Christine Roberts

The annual notice of reconstructive surgery rights under the Womens' Health and Cancer Rights Act may be transmitted in the same fashion as the SPD - does that mean that electronic transmittal is permissible, so long as it meets the SPD e-transmission requirements?

General rule for salary deferral to 457(B) is deferral election must be in place before compensation is earned (unless its a new plan or new participant). What about a 457(B) funded with an employer contribution only? Can an employer decide to bonus an executive on December 31, 2002, and have the bonus be contributed in its entirety to the 457(B) plan? In such an instance, wouldn't the organization have until December 31, 2002 to adopt the plan document?

Has a model notice been circulated (whether by the IRS, or privately) that contains the additional explanatory material the proposed regulation requires?

Thanks to you both. I saw the thread Pax cited; I think the second thread is closer to the inquiry I was making. Pax you are right, the existence of withdrawal or surrender charges should definitely be factored in in a fiduciary's initial decision to choose an investment provider.

Has anyone looked into the fiduciary aspects or consequences of electing to pay withdrawal or exit fees to move plan assets?

Thanks, Papogi - would your response be the same if the employee's new FSA election for the remainder of the year amounts to less than what the employer paid out previously in the same plan year? I am guessing the universal availability rule dictates an affirmative response but would appreciate your input.

Cafeteria plan sponsor has an employee who elected dependent care and medical care FSA in January 2002. In May the employee went from a benefit eligible position to a non benefit eligible position which stopped the FSA deductions. The employee returned to a benefit eligible position in September. This employee had originally pledged $5000 for dependent care and $1000 for health care. When the employee was reinstated into the health plan the pledged amounts were lowered on both accounts. As I understand it, the return to benefit eligible status is a change in status that permits new elections under the FSA. Am I missing something?

Apparently the discrimination issue I raised is discussed here: http://benefitslink.com/boards/index.php?showtopic=14662.

These rules are very complex and I am wondering who is advising self-insured plans, hospitals, and the like on compliance. Is it the "turnkey" HIPAA compliance consultants? Attorneys? Information systems experts? Just wondering.....

Kirk, in fact the stock will be held in the participants' individually directed accounts so you are right, the fiduciary prudence issue goes away. However I am wondering, does this raise issues as to discrimination in benefits, rights and features under the plan? None of the other participants will have the opportunity to invest in company stock under the plan, only the two owners (2/3 of the HCEs under the plan). Of course, the stock is not a particularly good investment, but I don't think that eliminates the possible discrimination issue.

These are all good questions. There is no question in my mind that, even if the transaction is technically possible, i.e., not a prohibited transaction per se, it raises serious issues from the perspective of fiduciary prudence.

Last fall some of you participated in an interesting discussion re: a plan purchasing privately held stock from a plan participant/company shareholder. See link: http://benefitslink.com/boards/index.php?showtopic=16557 My question is, would you reach the same conclusion (i.e., transaction is permissible provided independent valuation of stock is performed), if the shareholders want to use the stock to pay off participant loans? Shareholders are S-corp shareholders and loans are post-EGTRRA.

Notice 2002-45 is clear in saying that HRAs can't be used to reimburse expenses for qualified long-term care services, but can it be used to reimburse employees for premiums for long-term care insurance?

I believe HIPAA applies to "group health plans" which is not the same definition as welfare plans under ERISA. That said, the California law is really only family leave, not medical leave (I think I conflated the two in my original post - my apologies), so the employee's own PHI should not be at issue. I also believe HIPAA has an exemption for records that are part of an employee's personnel file. This is not a strictly defined term, however. But practitioners are interpreting it to allow employers to continue to process requests for medical leaves of absence.

Hi, Kip - since the benefit is a function of payroll tax withholding, the answer is "yes," I believe, if the non-California employer is making other California payroll tax witholding for the employee. Please note that the employer does not have to allow or offer any leave of absence at all if the employer is not subject to the provisions of the federal Family and Medical Leave Act ("FLMA") 50 or more employees in a 75 mile radius are subject to these laws. As a practical matter employers will likely be reluctant to refuse a leave of absence request to an employee with a sick child or other family member, but if they are not subject to FMLA/CFRA, they simply don't have to either permit the leave, or keep the job open if they allow the leave to take place. I've drafted a short memo on the paid leave law and hopefully Dave Baker will post it on the newsletter.

