lexi

what fees are permissibly charged to a (self-insured) health plan and where is it codified (i must not be phrasing it correctly because i can't find it in the DOL regs). help!

Outside directors defer fees into company's (account balance) NCDC plan. The deferred amounts are subject to SECA but my question is when is SECA due? Upon deferral or upon distribution? And is it in Notice 2005-1 or final 409A regs? thanks for your help!

Austin 3515: You make some really great points. I am completely perplexed about this situation. From what I understand (and this information is coming from the HCE/union members), they were part of a union when they were young guys (mainly to get the experience) and have long since left that stage to join the ranks of management. However, for some inexplicable reason (maybe the terms of the union plan have changed?), they would like to start participating in the union plan in addition to the office plan. And to answer your question, the UNION sponsors the union plan--not the office employer. i think it's clear that the plans can't be aggregated for 410(b) purposes and if that's the case, there is a problem w/ benefiting only HCEs. However, I was thinking that since the union and office plans can't be aggregated, maybe the office plan forgets about the contributions being made on behalf of the HCEs by their union and just makes sure that 402(g) limits are respected. At this point, I am not sure what the correction method would be.

from what they tell us, they are definitely allowed to participate in the union plan, so we are moving forward under that assumption.

we have several HCEs who are also card-carrying union members. the "office plan" they participate in allows HCEs to participate but excludes union EE. (i don't know anything about the union plan but assume that it would allow these HCE/union members to participate). for some reason, this year they decided they want to start participating in the "union plan." as far as the "office plan" is concerned, is there anything other than being aware of contribution limits that we need to be thinking about? i went throught the 410(b) regs and 404 regs re disaggregation and deductibility but am not sure if i have explored the universe of worrisome issues. (i am sure i haven't, which is why i woke up at 4:30 this morning.) do you have any insight(s)? already a sleep zombie, lexi.

A plan excludes EE covered under a CBA. The same plan includes HCEs. Some HCEs are union members and want to participate in the union-sponsored plan. How should these people be treated for 410(b) testing purposes?

We have an HSA plan that is funded by the ER making two contributions (Jan and June). For some participants, though, they quickly reach entire deductible limit before the June contribution. For them, the ER makes the "June contribution" before June. If someone quits before the June contribution, is she entitled to that June contribution amount since other EE are getting it before June when they quickly meet the deductible limits? My reading of 4980G seems to indicate that the terminating EE would be entitled to the June contribution even if she quits before it is required to be deposited.

Generally, our HSA is funded twice a year. However, some EE reach their entire deductible amount before the second (2nd) funding. For those EE, their accounts are fully funded before the 2nd contribution is made available to others. What happens if an EE leaves before the 2nd funding contribution is made to her account (and she isn't one of those EE that wracks up enough bills to be entitled to the pre-2nd funding contribution)? Is she entitled to have her HSA fully funded, even though she is leaving before the 2nd contribution? Section 4980G seems to answer yes to that question. Is there any other section I should be looking at? Thanks in advance to anyone who can help.

Following up on a thread posted below re ER-specific data from a multiemployer plan, we had a multi-ER group health care plan that was informed that premiums were to be increased by over 10%. when asked about the basis for the increase, the fund administrator refused to release that information (claiming there was a confidentiality agrmn't in place between the fund and the health care insurer). Is there any provision in ERISA or the DOL regs that would require the fund administrator and/or insurer to release basis for the 10%+ premium increase?

Austin: Thanks for your help. These people are working for the company, so they are receiving only income allocations.

Yes, it is taxed as a partnership. So if you can't make contributions on anything other than income allocations, what do you do if the members have been making contributions despite that limitation? Do you just take out the money and return it to the members? If yes, does any of that amount need to be taxed?

Members are participating in an LLC-sponsored 401(k) plan. what are the members contributions if there are no income allocations? IRC Section 401©(2)(A) defines "earnings" as "net earnings from employment." If no income allocations is there no contribution for that year? Any help would be appreciated.

An employer has a 401(k)/ESOP plan and wants to contribute treasury stock to satisfy its 401(k) match (and pension sharing contribution). I found PWBA Interpretive Bulletin 94-3, which makes a distinction between required and discretionary contributions. Other than that, I am not aware of any provision or regulation that would prevent an ER from contributing treasury stock. Has anyone else run across this situation?

After 10% and then 100% taxes have been assessed pursuant to 4971(a) and (b), respectively, what lien priority does IRS have with respect to those liens? I found literature discussing the IRS's position that it is entitled to administrative priority in bankruptcy proceedings. Some Circuits have accepted this while others haven't. Has anyone heard anything recent about this?

A 401(k) owns an interest in a business (e.g., LLC, LP, etc.). The owners want to remove the business interests from the 401(k) by buying out the interests (at book value). Would this be a PT? I have found a vast amount of literature detailing the mechanics of how you use a 401(k) or IRA to invest in companies but nothing regarding how you get the business interests OUT of the 401(k) account or IRA. Is it as simple as buying out the interest?

In 1.410(b)-7©(1), a "plan that consists of elective contributions under a section 401(k) plan, employee and matching contributions under a section 401(m) plan, and contributions OTHER THAN ELECTIVE, EMPLOYEE OR MATCHING CONTRIBUTIONS is treated as three separate plans for purposes of section 410(b)." Does anyone have thoughts on what the capitalized lang has been interpreted to mean?

contribution is equal to a % of employer's earnings.

A State has a law that requires employers in the coal industry to remit monies to a pension fund on behalf of coal workers employed in that state (and to make matters more complicated, some are union and some are non-union employees). Is there any reason to think that employers could disregard these state-mandated contributions when doing 410(b) discrimination testing?

1.401(a)(4)-5(b) restricts distributions with no mention of posting bond, letters of credit or escrow accounts. Rev. Proc. 92-76 details what the plan sponsor must do if it permits a distribution of a restricted amount. Q: Does the employer HAVE to provide for any lump sum distribution in excess of the straight life annuity or social security supplement to which the EE is entitled? In other words, can the ER say, we don't care what Rev. Proc. 92-76 says, you are getting the annuity or social security restricted amount?

neophyte ERISA attn'y.

If you look at the safe harbor regs 1.401(k)-3 and (m) (i think), there is a list of requirements you have to satisfy (e.g., notice, plan year must be 12 months, unless you are starting a new SH plan, in which case 3 month plan year is fine, etc).

Jim: Your summary of facts is right on. But how do you KNOW all of this stuff? Am I not seeing it in the Regs somehow?

if a calendar year plan is top heavy for 2007, does the ER have until 12.31.2007 to make 3% match? Specifically, how does a top heavy ER make contributions to satisfy the 3% DC minimum? 1.416-1 says that all participants as of the last day of the plan year are entitled to receive the top-heavy contribution. so can one interpret that to mean that the top-heavy contribution doesn't have to be made until the last day of the plan year? thanks in advance for your help.

TPA failed to pay 77 year-old participant any of her RMDs. As I understand, the correction method would be to pay her the amount owed plus interest and then get her current for 2007. Would I be correct in thinking that she would not get relief for reasonable cause when she has to file Form 5329? And would any liability attach to the TPA (I am sure the participant will be upset when she learns she has to pay a 50% excise tax for the past 5 1/2 years). How have any of you handled this?

An employer maintains two separate plans: a SH 401(k) plan and a 401(k) plan. In July, the employer is going to merger the two plans. What does the contribution rate become starting July 1? (Can one merge a SH plan before the end of its plan year?) I haven't been able to find any IRS guidance.