KimberlyC

To elaborate, you would need to offer the immediate life annuity for a single participant and both the qualified optional survivor annuity options to a married participant if lump sums valued at more than the cash out amount. You want to ensure you state how lump sums are calculated and actuarial factors. We generally use the actuarial equivalent of the benefit payable at normal retirement date. If you allow for enhancements for those eligible for early retirement subsidies to be taken into account, the lump sums amounts likely will increase.

Thank you for your thoughts. They are moving all plans (dbs, 401(k)) to the new trustee and want these small VEBAs to go with them. I am amending the original trusts to treat the new trust as an amendment, incorporating the provisions of the new trust, and stating the new provisions supersede the old trust provisions to the extent they conflict, except to the extent the new provisions would jeopardize the original trust's status as a VEBA under Section 501(c)(9) and the tax-exempt status under 501(a) or change the rights of VEBA members. I think it is the best I can do under the circumstances. One issue is that original VEBA documents are so old they credit earnings monthly, don't provide for any electronic communication, etc. New trustees want their own documents, and you are correct -- very few financial institutions want to serve as VEBA trustees. This one is doing it only because it is getting the retirement plan business.

I have a client who acquired companies with two very old VEBAs. The VEBAs are trust documents and received favorable IRS determination letters on their Section 501(c)(9) status years ago. The VEBA trusts have been amended from time to time to appoint successor trustees. The client plans to move all retirement and welfare trusts to a new financial institution. The new trustee insists its standard trust document must be used for the VEBAs and will not agree to incorporate or even attach the old VEBA documents that received the IRS ruling. The new trusts are boiler plate and contain no description of the original VEBA members or benefits (e.g., retired union employee; retiree health benefits). The new generic trusts state the trust document plus the employer's welfare plans constitute the entire VEBA. I am concerned that the original IRS letters will no longer govern the VEBA's tax-exempt status if there is no provision of the original trust left and no description of eligible members or benefits in the new trust documents. Note that the employer maintains a retiree health plan document, but the VEBA funds only certain members' (union) benefits. The new trustee insists obliterating the old document will not affect the VEBA's tax-exempt status. I appreciate that a VEBA can be amended and that a new IRS ruling should not be necessary simply to name a new trustee. However, i feel that the original VEBA documents that received the favorable IRS letters should at least be incorporated by reference ( at least to the extent they don't conflict with the new trust provisions). Any thoughts? I have considered amending the original VEBA trusts to incorporate the new trust documents (essentially doing through the back door what the new trustee won't allow through the front door).

Thank you, the biggest area of exposure for not offering COBRA are the penalties associated with not providing notice. Another issue is that the on-site provider is charging a fairly small fee - $275 per participant for on-site services regardless of use. If we used that amount as the premium, the CORBRA cost would not that expensive. Other services are very difficult to replicate if someone elected COBRA - treatment for exposure to chemicals in a lab.

Thank you! the problem is the COBRA and ERISA exceptions were drafted so long ago. The law is far behind what is happening with U.S. employers. In this case, it would be illegal for the employer to provide on-site services to former employees. They did exempt more robust on-site clinics from the ACA and could extend that exception to COBRA and ERISA by regulation.

I have an employer that employs select employees to work in medical and laboratory settings ( small percentage of the employee population). The employer provides vaccinations, TB testing, vision screening, initial health screening, blood pressure checks, first aid for work-related injury and illness evaluation, treatment, and case management, research lab exposure emergency access and follow up; and blood and airborne pathogen exposure valuations. Many of these "health plan" services provided on-site are required under OSHA. The services are not provided to other employees who don't work in the medical and lab settings. Although the services go beyond the limited on-site exception for ERISA, we can take care of documents and Form 500 reporting. I also am fairly comfortable that the services are either preventive or not significant for HSA participation for any of these employees in the HDHP. The critical issue is COBRA. The services go beyond the limited on-site clinic exception for COBRA. By law, the employer cannot provide these services to non-employees. COBRA doesn't specify where services will be performed so for other employers who offer vaccines and limited tests, we offer COBRA and send employees to a drug store. However, in the current situation there are multiple services and referrals to a outside providers would be difficult and expensive. The employees are required to have the services to perform their jobs and many are required by law. From a policy standpoint this makes no sense to require COBRA for health services required for a job when the employees are no longer employed. Any thoughts? Hopefully the agencies will one carve out limited on-site programs.

The IRS did request comments on the use of multiple employer cafeteria plans in 2007, but to my knowledge they didn't include it in the cafeteria plan regulations.

Certain unfunded deferred compensation plans maintained by non-governmental tax-exempt organizations (in existence on and not modified after August 16, 1986) are grandfathered and are not subject to Section 457(b) limits. Does anyone know how deferrals under these grandfathered plans are reported on Form W-2? is it still Code G of Box 12 or another Box and/or Code? Including grandfathered amounts in Box 12, Code G may cause an apparent exceeding of the 457 deferral limits.

A client (an LLC) was entering into discussions to provide a SERP to a top executive. The SERP would provide nonelective deferred compensation (no election by executive or deferred compensation agreement) payable in fixed installments over 5 years (at termination of employment, disability, death, etc.) with death benefits paid in the same form and at the same time for the surviving spouse. Sadly, the executive died before the SERP was executed. The client wants to complete and execute the SERP and provide the death benefits to the surviving spouse. I think this is possible (I have put in non-elective SERPs with effective dates retroactive to the first day of the executive's tax year), but have never come across this issue before. I am a bit concerned that Reg. Section 1.409A-1(b) defines a deferral of compensation plan as a plan where the service provider has a legally binding right during a taxable year to compensation that is payable to or on behalf of the service provider in a subsequent taxable year. Technically, the service provider didn't have a legally binding right to the SERP before death, and is no longer a service provider when the SERP is executed. Any thoughts and comments are welcome!!!

