rocknrolls2

I am working with an employer that has a plan that covers eligible retired employees. If the coverage is considered creditable, would a retiree's enrollment in Medicare Part D result in the retiree's loss of coverage under the employer's medical plan? What if the coverage is non-creditable and the employee enrolls in Medicare Part D. Would this result in the retiree's loss of coverage under the employer's plan? Can you provide a citation to a US Code provision or a regulation citation that supports your position? Thanks,

I am new to working for multiemployer pension funds. I see a number of these plans are money purchase plans and they have a concept of deemed termination of employment, in which no contributing employer makes a contribution for an employee (for say, 6 or 12 months), then the employee is deemed to have terminated his/her employment and is entitled to commence distribution of his/her account balance. In the context of a money purchase plan, the IRS treats them as a pension plan and they require that the employee have a severance from employment. Thus, as applied to those types of provisions, the plan risks disqualification because there is no determination of whether the participant must have an actual severance from employment. Is the IRS view on these deemed termination of employment provisions less restrictive in the collective bargaining context or should the deemed termination of employment provision in a money purchase plan be read as also requiring an actual severance from employment? Does anyone have any legal authority to cite either way for such a proposition?

I am new to working for multiemployer pension funds. I see a number of these plans are money purchase plans and they have a concept of deemed termination of employment, in which no contributing employer makes a contribution for an employee (for say, 6 or 12 months), then the employee is deemed to have terminated his/her employment. In the context of a money purchase plan, the IRS treats them as a pension plan and they require that the employee have a severance from employment. Thus, as applied to those types of provisions, the plan risks disqualification because there is no determination of whether the participant had a severance from employment. Is the IRS view on these deemed termination of employment provisions less restrictive in the collective bargaining context or should the deemed termination of employment provision in a money purchase plan be read as also requiring an actual severance from employment? Does anyone have any legal authority to cite for such a proposition?

A client has a defined benefit plan with 390 participants (all term vesteds, retirees and beneficiaries) and slightly under $2 million in assets. The plan would like to issue an RFP to solicit bids for a single premium group annuity contract for all of the plan's participants. Does anyone have an RFP they could share as a template for creating such a document?

Actually, this appears to be on all fours with what I am confronting, albeit in a different state. According to a colleague, most organizations operating an apprenticeship training program are established as 501(c)(3) organizations, from what he has seen. The trust assets are being used exclusively to provide for the apprenticeship training program and not to pay benefits to individual members.

A client with a VEBA had its exemption automatically revoked for failure to file 990s for three consecutive years. Seeking retroactive reinstatement of the exemption. According to Rev. Proc. 2014-11, the IRS will not assess failure to file penalties against the organization if IRS grants the organization's request for retroactive reinstatement. What if the IRS does not accept the argument raised in the reasonable cause statement, in which case reinstatement would not become effective until the date the reinstatement submission was mailed? Would the IRS assess failure to file penalties for the period between the revocation date and the mailing date of the reinstatement filing? Did anyone have this happen in a real-live situation with respect to a client where the IRS rejected the reasonable cause statement and assessed failure to file penalties for the period that the VEBA remained non-exempt?

With the Social Security Administration announcing its COLAs on the taxable wage base as well as the increased Social Security retirement benefit, the IRS now has all the information it needs to be able to announce the 2020 dollar amounts as indexed for the cost of living. Any indication of when this will happen?

It may be that the employer classified you and others as independent contractors. Were you issued W-2s or 1099-MISCs? If you were in fact an employee, there are all kinds of tax reporting and withholding rquirements which were violated and are subject to substantial tax penalties. You should also notify the IRS.

Under a multiemployer health and welfare plan, an employer and a local union enter into a collective bargaining agreement which includes a provision that permits the employer to request detailed claims information (which has been santized of HIPAA protected health information) from the fund. The fund is not a signatory to the collective bargaining agreement but later an individual who is both a local union officer and a union trustee for the fund signs in both capacities assenting to the preceding terms, including the portion of the CBA allowing the employer to request detailed claims information. Does the signature on a letter by an individual who is both a local union officer and a union trustee for the fund in both capacities bind the fund to comply with the employer's request for detailed claims information?

