KJohnson

Are FSA’s Subject To HIPAA’s Portability, Special Enrollment And Non-Discrimination Provisions? Under 62 Fed. Reg. 67687 (December 29, 1997) a Health FSA will not be subject to HIPAA’s portability, special enrollment, and non-discrimination rules if: (a) The employee has other group health coverage available for the year from the employer (to ensure compliance with this rule, the eligibility requirements for the Health FSA and the group health plan should be the same to insure such coverage); (b) The other group health coverage does not consist solely of benefits excepted from HIPAA; © The maximum benefit payable from the Health FSA does not exceed the larger of: (i) Two times the employee’s salary reduction election; or (ii) The amount of the employee’s salary reduction for the year plus $500. The maximum benefit condition essentially means that, to be an excepted benefit under HIPAA, the employer should never match more than 100% of the participant’s salary reduction to a Health FSA.

ESOP for an S Corp. was written to require distributions in cash. 1) Would there be a 411(d)(6) issue in amending the plan to provide that the distribution will be either in cash or in stock subject to the requirement that the stock immediately be sold to the company? 2) Alternatively, is there any way that the ESOP could borrow money for the distribution and treat it as an acquisition loan for the departing participants shares? The ESOP really isn't "buying" the shares from the departing participant, it is distributing cash under the terms of the Plan.

RLL I thought that under 54.4975-11(d)(5) you could use the last annual valuation for the put option.

Then I agree with Mike. As he implies, you might want to check out 1.401(a)(4)-5 to make sure you don't have any timing problems.

Doesn't it become an accrued benefit as soon as you put it in the Plan? Don't you have a 411(d)(6) problem? I know there is a special rule for multiemployer plans under 1.411(a)-(4)(b)(5) but are there other exceptions?

http://benefitslink.com/boards/index.php?showtopic=20837

I havent sat down and gone through the analysis, but it sounds like self-dealing to me which is a "smell test" rather than a mathematcial test of determining who is a party in interest ( or disqualified person in Code-speak). The custodian is probably trying to fit this into a variation of the Swanson case. You may want to look at this article: http://www.trustsandestates.net/IRAsFLPs/I...m#_Toc518297320

You may want to look at 1.401(a)(4)-11(d)(3)(i)© for rules regarding "pre-participation" service which seems to be your situation.

Section 54.4980B-4 of the regulations define what coverage must be offered and state that: If a qualifying event occurs, each qualified beneficiary (other than a qualified beneficiary for whom the qualifying event will not result in any immediate or deferred loss of coverage) must be offered an opportunity to elect to receive the group health plan coverage that is provided to similarly situated nonCOBRA beneficiaries (ordinarily, the same coverage that the qualified beneficiary had on the day before the qualifying event). See Q&A-3 of Sec. 54.4980B-3 for the definition of similarly situated nonCOBRA beneficiaries. This coverage is COBRA continuation coverage. If coverage is modified for similarly situated nonCOBRA beneficiaries, then the coverage made available to qualified beneficiaries is modified in the same way.

For example, check out this American Funds prospectus for the Growth Fund of America. http://prospectus-express.newriver.com/pne...undid=399874874 They have started selling R shares for retirement plans (that throw in some extras with regard to recordkeeping and a daily valuation platform) that range from an expense ratio of 1.53% for R1 shares to 0.43% for R5 shares.

See below with regard to Corbel's answer from the Prototype Plan Q&A's on Benefits Link. That said I have seen "snap on" amendments to regional non-standardized prototypes that purportedly support a multiple employer plan. I would assume that these are then converted into individually designed, but I am not sure -------------------------------------------------------------------------------- Non-Control Groups and Prototype Documents (Posted January 5, 2001) Question 13: Can a protoype plan document be used to draft a plan that covers multiple employers? The employers are not members of a controlled or affiliated service group. Answer: Pursuant to section 8 of Revenue Procedure 2000-20, a prototype plan cannot be drafted to cover multiple employers (i.e., two employers that are not members of an affiliated service group or a control group). -------------------------------------------------------------------------------- Important notice: Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner's situation. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of your situation. The laws, regulations and court decisions in this area change frequently. Answers are believed to be correct as of the posting dates shown. The completeness or accuracy of a particular answer may be affected by changes in the laws, regulations or court decisions that occur after the date on which that Q&A is posted. -------------------------------------------------------------------------------- Copyright 1999-2003 SunGard Corbel

I agree with chloe. However, when you are dealing with a multiemployer plan (which it appears that you are) always check the regs. There are special rules with regard to withdrawals from multis (it is in the same section as the asset/stcok sale rules). Althouhgh I doubt they would dictate a different result from what chloe has indicated, you may want to double check.

I don't think you would have an issue on whether the plan terminated. I assume that the reason the owner gets a contribution and nobody else does is that you have a last day rule (and you haven't put such a provision in the Plan in anticipation of this event creating a possible discriminatory amendment under 401(a)(4)). I think your issue would therefore be whether the owner was "employed" on the last day. I would think that if you continued to pay him comp for his duties in the wind up you would be home free. Based on the facts that you presented, I think you have a closer quesiton.

