Lori Friedman

The easiest way to sort through this is to think of the VEBA and the plans as separate "animals". The VEBA is an I.R.C. Sec. 501©(9) exempt organization. It isn't a benefit plan; it's a entity that holds and invests plan assets. In general, a VEBA is required to file an annual Form 990. There are special rules for a VEBA; beware of the Form 990's last page. The normal exclusion codes -- which you would normally use to exclude an exempt organization's interest income, dividend income, gains(losses), etc. from taxation -- don't apply to a VEBA. The plans file Form 5500 (if required).

You can find some very helpful discussions in PLR 8516025 and PLR 8321042. It's worth noting that PLR 8516025 refers to "parents", in the plural, accompanying a child.

I know that this is a pet peeve of some practitioners. But, there's still some authority to use the term "Keogh" -- the regulations to I.R.C. Sec. 401 refer specifically to Keogh plans. Of course, the term is also commonly used to describe qualified plans for self-employed individuals. Even though its technical meaning has changed significantly since the days when H.R. 10 was in force, the term continues to have validity. Personally, I'm going to save my own pet peeves for things that really, truly matter. For example, being served whole-berry cranberry sauce, instead of that wonderful stuff that looks like the can.

The due date of the income tax return -- in this situation, Form 1040 -- including an extension (10/15/07).Because you're asking about a 401(k) plan, you don't have an issue with the qualified plan minimum funding rules (8-1/2 months, or 09/15/07). Many taxpayers extend their returns for the sole purpose of needing more time to make a plan contribution.

Are you looking for software to calculate the net income eligible for a retirement plan contribution? Unless I'm missing something about your question, all you need to do is take Schedule C net income and subtract the 50% self-employment tax deduction from Form 1040, Line 27. Also, the I.R.C. Sec. 404 amount is limited to .25/1.25 = .20

I'd like to pose something to those of you who frequently work with medical FSAs (either with or without cafeteria plans). It's my understanding that an employer doesn't become the "Benefits Police" when it sponsors a medical FSA. The plan sponsor merely has to make a reasonable effort to determine that an employee has submitted an eligible expense claim. Usually, "reasonable" means: (1) providing information and guidelines to participants (2) obtaining documentation of a claim, and (3) having each participant attest, when he/she signs and dates a reimbursement claim form, that the claim is for an eligible medical expense paid or incurred for the benefit of the participant, spouse, or dependents. The employer's not held to the lofty standard of scrutinizing and investigating every request for reimbursement. Also, the employer probably doesn't want to take on the role of researching, analyzing, and applying federal tax law. Any thoughts out there?

While it's true that 401(k) elective deferrals can be elected through a 125 plan, doesn't doing so subject the 401(k) plan to an additional -- and avoidable -- layer of rules and testing?

I work almost entirely with labor organizations, so here are examples from my own client base: Multiple-employer plan: The national union sponsors a plan to cover its own employees. Also, the national union's affilated district councils and local unions -- which are separate entities that don't form a controlled group -- can also participate in the plan and use it to provide benefits to their own employees. Multiemployer plan: The plan covers union members, whose benefits are determined pursuant to collective-bargaining agreements. A Joint Board of Trustees, which comprises exactly 50% labor trustees and 50% employee trustees, is the plan sponsor and plan administrator. The labor organization doesn't sponsor the plan.

You've posted your question to the Multiemployer Plan forum, but you mention a multiple-employer plan. Could you please clarify whether you're asking about a multiemployer or a multiple-employer plan?

When a welfare benefit plan purchases stop-loss coverage (the plan itself, and not the plan sponsor, pays the premiums): 1. The policy constitutes a plan asset 2. Schedule A is required 3. The premiums are reported on Schedule H, Part I, Line 2e(2) ("...To insurance carriers for provision of benefits") But, how have you been completing Form 5500, Lines 9a and 9b? Do you check "Insurance" for plan funding arrangement, for plan benefit arrangement, or for both?

