smm

Q/A 7(B)(5) states that to be reimbursed a medical expense must "...have not been reimbursed or is not reimburseable under any other health care coverage..." Employee incurred a claim and does not want to submit it to her health care insurance company for reimbursement. Maybe they would reimburse it - maybe not....Claim is definitely a medical claim that would otherwise qualify for reimbursement under the FSA. Must the employee submit it to the insurance company first and have it denied in order for the claim to be reimburseable under the FSA??

I agree with you. Therefore, no special timing rule applies and the director is taxed when the distribution is made.

Employees who participate in a NQDCP get the benefit of the "special timing" rule in Code Section 3121. My reading of the rules for non-employees/directors is that they do not get the benefit of the "special timing rule" and Social Security/SECA taxes are due at the time payments are made from the plan, regardless of when services are performed. Does anyone agree/disagree? Thanks.

The preamble to the 457 regulations states that a participant may not elect to have the special 3-year 457 catch up election apply more than once..........unless the participant is covered by the plan of another employer (etc..)... The first paragraph of Section©(3)(i) of the regulations states that the plan ceiling can be raised for one or more of the participant's last 3 taxable years....... It is possible that I overlooked another cite in the regulations, but assuming a participant is otherwise eligible, how many times may the limit be increased? Thanks.

Does anyone have a citation to the case/ruling/etc. that Becky Miller has referred to? If so, could you post it. I tried to find it, but so far, no luck. Thanks for your help!

I agree that it is a hassle, and no one wants to do it. However, my only concern was whether the "payroll" language is sufficient to require that the loan be repaid in full when the terms of the note do not specifically say that the loan is due and payable in full at termination.

Former employee has an outstanding participant loan. Promissory note states that loan shall be repaid via payroll deductions. Loan is silent re. what happens when a participant terminates employment. Loan policy states that repayments must be made by payroll deductions. Loan policy similarly silent re. terminated participants. Plan document states that loans will be made to participants and beneficiaries on a reasonably equivalent basis. Any ideas on whether the plan can/must allow the terminated employee to make repayments, or whether the plan can/must call the loan and demand payment in full, now that participant is no longer employed.

I will try this again. I tried to edit the last thread, and somehow, I closed it. Can an (1) LLC member, a (2) domestic partner, or both, receive benefits from a plain vanilla, non-FSA/125, medical expense reimbursement plan under 105(h). I recognize that the benefits may be taxable, but is the inclusion of such individuals fatal to the availability of the plan to the remaining employees.

Can (1) LLC members, (2) domestic partners, or both receive benefits from a medical expense reimbursement plan under a plain vanilla Section 105(h)?

The lack of federal oversight is not necessarily related to how well a document is written. I have reviewed many ERISA documents that leave a lot to be desired. Good luck!

The July, 2002 edition of the Employee Plans Newsletter states that it will be out by the end of July, 2002. One day to go!

Thank you very much. The cite is 58 FR 25587. Didn't you author one or more parts of the regulations??

I am trying to locate the full text of the Treasury Decision/Announcement (??) that withdrew the old 414(o), et. seq. regulations. Any ideas or cites?? Thanks.

You are smart and that is the result that I would like to achieve. The only question of mine is whether that result can be achieved if they are excluded from the definition of employee in the 401(k) plan. If the answer to that is no, could you permissively aggregate the plan they are in (under which they max out) with the 401(k) plan in order to achieve the desired result?

What if the class is excluded because they all max out under 415©(1) or 415(e) under the other plan. Does that make a difference. (See the regulations 1.401(k)-1(g)(4) - last line.) They could be included in the 401(k) plan as being eligible but defer zero because they are maxing out under another plan. Does this technicality make a difference?

401(k) plans of employer exclude a class of employees who happen to be HCE. Is this class considered "eligible" for purposes of ADP test and hence, given a rate of 0? Would result be different if this class of employees are eligible to participate in another plan of the employer that does not have a CODA feature?

Natalie Choate discusses this question in her outline of the final regulations. The link was listed on benefitslink yesterday afternoon.

The thread, of course, is growing more interesting, so allow me to clarify my original question. If there are 3 beneficiaries of an IRA, we are all in agreement that the IRA can be divided into separate shares so that each share can be distributed over the life expectancy of the respective beneficiary. My original question was whether the same result is possible if a trust is a beneficiary of the IRA, but the trust has 3 beneficiaries, and the terms of the trust state that the assets of the trust, including the IRA, are to be divided into 3 shares immediately on the death of the IRA owner. Assume that the regulations are complied with so that the trust vehicle can be "looked through" to identify the designated beneficiaries. Under the current regulations, separate accounts can be established after the death of the IRA owner (up to 9/30 of the following year). Therefore, logically, the result should be the same, whether or not a trust is involved. However, the sentence in the regulations that I quoted ablove, appears to preclude this. Therefore, perhaps the solution is to set up 3 separate trusts, unless someone believes that it could be done.

Thank you for the reference to PLR 199903050. It does contain the quote that has been incorporated in the final regulations. However, although the quote made sence under the 1987 regulations, the rationale does not continue to apply anymore under the final regulations, which allow you to set up seperate accounts after the date of death. The regulations are quite clear and perhaps the solution is to use separate trusts if there is a great disparity in the life expectancy.

One clarification on my post. The trust I am referring to is divided into separate share and is not a sprinkling trust. Therefore, the 3 beneficiaries each have a 1/3 share of the trust.

I'm looking at the final 401(a)(9) regulations for the first time and am puzzled about a sentence that was not in the proposed regulations (or if it is, I missed it). Q/A 5© of (a)(9)-4 states that "the separate account rules under A-2....are not available to beneficiaries of a trust with respect to the trust's interest in the employee's benefit." Does this mean that if there are 3 individual beneficiaries of a trust, and assuming that the requirements re. the trust are met so that they are deemed to be the designated beneficiaries for (a)(9) purposes, separate accounts cannot be set up for their distributions post death of the employee? What is the rationale for this. If there was no trust, then separate accounts could be established following the death of the employee (unless again, I am reading this incorrectly), and distributions from the separate accounts could be made to the 3 individuals based on their own life expectance? Thanks for your thoughts.

Any thoughts on this thread in light of the new regulations?

Thanks for the quick response. I thought that was the answer, but wasn't thinking about the present value - I was thinking about the entire amount, but, you are correct. Assuming the non-compete clause works, presumably, if it applies to the entire period of installments, then the entire amount would be taxable when paid. Any thoughts on what type of "risk" would apply during the period of installment payouts. I don't like the idea of "consulting" (neither does the IRS in the Section 83 regulations). Thanks again.

Employer has an ineligible 457 plan for an employee. Plan provides for installment payments (monthly for 60 months)following termination of employment for any reason at any age. Plan has a no-compete clause (assume for argument sakes that this works) that runs for 36 months. No other risk of forfeiture clause following that. Is employee taxed on the balance (remaining 24 months) at the end of the 36 months? Thanks.

Plan previously stated that the RBD was 4/1 following the year in which the participant attains age 70 and 1/2 for all participants. Plan was amended in 2001 to provide that for participants who attain age 70 and 1/2 as of the beginning of the 2002 plan year, for non-5% owners, RBD is the later of 70 and 1/2 or retirement. The amendment complies with the Q/A 10 of 411(d)(6) regulations. Question: Some participants are in pay status and are still employed. Must those participants continue to receive distributions? Must they be given the option to stop distributions? Can distributions be stopped without their consent? Thanks.