GBurns

Since there does not seem to be any paternity litigation, the only source for verification of "visitation right's" would be from the father. In any case, Since when is "visitation" a condition for being a dependent? A child support order would only be derived from a dispute over support. If he has accepted responsibility and has been meeting any criteria set by the child's mother there would be no dispute or litigation, hence no child support order should be forthcoming. You expect him to adopt his own child?? How? The only thing that you will most likely ever get is the child's birth certificate. If this shows this employee as the father, then he is the father and the child could be a dependent. What definition of dependent does your plan use? Will he be getting a Custodial Release or Joint Custody form (I cannot recall the IRS Form#) from the mother so that he can claim the child as a dependent on his tax return?

I think that you are probably looking for Title 29 United States Code which covers the Department of Labor, which is more commonly referred to as 29USC. Here is a link: http://www.access.gpo.gov/uscode/uscmain.html Please note that it might not be up to date especially with the new Fair Standards regarding overtime pay etc. in Chapter 8. Also as a general rule the Dept Regulations and Written Determinations such as Advisory Opinions are usually of more value. Do a Google search for "29CFR" and for "Fair Pay". Also visit www.ahipubs.com for useful explanations and reports which can be found in the Sidebar on the left of the page and visit the DoL website.

The payment of premiums on a pre-tax basis for the medical is part of your Cafeteria Plan, the medical insurance coverage is not. If this employee wants to pay after tax as you posted, it therefore has nothing to do with the Cafeteria Plan. However, as JerseyGirl pointed out, getting medical coverage depends on the insurance company and policy terms, not on your Cafeteria Plan.

I would try the larger Plan "providers", Manulife, Principal, ADP, Fidelity, Vanguard etc.

JDuns, Thanks for the post, but I have a question re (3). This employer did not previously know that the SS# was not the employee's. All previous reporting was done under that SS#. Since the employer did not know that the SS# did not belong to that employee, according to your post, the employer would face no exposure to any liability. However, now that the employer knows, any future use would cause exposure. Therein, lies the problem, How do you report so as to maintain the connection between previous reporting and this "close out" ? Can you give a cite for the correction outlined in (2)? Amend which filing?

From the post, it seems that the Fund and the MERP are a single account. Why? AshleyL seems to have read it the same way, hence the suggestion of "providing for this flexibility in the plan document and SPD" and mention of plan assets and flexibility etc. It serves no purpose, but creates many problems if they are one and the same. It is more pragmatic to have a Reserve Fund separate and apart from the MERP, but from which funds are drawn to reimburse the medical expenses, under the MERP, as they are submitted. The MERP is unfunded at all times, but money is available as needed. If it runs out so does the MERP. If it has a surplus, there are no reversion or inurement considerations or other problems. This is no different from a Slush Fund, a Research & Development Fund, a Building Fund or a Retained Earnings Fund. Fund being synonymous to Account.

That depends on what is meant by "advisor". If "advisor" means legal advisor, that is much different than a plan "advisor". I doubt that any plan advisor would be, could be or might ever be in a position in which he/she would tell any employer to "adopt a plan that pays benefits funded by the employer to illegal aliens " and it would be a foolish advisor "who recommends that the employer amend the plan to deny payment of benefits to illegal aliens". While plan advisors might advise on eligibility and classifications etc, the subject of who is or is not employable, whether because of immigration status or otherwise, is not within the scope of advising about plans. Employment decisions are not related or relevant to plan decisions. As for asking for "IRS approval of a retroactive amendment" because " the employer never intended to employ illegal aliens since it is against the law". What does immigration law have to do with the IRS? What does illegal immigration status have to do with the contributions made and the vesting of benefits?

mbozek What is the rationale for "unvesting" this former employee/plan participant? His entitlement to employer contributions was based on plan participation and legth of participation. These in turn are based on the providing of services to the employer, participating in the employer's plan (and probably benefitting the HCE and employer), and was vested in return for long loyal service. None of these items have anything to do with the SS#. Now, although the employee is known and can be identified, which your last post shows that you concede, you want to "unvest" this employee. Also this person was never an illegal employee, they were an illegal alien (and even that might not be true).

You misunderstood my post. Employees through a PEO are usually the client organization's "former" employees who are now "reclassified". The "former" employees are usually FTE and not PTE. Organizations that provide Temporary employees are Temporary Staffing agencies not PEOs. The question is really, how come you have PTEs through a PEO? Is it really a PEO or is it a Temporary Staffing service? If these are PTEs through a Temporary Staffing service, they are not leased employees initially.

