J Simmons

For purposes of the hardship safe harbor, would tuition and related fees for masseuse school count?

Prop Treas Reg § 1.125-1(m) allows for "[t]he payment or reimbursement of employees' substantiated individual health insurance premiums" as "a qualified benefit for purposes of section 125." What then are employees' health insurance premiums? Does the possessive mean that the employee must be obligated under the policy to pay the premiums? or simply that the employee otherwise would pay the premiums or has paid the premiums on a policy in the spouse's name?

An entire treatise could likely be written on that. Primarily the difference is that there would be no Business Associate agreement needed between the ER and a TPA, or monitoring of a TPA. The ER would yet need all the same 'internal' controls and limitations needed for whenever it possesses PHI, whether while using a TPA or the ER itself administering the plan. Due to the in-house administration, the employees with needed access to PHI to perform their job duties would likely be a larger number than if a TPA is used. However, the physical and IT issues and precautions ought to be just as rigorous for an ER that possesses any PHI while using a TPA as it is when not using a TPA. If the ER is entirely administering the plan and has under 50 employees, the ER might qualify for an exception from HIPAA Privacy Rule, but yet need to comply with the HIPAA Security Standards.

Prop Treas Reg § 1.125-5(e)(3): "Dependent care assistance, adoption assistance, and a health FSA are each permitted to have a separate period of coverage, which may be different from the plan year of the cafeteria plan." It doesn't say one way or the other that two different health flex accounts offered by the same employer may have 12-month periods of coverage different from one another. But LRDG's suggestion about 'legitimate business reasons' for the different years sounds reasonable in light of the fact that the prop regs do permit differing 12-month periods of coverage for flex accounts of differing types (health, day care and adoption assistance) and the prop regs do not (at least I haven't found where they do) lump together all flex accounts of the same type to be treated as one flex account. On the limited use flex account rules, I thought they only applied to HSA-eligibility and limiting the use to preventive care. Rev Rul 2004-45. I'm not aware of that ruling requiring that if a type of health expense is allowed, the employer must allow such expenses from any health care provider or must have another option for the employee to claim/substantiate that type of expenses if incurred elsewhere.

Don't know of any changes that sanction a plan without a sponsor, but there are the regs on how to deal with an orphaned plan. For a plan to which no further contributions are being made, the real concern is who will have authority for amending, appointing successor plan administrators, terminating, etc. I've dealt with Form 5310 termination applications with the IRS where we had transferred in formal documentation the sponsorship of the plan from the entity that was dissolved before the plan to one of the owners, personally. After that, the owner that was the successor plan sponsor signed to take the remaining steps of updating and terminating the plan. The IRS did not make any mention of it.

Not spelled out in the statute or the regs. The closest thing I know of that the IRS addressed the issue was in the Preliminary Draft of IRS Examination Guidelines for Cafeteria Plans (Spring 1998) that indicated, as best I recall, that the policy needs to be taken either in the name of the employer sponsoring the cafeteria plan or the employee participant, not in the name of the employee's spouse or the spouse's employer.

Take a look at IRS Notice 2004-23. If annual physicals are part of the safe harbor list for preventative care that does not disqualify one with HDHC from HSA contributions, it would seem annual physicals for executives would not be a problem. So long as the executive physical does not include any service or benefit intended to treat an existing illness, injury, or condition, it should be okay.

I thought Einstein postulated that energy is just another form of matter, not that the conversion to energy destroyed matter? In fact, can the energy not be re-converted to matter, demonstrating that the matter was in fact not destroyed? I too think QDROphile gave a good answer.

Situation: ER has a 401k plan. ER establishes a nonqualified deferred compensation plan calling for payments of $X each year for the year the particular EE retires and next 3 years. The $X payment in year of retirement will be reported on a Form W-2 along with the EE's earnings for that part of the year before retiring. (The 3 payments in future years will be reported on Forms 1099.) Question: If EE before retiring this year elects and before the $X payment for this year becomes available, may that $X payment be electively deferred into the 401k plan?

If the minimum service requirement were being waived for this group, I'd agree with you. But it is not. Rather, you will be tracking their service from their individual dates of hire with what amounts to a predecessor employer, albeit seller in an asset purchase.

You might also want to check section 6.09(2) of Rev Proc 2006-27.

I use Mozilla Firefox and have the same experience as vebaguru, but if you hit the logout and then later re-login to the message board, it will only bring up only those since your logout.

