J Simmons

Not direct authority, but you might take a look at Rev Proc 99-50 for IRS rules about who reports payouts for that part of the year before plan sponsorship changes and who does for that part of the year after that change.

Does the plan permit waiver/disclaimer of benefits? See Kennedy v Plan Administrator of DuPont Savings and Investment Plan decided by the Supreme Court on January 26, 2009 for discussion.

The value of the COBRA continuation coverage is that you get a group rate for the cost of coverage rather than have to pay your actual costs in excess of $6,000. Suppose that actuarially it is determined that the cost for 2010 that the employer will pay under the self-funded plan boils down to $4,800 per employee. Your 'premium' cost under COBRA could be 102% of that group rate. That it, your COBRA continuation coverage would cost you $408 per month ($4,800/12=400.00; 400.00X102%=$408). If your health expenses over $6,000 are for the year $30,000, you'd have paid just $4,896 rather than bear the expense of that $30,000. Your former employer would be picking up the rest of the tab.

Barring someone being able to direct to authority directly on point and of which I am not aware, I do not think that you may permit it. Granted, it would be a mid-year change between two taxable benefits, the after-tax payment of life insurance premiums and additional cash pay. A choice between taxable benefits does not have to be made in the context of a 125 plan--it's taxable either way, so the choice itself would not render a tax-free benefit to be taxable. But having made the after-tax payment of life insurance premiums an option under the cafeteria plan (it is a permissible taxable benefit--Prop Treas Reg § 1.125-1(a)(2)), then I think you have to follow the cafeteria plan election rules, including the general prohibition against mid-year changes unless incident to certain changes in family status. As mentioned above, it would be a choice of two taxable benefits, not a choice across the taxability issue (i.e., not a choice between taxable and tax-free benefit) for which 125 compliance is necessary to keep those that choose the tax-free benefit from being taxed. Even though it is a choice on just once side of the taxability issue, the cafeteria plan rules would not permit an employee (sans a certain change in family status) to make mid-year change between two tax-free benefits. That is, an employee is not free mid-year to have the $250 a month being deducted for dental insurance premiums to be diverted to the payment of major medical insurance. So, I would reason, the employee is not free mid-year to switch between taxable benefits (after-tax payment of life insurance premiums to extra cash pay).

What is being filed?

I've seen investment policies for plans that permit participants to direct the investments specify that a directive not implemented is presumed not to have been provided to the TPA unless the party claiming to have sent it has proof that it was received by the TPA, such as a fax confirmation page, an e-mail read receipt, certified mail receipt (signed), etc. This is to avoid the proof problem in a 'he said, she said' situation.

Don't know about a SEP, but if any 401a plan, yes. A good write-up about this may be found at http://www.reish.com/publications/article_...m?ARTICLEID=682

The plan sponsorship may be assumed by the parent, with the consent of the subsidiary (the current plan sponsor). This should be done by plan assumption documents that are signed by the parent and the subsidiary. Once so assumed, the plan would continue 'as is' until it might later be amended. Since this is a CBA plan, obtaining the consent of the union is suggested so that the union does not have additional claims against the subsidiary for, perhaps, breach of contract. Health care benefits are not required by ERISA to vest, but watch out for what the plan documents might say. By the documents, the subsidiary may have given the employees a vested right. In addition to that, check the CBA agreement to make sure it does not require the continuation of the plan, or require the union to sign off before the plan may be terminated. Otherwise, you can be in breach of the CBA.

