GBurns

Have you looked at the Homepage? Both the right and left side of the page are devoted to Benefits related jobs etc.

It is not the policy that is covered, it is the employer plan under which the coverage is provided that determines ERISA coverage. Life, disability and health etc are provided under the "catch all" category of Welfare Plans. They are not themselves separate categories. It can be confusing and curious at first, and definitely difficult to explain some aspects, so my best advice is to Google a term such as "ERISA welfare coverage" and read some of what has been written over the years.

What sort of claim do you mean?

When you are using the screen, see what happens when you make an election then press either the "up arrow" or the "down arrow" to navigate the form. I have seen many screens where using the arrows instead of "Tab" or mouse scroll, moves the selection. I have also seen the election change with the "mouse scroll".

Unfortunately, their website does not give much information. There also seems to be some question as to who, or what, is Benesmart. If they are recharacterizing rank and file employees as 1099 employees or randomly including the shareholder as an eligible employee, they should shortly get a rude awakening from the IRS and Dept of Justice. But whatever it is that they are doing is not very clear. There is a proper way that is applicable to some situations, but it requires spousal employment in most cases or does not involve employee pre-taxing in others. There is no catch-all that fits all theses scenarios nor the 2 categories that they are promoting. The best sales explanation is probably this one : tasconline If you Google "agriplan" and "bizplan" you should find links to many of the cases that the IRS used to try and clean up this issue years ago. Tasc is probably the lone survivor of that debacle and seems to be able to keep a tight rein on its compliance. Also take note of Rev Ruling 71-588 and PLR 9409006 which seems to be their basic guidance. I would also take guidance from the actual court cases. Note that the guidance and the majority of the court cases require eligible spousal employment NOT rank and file employees and mainly in a SOLE PROPRIETORSHIP. They also do not address pre-tax employee contributions. Extending the treatment to other forms of corporate entities is a whole nother issue, which is probably why they use such cautious wording and different criteria for S, C and LLCs. NOTE: They do not seem to use employee contributions pre-taxed or otherwise, for funding. There is not even a passing reference to section 125. There is no payroll recalculation involved. There is no advancing of money in any form. It should be interesting to see what happens if a client or prospective client called Harry Beker's office at the IRS with some details and asked. The last telephone number that I had was 202 622-6080.

Can you provide more info, such as a link to their website or a copy of a brochure etc? I cannot believe that they are offering what you are explaining, but have to think that you misheard or probably the person explaining it to you misunderstood. See Revenue Rulings 2002-80 and 2002-3 in the meantime. See also www.justice.gov/tax/prtax/txdv06842.htm

What rules apply to this particular "executive bonus plan"? If it is not a qualified plan then the rules for qualified plans should not apply.

You say "may". Under what conditions and What says? The employee amount is not elected by the employee, it is part of their wage payment.

QDRO I think that you are missing the fact that in the scenario posted, which is standard for a Benefits Credit plan design, the employer does contribute payroll by payroll. If there were no payroll by payroll contributions, then there could not be an accumulation of the unused funds to create the forfeiture/reversion issue. A separate fund is not in common usage, only a separate bank account, usually accessible by the FSA Claims Administrator. That account consists of the FSA contributions, which in this case, are the employer's periodic contributions. The contributions are made each period so as to have funds available to pay any claims submitted. morris, Yes. It has been distributed/disbursed. It has been paid out. It is gone. Is that any different treatment than that given things like the employer's 401(k) match? Does the match revert to the employer if the employee leaves employment and leaves his/her account behind?

According to the OP, no benefits were paid, hence the unused employee account balance. A distinction has to be made between the employer contributions (which were, of course, from general assets) and benefits paid (which would be claims/expenses reimbursed). If the Uniform Coverage requirement is to be met, then each contribution (each payroll) made by the employer is irrevocably made to the employee's FSA account, creating the use it or lose it condition. If the employer contribution was not irrevocable then there would be no risk and no use it or lose it.

I doubt that there is any way to stop the increase in vested % or to relate it to the restoration of the distributed amount. That is what I see as the problem.