In regs issued 3/7/07 by the DoL under 206(d)(3), QDROs may be issued even after the death of the participant. However, as I recall in the case Appleby pointed out, there was a single life annuity that ended with the participant's death and after death, a QDRO was attempted to create a survivor benefit. However, the single life annuity was computed on just that, a single life, and the benefit completely paid. In that situation, a post-death QDRO would have the effect of requiring the plan to pay more benefits than called for under the plan. The new regs would have more of an application as to a DC plan when there is a balance remaining in the plan on the death of the participant.

Previous to the August 2007 proposed regs, the guidance suggested that an employer could only keep the net experience gains from a year to the extent necessary to offset net experience losses from prior years or expenses to the employer of having the plan. The remainder had to used either to reduce the salary reduction to employees to pay for benefits elected for the next year or could be returned to the participants for the year from which the net experience gains arose, but not in proportion to the amount each participant forfeited. The August 2007 proposed regs simply permit the employer to keep the net experience gains from a year. Prop Treas Reg 1.125-5(o)(1)(i). Prop Treas Reg 1.125-5(o)(1)(ii)© also allows the next experience gainst to be applied to defray the administrative costs. At a second spot, the introductory clause of the Prop Treas Reg 1.125-5(o)(2), "Allocating experience gains among employees on reasonable and uniform basis", provides that "If not retained by the employer or used to defray expenses of administering the plan, ... ." Under the heading "Proposed Effective Date" in the preambles, it is provided that "Taxpayers may rely on these regulations for guidance pending the issuance of final regulations."

From the IRS, non-ERISA model document provisions (designed for public schools) are attached to Rev Proc 2007-71.

Yes, you do check that the plan with a match is a 401(m). ACP or safe harbor are methods of showing that the 401(m) feature of your plan is nondiscriminatory--either way, it is yet a 401(m) plan.

Well, by surrendering the 30 shares, I suppose you mean to the ER. When do you get to pay tax to an ER rather than the IRS? You wouldn't think you'd have any tax basis would you from paying the ER rather than the IRS? Maybe if the IRS paid in cash the value of the 30 shares to the IRS and it was reported as a tax payment made by the EE you could do this.

So you'd want to count compensation that was paid at a time when there was no plan for purposes of determining the deduction for contributions to the plan before it was term'd? Seems strange but 404(a)(3) does say "25% of compensation otherwise paid or accrued during the taxable year" not limited to plan year."

afreeling, That's a curious situation. Whose child is it? How did this couple come to have a child they thought was theirs but turns out not to be? Is this an adoption that turned sour? Inquiring minds want to know.

In the past 18 months, an employer that was investing in a real estate LLC was valuing the interest off of the K-1's as well. On field audit, the EBSA regional office challenged valuation by that method as not meeting arriving at fair market value in the way defined in ERISA 3(26), even though the plan had language that the plan's trustee could perform the valuation or hire appraisers. The EBSA office would not resolve and close the audit until an independent appraisal was obtained. There, the plan's investments were pooled and made at the direction of the trustees, so the valuation would affect the amount of cash payouts of benefits. You indicate that your client, as a participant, directed the investment. Thus, no one's benefits distribution amount would be affected by the valuation method used. Hopefully EBSA would recognize that distinction if the plan you are dealing with is audited. Don't know about your bonding question.

Only annuity contracts, but it is in my experience this year usually the annuity contract vendors that are the least cooperative. Usually the mutual fund-only account vendors are cooperative.

Thanks, Larry. That's another one I owe you.

Lori H, If the loan policy and enabling amendment as discussed is adopted, and later the sponsoring employer wants to withdraw the loan policy, you might have a problem if the loan 'window' is too short. It might be that when viewed in a broader term, offering the loans for a short window is discriminatory in that its timing is for execs to buy company stock. The company might want to consider now, before going forward, that if it does but later wants to stop plan loans, the company might need to continue them for longer than desired to avoid the timing of allowing loans being discriminatory, or to actually be for the benefit of the employer rather than the employees.

Yes, I agree. The interpretation the vendor gives the regulatory provision would make it hazardous to ever exclude anyone as it may some plan year in the future turn out that they work 1,000 or more hours. The vendor's interpretation would make having previously excluded the employee improper. An employer would have to know up front a worker's entire work history that is yet to unfold. Your interpretation, that it is a requirement on a year by year basis, seems much more reasonable.

Ak2uary, Thanks for your bulleted list. In the particular circumstance that has prompted my concern and OP, a partnership check was written and signed alone by Partner A (Partners A and B each have individual signing authority) to make the contribution in question. Partner B has been completely indifferent to what amount Partner A put into the plan, since it is all allocated to Partner A--in the plan and in the partnership flow-through. Partner A seems equally indifferent to the fact no contribution is made for Partner B. In the future, I'll instruct them to take the precautions you mentioned and to have B sign the partnership check for A's contribution.