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An employee resides in state X and his marriage is dissolved by a state x court which enters a judgment of divorce and the decree provides for spousal continuation. At the time of the divorce, employee works for Company A. It is unknown whether employee elected insured or self-funded medical coverage at the time the divorce decree was entered. Employee moves to state y and works in state x for Company B. Employee eleects coverage under an HMO issued in state x. Assume both state x and state y have spousal continuation statutes for insured medical coverage. Generally, I would be fine if employee were employed by Company B at the time the divorce was entered. However, there seems to be an implied provision in the spousal continuation statute that the employee be a member of the plan at the time the divorce was entered and that s/he continue to be a member. Does this mean that if employee terminates his/her job and is hired by another employer, the spousal continuation statute would not apply to the new employer?

Company X maintains a number of welfare benefit plans providing benefits to its active and certain former employees. For its former employees, X has a separate plan document and offers particpants a choice among different medical, dental and employer-paid life insurance options. For medical purposes, the retirees are rated for experience separately from their active employee counterparts (which results in a substantially higher premium payment for retirees). However, for Form 5500 purposes, the active and retired employee plans are bundled with certain other active employee coverages and filed under the bundled plan's plan number. Does X's plan for its retirees meet the retiree only exception for purposes of HIPAA and the PHSA provisions added by PPACA?

If you represent an employer that seeks to avail itself of the Early Retiree Reinsurance program, what amendments would you suggest should be made to your group health plans covering such early retirees?

I have looked at the legislative language and the interim final regulations on the requirement to cover adult dependents up to age 26. The term "group health plan" is used but there are many definitions. In other words, is dental coverage subject to the requirement? The interim final regulations do not include a definition nor do they amend an existing regulations to expand the list of sections subject to the definition that has applied for HIPAA and certain other health benefit purposes.

An employer maintains a medical plan as one of the options available under a cafeteria plan. Under the plan, the children of a domestic partner are considered eligible dependents under the plan. Under pre HCERA law, there were many hurdles which made it difficult (if not impossible) for a child of a domestic partner to qualify as a dependent for purposes of Code Sections 105 and 106. Under the law as amended by HCERA, a dependent includes any child (as defined in Code Section 152(f)(1)) who has not attained the age of 27 as of the end of the taxable year. The child definition includes a stephchild. Since it is likely that the child of a domestic partner will be a stepchild to the employee, would the employee's coverage of such individual be tax-free?

I have been advising a client with a large 401(k) plan (a few billion in assets) where other situations have arisen, not quite factually related to yours. The very first thing I would do would be to impose a suspension on the participant's account until an investigation can be conducted and findings can be made a s result of such investigation. You would need to hire an investigator who would be good at following the money trail through the international banking system. Some times, the participant is a party to the fraud, in which case, you might want to terminate his/her employment. Sometimes, the transactions are requested by a former spouse or significant other with knowledge of all the correct numbers and information so that s/he can access the account. Once your investigation has been completed, you would need to involve the law enforecement authorities to arrest any wrongdoers and order them to pay restitution as a condition of whatever sentence the court orders. Until the investigation has been completed and the conclusions of the investigation are presented, it would be premature to recharacterize any transactions, including any allegedly resulting from fraud. If it is indeed found that the account was fraudulently accessed, the loan should be reversed from the beginning and the particiipant's account should be recredited with the amount allegedly "borrowed." In addition, you might want to consider amending your plan to authorize account suspensions where reports are made that the account has been fraudulently accessed and in other circumstances where it is apparent that the transactions were made under suspicious circumstances.

A 401(k) plan allows a participant to have up to two loans outstanding at any time. The participant could either take two loans with up to 5-year terms ("personal loans") or one personal loan and one principal residence loan. A participant has purchased undeveloped land. S/he is interested in having a home constructed on the lot which will become his/her principal residence. Can we make a principal residence loan in this instance if it has been a few years since s/he purchased the land?

