Greg Judd

Hi, In my experience, companies that treat benefits eligibility separately from employment are the most successful. In other words, as long as a person satisfies the plan's definition of disability, the person may be entitled to a disability benefit (short or long term) irrespective of their employment status. Said another way, a disabled employee may be terminated well before their disabling condition is resolved, without loss of their disability benefits entitlement. The conditions under which employers can & do terminate disabled employees varies based on firm size, situs, and applicable state/federal statutes, but disablement is not a job-entitling condition.

As I understand it, negative elections are shaping up as prime potential ERISA pre-emption battleground, since the payroll deduction is traditional state turf, & 401(k) is obviously federal ground. Federal encouragement doesn't necessarily mean the states will love it--especially if(when) we get a good market downdraft. Regardless any precautions plans may take re: investment of automatically deducted contributions, negative elections can easily be cast in shadow when markets are off. Trucker Huss prepared a nice brief on this issue last summer, the URL for which was posted at Benefits Link (of course). That article does delve into the pre-emption issue. The current link doesn't quite get you there, but this one may: http://www.truckerhuss.com/0798news.html

Good exchange going here on a perennially important issue in benefit communications. The "mix SPD/plan document(s)?" debate is practically as old as ERISA. Combining the 2 eases management of communications logistics (and communications budgets), and at least in theory reduces employee confusion about what info they have vs what they're entitled to from the sponsor. At the same time, laying 'officially required' info next to generally more plan-friendly plan document content can create 'marketing' issues (cognitive dissonance, I believe the social scientists called it once). Statutory language re: SPDs and other required communications, intended as is all law to act as a guide wire rather than an all-encompassing pipe, is not definitive here--and for once I believe that's not an oversight on legislators' part. I lean towards combining the two, and 'transitioning' by simply labelling the section where the required stuff goes as "required stuff" (insert preferred heading here), with perhaps an explanation that the plan document expands on how the plan operates day-to-day.

Gayle, I believe Kip's nailed this one. It's a good question to post, because more than a few firms have traced this path over the past 3-4 years--and may soon re-trace it, as the managed care firms' mania to buy market share by swallowing costs has left many gasping for financial air.

wow! Here's one hot off the press on this topic-& it's an exclusive to the redoubtable Benefits Link: www.benefitslink.com/articles/419.shtml

Hi, This is a terrific exchange on an issue that can be tricky to unravel. Here's a summary to this point from an interested onlooker; a)the match matches only what 'should' be contributed. So, if matched contributions must be refunded, the match amount needs to be retracted also (the philosophical issue of what's just re: earnings on the match is a matter for another day....) b) an 'OK' match on funds that are subsequently withdrawn should stay in the plan. c) basically, antidiscrimination tests are an attempt to confirm that a plan's administration for a plan year [i/]as a whole [/i] has been OK. So, if in the course of testing after a plan year's last calendar day has passed, it's discovered that refunds are necessary, you need to unwind the events that required the refund. No one should get to keep, within a tax-qualified plan, any $$$ they wouldn't have received had the plan somehow 'known' they weren't entitled to it during the plan year. d) The matter of what's equitable from the participant's perspective, who may feel they shouldn't be penalized (cut back) just because the plan has problems, is also a matter for another day - and one that keeps more than a few benefits managers busy, whatever the statutory requirements regarding their qualified plans.

Hi, And thank you for the opportunity to justify my existence as moderator of the Welfare Plans in General message board! Things have been much too quiet here lately. Fortunately for both of us, Dave had already excerpted what looks like a great National Underwriter article on just this topic.I simply entered the Code section you referenced in your post in Benefits Link's search tool, clicked "Search", & there it was. I've included the URL to the whole article below: www.nuco.com/nu_online/archives/lh_weeklies/1997/L1-6/0001NEBA.html Please let us know if it helps - I could use the message count....

While I have the utmost respect for some lawyers (especially our esteemed webgod here at Benefits Link!), I've always assumed the First Law of Legal Dynamics is "for every action, there's an unequal and litigious reaction." This 'law' may be interpreted in several ways--"whenever possible, take no action at all", "anyone can & probably will sue anyone else over anything", etc. I'd look askance at any attorney, let alone a squad of them, who couldn't make a convincing case that taking my next breath would bring legal doom down around my ears. To date, 401(k) plans have seemed remarkably immune to significant participant-centric legal action. While I agree with Tschenk that more suits are sure to emerge, I side with several respondents who've correctly weighed the "act or not?" question & determined that long-term investing for future needs is the wiser course of action. Any investment advisor worth their salt will acknowledge that, long-term, it's less a matter of what you're invested in than whether you're investing.