QPAetc, I called yesterday and I got a voice message today that the acknowledgement letter had not been issued but that I should check back in 8-10 weeks for an update.

My client is a multiemployer pension plan that has terminated in a mass withdrawal. It is projected to become insolvent and run out of funds in the next plan year. Its only sources of funds are two employers who made complete withdrawals and are making installment payments of withdrawal liability. As you likely know, in that situation, the plan has to be amended to eliminate benefits in excess of the greater of the amount of the plan's assets or the extent of the PBGC's guarantee. See ERISA Section 4281(c). In addition, to the extent that benefit payments under the insolvent plan exceed the resource benefit level (i.e., the difference between the plan's level of benefits and the plan's assets, but no less than the PBGC guarantee), any benefits above the PBGC guarantee shall be suspended. To me, there may be little or no difference between the level at which benefits have to be eliminated versus the level at which benefits have to be suspended. Has anyone seen a sample amendment to reduce/suspend benefit levels of the type described here? If so, could you please supply me with a copy?

Thank you for this very helpful information.

I filed a VCP request on behalf of a client over eight months ago but we have never received even an acknowledgement form from the IRS. Does anyone have a telephone number that they call to speak with a live person to determine the status of the request and possibly, to which agent the request has been assigned? Thanks.

I submitted a VCP filing on behalf of a client. After submitting the filing, it was determined that some of the corrective contributions indicated on the charts will have to be revised due to incorrect data. We have completed the revised charts and want to submit them to the IRS to become part of the filing. Two issues: (1) We have not even received an acknowledgement from the IRS. Should we send it anyway and ask them to replace portions of the existing material that was filed with the new material? Or should we wait until the IRS actually acknowledges our filing or has an agent send us a letter? What if the IRS approves the filing without any further action or change required on our part? (2) We submitted the filing in February 2019, before the new procedure for faxing the filing became effective. If we supplement the filing, can we send the supplemental filing and its attachments via regular mail or should we utilize the new procedure of faxing it to the Service? Thanks.

I felt that I had to put my two cents into this debate. State "revoke upon divorce" statutes treat the former spouse as if s/he died before the participant. A plan provision that revokes the beneficiary designation as to the spouse following a divorce would operate in a similar way. The former spouse is treated as if s/he died first, thus revoking the designation. Since there is only one contingent beneficiary named in the form, the father would get the entire account of the participant. If the father doesn't want the money (what if s/he is in a nursing home or collecting Medicaid and receipt of the participant's account balance would disqualify him for Medicaid?), the father could disclaim his right to the account balance which would also operate as if the father died before the participant. Some plans have the participant's estate as the very last catchall default beneficiary. That would likely not be desirable because it would cause the benefit to be included in the participant's estate for state law purposes and potentially subject it to a state level estate or inheritance tax.

Contributions would generally be required at the contribution rate per hour of service. The employer could cease to be required to make contributions to the plan in any of the following scenarios: (1) the employee is still working as a participating non-bargained employee which the recordkeeping system is not picking up, (2) the employee has stopped working, or (3) the employee has been into a job category that the employer is not required to make contributions to the plan on the employee's behalf. The employee should not be permitted to get a distribution from the plan in scenario (1) or (3), but may get a distribution in scenario (2). In scenario (1), there is possibly an operational compliance issue which would have to be corrected.

A money purchase Taft-Hartley plan provides that an employee is deemed to be retired, for administration purposes, as of the first day of the calendar quarter following 60 days for which contributions from a contributing employer ceased to be required on his/her behalf. At that point, if the employee is unmarried, benefits are payable in the form of a straight life annuity, unless the participant elects a lump sum, or installments payable over 3 years, 5 years or 10 years. If a participant is married, the joint and survivor annuity is payable unless the participant elects, with spousal consent, to receive his/her account in the form of a qualified optional survivor annuity, a straight life annuity, a lump sum, or installments payable over 3 years, 5 years or 10 years. Since the IRS considers a money purchase plan to be a pension plan, there are restrictions on in-service distributions prior to the participant's attainment of age 62. I can appreciate the fact that it may be difficult for a multiemployer fund to determine whether a participant has in fact terminated his/her employment. However, I am concerned that the IRS could question the plan's qualified status if the participant is deemed terminated or retired and it is determined that the participant was not in fact terminated. Does anyone have any thoughts on this? Thank you.

