Steve72

Got it. I think you're right. The DOL is taking the quick hits when they could actually be going after the true bad actors.

dmj1998: I disagree with the following statement in your post: >>>i think the 15 business day limit is the guide you should use until the law is changed. the law is currently written to allow ERs to use these funds as cash flow devices for a period of time <<< The 15 business day limit is NOT a safe harbor on which the plan sponsor can rely. If the sponsor is using 401(k) contributions as a cash flow device, the sponsor will be subject to penalties if and when the DOL arrives. The 15 day limit is an outside limit. The examples following the regulations make it clear that, absent unusual circumstances, the deadline will actually be much sooner.

Ha! In law school, my friends and I used to play "Socratic Bingo". You'd place the names of the usual suspects (the ones who always talked in class) on your board, and check them off as they made a comment. When you won, you actually had to make a comment including the word "bingo" Example: "So, the defendant created the dangerous condition and, bingo! He can be held liable for negligence".

To oversimplify, the trust is an asset of the employer's, not the plan's. It is used to offset the outstanding debt incurred by the employer in promising non-qualified deferred comp. The assets of the rabbi trust may be used by the employer to pay this debt, or to pay the employer's general creditors. There are no funds that are earmarked solely for use by the plan, thereofre the plan is unfunded.

Section 2.02 of Rev. Proc. 2001-17 states that the IRS is considering implementing a similar procedure for SIMPLE IRAs. I have not seen anything that states they have moved beyond the consideration stage, however.

Sorry. HIPAA requires certain documents (consents or authorizations) for most disclosures by a covered entity other than treatment, payment or healthcare operations. By paper trail, I just mean ensuring that the proper documents are in place for the necessary business disclosures. IMHO, HIPAA (at least the privacy side) is primarily an administrative issue. Most current business activities can continue so long as the proper paperwork is in place. The primary difficulty is determining the current usage of information within the company to ensure that nothing slips through the cracks, and educating the workforce; both to show the necessity of certain disclosures, and to ensure the proper treatment of PHI by those employees who access it. I've emailed you my contact information. Feel free to contact me offline.

A covered entity (in this case, the health plan) can disclose PHI without consent or authorization to an agency responsible for administering workers comp, or to the party responsible for payment. However, disclosure to these entities is limited in scope. Use of PHI for disability benefits or FMLA is significantly more problematic, as is employer involvement in the adjudication of claims. Setting up training for employees, as well as creating a HIPAA compliant "paper trail" is recommended.

From the American Health Information Management Association website: http://www.ahima.org/infocenter/models/Pri...Officer2001.htm You may also want to check out iapo, the international association of privacy officers www.privacyassociation.org

I agree completely with BenefitsLawyer's description of the rule, however I would add that, if any of the sponsor's employees perform work for both the plan and other services for the sponsor (e.g., disability benefits or payroll) they must be trained to "firewall" the use of PHI from non-health plan related functions they may perform.

Georgetown did a comprehensive summary of state privacy laws. I don't know if it's regularly updated, but it's a good starting point: http://www.healthprivacy.org/info-url_noca...o-url_nocat.htm

Don't forget, Massachusetts is also the state that attempted to have its own foreign policy with regard to Burma. This attempt to displace Federal law seems pretty much par for the course. (Disclaimer: I grew up in New England and lived several years in Boston. This post is very much tongue-in-cheek, and should not be seen as impugning the great Commonwealth of Massachusetts)

