luissaha

Thank you for the response. Yes, the contributing employer is a government al agency, but the Trust was created by various labor organizations for participation by represented employees. I think the fact that the labor organizations created the trust would make the trust subject to ERISA.

The governing documents require the employer to contribute an actuarially determined amount to the trust when the employee first becomes eligible to retire based on age and Service credit. The error occurred because the City had incorrect payroll information for some employees. For example, incorrect birthdates, employee ID numbers, etc. The employer audited the contributions but didn't uncover the errors until more than a year had passed since it made certain contributions.

Employer made a significant amount of mistaken contributions to retiree-only HRA trust. The trust contains ERISA Section 403(c)'s prohibition on return of erroneously made contributions (mistaken contributions can only be returned if discovered within 1-year of error). Here, the mistakes were discovered after the 1-year period. Employer is not requesting a refund, but instead asking to "offset" future required contributions to the trust by the amount of the mistaken contributions. Anyone know of legal support for the offset in a case like this? Would the offset violate ERISA Section 403(c)?

Haha, yes, it is the wild west for sure. I'll complicate it even more. Yes, this is a governmental employer but the trust holding the contributions was established by public sector unions. Thus, there is an argument the trust is governed by ERISA, but it's not clear. I don's t see any legal issues if the public agency were to take contribution "credits" for the overpaid amounts to offset future funding. Thoughts?

Brian, thank you for the response. Yes, the contributions have been deposited into a trust account. I'll check the terms of the HRA plan/trust document and see what they provide on this.

I have a situation where mistaken contributions were made to a retiree-only HRA. I'm familiar with IRS guidance on recovery of mistaken HSA contributions but cannot find anything on mistaken HRA contributions. The custodian of the HRA is claiming the HSA rules apply but I'm wondering if there is any other applicable guidance for mistaken HRA contributions.

Is there any provision in the Internal Revenue Code that prohibits voluntary, after-tax contributions to a DB plan? Put differently, the plan requires mandatory employee contributions based on age of entry. I'm asking if employees could voluntarily contribute additional after-tax amounts to accounts under the plan. Any insight would be appreciated.

Regarding deferrals, does that mean combined deferrals to the 401(k) and 457 (b) plans cannot exceed $20,500 for 2022? I thought an employee could defer $20,500 to each plan for a total of $41,000. The 401(k) is grandfathered, so this is a bit of an odd case. Strange the employer has a 401(k) and 457 plan.

A governmental employer sponsors a 401(a) defined contribution plan, a 401(K) plan, and a 457 (b) plan. For purposes of the annual contribution limits under 415 (c), are the 457 (b) plan contributions treated separately, or are they combined with the 401(k) and 401(a) contributions?

For employees returning from military leave, it's my understanding they have the option to make their employee contributions for time out under USERRA, but are not required to do so. What about the employer's contribution? Does it have to be made if the employee elects not to make his/her contribution?

It is not ERISA-governed because the employer is a governmental agency. It is a stand-alone, retiree-only HRA. There is anti-alienation language in the document, but no citation to any IRC provision. Is the anti-alientation language sufficient to rely upon? A court has ordered the division.

Can assets from an HRA be transferred to a former spouse upon divorce? My inclination is that they can't be, but is there a specific Internal Revenue Code provision I can cite for authority? Any help is appreciated.

Does anyone know how Social Security's Windfall Elimination Provision (WEP) would apply to a governmental defined contribution plan? For example, some governmental agencies have done away with db plans as their Social Security replacement plan, and moved new hires into dc plans. Some of these new hires have Social Security earnings from prior jobs and are wondering how or if the WEP would apply to them. I'm not sure how it would work. Does anyone have any insight on this? Any help would be appreciated.

Thank you for your responses. Very helpful!

Cafeteria plan document contains language providing that a participant may modify or revoke an election under a 401(k) plan as allowed under Treas. Reg. section 1.125-4(h). The 401(k) plan document, however, provides for an "irrevocable" election to transfer amounts from the cafeteria plan to the 401(k) plan. As such, we seem to have conflicting language in the plans. My inclination is that the 401(k) plan should be amended to allow for changes to deferrals for the cafeteria plan mid-year. Is there any reason why we should not allow for these mid-year changes? Don't most cafeteria plans allow for mid-year changes to 401(k) elective deferral amounts?

One child is (age 17). Thanks for the responses. They are helpful. I think we may just explain to the employee that the beneficiary designation should not have been accepted because of the language in the policy requiring him to be the beneficiary. We'll ask him to apply for the benefits and see how he reacts.

