GBurns

What sort of information? What sort of statements are you referring to? As far as I have ever seen, Open Enrollment information and SPDs etc usually have such information.

What ERISA benefits? I cannot think of any connection between ERISA and the IRC which is what really governs the taxability of employee health benefits through sections 104, 105, 106, 125 etc etc. More information is needed.

Kristine, I am not clear as to what and why this is all happening. What is your company providing? Why do you have insurance brokers in your office? What sort of office is this? I could not determine if you were an insurance agency, a cafeteria plan TPA or someother sort of service provider. In any case why not ask the insurance companies what they they need and by when? It is the insurnace company that sets the coverage requirements etc not the broker. It is the employer who determines what will be purchased and when they want it to be effective, not the Broker. There are not only the limits on what you can do with a salary reduction agreement that are set by the IRS, but there are limits set by the payroll system felixibility and the employee tolerance. You cannot just abritrarily miss deductions then take them when you feel like.

What was the argument about? Why could it not be a civil rights issue? What happens if it was about dangerous working conditions, wages or customer abuse of employees or a myriad of other issues? In any case, What falls under federal civil rights and who makes that determination?

I assume that you will soon be looking for other employment. I would contact the EEOC and state labor division and see if your facts and circumstances fit any of the requirements of being retaliation. There are actions than can be pursued if what he did was prohibited retaliation or otherwise. Check the EEOC website before you call so that you have some familiarity with the concepts etc. Although you have not been terminated also do a Google search on terms such as "retaliatory firing" "retaliatory termination" and "retaliation employee" etc

What sort of corporate structure (if any) was this "independent contracor" using when the debt was incurred? Was there a business, business name, FEIN etc?

While the OP did state that there was no match, ttott in a follow up posted on September 19 at 6:37 PM "They would get destroyed if all of a sudden 600 people started deferring, there would be potential for 1 million in matching dollars due. " I underlined for you the "destroyed" and "matching dollars" so that you can see where I saw it posted and why my response was worded that way. I was responding to the second post and yes that second post was giving the reasons why they would not do a Safe Harbor and was not addressing the plan in the OP. But that still does not change the possibility that the employer set up the plan this way so that it would fail. And it does not change the fact that the employer was aware of all the possible scenarios before they chose that plan design without a match.

Something is not right with this scenario. When a company decides to set up a 401(k) there are usually some illustrations done forecasting different scenarios. These usually show different participation rates, worst case, pie in the sky etc. and also shows what the employer liability will be for each. These forecasts are used for many different reasons including being used by the broker to hype the possible services etc needed and to justify add-ons etc such as daily val. So the company knew when setting up the plan, how much they might have to contribute as matching amounts each year, even before the plan was installed. How can they now be facing "destruction" if they now get increased participation and now have to contribute the matching funds that they knew up front that they might have to, but did not and instead saved all that money all these years? My bet is that ownership put in the plan under duress then discouraged or undermined the enrollments to drive down participation, so as to save the matching contributions. If this is true, then there is nothing that you will be allowed to do to increase participation until ownership truthfully agrees and makes the commitment.

Shouldn't the document provider be the one to give the cite and support for the position taken? If you look for what you think might fit what you think they might have meant, you run the risk of finding the wrong thing even thought it might look right. But you should still look up Reg Z.

What is the connection that you see between employment taxes and 401(k)?

Aside from any possible IRS or DoL rules, does it not depend on what the Employer Agreement, the PD, the Cafeteria Plan PD, the Employee Handbook and if applicable the CBA says? I also wonder about any state laws related to either health plan enrollment and/or salary deductions. What happens if it is stated that the employee is given time or time off for such matters? What happens if an in person selection of coverage and signing of the SRA is stated? If being done through a section 125 cafeteria plan, How do you plan to make it avaialble for the employees to make a choice and an election? Since the employee's SS is affected, shouldn't the employee be entitled to an explanation of the possible impact ? Even more so if if there is a 401(k) etc involved? If a 401(k) etc is also involved, Is there any provision for explanation of rules, selection of investment etc? How can any of these be handled without meeting with the employees? In any case all the employer agreements that I have seen state that the employer will give adequate access to the employees by the enrollers. In 20 years I have only seen 1 employer who objected to such meetings and that was only for 1 particular voluntary product. Even then the objection came from the subsidiary HR Director and was overridden by Corporate. What is the big deal? The broker probably misspoke regarding "IRS rules" because she never ran into such a situation before.

