Alf

Can't transportation costs in theory be reimbursed if they are inextricably linked to obtaining care? I have always thought of transportation as being like postage and sales tax in some cases where it is necessary to get the medicine or medical care. Am I way off or what?

Conservative approach if they are NHCEs is to give them the highest return of available funds. We generally have seen a weighted average of all funds used because every plan has at least one super-performing fund each quarter. QUESTION: What if you have a safeharbor plan and don't run ADP tests. Can you just use actual ADP for the NHCE or HCE group?

If the plan came over, does it really matter whether it was a stock or asset deal? My understanding of the informal IRS position is that the comp from the target counts if the plan comes over. I don't think there is any authoritative answer either way on this question, though.

I am trying to figure out if an employer can pay the employee directly for individual insurance (or insurance the employee gets through a spouse's group health plan) without it being taxable compensation. I tried several searches and came up with a lot about using a cafeteria plan of one employer to pay premiums to another employer, but my question does not involve a cafeteria plan. Does the taxation depend on whether the husband gets a check made out to him or whether his employer pays the insurance company directly? Thank you in advance for any help you can provide.

One of the safeharbor conditions for hardship is that they have exhaused all taxable distributions from qualified plans. Usually, terminated people are eligible for full distributions, so they are frequently not eligible for hardships.

If they really are temp employees (not worksite employee or employees of the clients) they are your employees for testing purposes. You can offer retirement benefits to any employees you want, subject to the eligibility and nondiscrimination rules of the IRC. You missed the boat for 2003. I think that even a SEP has to be in place by year end, but I am sure others will know for sure.

Both corporations are treated as a single employer. Also, it is illegal for a company to provide benefits under a 401(k) plan to individuals who are not employees of the sponsoring employer (in substance, not just form).

Direct payment of third party expenses out of the plan is usually easy. Reimbursement of the plan sponsor for costs it incurs and for expenses it has paid to others is sometimes the toughie.

I always understood that there is an "informal" exception that allows one to skip the loan requirement where it would not be enough to satisfy the hardship. Does anyone know if that is too aggressive a position or is it actually based on a ruling or ASPA comment?

Look at the RBD definition in the plan. Employers are allowed to delay distributions to non-owners until they retire, but the change is technically optional. Also, the effective date is optional. If it is a prototype plan, I believe that the amendment may not have been made in some cases, but it probably has been. Be sure to check all amendments because this change may have been done as a supplement or amendment and may not be in the main document itself.

Another way to skin this cat is to verify whether the plan actually matches catch up contributions. It really depends on how the plan was written with catch ups were added, but I will go out on a limb and say that most employers do not (intend at least) to match catch ups.

Are you questioning the distribution timing/valuation? The plan should be very specific on this point and you should confirm which approach to the valuation is correct. To do otherwise, you should amend the plan and that would change how everyone else is treated. If this son is an NHCE, the amendment may be ok. If you can't there with the document, the fiduciaries have to ask for the funds back and notify the custodian of any IRA that received a rollover I believe.

Other than old 5500s that had the question about whether a det letter has been issued, I don't know of any informal method. Of course the IRS has all of the records in theory, but I have never been brave enough to ask them in a situation like yours where you do not want to alert the government that something may be off. Is it really very likely that a det letter application was filed for a plan with 0 or 1 participant? It sounds like a long shot. I know you know this already, but I would assume that you have everything that exists.

Not having det letters is not going to be the problem, it is the prior documentation. Do not file a det letter application without being able to prove up prior law amendments. The IRS will send you into Audit-CAP and you will lose the favorable fee schedule for a voluntary submission. You should run your voluntary DFVC and EPCRS non-amender appliactions and file the 5310 as part of that process.

I assume that all of you are talking <$5,000 distributions or does that even matter? Just to stir things up a bit more, aren't there literally criminal penalties for knowingly filing incorrect withholding forms?

Offset is just paying the loan off early. It is the last bite at the apple, so all accrued interest, fees, and expenses have to be included.

The existing plan/new plan distinction is only important for the 12 month requirement, not the notice requirement.

Does anyone know how are split-dollar insurance plans for tax-exempts treated? Do the 457(f) rules control?

Are health FSAs subject to the group health plan rules (urgent care, etc.) in the claims procedures regulations? Does all of that detail need to be in our SPD?

There is no statutory limit on contributions to health FSAs.

Nope. $12,000 per year total.

Search this board and you should find several very involved threads about this topic. They are US citizens so, as I recall, they are included in the ADP test unless they can be split off in a qslob.

You can have limited reliance on prototype sponsor's letter if you just go to an nonstandardized plan. Everything else can be the same except the affilitate adoption. If you go individualized plan on 1/04, you don't have to file for a determination letter application until 3/15/05 for a calendar year plan and I expect the determination letter application process to be completely different then if you believe the proposals that the IRS is tossing around.

I read the question as relating to 2004. Is everyone correct, then?? 2005 is too easy since there were no HCEs in 2004. Mike is correct for 2004, which has to be what the question is about. No 2004 HCE's but nondiscrimination testing looks at NHCE info for 2003 (last year there were NHCEs) and the HCEs will be limited unless current year method is elected.

The DOL wants us to consider it in setting the interest rate. It is a secured loan, so no lender would deny a loan to a bum, but they would jack up the interest rates, which I think the administrator has to do under the literal DOL regs. Also, note that the December final regulations require additional collateral for future loans for someone who has defaulted on past loans, which sounds correct to me.