Hi Belinda, I'm scheduled to teach Course 2 for UConn at its Stamford extension campus. We start in March. Most of my fall Course 1 class - 10 participants in all--said they planned to enroll for Course 2. They were a great group - very participative. Would you mind my relaying your email address to my class members? They've all found that connecting with other participants makes for more effective study.

When the prices go up, the tough get budgeting....With healthcare cost increases several percentage points north of general price trends heading this way, I'm sure many firms are dusting off the plan design/forecasting/budgeting tools they applied annually during the late 80's - early 90's. If you're the chief tool-sharpener at your firm, what implements do you plan to hone first? Do you have your sights set on any emerging cost-management techniques? On the other hand, if your firm's yawning in the face of impending price increases - maybe because none are in sight for you - can you shed some light on your reasons for calm in the face of the brewing storm?

By now, most benefits managers running flexible benefits programs and/or offering multiple health benefit options have had a chance to summarize their firms' fall enrollment season results. In my experience, those results make great 'tea leaves' for emerging industrywide benefits trends. If you're close to the benefits elections data at your firm, how about sharing your results with us? No need to name names, or even provide numbers - just your take on what the patterns foretell.

Recent Employee Benefit News - Hay/Huggins survey info suggests benefits are administered by 2 or fewer staff at over half of entities with 500-1000 employees; around 40% report over 2 benefits staff.

Tried Employee Benefit News' Sourcebook? They list TPAs of all sizes. Probably not comprehensive, but quite good, and free. You can search their online edition here: data.thirdcoast.net/ebn/sbsearch.cfm Just enter the state you want to start with, then scroll down the page to the Retirement Plan Services box, and check the item(s) you want to find entries for. [This message has been edited by Greg Judd (edited 01-29-99).]

If this plan is legit, I'm at a loss as to the employer's advantage in insisting on some sort of 'per-pay-period' RECOGNITION(?) of the profitsharing allocation, when it's not actually ALLOCATED per pay period, vs a simple year-end (or semiannual, or quarterly) recognition, when the cash contribution--the plan's funding--is actually made. Are there quarterly tax benefits to the arrangements Oppy describes? Is there some sort of cash flow 'win' re payroll taxes due? Or is it only a misguided attempt to show employees the 'value' of the (I'm assuming mandatory) profitsharing allocation? Based on Oppy's experience, even if the plan IS ok, the way its been communicated has been bungled--it's value proposition for employees squandered. My feeling at this stage of the discussion is that this plan may hold some sort of advantages for the employer, but whomever advised the employer to implement it conveniently forgot that for real success the plan needs to provide compensation value to employees. 'Value' depends heavily on participant perceptions of the plan's benefit to them. While I believe I could make a case that such a plan MAY have value for participants, clear explanation of HOW should have been part of the plan's implementation. As Oppy describes it, there was a crude attempt to sum cash compensation and the profitsharing 'promise'. The former is fungible, the latter decidedly less so - and an explanation of the plan should carefully lay out the 'strings attached', in my opinion.

Oppy, psalemme's neatly capsulized your probable situation in his/her first paragraph. Contributions you make from your regular paychecks are elective deferrals, and the plan sponsor has no discretion to wait until plan year end to invest them. Following thru on his/her advice is a good idea, too. ------------------

We've been using the internet for a some years, and would have stumbled across a better venue for health, disability, life, etc info, issues, & professional exchange by now. There isn't one, in our opinion. I second (or third) the proposed Welfare plans in general message board idea as a way to expand the welfare plan exchange. ------------------

QDROphile's got Time's number on their miscue. That little blurb will kick off about a month of communication 'opportunities' for benefits pros whose plans DO have a waiting period--which is most plans--and my guess is most will keep their waiting periods.

Strikes me this action will struggle to satisfy a reasonableness test, let alone qualified plan issues. Why not prefund your payroll for the coming X months/years while you're at it? The particulars of the situation must be pretty special.