get the money back? - and then if the money can't be returned (if it was used to buy a fancy speed boat) - does the sponsor just show they made reasonable effort to get the money back?

Thanks

In the process of preparing a loan form for one of our platform 401k providers, it appears they deduct the loan processing fees from the loan check, thereby netting out the amount a participant will receive. ie a person requests a loan for $5000 but receives a net check of $4900 after fees are deducted for processing. however the platform deducts their loan maintenance fee quarterly directly from the participant's account on the 401k platform.

How is this correct when it was my understanding that fees are not taken into account for tax purposes when receiving a distribution from a plan but a participant is somehow obligated to repay the administrative fee to the plan when taking a loan. The platform is also including any express mail delivery fees to be deducted from the loan check amount as well. If the participant has no ability to receive this $ in the actual loan, why are they obligated to repay it as part of their outstanding loan ??

Anyone aware of a discussion of impact of ACA on the future of welfare plan 5500 reporting?

I have the situation below: I have determined this is an Affiliated Service Group.

Company A Company B
Employee 1 Employee 1
Employee 2 Employee 2
Employee 3 Employee 3

Employee 2 owns 0% of Company A and owns 10% of Company B. He is not an officer of company A and is not an employee of company B.

Because of required aggregation for Top Heavy is he a Key Employee?
I have seen in the regs that a person must be an employee to be a key and therefore he is not a key. I have also seen some language that says ownership will transfer to company A making him a key??

Thoughts?

We have a client that reinstated their match in the middle of the plan year. The employer would like to add an additional discretionary match now that their plan year has completed. Is it possible to only include the period of the plan year in which the employer reinstated in calculating the discretionary match amount?

Thanks

I have a client with employees in California. They generally don't provide medical coverage for same-sex spouses, but they just got a request for a California employee. If California employers offer spousal coverage, do they have to cover same-sex spouses or can they limit coverage to opposite-sex spouses.

Any thoughts would be great. Thanks!

I'm inclined to think this is ok, but thought I'd solicit opinions.

Client establishes a DB plan at age 62, with NRA of 65/5. One-person plan. Anticipating huge income for three years, then income dropping off.

At age 65, decides she is tired of it all, and closes up her business to retire, and wants to terminate the plan.

I know this is a "facts and circumstances" issue, but my inclination is that this should be an acceptable reason to terminate. Any thoughts?

Hello,

Is a distribution from an LLC to a member (owner) a permissable basis for making a deferral or employer contribution to a tax qualified retirement plan?

Thanks for the help!

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Here's the notice.

http://www.irs.gov/pub/irs-drop/n-13-71.pdf

Why can't the Service issue anything without complicating other things?

Participants can now roll over up to $500 to a new year, but the exceptions and restrictions make it almost useless.

Just came across a new 403b client that has a contribution formula that says:

< 3 years = 0%

4-6 yrs = 3%

6+ years = 6%

Seemed like a sneaky (maybe illegal?) way to get over the 2 year eligibility requirement. But if the plan can pass coverage testing at the three benefit levels, is this okay? Thanks.

It looks to me like this is the end of any type of individuly health policy being pre-taxed through a Flex Plan. Does anyone see this differnetly--I hope?