Jacmo

I would suggest that you subscribe to a tax service that would have an example of an ERISA PD and SPD in the "Sample Documents" tab in the back of their manual. But let me assure you that if you follow this advice, you will gain a much better understanding of what you are getting into and will probably end up farming this out to a professional.

Yes--they are subject to 125 a/d testing.

The key thing is, as indicated by ldrg, that you must do it before the new plan year starts.

You can correct from this point forward by doing a joinder agreement pulling the sub/affiliate under the Sponsoring Employer's plan. There is also an informal method of "prior correction" called a Plan of Correction. It simply identifies the problem, the whys and wherefores, dates, and states the steps taken for correction and briefly outlines steps put in place to prevent future similar occurrences. The Plan of Correction is then placed with the Plan Document to be available in the event of a future audit.

No final filing necessary--there was no filing done originally, either for the 125 plan or the ERISA H&W benefits.

If the employer makes a direct contribution to an employee's HSA, that employer has just made itself subject to the comparability rules under Section 223 (governing HSAs). Which means--now the employer must see that EVERY employee has an HSA, and make comparable contributions. The only way to do it is to give the employee a raise and let him/her use that to fund the HSA. No tax advantage to the employer.

There is a list of benefits, and adoption assistance is not one of them (as well as DCAP).

The medical reimbursement plan you're describing under 105 is a MERP, and an HRA is a type of MERP. That's why they seem so similar.

But if they can elect PTO as a taxable benefit, then their salaries would still be $52K. No problem there.

The DOL takes the position that an employer funded insurance arrangement is automatically considered to be an ERISA plan if it does not meet the first criterion set forth in DOL Reg. 2510.3-1(j) ("no contributions are made by the employer")--this is a regulatory safe harbor for certain voluntary plans.

A plan offering an election between paid time off and taxable benefits (cash) is not a cafeteria plan. So you can't "buy" (salary reduce) a paid week off thru a 125 plan.

sluskin: the reason that you can do what you're proposing (re the 125 plan) is because you can treat different classes of employees differently. However, you could run afoul of discrimination as to contributions and benefits. (Actual election and receipt of benefits). Regarding the FSA--as above, yes, you can discriminate by class (length of service). But again, if it turns out that the only persons who have been there more than 3 years also happen to be HCEs (or predominantly HCEs), then you could run afoul of the contributions and benefits test.

Per Simmons statement, adoption assistance is not one of the benefits listed in the ERISA plan definition.

Jala: Answers: 1) Yes 2) Probably plan #501, for a "wrap" plan (which incorporates all the H&W plans you referenced.) 3) Cafeteria plans (for the premium only part of a 125 plan) no longer require 5500 form filing. If there is an FSA under the 125 plan with more than 100 participants, yes, it would require a filing. If there was already a plan #501 in place, you might see a plan #502 for the FSA portion, although it could also be incorporated in plan #501. There are a number of factors pro and con as to whether an employer would want to do a "wrap" plan or file a separate plan # for each H&W benefit, or for various combinations of benefits.

I don't think you would want to even consider editing a 125 plan document to meet what you want to do. ERISA documents are fairly unique to each employer. As such, you will probably want to hire a legal firm specialising in ERISA or employee benefits. Some TPAs provide this service also.

Susan: To answer your question: Employees and employers will save on the cost of term life just as they would any other qualified benefit. Group Term Life is subject to the rules of section 79, and the rules under 125 are reflecting some of those requirements. An employee can pre-tax the cost of up to 50,000 face value coverage. That coverage is now considered "employer provided" coverage. So any other or additional employer provided group term life will require that the value of that excess (over 50,000 of employer provided coverage) be added back to the employee's W-2.

Are they under the same plan number or separate plan numbers?

I would say pro rata between A's children and B. In other words, 1/3 of the dependent cost is imputed (you said there were 2 children). However, other reasonable methods would be acceptable as long as all future similar cases are treated the same way. Problem: The fair market value is supposed to be imputed. The question is, what is the fair market value? Is it 1/3 of the dependent cost for that employer, or is it the cost of an individual insurance policy for that person, providing like benefits? For simplicity, you would want to stick with pro rating the employer (or carrier's suggested rate) cost.

He would be treated as any other new hire.

1) Who is being spoken to when you relate "your failure to pay plan premiums"-- you, or the employer? 2) Even if they file bankruptcy, there are still assets to be sold off. Employee salaries and benefits will be first in line for whatever's left (I'm not sure if that's before or behind the attorneys fees). Furthermore, in our area, I've seen the bankruptcy courts force the insurance carrier to continue providing benefits even when there's no premium payment.

Why wouldn't the employer simply set up a separate checking account (at the same bank as their general assets fund) and let the debit cards pull from that account? No trust requirement there. Pretty good deal for the bank to get all the assets up front, one time.

The SARs we do show the type of benefit, the name of the insurance carrier and the dollar amt paid to that carrier. The carriers master group policy with the employer has nothing to do with the SAR requirements.

After doing a little research, it appears that QDROphile is right. Expenses incurred after the plan year starts but before the election form is signed (or before next payroll date) would not be reimbursable.

MERPs and HRAs fall into the section 105 category.

1) answer to first question--yes. These are ERISA H&W benefits, regardless of whether or not a cafeteria plan exists. 2) Plan numbers: Acc & Health (including life) plan numbers start in the 500 series (Pension, 401-k, etc start in the 800 series). Documents are not needed to assign plan numbers, but documents are needed to comply with ERISA disclosure requirements and will reference the plan numbers. 3) If an employer has done a "wrap" plan document, which incorporates all of the H&W benefits, then there will be only one plan # covering all benefits.