Under the Code and ERISA, spousal consent is not required if the spouse cannot be located. For a participant who is looking to utilize this exception, is the plan required to have the participant submit an affidavit of when s/he last saw their spouse and state in detail what efforts have been made in an attempt to locate the spouse? Or is it simply enough if a participant checks a box on the benefit election form under spousal consent which says. "I do not know where my spouse is currently located."?

Regarding the last part of my question in the above, the regulations at Section 1.501(c)(9)-4(e) provide "Personal legal services which consist of payments or credits to one or more organizations or trusts described in section 501(c)(20) are considered 'other benefits.'" Since the tax exemption under Section 501(c)(20) for group legal trusts was stricken from the Code, this suggests that group legal benefits may not be legitimately provided under a VEBA but it is not necessarily determinative.

A client maintains a VEBA which provides the following coverages: dental, life insurance, critical illness and accident benefits, vision coverage and group legal services coverage. All coverages except group legal coverage are excludable from the participants' gross income. The employer pays the premium for all such coverages and employees do not have the ability to choose whether or not to have certain coverages, other than to indicate for dental and vision whether the coverage is for the employee only, the employee and spouse or family coverage. If the client was unaware that the group legal plan was not excludable from members' gross income but learns for the first time that such coverage is taxable, should the client limit the taxability of such coverage to the current year and prospectively thereafter, prospectively only from the point of learning its true taxability or should the employer retroactively revise its tax treatment of such coverage? A related question relates to the treatment of benefits received for such coverage. Section 120 of the Code excluded both the employer's contribution or premium payment for coverage as well as the value of benefits received for such coverage. How should the employer determine the value of such coverage for tax purposes? A final question is whether the group legal benefit should be completely removed from the VEBA since it is taxable. Thank you.

I agree that a participant cannot waive an allocation of employer contributions to his/her account, even if it is done in connection with a settlement of an emplohment dispute. I did want to interject the point that a lot of this anguish could have been avoided if the plan document required employment on the last day of the plan year as a condition to receiving an allocation of employer contributions. To the extent this is a safd harbof 401(k) plan, I understand that this mighg not be available to the extent the plan is using nonelective contributions to meet the safe harbor. I agree with Luke Bailey's point about the timing of a plan amendment if the plan did not already condition employer contributions upon employment on the last day of the plan year and was beinh amended to do so.

It is almost always preferable to start simple and add complexity only if you feel it is necessary to meet your needs. VEBAs are generally established only by sponsors with some degree of sophistication in the health care field. Unless you are driven to having the administration work done in-house, you may find that it is probably more convenient (and possibly cheaper) to have medical coverage provided through health insurance at first, in which case, you would be outsourcing the administration of the health plan. Even before you get to the point of establishing a relationship with benefit consultants and competent benefits counsel, I think the first thing you need to do is to establish contact with a health insurer, even if you ultimately decide to go the VEBA route.

A client is interested in having their existing VEBA reorganized as a 501(c)(3) organization? Has anyone ever heard of this being done? Even assuming that the IRS would agree to grant this type of request, what are the pros and cons of going down this route?

Most likely the MEP is a multiple employer plan. I agree that the fact that one entity is sitused outside of the US does not in any way exempt the enities from controlled group testing.

Two things come to mind in this situation: 1) were participants whose lump sum value was beneath a certain threshold set by law routinely cashed out at termination of employment? If so, you may be able to rely on that as a plan practice even if you cannot locate the participant's information. 2) it may be worth while to search the PBGC's missing participant web site to see if they have any information about a benefit for this person. if yhey do you can simply direct the participant to the PBGC.