FYI Private Letter Ruling 8933018 Full Text: May 19, 1989 This is in reply to your request for a private letter ruling in a letter dated December 2, 1988, submitted on your behalf by your authorized representative. Your ruling requests concern the federal income tax consequences of certain plan loans secured by real estate. Company M maintains two profit sharing plans, Plan X and Plan Y. Plan X was adopted effective January 1, 1987. Company M has applied for a determination letter as to the qualified status of Plan X under section 401(a) of the Internal Revenue Code. Plan Y, established effective January 2, 1982, includes a cash or deferred arrangement (CODA) under section 401(k) of the Code providing for elective deferrals. Company M has received favorable determination letters on the qualified status of Plan Y under sections 401(a) and 401(k). Both Plans permit participants to borrow money from their accounts. The Plans set the terms and conditions that all loans must meet under the Plan to satisfy the requirements of section 72(p). Company M proposes to amend Plan X and Plan Y to allow participants to borrow from their account for the purchase or construction of their principal residences and have the loan secured by a recorded deed of trust on that residence. The participant's Plan X and Plan Y account balance will not be used as security for such loan. In addition to certain other requirements, the Plans provide that -- each loan will be available to all members on a non- discriminatory and reasonably equivalent basis; each loan shall bear a reasonable rate of interest; each loan shall be repaid over not more than five years from the date the loan is made, unless the loan will be used to acquire any dwelling unit which is to be used as the principal residence (within the meaning of section 1034), in which case the terms of the promissory note shall require repayment over no more than a specified number of years; each loan shall be repaid on a level amortization basis, and payment made no less often than quarterly; each loan shall be evidenced by a written promissory note; and each loan shall be adequately secured. Based on these representations, you request the following rulings: 1. Assuming that the terms of the proposed amendments to Plans X and Y are complied with, interest paid by a member on a residential loan from Plan X or Plan Y will be “qualified residence interest” secured by a qualified residence under section 163(h)(3) of the Code and therefore, subject to applicable statutory limitations, deductible under section 163 by the member to whom the residential loan is made. 2. The limitation on the deductibility of interest contained in section 72(p)(3) of the Code will not apply to residential loans from Plan Y except with respect to interest paid on residential loans made to key employees. Ruling request one has been referred to the Chief Counsel, Income Tax and Accounting Division for their consideration and reply. With respect to the second ruling request, section 72(p)(2)(A) of the Code provides generally that a loan will not be considered to be a taxable distribution to the extent that such loan -- (when added to the outstanding balance of all the loans from such plan) does not exceed the lesser of (i) $ 50,000, or (ii) the greater of 1/2 of the present value of the nonforfeitable accrued benefit of the employee under the plan, or $ 10,000; is repaid within 5 years, except for certain loans used to acquire any personal residence; and is repaid in at least quarterly level amortization payments. Section 72(p)(3)(A) of the Code disallows a deduction for interest paid on plan loans to key employees (as defined in section 416(i)), or if such loan is secured by amounts attributable to elective 401(k) or 403(B) deferrals (as defined in section 402(g)(3)). In this case residential loans obtained by Plan Y participants will be secured by a deed of trust and not by amounts attributable to elective 401(k) deferrals. Based upon this representation, we conclude, with respect to your second ruling request, that the disallowance of the interest deduction set forth in section 72(p)(3) of the Code will not apply to residential loans from Plan Y except with respect to interest paid on residential loans made to key employees. The above ruling is based on the assumption that the proposed loan is a bona fide loan as defined in section 4975(d)(1) of the Code, made in accordance with section 72(p)(2) and that Plan Y will be qualified under sections 401(a) and section 401(k) and the related trust will be tax-exempt under section 501(a) at all times pertinent to this ruling request. In addition, this ruling does not address any issues with respect to section 163(h) of the Code. In accordance with a power of attorney on file with this office, a copy of this ruling is being sent to your authorized representative.

A starting place might be www.freeerisa.com. They claim to have the most recent publicly-available Forms 5500 for each plan viewable online. If they've got the Form, I'd bet the PWBA does too.

Internal Revenue Code Section 7872 generally.

I believe that any loan from an employer to an employee for less than the Federal rate results in taxable income to the employee in the amount of the Federal rate interest minus the actual interest. Therefore in this case, the income would be equal to the Federal rate on the loan. (Later modification, after I actually read the Code) If the aggregate loan amount outstanding between the employer and the employee is l$10,000 or less, the above does not seem to apply (unless the loan has a principal purpose of tax avoidance).

COBRA is a law which permits you to participate in your employe'rs group health plan. If the company goes out of existence, so does the group health plan. Unfortunately, that means your insurance coverage stops as well. I would advise contacting your state department of insurance regarding "guaranteed access" insurance policies offered in your state. Fair warning, though, "guaranteed access" does not mean guaranteed affordability.

Nitpicking point: The 15 business day rule is NOT a safe harbor. The deposits must be made as soon as administratively feasible. From your post, it sounds like that would be within 7-10 days, but the DOL has been known to take a harder line on this issue.