Treas Reg § 54.4980G-3, Q&A-10: Q-10: If an employer contributes to the HSAs of former employees who are eligible individuals, do the comparability rules apply to these contributions? A-10: (a) Former employees. Yes. The comparability rules apply to contributions an employer makes to former employees' HSAs. Therefore, if an employer contributes to any former employee's HSA, it must make comparable contributions to the HSAs of all comparable participating former employees (former employees who are eligible individuals with the same category of HDHP coverage). However, an employer is not required to make comparable contributions to the HSAs of former employees with coverage under the employer's HDHP because of an election under a COBRA continuation provision (as defined in section 9832(d)(1)). See Q & A-5 and Q & A-12 of this section. The comparability rules apply separately to former employees because they are a separate category of covered employee. See Q & A-5 of this section. Also, former employees who were covered by a collective bargaining agreement immediately before termination of employment are not comparable participating employees. See Q & A-6 of this section. (b) Locating former employees. An employer making comparable contributions to former employees must take reasonable actions to locate any missing comparable participating former employees. In general, such actions include the use of certified mail, the Internal Revenue Service Letter Forwarding Program or the Social Security Administration's Letter Forwarding Service. © Examples. The following examples illustrate the rules in paragraph (a) of this Q & A-10. None of the employees in the following examples are covered by a collective bargaining agreement. The examples read as follows: Example 1. In a calendar year, Employer N contributes $1,000 for the calendar year to the HSA of each current employee who is an eligible individual with coverage under any HDHP. Employer N does not contribute to the HSA of any former employee who is an eligible individual. Employer N's contributions satisfy the comparability rules. Example 2. In a calendar year, Employer O contributes to the HSAs of current employees and former employees who are eligible individuals covered under any HDHP. Employer O contributes $750 to the HSA of each current employee with self-only HDHP coverage and $1,000 to the HSA of each current employee with family HDHP coverage. Employer O also contributes $300 to the HSA of each former employee with self-only HDHP coverage and $400 to the HSA of each former employee with family HDHP coverage. Employer O's contributions satisfy the comparability rules.

Correction: "hidden cost boilerplate template plans provided by retail Broker-Dealer Custodians"

I know of no exemption from the cafeteria discrimination rules for cafeteria plans. Since there would be no owner employees, the only key employees (for purposes of the 25% concentration test) would be those who are officers earning more than $160,000 in 2009. Also, for the other testing, there would be no HCEs by reason of ownership interests.

The coverage of expenses that exceed $6,000 is the the coverage that is self-funded by the employer and which you are not paying for now. If you elect COBRA, the employer is allowed to charge you the cost of coverage under the group plan for the continuation period. So if you want the coverage for the possibility of health expenses over $6,000 per deductible year, you will have to pay your employer an amount, and it is that amount--the COBRA continuation coverage premium--that you do not know. If you do not elect and pay for COBRA continuation coverage, the old employer is not going to pay your health expenses to the extent that they exceed $6,000 per deductible year.

A new client pops on me SERP docs that do not comply with IRC § 409A. Does anyone know what the IRS' progress is on developing an EPCRS for IRC § 409A document failures is? How soon the IRS might be to launching such? Any suggestions on how to handle the document failure in the meantime?

Ask your employer or the 'plan administrator' what the COBRA cost would be. The plan administrator should be listed in the plan summary you were supposed to have been provided (unless your employer is governmental).

Another good one, Sieve. Anyone got another, to make it a hat trick at Texas' expense?

That explains a lot! Thanks, JanetM. I enjoyed that one.

Please explain in greater detail.

If the interest rate is not commercially reasonable, the loan is a PT when made. You'd need to correct and file a Form 5330. If the interest rate does not comport with what the loan policy specifies, then you have a breach of fiduciary duty for not following the written plan terms. You'd need to correct per DoL's VFCP. The loan policy ought to be re-written to simply provide that the interest rate will be commercially reasonable. This will avoid Catch-22 situations from developing in the future.

It sounds like the train has already left the station. Take Sieve's first paragraph, and look into EPCRS corrective steps for making distributions before EEs were eligible for such.

Half a dozen one, six the other. TEFRA was the bill by which the Medicare Secondary Payer rules became law.

Oh that there were such a requirement--pension simplification would be thy name!

Not prohibited, but not required by the IRS either. So a payout for 2009 would not be a required minimum distribution as defined in the IRS regs. What does your plan language say? That RMD's will be paid to the extent required? Or, as Bird suggests, does the plan describe how much will be paid per year after the required beginning date? Therein will lie your answer.

Bird, please explain how a strict reading of a plan provision that only allows lump sums and RMDs would lead to providing a distribution in 2009 other than a lump sum when for 2009 there are no RMDs?

204h notice is only needed if the reduction in benefit accruals is due to a plan amendment, not changes of independent significance in other aspects of employment that render the individual to accrue less or none in the future.

Money an ER puts into a plan is considered a contribution for that plan year, unless there is a prior or contemporaneous designation that it is for a different, closed plan year. I don't think you could have it carry forward as you suggest. I think it is a contribution for the plan year of which August 2008 is a part.