Is there any legal requirement that an employee must be the beneficiary on a dependent life insurance policy? I see this in many policies and I'm not sure why this is the case. I have a situation where an employee designated his children as beneficiaries on the policy on his spouse's life. The employee made this designation on the dependent life insurance enrollment form provided by the insurer. The insurer did not object to the designation when originally made. Unfortunately, the employee's spouse passed away recently and the insurer is now saying it will not pay the children because the policy language requires the proceeds to be paid to the employee. I think if the insurer accepted the designation, they must pay the designated beneficiaries, even if that conflicts with the terms of the policy. The only reason I can see for not paying the children is if there is some legal prohibition against naming someone other than the employee as a beneficiary on a dependent life policy. Any insight would be appreciated.

An employee requested a hardship distribution to prevent foreclosure on his principal residence. The foreclosure notice is not addressed to the employee, however. It is addressed to the estate of the employee's deceased father, care of the employee's brother. The address of the property is the same address we have on file as the employee's home address. I'm inclined to recommend approval of the hardship request, as this appears to be the employee's principal residence that is in danger of being foreclosed on, but I'm concerned that the property is apparently owned by someone other the employee or his spouse. Any help would be appreciated.

Yes, I still see it as a CODA as well. The employee has a choice between cash or other benefit under the plan. The benefit in this case is the ability to extend DROP and increase your DROP account.

Thank you for the response. One point of clarification, though. My understanding is that this is essentially a "cashless" transaction. The cash value of the annual leave is not contributed to the db plan. Certain employees can use their "bank" of annual leave hours to extend their DROP period. For example, if an employee had 320 hours of annual leave in their bank at the time they entered DROP, they could choose to cash out that leave or use it to extend their DROP period by 2 months. If they choose to extend DROP, the cash value of the leave is not contributed to the db plan. It is used solely to extend the DROP period. Does this change your view at all as to whether this is a CODA?

Governmental defined benefit plan contains a provision that allows certain employees to extend their DROP periods using accrued annual leave. Employees have the option to cash out leave or use the hours to extend their DROP period. This looks like a CODA to me because the employees have the option to cash out or us leave hours to extend DROP. Am I wrong on this? Any help would be appreciated.

I'm new to the governmental plan area, and am having trouble wrapping my head around a defined benefit retiree health plan offered by a city. The municipal code provides a retiree is entitled to obtain health care coverage under any city-sponsored plan, or any other health plan of their choice, and will be reimbursed for health care premiums subject to certain limits. The code goes on the prescribe reimbursement rates based on length of service. The reimbursements are made out of the city's general assets. I believe the reimbursed amounts are not included in retirees' gross income under section 106 of the Code. My concerns/questions are there really is no plan document or plan summary available to retirees that sets forth rules for what expenses might not be reimbursed, or how reimbursement amounts are calculated. For example, it is my understanding certain retirees are obtaining coverage through their working spouses' plans and are seeking reimbursement for the cost difference between employee-only coverage and employee plus spouse coverage. Is this allowed under the Code? I can see if the employee bought coverage through the city's plan for himself/herself and spouse that the city would reimburse the employee-only rate (or if the retiree went out and bought other coverage for himself and spouse), but I'm not sure if coverage is obtained the spouse's plan. What if the the spouse uses flex credits under 125 plan to pay to add retiree? Isn't this "double-dipping" so the reimbursement would be income to the retiree? Shouldn't this all be explained to retirees in some sort of plan summary?

Yes, I agree in the circumstances you describe. But what if no 125 plan and spouse's employer pays employee only coverage and employee pays cash for employee plus spouse?

Retiree only HRA provides that eligible retirees are entitled to obtain coverage under any plan sponsored by the Employer, or any other health insurance plan of their choice, and will be reimbursed their premiums subject to limits (i.e. $700/per month). An eligible retiree obtains coverage through his spouse's plan and requests reimbursement for the increase in cost from employee only coverage to employee plus spouse coverage under the spouse's plan (i.e. $250/month). Is this expense reimbursable? I was under the impression that only premiums for single coverage were reimbursable under a retiree only HRA. I can't find any guidance on this. Any help would be appreciated.

We have an employee who files income taxes with his spouse as married - filing separately. The spouse claims their child as her dependent (i.e., our employee does not claim child as dependent). A question has come up as to whether or not dependent care expenses incurred for the child are eligible for reimbursement under our dependent care assistance plan. The employee is arguing the child could be his tax dependent and otherwise meets the definition of a qualifying child, so the expenses should be reimbursed. Our plan document defines "qualifying individual" as a tax dependent of the participant as defined in IRC section 152 who is under the age of 13 and who is the participant's child as defined in IRC section 152 (a)(1). I guess my question is if the child can qualify as a dependent of the participant, but is not claimed as a dependent for tax purposes, could dependent care expenses for that child be reimbursed under the plan. Any help would be appreciated.