Flyboyjohn

Starting in 2014 all individual health insurance policies must cover the 10 Essential Health Benefits (including for example maternity and pediatric dental and vision even if not applicabe to a male insured), this is a major piece of the ACA health insurance reform. Whether specialty insurance excluding physician services will become avialble and can somehow avoid being classified as "health insurance" is beyond my limited knowledge but I doubt it.

I'm reposting in hopes there's a guru amongst us who missed the first post, bottom line question is whether Federal government retirement programs (and in particular US military retirement pensions) are considered to be 401(a) qualified plans.

Not to get off on another tangent but shouldn't the audit requirement be based on assets and risk rather than some arbitrary number of "participants"? I've seen start up plans with over 100 eligible where the audit fee is more than the total plan assets. The DOL took some baby steps in this regard with respect to the need to have bonding equal to funky assets in small plans to avoid audit. I heard one time that if they raised the audit threshold to 500 participants it would eliminate about 3/4 of the roughly 80,000 plan audits done every year.

I'm going to demonstrate a lot of ignorance but here's what I "think" the rules are: 1. Governmental plans are exempt from ERISA 2. State and local governmental plans can (and usually do) obtain a DL saying they are qualified under 401(a) so their employees have some certainty as to their tax consequences If OK so far now to my question: do Federal government plans also have DLs or is there something somewhere that says they're 401(a) qualified? Question is coming up under the new section 1411 Net Investment Income Tax where the regs are exempting distributions from plans qualified under 401(a). Thanks

What about this argument: 1. Plan audit fees can (and sometimes are) paid from plan assets and can directly or indirectly be "paid" by participants 2. Plan fiduciaries have an affirmative duty to review reasonableness of all plan expenses and if possible reduce such expenses 3. Therefore plan fiduciaries have a duty to at least consider ways to avoid plan audit fees

1099R is issued to the taxpayer who got the $$ (spouse in this case)

IMHO a MEP is not the right answer (large single plan still needs to be audited but the audit fee is spread over a larger base of plan sponsors). I would recommend taking steps to reduce "participants" below 100 by 1/1/2015, including excluding a group of low paid employees who aren't contributing (watching out for 410b)or possibly splitting into 2plans (both below 100).

Plan has been safe harbor since 2003 and plan documents prior to EGTRRA restatement were correctly prepared. Bundled provider botched EGTRRA restatement and didn't check all the correct boxes for safe harbor status. Interestingly the provider administered the plan "as if" it was safe harbor until they discovered document error early in 2013. What is the best way to fix the document problem? Can we prepare a "correct" EGTRRA restatement now and submit as a late amender under VCP? Seems like being late would be better than being wrong. Thanks.

You're correct, no longer any way to reimburse premiums pre-tax in the absence of an employer group plan. A partial solution beginning in 2015 will be for the employer to make available all the offerings in the SHOP and provide an employer subsidy for those EEs purchasing among the SHOP alternatives (unfortunately in 2014 there's only 1 offering in the SHOP)

The actionable error was not disclosing to the sponsor that under their chosen eligibility provisions they would incur substantial cost that could be avoided by a few minor tweaks to plan design (slightly lenghtening the eligibility waiting period if not at the max, excluding a small group of employees not likely to contribute, etc.), based on the facts appears no 2nd plan would be needed. Then, after disclosure, if the sponsor choose to go the audit route so be it. IMHO this is malpractice per se but I'm sure the platform provider, financial advisor and TPA (if there was one at the table) disclaimed all responsibility for everything. Those rare sponsors of relatively small plans who think they're getting something of value from the plan audit have my deepest sympathies. Sorry about the rant.

Snide comment follows: Sounds like 2013 (and possible a few more years) audit could have been easily avoided with a little attention to this issue at the time the plan was implemented. Based on the costs of audits in our area you could be talking about a $10,000- $20,000 "error". Hal, if someone other than you was responsible for plan design is there any potential liability to be explored?