Has anyone seen, drafted, been involved with or otherwise dealt with drafting model Section 436 language?

sieve and Bird, Forgetting about the peculiarities of the current plan design, for a moment, I have seen some 401(k) plans continue to provide matching contributions at the same rate that would have applied had the participant not reached the 402(g) limit. I also do not consider such contributions to be nonelective, or profit sharing contributions because they would have matched deferrals had the limit not applied. In fact, I recently obtained a favorable determination letter on behalf of a client that had such a design. At no time did the agent raise the question whether such contributions should be treated as nonelective contributions with benefits, rights or features discrimination issues. A genuine true-up contribution could be structured either by recomputing the match based on annual compensation or by applying a cumulative percentage of contribution at the time the match is recalculated so long as there is no reduction in the matching contribution credited to a participant's account after the recalculation of the match.

Allow me to clarify a few things. The payroll-by-payroll match is intended to be retained for the regular matching contributions but without a last day requirement while the last day requirement would be applied solely to the true-up conributions. In addition, the plan does contain provisions referring to a payroll-by-payroll match.

Company C maintains 401(k) plan X for its employees. Under Plan X, C makes matching contributions on a payroll-by-payroll basis. Plan X provides matching contribuitions on any combination of before-tax 401(k), Roth 401(k) and after-tax contributions provided that contributions in excess of a specified percentage are not matched. When participants' before-tax and Roth 401(k) contributions reach the 402(g) limit, the participant is treated as having elected to contribute an equal percentage of after-tax contributions for the remainder of the year so that matching contributions can continue to be allocated to his/her account. C is considering making an amendment to X which eliminates this automatic after-tax contribution rule and instead permits matching contributions to be paid after the participant's elective deferrals reach the 402(g) limit. If X is amended in such a way, would this feature be subject to benefits, rights and features nondiscrimination testing? I also recall that the coverage regulations provide that if a plan imposes a last day of the plan year requirement as a condition to eligibility to share in an employer contribution, that the employees who fail to meet the requirement would have to be included in the test as nonexcludable employees. What if X instead were amended to provide a true-up match by comparing employee contributions as a percentage of compensation?

You might be better served by someone inside the Beltway, preferably someone who recently worked at IRS or Treasury in that area. I can give you an entire list of names including a recent former Benefits Tax Counsel at Treasury.

No, but the definition of a domestic relaitons order is one which "relates to the provision of child support, alimony payments,or marital property rights to a spouse, former spouse, child or other dependent of a participant," Code Section 414(p)(1)(B)(i).

A participant's former spouse has obtained a court order directing the employer's 401(k) plan to pay a specific sum of money, the vast majority of which will be applied toward attorney's fees for the parties and a small portion of which would be applied to the former spouse for rent, security and moving expenses. While the very small portion of the amount of money could be considered to relate to alimony, can the order qualify if a vast majority of the money is applied toward attorney's fees?

Company X maintains a 401(k) plan. Participant C was born on 10/9/1940 and started receiving minimum distributions during 2010. On February 4, 2012, C dies. Under the RMD regulations, the lifetime RMDs end with the year of the participant's death even if the participant dies before payment for that year was made. This raises the following questions: (1) To whom should the 2012 RMD be paid? and (2) How should the 2012 RMD be tax reported?

Company X provides medical benefits to its active and certain retired employees. Company X is changing its post-retirement medical plan so that if a retired employee who is eligible for such coverage declines to enroll in it, s/he will be forever barred from electing into such coverage. In addition, it is intended that such retired employee cannot get back into the plan through the occurrence of an event that would be a change in status for active employees under its cafeteria plan or that would entitle the retired employee to elect back in through HIPAA special enrollment rights. The only concern is whether HIPAA's special enrollment rights rules apply to retired employees. The Code and ERISA refer simply to "employee" while IRS regs at 54.9801-6 refer to a "current employee." There is nothing in the preamble to the regs which clarifies this. Any thoughts?

The next questions to answer are the following: (1) is the medical coverage insured? (2) if (1) is yes, was the contract issued or renewed after July 1, 2009? (3) if (1) and (2) are both yes, then it would appear to apply. However, if the medical coverage is provided on a self-insured basis, the contract is issued or delivered outside of NYS or the contract is not up for renewal until later, then the answer would be no. If the contract is issued outside NYS, then any state mandates imposed by that state would most likely apply.

