E as in ERISA

The rule of thumb in correcting errors is that you should make things as close as possible to what they would have been had the error not occurred. What type of plan is this?

http://www.tfp.com/references.shtml

My understanding is the same as yours -- that an audit and 5500 are required for one day. I understand that the DOL may have become less aggressive about enforcing this, but that doesn't necessarily provide enough comfort to everyone to stop doing them.

It doesn't matter which dollars you are distributing. Section 402 says that Section 72 controls the taxation of these monies. And under Section 72, she will only recover part of her basis in the distribution (and the rest will be taxed).

Need a lot more detail... The issue will ultimately be whether the facility's claim is subject to ERISA or subject to state law. It depends on the relationships. Is the payer the plan or the employer or someone else? Is the "facility" a clinic or something that has contracted with the employer to be a service provider to the plan? Etc., etc.

I think that legally you could delay distributions until after a break in service. But participants might not be very happy about that.

The concept of "break in service" is used more frequently in ERISA and the Code than termination (severance of employment and separation from service have limited uses, some of which are going away). But in today's world, you can't delay distributions until after a break in service....

An article on benefitslink at http://benefitslink.com/articles/DLA20020807.pdf is reporting that the rules could be applicable to benefit plans, but that the "SEC is considering extending the Form 4 reporting deadlines for a narrow range of transactions, including discretionary transactions involving employee benefit plans."

The administrator could flag insiders' accounts, so that no transactions are executed without first contacting the employer.

There are forms where info is reported, just not a Form 5500. The individual reports contributions on their Form 1040 and/or Form 8606 attached to their Form 1040. The vendor reports contributions and valuation information on a Form 5498. I don't know all the rules. So there may be other forms. Check those forms and see if they lead you anywhere.

Are the "Brothers" siblings of the Father...or the Daughter? Can we assume any children are over age 21?

In my experience, most don't include eligible employees who are not participating in the welfare plan in the count.

No. You can generally only reimburse expenses that would be deductible on the person's tax return under Code Section 213. Page 12 of Publication 502 lists nondeductible items, including: Nonprescription Drugs and Medicines Except for insulin, you cannot include in medical expenses amounts you pay for a drug that is not prescribed.

An 80% interest by the hospital changes the analysis. But is the LLC treated as a partnership or corporation for tax purposes?

Employees still complain even if they don't have good reason to do so!

What type of ASG are you thinking this is: A, B or management-type? Can I confirm that you are saying that the doctors themselves own the interests in the LLC, not their practices? And their practices are completely separate from their LLC activities? Off the top of my head, I'm thinking that the relationship between the doctors' practices and the hospital is too remote -- from the facts you give there is no overlap there. I think that I would be more concerned if there was a plan at the LLC level.

It depends on what A's plan says about who is the employer and who are participating/adopting employers (if it only allows companies in the controlled group to be participating/adopting employers, then at the date when A is sold it is possible that B is no longer allowed to be in the plan). The bigger issue is usually what happens to the benefits of B's employees in A's plan. There is frequently a spinoff of B's portion of the plan effective as of the transaction date. Alternatively, they could start a new plan at any time. But then there are issues about testing the plans together, B's employees getting distributions from A's plan, etc., etc.

I don't recall that there is anything from the IRS indicating that the rate of automatice contribution was an issue. I would anticipate that it would be an employee relations issue, not a regulatory issue.

My concern is that employers often believe that they have relieved themselves of a lot more responsibility (and liability) than they actually have. So they fail to perform their duties.

Most exercise some degree of discretionary authority or control over the plan. I realize some decisions might be considered "settlor" functions. But can an employer really avoid doing anything that might cause it to be considered a fiduciary? Is the naming of other parties as plan administrator, trustee a pure "settlor" function? Or does the employer have some fiduciary responsibility there?

How can you avoid that result?

404(a)(3) provides the contribution is deductible for the employer's taxable year ending with or within the trust's taxable year. 404(a)(6) provides the contribution is deemed made on the last day of the employer taxalbe year if made on account of that taxable year and not later than the date for filing the return (including extensions). Note that there are special timing rules for 401(k) (and match, too, if I recall correctly). The contribution can't be made on account of compensation earned after the end of the employer's taxable year.

Is Company A going to be in business up until December 31, 2002? If so, it's likely that under state law, the company will not be dissolved on December 31 -- there are timelines for notifying creditors, etc. From a practical standpoint, it's likely both companies will be in existence for some period during 2003. And, depending on the ownership percentages, probably under common control during 2003?

Your plan is imposing a significant detriment to those who don't take a distribution -- it is being invested in an interest bearing account. Therefore, participants are being forced to consent to distribution. So the consents are invalid. So the plan does not meet the requirements of 411(a)(11). (I think that is what mbozek was getting at?)

Does he know the form of the various transactions. If any of them were "asset sales" instead of stock transactions, then the plan may not have moved in the transaction. It may still be sitting in a shelled out corporation somewhere.