R. Butler You would have to pass 410(b) coverage even before you came to BRF. It seems that if they pass coverage they would probably satisfy BRF because isnt' the BRF test just 410(b) coverage withtouth the ABT?

I was just responding to the question of whether there was anything further from the IRS. You are right that the proposed regulations are not in effect and do not promise reliance

Andy H you are right. I went back and looked at the proposed regs(which is always a good idea) and this is from the preamble's explanation: The proposed regulations would recognize the practical difficulty in a 12-month requirement by following the rule in Notice 98–52 that allowed a short plan year in the first plan year and would allow a short plan year in certain other circumstances. Specifically, a section 401(k) safe harbor plan could have a short plan year in the year the plan terminates, if the plan termination is in connection with a merger or acquisition involving the employer, or the employer incurs a substantial business hardship comparable to a substantial business hardship described in section 412(d). In addition, a section 401(k) safe harbor plan could have a short plan year if the plan terminates, the employer makes the safe harbor contributions for the short year, employees are provided notice of the change, and the plan passes the ADP test. Finally, a safe harbor plan could have a short plan year if it is preceded and followed by 12-month plan years as a section 401(k) safe harbor plan.

I didn't go back and look at the proposed regs. You may well be right. I only had the ASPA comments sitting on a pile on my desk that addressed the final year issue.

I believe that the IRS in the proposed k regulations made an exception if the short year is the final plan year. ASPA's comments only asked for clarification of what was meant by the "final" plan year. I think that making this exception for a short final year simply solidifies the rule in other contexts-- you can't be safe harbor in a short year (except for the first year for a new (k) arrangement and the final year under the new proposed regs). Here are the ASPA comments: The proposals provide that a safe harbor plan will continue to qualify under §401(k)(12) and/or §401(m)(11) in a short plan year if the short year is a result of a plan termination. When a plan sponsor terminates a plan, deferrals and other contributions cease at the date of termination but the plan continues to be in effect during the “wind down” process while the plan sponsor finalizes distribution documentation and, perhaps, applies to IRS for a letter of determination with respect to the plan’s termination. The proposals do not make it clear that the plan’s safe harbor status in the year of termination is not adversely impacted if the plan continues to exist beyond the date of the plan termination. In addition, final regulations should make it clear that safe harbor contribution obligations are met if such contributions are made only with reference to compensation and deferrals during the period for which the plan was active. ASPA Recommendation: Final rules should clarify that the length of the “final plan year” is determined by reference to the plan’s termination date for purposes of §1.401(k)-3(e)(4). The short plan year rule should relate only to the period the plan is active.

1.414(s)-1(b)(2). When running your ADP, ACP, and 401(a)(4) tests you always have to follow your document. Therefore if your document only uses one definition of "compensation" then you are stuck with that if your ADP and ACP tests use the defined term. If on the other hand your document for ADP and ACP testing says that you can use any 414(s) definition then I think you have the flexibility. In these days I would assume most documents are silent on how you run 401(a)(4) non-discrimination testing and don't even mention compensation.

If your document supports it, can you use a different 414(s) definitions for ADP, ACP, and 401(a)(4) testing? The regulation quoted below seems to indicate that consistency is only required in satsifying the "applicable provision" and you would seem to have different "applicable provisions" under 401(a)(4), 401(k) and 401(m) However, I suppose that someone could make an argument that the ADP and ACP tests are really “part” of 401(a)(4) under 1.401(a)(4)-1(b)(2)(B). (2) Consistency rule.--(i) General rule. A definition of compensation selected by an employer for use in satisfying an applicable provision must be used consistently to define the compensation of all employees taken into account in satisfying the requirements of the applicable provision for the determination period. For example, although any definition of compensation that satisfies section 414(s) may be used for section 401(a)(4) purposes, the same definition of compensation generally must be used consistently to define the compensation of all employees taken into account in determining whether a plan satisfies section 401(a)(4). Furthermore, a different definition of compensation that satisfies section 414(s) is permitted to be used to determine whether another plan maintained by the same employer separately satisfies the requirements of section 401(a)(4). Although a definition of compensation must be used consistently, an employer may change its definition of compensation for a subsequent determination period with respect to the applicable provision. Rules provided under any applicable provision may modify the consistency requirements of this paragraph (b)(2).

It wil not die....If it is in the New York Times it must be true. http://www.nytimes.com/2003/11/14/business/14savings.html

I would be interested this as well. However it would seem strange that there would be a PLR because the way you seek a determination with regard to ASG is via a 5300.

http://www.ebia.com/weekly/articles/2001/C...HarryBeker.html

As to point number 1, this has always been an area where I pull out the statute again and again. I thought that indebtedness used to improve or acquire real estate would not be treated as acquisition indebtedness unless one of the factors in 514©(9)(B) were present (price not fixed at time of aquisition, sale lease back, indebtedness depends on revenue, property is held by a partnership etc). Thus if the plan purchased the entire thing on a leveraged basis, would you have UBTI?

Salaried Retirees Action Committee v. Hughes NonBargaining Retirement Plan, 72 F.3d 686 (9th Cir. 1995)