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I have a client that offers Health Flexible Spending Accounts to their employees. One employee elected to contribute $2,900 for 2010. She was involved in an accident and was out of work from May through October. She did not terminate employment nor did she have any sick or vacation time left. As a result, she did not receive a paycheck for the months that she was out of work. This meant that from January 1, 2010 to May 2010, she contributed a total of $1,115. Due to the accident, she requested and received a total of $2,860. She is now able to return to work in November, leaving about 8 weeks left in the year to continue contributing to her HFSA. Does the employer have the right to increase her HFSA contributions each payroll so she may complete the funding of her $2,900 commitment. Since she has only funded $1,115 so far this would mean that she owes $1,785 into her account to be paid within an 8 week period. What are the rules and/or alternatives in the above situation? Can the employer make her pay the amount due? Can they increase the HFSA deductions from her pay to collect the amount due by the end of the year? Any guidance in this matter is very much appreciated.

Employer is Self Employed and has 2 employees. Employer does not provide health insurance. Employer increased wages for 2 employees in order to assist them with purchasing their own policies. Employer purchases his own policy but has the company pay for his premiums only. In addition, he takes a credit on his Form 1040. Is this allowed or is this discrimation?

Employer is Self Employed and has 2 employees. Employer does not provide health insurance. Employer increased wages for 2 employees in order to assist them with purchasing their own policies. Employer purchases his own policy but has the company pay for his premiums only. In addition, he takes a credit on his Form 1040. Is this allowed or is this discrimation?

A couple are married and have no children. Each have a HDHP with individual coverage through their employers. Each have their own HSA. Can each deposit up to $3,050 for 2010? since they file a joint return, does that make them subject to the "family" limit of $6,150? Not sure what their limits would be?

Employer is Self Employed and has 2 employees. Employer does not provide health insurance. Employer increased wages for 2 employees in order to assist them with purchasing their own policies. Employer purchases own policy but has the company pay for his premiums only. In addition, he takes a credit on his Form 1040. Is this allowed or is this discrimation?

I have a cafeteria plan that is terminating. The plan has been exempt from filing Form 5500 since it has less than 100 participants and does not maintain a Trust for the plan assets. Since they have not had to file in several years, is a final Form 5500 required to be filed?

An attorney, working with his widowed client, discovers that the retirement plans, Profit Sharing and Money Purchase Plans, that her husband was a participant in had never been amended or restated since inception, February 1977. Husband was a doctor and only participant in both plans. Someone else administered the plans for him. This person died, and no one else kept up with the amendments and restatements. Form 5500 EZ was filed annually by his CPA and is up to date. Widow would like to roll the balance from the two plans into her IRA. Should the attorney apply under the VCP to correct and bring the plan into compliance before the balance is rolled over into the widowed spouse's IRA. Or since it was a single participant plan, is there another means of correction. I would appreciate in guidance on this issue. Thank You

thanks to all of you for responding. This helps a great deal.

In a defined contribution plan, the participant's balance consists of deductible contributions (taxable) and voluntary contributions (after-tax). He is an owner and must begin taking his required minimum distributions in 2010. Is there a certain order to follow in distributing his RMD, Voluntary Balance vs Deductible Balance? Can he withdraw/deplete his voluntary contribution balance first and be taxed on the applicable earnings only? We have the basis in order to calculate. Can he withdraw some from his deductible contribution balance and some from his voluntary contribution balance? I appreciate any guidance. Thank You,

Thank you for responding. I appreciate your assistance.

I have a cafeteria plan for a non-profit church organization. It has 126 other related entities, Parish Churches and Parish Catholic Schools. Since it is a non-profit, there is no ownership and each entity is a separate legal entity. Their cafeteria plan offers medical benefits and also health and dependent flex accounts (POP & Flex). They would like to establish another cafeteria plan with only medical benefits, NO flex accounts, and offer this plan to the other related entities. Can the non-profit sponsor 2 cafeteria plans and offer the plan with POP and Flex to the administrative staff and offer the plan without Flex to the other related entities? I would appreciate any guidance on this issue. Thank You.

We have just taken over a plan and are unable to determine what their Trust ID was? Since the Schedule P is no longer required, we cannot tell from the prior year's Form 5500. The Schedule R reflects the ID number of the prior recordkeeper/broker that took care of distributions, tax withholdings and tax deposits. The client is not sure of the Trust ID. We looked in FreeErisa, but the older returns are archived. Since we cannot confirm, would we creat a problem by applying for a new Trust ID? If there is an old Trust ID out there, would it create a problem if a final was never filed for that Trust ID? I would appreciate any guidance. thank You

Solo 401(k) plan (owner and spouse) went over the $100,000 threshold in 2006 so a return was filed. Their balance is now greater than $100,000 but less than $250,000. Since the threshold is now $250,000, must I continue to file since I filed for 2006 or do I just stop since their balance is less than $250,000? If you know where I can find this information, I would really appreciate it. Thank You,

I understood that when an HSA account was listed as benefit under a cafeteria plan arrangement, that it had to adhere to the rules of the cafeteria plan. Being locked in for the plan year unless a "Change of Status" occurs. Am I correct that this has since changed? Is it a fact that an HSA contribution can be changed at any time by the participant? If this is correct, can someone tell me where I can find this information so I can provide a copy to our processor? I would very much appreciate your guidance. Thank You

I really appreciate your help with this. To make sure that I am understanding this correctly: A company consisting of 5 employees (2 owners and 3 non-highly compensated employees) would not have a problem if the company pays for the insurance for the owners only and NOT pay for the insurance for NHCE. Two classifications exist: Owners (HCE) and Non-Owners (NHCE) and this would not be considered discriminatory??

