Kirk Maldonado

Income and employment tax withholding is required with respect to the imputed income recognized as a result of providing health coverage benefits to domestic partners. IRS Private Letter Ruling 9850011.

IRS representatives have publicly stated that it doesn't work.

My recollection is that the only result of the failure to make contributions for an extended period of time is that full vesting of all participants occurs.

There are some very serious unrelated business taxable income rules problems here.

Try the Mandated Health Benefits Handboodk (or some similar title. It was written by Paul Hamburger and published by Thompson Publishing. Warning! Last time I checked, there were approximate 400 cases involving COBRA.

Archimage is right; you can't use a prototype document for a multiple employer plan.

I think you are obligated to pay 100% of the accrued amounts to employees situated in California.

One reason why health FSAs are typically run on a calendar year basis is because oftent the deductible under the health plan is also on a calendar year. Thus, using a fiscal year for the health FSA causes some complications.

I much prefer the Tax Management Compensation Planning Journal on cafeteria plans.

The Higher Education Amendments Act of 1998 amended the Age Discrimination in Employment Act to provide that such early retirement incentives for tenured faculty do not constitute impermissible age discrimination. This amendment is found in 29 USC 623(m). However, I am also looking for articles, etc. on this topic. Has anybody seen anything worthwhile?

Don't get a bankruptcy attorney. My experience has been that they can't even spell ERISA. You are better off finding an ERISA attorney that has worked on bankruptcy matters. Unfortunately, that is a pretty small universe.

A number of years ago, I was retained by a client to set up one of these arrangements. After spending a lot of time, and racking up a significant legal bill, I concluded that you couldn't make one legitimately work, which was not what my client wanted to hear. I have reviewed a number of these products, and I've never seen one that I thought made sense.

mbozek: I don't think that employees have any rights greater than what is stated in the plan. If the plan only allows changes in contribution amounts (including complete cessation) on a quarterly basis, then the employee can only change the contribution amount quarterly. If you are aware of any statute, regulation, ruling, or court decision to the contrary, I'd be very interested in seeing it.

Section 423 plans are not subject to ERISA. DOL Advisory Opinion Letter No. 90-17A.

I think that you taking a serious risk unless you obtain an individual prohibited transaction exemption or other guidance from the DOL. The exemption I was thinking about did relate to Emory University.

GBurns: You need to read Section 1.105-11(B)(2).

There is a prohibited transaction issue here, but there is a statutory exceptiont that might apply. Look at IRC Section 4975.

I think that people need to read Rev. Rul. 61-146, 1961-1 C.B. 25.

The DOL issued an individual prohibited transaction exemption on this point a number of years ago, but the conditions imposed were pretty onerous. If my memory is right, the hospital was maintained by a major university in the south.

KJohnson: Your message is predicated upon the assumption that the plan says that the employer will pay the expenses. My message was that the plan could be drafted to avoid the issue. Obviously, if the plan says that the employer will pay the expenses, that is the worst case from a drafting perspective. The best case would be where the plan says that it will pay all of the reasonable expenses of administering the plan (which I believe is the wording in ERISA).

I think that the plan can be drafted in such a way so as to make this a "settlor" rather than a fiduciary function.

I had the same situation, except my facts were even worse; the plan was still in existence. (Believe me, it's even worse if the plan is still around.) Fortunately, I lost the client before we were able to reach a resolution. Although I spent a lot of time on the issue, I wasn't able to come up with any cost-effective solution. The later-discovered asset was about $60,000 or $80,000, so we couldn't burn it all up paying plan administrative expenses, which is probably the best of the alternatives that I could come up with.

Historical note. Many years ago, I was an attorney at the IRS and Dick Wickersham was my Branch Chief.

Plan can eliminate hardship distributions at any time. Treas. Reg. 1.411(d)-4, Question 4(B)(2)(x).

actuarysmith: You are a cite for sore eyes. Or maybe you cause sore eyes, I'm not sure which.