Seeking "yeas" or "nays" on the following: California recently enacted SB 1661, which mandates up to 6 weeks of paid leave (subsidized by employee payroll taxes paid to the state disability fund) in order for an employee to recover from a non-work related illness or injury, or in order to care for a sick family member, or bond with a new born or newly adopted child. Some opponents to SB 1661 have argued that ERISA preempts California’s paid leave law. ERISA's definition of “welfare plans” does indeed include plans providing benefits in the event of sickness, accident, disability, death or unemployment. However, ERISA excludes “payroll practices” from the definition of “benefit plan.” Usually this refers to “benefits” such as overtime pay, shift premiums, holiday premiums, and the like. Arguably, the family leave benefit, though funded through payroll deductions, does operate more like a “welfare plan” under ERISA, because it involves more administrative functions, such as a determination of who is eligible for paid leave, than the other types of plan. To illustrate, an employer can tell an employee is entitled to receive overtime pay if it can document that the employee’s work hours exceeded eight in one workday, or 40 in one workweek. However, an employer cannot be sure if an employee is eligible for paid family care leave unless the employer knows (a) that the iemployee or the family member has a “serious health condition” as defined by the law; (B) in the case of family care, that the sick individual is a “family member” as defined by the law; © that no other member of the employee’s family is available to care for the sick family member; and (d) that the employee is not receiving any unemployment or disability benefits. Whether or not California's Employment Development Dept. shoulders some of these administrative tasks, an employer could make a good argument that the paid leave program is more than a mere “payroll practice” for purposes of ERISA preemption. What do you think?

The link to the unofficial transcript of the hearings on the 457 regulation is available to Lexis/Nexis subscribers at: http://www.lexis.com/research/retrieve/fra...6490e9255889f5f

Thanks, this helps quite a bit. Any comments on the FASB issue? Or is the duty to track retirement health benefits as a liability for balance sheet purposes only in effect when such benefits are offered to a large class of employees.

RTK, thanks for the response, but I am not sure I understand the distinction you draw. Sec. 105(h) refers to reimbursement of medical expenses, and medical expenses do not include premiums for any type of health/medical insurance. Are you viewing provision of self-insured care as expense reimbursement? Please excuse my dense-ness.

Presume a top hat nonqualified deferred compensation plan that contains language entitling a participant to receive group or individual health insurance at the Company’s expense for the remainder of the participant’s life following retirement or disability, and extends this benefit to the participant’s surviving spouse for her lifetime if the participant dies after becoming eligible for full retirement. Does this present a discrimination problem under IRC Sec. 105(h)? And does it trigger the FASB standards applicable to retiree medical expenses? Any comments appreciated.

Have there been further developments on the interaction of Sec. 83 and Sec. 457(f), now that the public hearing on the new regs has taken place (was scheduled for Aug. 28, 2002)? My understanding was that the 457(f) reg, if finalized, would prevent nonprofit employers from using options on mutual funds and other property to compensate executives. Any comments appreciated.

Have there been further developments on the interaction of Sec. 83 and Sec. 457(f), now that the public hearing on the new regs has taken place (was scheduled for Aug. 28, 2002)? My understanding was that the 457(f) reg, if finalized, would prevent nonprofit employers from using options on mutual funds and other property to compensate executives. Any comments appreciated.

Thanks for the update. Are the documents available from these providers (or you) on a self-standing basis, or only if attached to investment or other services?

Are there any examples out there yet?

PSP with pooled assets converts to 401(k); all assets liquidated and reinvested per participant direction, with one exception -- promissory note/deed of trust in name of plan. Investment provider/TPA for 401(k) plan recommends that note be allocated (and reissued in name of) 401(k) account for one of the owners of the plan sponsor. Five years of repayments remain on the note. Is this kosher? Can the note not be held in a suspense account? Seeking any comments.