I figure we could all use a little of this today. Originally written in the 1970's, hopefully just as appropriate now. A TRIBUTE TO THE UNITED STATES This, from a Canadian newspaper, is worth sharing. America: The Good Neighbor. Widespread but only partial news coverage was given recently to a remarkable editorial broadcast from Toronto by Gordon Sinclair, a Canadian television commentator. What follows is the full text of his trenchant remarks as printed in the Congressional Record: "This Canadian thinks it is time to speak up for the Americans as the most generous and possibly the least appreciated people on all the earth. Germany, Japan and, to a lesser extent, Britain and Italy were lifted out of the debris of war by the Americans who poured in billions of dollars and forgave other billions in debts. None of these countries is today paying even the interest on its remaining debts to the United States. When France was in danger of collapsing in 1956, it was the Americans who propped it up, and their reward was to be insulted and swindled on the streets of Paris. I was there. I saw it. When earthquakes hit distant cities, it is the United States that hurries in to help. This spring, 59 American communities were flattened by tornadoes. Nobody helped. The Marshall Plan and the Truman Policy pumped billions of dollars! into discouraged countries. Now newspapers in those countries are writing about the decadent, warmongering Americans. I'd like to see just one of those countries that is gloating over the erosion of the United States dollar build its own airplane. Does any other country in the world have a plane to equal the Boeing Jumbo Jet, the Lockheed Tri-Star, or the Douglas DC10? If so, why don't they fly them? Why do all the International lines except Russia fly American Planes? Why does no other land on earth even consider putting a man or woman on the moon? You talk about Japanese technocracy, and you get radios. You talk about German technocracy, and you get automobiles. You talk about American technocracy, and you find men on the moon -! not once, but several times - and safely home again. You talk about scandals, and the Americans put theirs right in the store window for everybody to look at. Even their draft-dodgers are not pursued and hounded. They are here on our streets, and most of them, unless they are breaking Canadian laws, are getting American dollars from ma and pa at home to spend here. When the railways of France, Germany and India were breaking down through age, it was the Americans who rebuilt them. When the Pennsylvania Railroad and the New York Central went broke, nobody loaned them an old caboose. Both are still broke. I can name you 5000 times when the Americans raced to the help of other people in trouble. Can you name me even one time when someone else raced to the Americans in trouble? I don't think there was outside help even during the San Francisco earthquake. Our neighbors have faced it alone, and I'm one Canadian who is damned tired of hearing them get kicked around. They will come out of this thing with their flag high. And when they do, they are entitled to thumb their nose at the lands that are gloating over their present troubles. I hope Canada is not one of those." Stand proud, America!

I disagree. The money becomes plan assets on the date it may be segregated. If the check is not cashed by the custodian, then plan assets remain in the general accounts of the employer, and there is a prohibited transaction.

One important issue to note is that the contribution limits are significantly lower under the PR IRC. Excess deferrals by PR employees (over the PR limit, but within the US limit) must be distributed under the PR IRC, but no distributable event will have occurred under US law. If anyone has a solution to this (after the fact) I'd be very appreciative.

Horry O: I'm aware of the personal liability provisions, but 409 requires that the individual be a fiduciary to be held personally liable. I'm also aware of the functional definition of fiduciary, however in many the fiduciary violation cases which most often arise, the fiduciary involved would be the corporation.

This thread has taken an interesting turn. QDROphile: But if you make the plan sponsor the fiduciary, at least you have protection for the officers and directors against individual liability through the existence of a corporate entity. Naming the committee, or an individual as the plan administrator does not afford such protection (unless you plan on incorporating the committee.....)

Have fun. It's a painful process. The website for the Hacienda (Puerto Rico's Treasury department) is: http://www.hacienda.prstar.net/ There are several schedules which must be completed for each year for which you want a qualification, as well as submitting the operative documents of the plan (trust, spd, resolutions by which the plan came into existence, etc.) Also, my understanding is that Puerto Rico REQUIRES that a plan file for qualification in order for taxes to be deferred.

Also, make sure your employer is bound by COBRA. Smaller employers (less than 20 employees) are not required to comply with Federal COBRA requirements, although there may be parallel state laws.

Ok, here goes. Maximum time periods for everything: E's terminates 1/31. 44 days later (3/16), receives the notice. Elects within 60 days (5/15) and has 45 days (6/29) to make first payment. At this point, ALL payments which have come due become payable (February through May-but not June quite yet). For months beginning with may, the payment is due 30 days afterthe first day of the month for which premiums are being paid. Therefore, 7/1, an additional payment must be made for June. All months thereafter, the ex-employee has this 30 day grace period, so, yes, they could be a month behind. Agree? Disagree? I was told there would be no math.