I've done lots of delinquent welfare plan filings without paying the ridiculous $4,000 DFVC penalty and always gotten off with reasonable cause letter BUT that doesn't mean DOL/IRS have now changed their prior favorable position, especially since client filed in the past (can't use the "never knew welfare plans required filing" excuse). Give client the options and have them decide whether certainty and peaceful sleep is worth $4,000.

Yet another example of why not to allow life insurance in qualified plans. Former employee/participant left behind a life insurance policy and then had the nerve to die. Since the policy was a special asset our platform recordkeeper wants nothing to do with it. Proceeds about $200K and CSV about $40,000 so we think the death beneficiary pays tax (or rolls over) the $40K and gets the $160K as tax free life insurance. Our questions are: 1. Do we issue one 1099-R for just the taxable amount or one 1099-R for the entire amount and just show the $40K as taxable or issue two 1099-Rs for the taxable and non-taxable portions? 2. What IRS codes on whatever 1099-Rs are required? Thanks.

Given that there are only 500,000 401k plans but over 6,000,000 health plans (almost all of which have related cafeteria plans) I think it's very smart to start gearing up for welfare benefit plan compliance services as the "next big thing". I gave a presentation on this topic at ASPPA and will be giving another at NIPA BMC next month in case you're interested in the handouts.

I'm consulting with sponsor of a 403b plan that's never had a plan document. Any EPCRS gurus out there know whether they can sign a good faith 403b document now (retro to 2009) and get the current $375 fee discount for late amender?

Unless they were poorly advised to set up a VEBA Trust to hold "plan assets" they are "unfunded" and don't have to file 5500s until they exceed 100 participants at the beginning of a plan year

No, the SE calc is designed to give the self-employed individual "credit" for the 1/2 of SS and Medicare taxes normally paid by the employer. Since the new .9% is an addition to only the employee portion it doesn't impact the calculation.

With respect to the protocols the Federally Facilitated Marketplaces are supposed to follow in verifying avaialbility of "adequate" and affordable" employer coverage I know there are voluminous regulations and procedures out there but don't have a citation, sorry. Maybe after folks start applying we'll get some first hand reports from clients on contact/calls they're receiving from the Marketplace. With respect to contesting the penalty later, the process will be the IRS will recieve "reporting" data from employers, insurers and Marketplaces in early 2016 and then from individual taxpayers/households on 2015 1040s, grind it all through their computers and send "Dear Employer" letters (probably earliest November 2016) suggesting that a penalty might be due for such & such employees for such & such months in 2015. Letter will say if you agree, send check, if not send response as to why our proposed assessment is wrong. That's when I start making the big bucks as an ACA advisor.

Small employers (<250 W-2s) have been exempt through 2012, anybody know if they have to start reporting on 2013 W-2s? Thanks

The way the process is supposed to work is the Marketplace will contact you (employer) to verify the accuracy of the employee's representations (remember when you had to provide a contact name and number in the Marketplace opening notice you gave on 10/1?) Whether it's actually happening or not is anybodies guess, probably the least of their worries at the moment

No problem letting the spouse drop coverage under your group health plan at any time for any reason. Your problem is with your cafeteria POP plan which, as you know, generally does not allow a change in pre-tax premiums mid year except under specific circumstances and the IRS safe harbors don't include the situation you're positing. Unless you want to go out on a limb with a non-safe harbor "event" I would recommend telling the employees who expect to shift their spouses to the spouse's plan mid-year to not elect pre-tax status for the spouse surcharge.

No, see 5500-SF instructions, don't file SB just keep signed copy on file (same as 5500-EZ)

Plan document needs to be amended to provide that the employer contributions/credits are NOT avaialble in cash.

Yes, the $2,500 limit is only on the employee elective contribution, for 2013 there's no dollar limit on the employer's non-elective contribution (flex credit). Note that in 2014 the employer's contribution will be limited to the greater of $500 or the amount of the employee's elective contribution (posibly as much as $2,500)

Employer pays 75% of NHCE employee premiums, NHCEs pay their 25% pre-tax via premium-only cafeteria plan. All HCEs get no employer subsidy but pay 100% of premiums pre-tax via POP. Since NHCEs are getting the better deal will this structure automatically pass the POP safe harbor testing rule? Thanks