Under the Mental Health Parity and Addiction Act of 2008, a group health plan (or insurer) generally cannot impose a financial requirement (e.g., copayment, deductible, or coinsurance) or a quantitative treatment limitation (e.g., number of inpatient days covered) on mental health or substance abuse benefits that is more restrictive than the requirements or limitations that apply to at least 2/3 of medical/surgical benefits in the same classification (e.g., in-patient, emergency care, prescription drugs). Under these rules, mental health and substance abuse benefits should be subject to the same deductible as comparable medical/surgical benefits. I recently have seen health plans drafted by insurance companies (whether it is an insured or self-insured plan) that provide the same deductibles for mental health and substance abuse benefits as for medical/surgical benefits, but treat the deductibles differently for purposes of rollover. For example, the plan provides that costs incurred in the last two months of the plan year for medical/surgical benefits may be applied toward the deductible in the following plan year, but costs incurred for mental health and substance abuse benefits in the last two months of a plan year will NOT be applied to the deductible in the following plan year. This appears to be illegal to me -- certainly it seems to violate spirit of the Act and guidance issued to date, but I haven't seen anything (such as A FAQ) directly on point. Any thoughts?

Before the EEOC enacted Regulation Section 1625.32, the EEOC and courts took the position that an early retirement incentive plan (ERIP) that uses an upper age limit or age-based window for eligibility violated ADEA. For example, in Jankovitz v. Des Moines Indep. Comty Schools, the court found that an ERIP that paid for retiree health insurance premiums only until age 65 was discriminatory on its face for using an age limiting factor (age 65) and was inconsistent with the purposes of ADEA. This case is still good law and is cited by other courts to strike down age limits. However, in 2007 the EEOC issued Regulation Section 1625.32, which provides a broad exemption for employers to offer different retiree health plans for retired participants that are not eligible for Medicare and retired participants that are eligible for Medicare. This rule allows employers to offer carve out and supplemental plans for Medicare that are not as valuable as the plan for retiree that are not eligible for Medicare. What is not clear, is whether the regulation also applies in the context of an ERIP. Can an employer as part of an ERIP offer employees who retired during the window subsidized retiree medical in the non-Medicare eligible retiree health plan without offering a subsidy to employees that retire during the window and will be eligible for the retiree health plan for Medicare eligible employees. As you can see, I have avoided calling the plans the "under age 65 plan" ) and the "age 65 and older plan". I have a call into EEOC but have not heard back. Any thoughts are welcome!

Thank you! That is where I come out logically. However, I haven't ever seen a plan with a modified catch up rule and I couldn't find any guidance (even unofficial) on point.

I have a client who has a nongovernmental Section 457(b) plan. Under the special "last 3-year catch-up" contribution rule for Section 457(b) plans, a particpant in the last three years before the plan's normal retirement age (age 65), the annual deferral amount is increased to the lesser of (i) twice the annual 457(b) limit ($18,000 for 2016 or $36,000) or (ii) the annual limit ($18,00 for 2016) plus amounts allowed in prior years that weren't utilized. My cllient would like to add the special catch up rule, but is concenred that it can't accurately recordkeep deferral amounts over participants' careers. The catch-up rule is permissive; an employer doesn't have to add it to a plan. Is it possible to include a lesser catch up rule? For example, allow particpants to make up amounts that were not utilized only in the 5, 7, or 10-year period prior to normal retirement age (instead of their entire careers). One part of me feels that since it is permissive, you should be able to do something less than the maximum permitted by law. The other part feels that the IRS may not be flexible -- you other adopt the rule as is or not at all. Any thoughts are welcome

My client terminated its cash balance plan effective December 31, 2014 and received a favorable IRS determination letter. The Plan provides that the applicable interest rate and the applicable mortality table under Section 417(e) are used to convert the participant's cash balance account to his or her accrued benefit (annuity) at normal retirment or the determination date. The mortality table is variable. Only 1 insurance company was willing to bid on annuities for the few participants who did not elect lump sums. That insurance company will bid but only if it can used the 417(e) mortality table for 2015. This is odd since the variable mortality table likely will result in lower payouts -- absent a pandemic or nuclear disaster life expectancy will continue to increase. However, they claim they can't administer the variable mortality table. My concerns are: (i) the annuity K must reflect the Plan and (ii) changing the plan mortality table could result in a Section 411(d)(6) violation. I have considered an amendment using the table that produces the greatest benefit, but I am not sure if the insurer will accept this. I am aware of Treas. Reg. Section 1.411(b)(5)-(e)(ii), which will become effective 1/1/2016. Any ideas on how to complete the termination?

Thank you all for your comments. This was a case where an agreement was signed and then legal counsel was contacted to make the agreement happen. The buyer and seller don't want to change the agreement in any way (won't even prepare a statement of how to construe the agreement). Yes, I like to see the agreement specify who will do what with adjustments to the purchase price. Based on preliminary analyses, they may have trouble with rate groups and general testing since some employees have already earned compensation above the 401(a)(17) limit. There are many other issues ..... like agreeing to transfer certain employee benefit plan assets before rather than as of the closing date. A couple of hours on the Agreement could have saved many hours after signing. The preamble to the final regulations stated that Treasury planned to issue guidance on special issues that arise in sales and acquisitions, but that has never happened. I had hoped that had formally or informally approved a contribution based on part-year compensation due to a deal. Cleary there is no intent to discriminate (although I suppose I could conjure up fact patterns where it could lead to a discriminatory result),