I understand this thread being a source of mirth but because of two recent cases that I saw, I realize that it is a serious matter that seems to be increasing in frequency. I am now retired because of disability but I do make contact with a few agents once in a while. I also apparently on quite a number of mailing and contact lists and as a result get newsletters and recruiting calls. In the last few months I have received 4 or 54 calls asking me if I would do a seminar or a presentation to groups of prospects. The topic was usually regarding investments in this financial crisis, however, the vehicles seem to be CDs and selected life insurance policies. All the calls were from fairly large specialized insurance brokerages/agencies. Specialized in retirement and estate planning and affiliated with a Broker/Dealer. I did not think much of it and thought that it was just a cyclical spurt. But then I had 2 calls in mid-November from individuals which made me come to the conclusion that there was significant increase in marketing activity in this area. Both callers had been approached with the idea of protecting their assets and increasing their investment returns. The first involved 401(k) funds with a person residing in Virginia and the second involved 403(b) funds in Florida. Both had been approached by agents from the same large big name insurance company. Both insinuated that their choice of insurance product was the best way to protect the client's assets. The first case quoted a Variable Annuity and a Whole Life product. The second quoted only the same Whole Life product. There was no definite statement saying that either was an investment, but that is a logical insinuation since the target was the already invested funds which were to be transfered to a better investment vehicle. Otherwise there would have been no point to the sales approach. Both Whole Life illustrations showed a large lumps sum contribution to a accumulation Rider whose catchy acronym I cannot recall. Both prospects wondered if these were good investments. They regarded the issue as an investment issue because they had no need for, nor was there any discussion of, death benefit. So the OP seems to be 1 more in what might be a developing trend, of offering a life insurance product to someone looking for an investment vehicle, in such a way that the prospect thinks that it is an investment.

Are you sure that a private letter ruling is what you really need? What is so different from established plan designs that suggests a need for such a ruling?

It would help if we knew what your thoughts were. Why life insurance? Why move from wherever it is now? Why did you post this under 401(k)?

I have seen a few cases where there was prosecution after co-operation. The thinking was that the cooperation was only because they were caught and that there was still a crime committed. If you thumb through the EBSA News Releases you should easily find a few cases.

I think that the OP would be better understood if actual $ figures were used. For example, if the employer contributes $50 per month for a total of $600 for the year and no claims are made, leaving an account balance of $600, Would the $600 which are now forfeited funds, become plan assets or would they revert to the employer's general assets? IMO, the forfeiture becomes plan assets which must be used for the benefit of the plan participants. The forfeitures cannot revert to the employer. This is why I prefer a fund as needed HRA.

There probably are some details that were left out. Will all employees be covered? Will all employees have similar coverage? Will eligibility be the same for all?

Dougsbpc I am curious as to what you see as being discriminatory? Are you, by any chance, thinking that whole life is somehow better than or superior to term in this situation?

Did you have him cite you anything that supports his position ? Did this other TPA firm explain what they do? Is there a difference compared to what you do?

Was it really a partnership ? It continued after the "partner" left. I think this needs clarification.

Wouldn't that mean that each time it is bumped up, those people on the Board subcription list would get an email?

It turns out that the hospital policies are treated differently than the other supplemental plans and it also depends on the riders. Note Policies G and H in the PLR issued to Allstate: http://www.irs.gov/pub/irs-wd/0704010.pdf http://www.irs.gov/pub/irs-wd/0704010.pdf

I have been told that there is no relationship between most supplemental plans such as those sold by Aflac and AllState etc. and HSAs or FSAs. The main reason being that the supplemental plans pay benefits under section 104 based on personal and physical injuries or illnesses. They do not reimburse medical expenses. I think that Allstate secured a Private Letter Ruling from the IRS regarding this or a related issue.

There has been no mention of a contract by the OP. All that is known is that the employer wants to make the change.

If these were potential employees and this was part of the job offer, I would agree, but, these are current employees who are already under agreed conditions. I would think that a condition of employment is ... This is how it will be done IF you take the job. To make the change afterwards is a change of conditions. To make the change afterwards and make it mandatory with no choice is different but still a change of conditions. To make the change afterwards and make it mandatory with the threat of termination is a whole different ball game.