I understand that welfare benefit plans under cafeteria plan arrangements are subject to certain nondiscrimination rules: eligibility, concentration and benefits tests,etc. Do the same rules apply to a welfare benefit plan NOT under a cafeteria plan? Questions are: In welfare benefit plans........ May health insurance be offered only to certain individuals? Can the employer pay different amounts to different employees within the company(ies)? Does the employer have to offer insurance to all employees if they are a part of a control group and/or affiliated service group? I can't find rules on just welfare benefit plans as opposed to welfare benefit plans under cafeteria plan arrangements. I would appreciate any guidance on this issue. Thanks!!

Yes it was. Employee received bad advice years ago, and periodically checks to see if there have been any changes that would allow him to "Opt" back in.

In a Profit Sharing Plan, if a participant elected out of plan participation at the date they became eligible to participate (meaning that they elect not to receive an allocation of any employer contribution), can they at some point in the future, reverse the election, and elect to participate?

Company sponsoring cafeteria plan covering welfare benefit plan components is closing the business. If the plans have been exempt from filing (less than 100 participants and NO trust): Do I need to file a final? OR If the plan was exempt from filing then a final is not necessary? If I must file, can you tell me where it states this in the 5500 instructions or regulations so I can pass this on to the client? thank You

I have a cafeteria plan covering several welfare benefit plans. Filing was never required since the number of participants in the component plans were less than 100 and a "Trust" was never established. The plan sponsor is now closing the company so the plans will now be terminated. I read somewhere that even if fiing was never required, a final return must be filed for the cafeteria plan covering the welfare benefit plans. Can anyone tell me if this is correct and if so, where can I find this information so I may show the client that we must file a final?

Thank you.

Client has welfare benefit plans. Employer pays premiums (no cafeteria arrangement). Each welfare benefit plan has over 100 participants. I am looking for a "Wrap Document" in order to cover these welfare benefit plans and file only 1 Form 5500. I can only find a cafeteria plan document, which refers to pre-tax arrangements. Our current document provider offers retirement plan and cafeteria plan documents only. Rather than editing a cafeteria plan document to eliminate and/or insert certain language, I was hoping someone could refer me to a document provider that offers a "Wrap Document" or perhaps is aware of a model that I could use. Appreciate any help and guidance. Thank You

Client has welfare benefit plans. Employer pays premiums (no cafeteria arrangement). Each welfare benefit plan has over 100 participants. I am looking for a "Wrap Document" in order to cover these welfare benefit plans and file only 1 Form 5500. I can only find a cafeteria plan document, which refers to pre-tax arrangements. Our current document provider offers retirement plan and cafeteria plan documents only. Rather than editing a cafeteria plan document to eliminate and/or insert certain language, I was hoping someone could refer me to a document provider that offers a "Wrap Document" or perhaps is aware of a model that I could use. Appreciate any help and guidance. Thank You

Thank you for clearing up the filing issue for me. I am still uncertain about the document issue. I know that the benefits such as medical, dental, etc. have policies/contract numbers with the insurance carriers, but what about a plan number since this must be reported on Form 5500? You mentioned that each component is assigned a different number 501, 502, etc., but do they need a document in order to assign a number (other than their policy/contract number). I am familiar with a cafeteria plan document, where the benefits are listed and the plan is assigned a number such as 501. Does the same exist for "Non-cafeteria" benefits? Example: Filing is required for a client's "Non-Cafeteria" welfare benefits of LTD and group term life since they have exceeded the 100 participant threshold. I have the contract/policy numbers for each. Do I just assign #501 and #502 to each benefit respectively or do I need to have a welfare benefit plan document?

If the employer pays the premiums for the following benefits: Life, AD & D, Long Term Disability, and a cafeteria plan does NOT exist, would a Form 5500 with related Schedule A information have to be filed if the benefits have over 100 participants? If filing is required, and a cafeteria plan document does not exist, what plan number do you put on Form 5500? I'm getting confused about filing a Form 5500 and Schedule A information for benefits in a cafeteria plan (when there are more than 100 participants and/or a Trust has been established) as opposed to filing for welfare benefits plans not covered under a cafeteria plan. Do we need to file if our welfare benefit plans have more than 100 participants and the benefits are not under a cafeteria plan? Can someone please clarify this for me? Thank You