AndyH, I do not recall any immediate annuity having a surrender charge. Immediate annuities do not have to come from insurance companies so there is no reason to limit anyone to "a top rated insurer". As for 1% commission: Aside from Vanguard, T. Rowe Price, Fidelity which you might say are funds not insurers there are highly, if not highest) rated insurers such as TIAA-CREF, Prudential, ING, Berkshire Hathaway (http://www.biltd.com/products/SPIA.pdf), USAA, GE and you can find many others through www.annuitynet.com The link below is to what one national insurance brokerage offers, however, these are among the higher commission products, which is why they are available through these insurance brokerage houses. That distribution channel needs high commissions in order to operate. The lower commissions are usually from the highest rated companies who do not participate in the large scale brokerage house distribution channel and are therefore not on this list: http://www.biltd.com/products/SPIA.pdf

I thought that employers employed persons not SS#s. I also though that plan participants were eligible employees and not eligible SS#s. SS#s are identifiers used for reporting. The main reason for using SS#s was because sorting, matching and merging by alphabet (name) was very slow on early mainframe computers and keying in names was slower than keying in numbers. Keying in was data entry via punch cards and sorting was by multi function card readers using multiple passes. Increased accuracy caused by the use of SS#s was never a consideration partially because a SS# is supposed to be unique to each person etc. In any case, services as an employee was provided by a known person. Participation was granted to a known person. Contributions (salary deductions) were accepted from a known person. Why all of a sudden this person is not known? From the post I suspect that the real reason behind this is really just to find a way to confiscate (reclaim) the employer's contributions and if possible also the employee's deferrals. The original post stated "they actually don't want to give the money to him". They could identify him before, why not now? The reporting to the IRS has nothing to do with paying the money to him. The check bears the name of the participant not his alleged SS#. Reporting to the IRS would be done to the same SS# that previous reporting was done, there is no other SS# involved.

Here is a good recent discussion: http://benefitslink.com/boards/index.php?showtopic=25584 However, my experience is that COBRA notices are quite often deficient in that they very often omit reference to, or inclusion of, the FSA. Which means that the employer might be out on a limb if the employee gets savvy to what could have been.

The cost of individual policies would be very much higher and all employees could be subject to full medical underwriting. So you would have to do quite a bit of shopping around to find a Guaranteed Issue provider of small face amount term policies. Maybe you should find out why you only had less than 10 enrollees. It might be cheaper to subsidize the premiums in order to get up to or over 10, if that is the GI criteria. If however, the less than 10 is because you do not have more than 10 employees, you should change insurance companies. You should also change your Broker/Agent, this is a simple problem that he should have handled in 1 day. Guarantee Life, Boston Mutual and Transamerica might be alternatives woth looking into.

With whom does the fiduciary duty rest, the Benefits Manager, the Plan Sponsor or the Plan Sponsor's agent (the TPA)? Who is the Plan Sponsor, the Benefits Manager or the Employer? Who is the Employer, the Benefits Manager or the "Boss"? It does not matter what the Benefits Manager feels or wants, it matters only what the "Boss" wants? He pays any penalties for wanting something illegal or improper, not the Benefits Manager. The only the thing that the Benefits Manager can do, other than to follow orders, is to give guidance to the Boss. It is the Boss's decision whether or not to accept the guidance.

I cannot think of a reason why a sole proprietor, a more than 2% S Corp shareholder, a partner in a LP or LLC etc, or the sole shareholder/employee of S Corp, would need an FSA even if they could be eligible to participate in an FSA, which is most unlikely anyhow. Why does this person think that an FSA is necessary? Why is this person eligible to participate in an FSA?

What you have described is what I have always seen as standard practice, whether for 403(b), 401(k) or even IRAs. The account holder (participant) gets a bill with a deadline to remit payment out-of-pocket, which if not met leads to a deduction from the account.

I thought that employees leased through a PEO were always FTE, whereas PTE were provided by Temporary Staffing firms.

What happens if this employee elects COBRA? Did they get a COBRA notice which included the FSA?

Who is charging and for what?

banality, A Benefits Manager is only an employee. Employees follow orders given by the bosses. Employees look after the interests of the bosses who employ them not those of the co-workers who work alongside them temporarily. Usually anyone who places the interests of employees before the interests of the employer, does not last very long in their position.

Why would this individual have coverage under 2 different HDHPs? Unless both employers provide free coverage, it seems that this employee might be paying for coverage that will not pay any benefits. Of course it might be that individual coverage from the first employer might be mandatory and free but dependent coverage is cheaper under the spouse's plan but where children coverage is not an option. In any case, the employee even if covered under 2 plans is still covered only by HDHPs and should be eligible for an HSA.

Doesn't your 403(b) consist of individually owned investment accounts or annuity policies? If so, shouldn't individuals pay for that which individuals own and control?

Where have you seen 8 1/2% commission on an immediate annuity? Even if you saw 8 1/2%, why would you not feel free to choose 1 with 1%? Re Item 4: In any comparison or evaluation all aspects should be considered. So as long as there is a possibility of an item it should be included. Taxes included. Do you know if the rate of taxes will be the same for each item? How would we know that if we had excluded it from consideration?

Here are a few key questions: Will the employees be changing or filling out a new Salary Reduction agreement? If yes, Why? What will they be reducing (deducting) from their salary? If no, How is this a change in FSA election? Have you yet looked at what the large employers in your area who have a Benefits Credit cafeteria plan do and how they handle this?

A cafeteria plan is not the health insurance plan nor any other benefit. A cafeteria plan is only relevant where there is an employee contribution. Since, at this time, there are only employee/owners who will be covered, the need for an employee contribution would serve no purpose, therefore no need for a cafeteria plan. Why do you think that a cafeteria plan is needed?