None...zip...nada...zilch. The only thing that ever gets attached to a 403(b) plan's Form 5500 is an extension form or DFVC program statement.

I once had a client inquire about establishing an off-shore bank account...on Martha's Vineyard. No, I am not joking. He and I had a terrific discussion about how "offshore" doesn't mean Massachusetts.

I'm not going to back up my reply with any statistics or references, but I will say that disqualification is the path of last resort. Who gets hurt the most when a plan's disqualified? It's the participants, who are powerless with respect to the plan's operation and administration. It isn't the intent of Congress or the Dept. of Labor to cause unnecessary harm to plan participants. Having said that, your plan committee's concerns really don't add up to a bad thing. It sounds as if the fiduciaries are extremely cautious and take their duties very seriously.

Multiemployer plans, which provide welfare benefits pursuant to collective bargaining agreements, are required to hold their assets in trust. The trusts apply for recognition of tax-exempt status under I.R.C. Sec. 501©(9). Otherwise, most employee benefit plans are funded by general assets.

He was loved by the Seattle fans, and he always seemed to enjoy playing there. It's too bad that he ever left in the first place. But, who among us could resist the allure of $25 million per year?

Another link: http://benefitslink.com/boards/index.php?s...mp;#entry126379

Not that long ago, Slappy was one of the premiere shortstops in MLB. When he moved to the Yankees, he became a very poor third baseman. Slappy also has problems handling the pressures and attention of a huge market and highly visible franchise. He really needs to move to a smaller franchise, where he can play shortstop again. But, small city = tiny payroll. Can anyone afford him at $12,000,000?

Are you referring to Schedule C?

Ah, yes...the best lineup that money can buy. No amount of money can buy the spirit, heart, and determination of the Tigers.

You might find it very helpful to read Chief Counsel Advice 200603025, 01/20/06. Very briefly... Before 1990, the IRS had been interpreting the term "medical care" to include any procedure that permanently altered the form or structure of the body, including procedures that were entirely elective and for cosmetic purposes. The enactment of I.R.C. Sec. 213(d)(9)(A) changed that. Now, a cosmetic procedure is deductible only if it ameliorates a deformity arising from: (1) congenital abnormality (2) injury resulting from an accident or trauma, or (3) disfiguring disease. If this individual has a valid medical condition that causes disfiguring facial hair growth, I would take the position that her hair removal procedures are deductible under Sec. 213 and, thus, eligible for FSA reimbursement.

The EEOC enforces the federal civil rights laws. Unless Shogun64 has reason to believe that he/she has suffered job discrimination related to age, disablity, gender, nationality/ethnicity, or religion, the EEOC would have no jurisdiction in the incident. Shogun64 says that his/her boss "got mad" after an argument with him/her, which doesn't suggest a civil rights violation.

A defined benefit plan has mandatory employee contributions. A plan participant terminates with 0% vested employer contributions. The plan makes a lump-sum distribution of the employee's own contributions, plus earnings. Is this distribution reported on Schedule R, Line 3? Clearly, a lump-sum distribution has been made, but was a "benefit" distributed to a "participant"? For the purposes of Schedule R, a "participant" is someone who, at any time during the plan year, had an accrued benefit in the plan. Accrued benefits include both forfeitable and nonforfeitable amounts. Would you report the lump-sum distribution? The Schedule R instructions specifically say not to report lump-sum distributions of elective deferrals, but there's no mention of mandatory, after-tax employee contributions.

Dell, thank you for providing such thorough and scholarly information about a rather esoteric subject. I really appreciate your help.

http://benefitslink.com/boards/index.php?s...&hl=Dolgoff

Thank you for pointing me in the right direction. The Relius instructions are rather poorly written and difficult to follow -- DBTech's document is much more helpful. But, I finally managed to generate an accurate Link Map and successfully import data into the software. Now that I know how to do this, I'll be happy to help anyone in the same situation. Just send me a PM or email message.