An employer has a fully insured medical plan issued in New York which covers employees in all 50 states and US territories. MA has a mandate providing continuation coverage for a former spouse. The statute, found at Chapter 175, Section 110I (a) specifically provides, "The provisions of this section shall apply to any policy issued or renewed within or without the commonwealth and which covers residents of the commonwealth." Does the mandate apply to a contract issued in NYS which covers MA residents?

Let's say an employer maintains a 401(k) plan for its employees. A participant retires and then starts receiving minmum distribution payments in connection with his/her attainment of age 70 1/2. The checks are payable to the individual who is the participant and bear the correct social security number. Unfortunately, the participant moved without informing his//her employer of the change of address. Therefore, the checks are still delivered to the same home address in the name of the participant at the same social security number. However, in the meantime, an individual with the same first and last name as the participant has begun cashing the checks although s/he has also been reporting the distributions on his/her tax return. The error has since been discovered and the individual who had cashed the checks is now willing to pay the amount back to the plan. My question would be what should be done by the plan other than through the SCP program of simplying issuing the checks to the intended participant? I see no qualification issue on the part of the plan since it paid the checks to the correct SSN and to what it thought was the correct address. Similarly the participant should not be subject to the excise tax because the circumstances should make him/her eligible to satisfy the reasonable error test resulting in waiver of the tax. Does anyone see anytihing else here that I have not specifically mentioned?

Does the new NYS mandate for insured health plan coverage apply to dental insurance issued in New York State?

Thanks. Now I have learned of a twist in the facts. The employee was hired and was expected to work less than 1,000 hours in any employment year. Under the qualified plans, if the employee actually works at least 1,000 hours in any employment year, then s/he is entitled to become eligible to participate in the plans. In this case, the individual had a few months of service before being called up to the military. Thus, the safest approach would be to project his actual service before going on military leave to an employment year to see if he ever would have satisfied the 1,000 hour rule. Do you agree? If he never would have satisfied the requirement based on his pre-military actual hours as projected, we do not even get to the issue of being able to make up contributions to the 401(k) plan. Agree?

Company X sponsors a 401(k) plan for its employees. Employee M was hired in 2004 and did not elect to contribute to the 401(k) plan. A few months later, M is called into military service. In July, 2009, M returns from active military service. Is M entitled to contribute make-up deferrals even though s/he had elected not to contribute to the plan prior to going on leave?

Employer X maintains a 401(k) plan for its employees. Due to the fact that payroll is decentralized, when there was a change at one of the locations, HQ put the employees onto a new payroll system resulting in deferrals being taken from their compensation but not deposited into the plan. After a few participant complaints, the problem was discovered and the amounts were credited to the affected participants' accounts and credited with earnings at a stable value fund rate (which was higher than the VFC online calculator rate). In preparing a VFC application for this, I read the rules for the class exemption and learned that to get out of the notice requirement, the employer could credit the amount of the 4975 excise tax otherwise due to the affected participants' accounts. Another part of the class exemption states that in lieu of calculating the excise tax, the plan could use the online calculator amount of interest and contribute that. It seems to me that the employees who are impacted by this would be getting double credit for interest, first to make the necessary correction and then to comply with the exception to the notice requirement under the class exemption. Am I missing something or is this what is intended? Thanks.

Employee participates in Company's cafeteria plan and elects family medical and dental coverage. Employee's spouse is convicted of an offense under state law and imprisoned for up to 5 years. While spouse is incarcerated, medical expenses will be covered by the state. In addition, Company's medical plan provides that it will not reimburse medical expenses incurred while an individual was covered under another governmental plan or program. Can the Employee validly drop the spouse's medical and dental coverage due to a change in status event or is the Employee required to continue covering the spouse until the next open enrollment period?

Thank you for your response. I interpreted your response to reach the same conclusion with the prospective unavailability of matching contributions prior to age 59 1/2. I was not proposing to eliminate the age 59 1/2 distribution option but rather the pre-age 59 1/2 distribution option for matching contributions. For the post 59 1/2 distribution option, the proposal was merely to eliminate the 6-month suspension period.