I am curious as to the "permutations" created by this "complicated ownership structure" that creates 4 separate controlled groups within this corporation, which seems to be more of either a holding company or a equity capital partner of some sort. While anything is possible, I would love to learn more about the creativity behind this structure design. Is it possible to tell us more?

Are you sure that they have a single payor system? I don't see how they could since aside from BCBS (HMSA) and Kaiser about 10% of the market is covered by a number of other carriers.

It is quite easy to use the calculators on the SSA website to plug in the info from the employee's recent Earnings & Benefits Statement and show year by year that there is negligible, if any, impact on their SS Retirement Benefit caused by the section 125 pre-tax salary redction. Info from the Federal study done by the OPM before the Feds put in their 125 Plan is still on the OPM websites, showing the negligible impact, along with explanations and worksheets. From these you could put together some examples, if you do not want to do each employee. What I usually do is do a representative cross-section of the employee population and use as illustrations. The results are explained to a few of the employees then identiication is removed before using. Be sure to include any union stewards or particulary vocal employees. Including them gets the word out even better.

No. You first state that "The insurance company bills the company using one rate for family coverage, regardless of how many children." Then you state that "the total premium due the insurance company may be ... " but show varying amounts. If there is "one rate" How can there also be varying rates?

If there are employee contributions, What would you do with them in the period between the salary reduction and the claims submission? How would you timely pay claims if the money was not set aside prior to claims submission? If you are going to operate in what is essentiallly a "pay as you go manner" Why would you need a VEBA? A primary purpose of a VEBA is to have a secured vehicle holding the funds to ensure that the funds are available when needed. If there are no funds to hold securely, then there is not much use for the VEBA.

Presumption? Where? In any case I do not understand the sentence nor the use of the term relative to your previous post. Can you cite a few or any cases?

You can only get into trouble if you break rules etc that are applicable. What is applicable does not yet seem clear. It is not stated as to whether the employer will be funding this obligation or not, and maybe it does not matter for purposes of the OP. And I wonder what new FASB or GASB proposals could be applicable even if "proposals" have any relevance and even if "proposals" are eventually adopted ? To me, vesting has always meant that the item is irrevocably given/earned by the participant. An agreement to provide lifetime medical that had no forfeiture or termination of benefits clause, certainly seems a vested benefit. It cannot be revoked or taken back.

The "reimbursement agreement" is a separate issue and item from the "plan" and or "plan document" in the cited case. The cited case had 2 issues which is why I even referenced some of the relevant pages. In Section 1 A. Popowski v Parrott the "reimbursement arrangement" was referrred to on page 5 as a "reinforcing reimbursement agreement". But this is irrelevant to this thread anyhow. Section 1 B. BCBS v Carillo which starts on page 6 is the section which deals with the plan document and is the section in which the court refers to "breach of contract" etc in the context of and referring to "plan documents".

I would advise against sending to the Third Party without the knowledge and consent of the COBRA participants.

What is the definition of "contract"? I thought that 1 definition was "an agreement between 2 or more parties". A PD is what the employer (1 party) agrees to give/make available to another party (2nd party). From what I recall, many plan disputes revolve around or include breach of contract issues. How could you have breach of contract if the PD is not regarded as a contract? I will follow what I see in case law, where many courts have referred to the PD as a contract.

You stated that this is a 403(b) client, you did not say that they were or were also a pension plan client and this is a 401(k) Forum. So I have to ask what sort plan are these second charity people enrolled/participating in?

If a plan document is not a contract, How do you reconcile that belief with the many courts that have adjudicated cases based on breach of contract and other contract issues regarding plan documents? Here is a recent example. See pages 10 onwards for the references to the contract namely the plan document: http://caselaw.lp.findlaw.com/data2/circs/11th/0510235p.pdf

Re: Q1: The contribution has to have been made for "contribution is deductible in employer tax year in which it is made or for prior tax yr..." to be applicable. No contribution has been made, hence my questions. You have only repeated the vague generalizations but still have not stated how the contribution is to be treated such as on what year's tax return the deduction should be taken, or even if a deduction can be taken at all. As per the OP the particular years in question are 2004 and 2005 "Can they take the deduction in 2005 even though the allocation is based on 2004 compensation?"

LRDG It is curious that such a condition was not an issue in cases such as Grande v Allison. Nor do I remember it being raised in the many discussions that have taken place in the last 5 years involving FSAs (claims substantiation, use it or lose it, and debit cards in particular), HRAs, MERPs and even the "double dipping" issues.