mbozek

There is no discrimination if the additional premium is paid by the employer to an insured plan which is not taxed to the employee. Alternatively the employer could pay the cost of family coverage to the employee as taxable compensation which could be contributed to the 125 plan and deducted from taxable income without violating the 125 nondiscrimination rules.

1. What is the reason for putting a cap on the ER stock? If the stock tanks the plan will be sued for allowing the stock to be an option under the plan regardless of the limits on employee ownership. 2. How will the cap be implimented? Will employee be forced to sell stock once their interest goes above the cap or merely not permitted to purchase more stock. Second what if an employee's interest is above the cap on day one which requires a sale of stock at price of X and the next day the stock falls requiring that stock be repurchased at X-1 benefiting the employee at the expense of other participants. Who will pay for the cost if the additional trades cannot be handled internally through order matching.

I dont know of any requirement for quarterly review by any committee. Some committees dont meet more than once a year because there isnt enough for the members to do. The only reason to review quarterly is if the plan offers volitile funds that need close monitoring.

This question must be referred to legal counsel because there is no definitive rule.

The DOL rule only applies to plans that are subject to ERISA. For 415 purposes the contributions must be made no later than 30 days after the tax return is due. However reg 1.401(k)-1(a)(2)(iv) effective 1/12/06 provides that the date on which elective contributions become plan assets for the purpose of the PT rules under IRC 4975 and ERISA shall be determined under the DOL regs. This implies that elective contributions of solo 401k plans will be considered plan assets which will be deemed loaned to the employer under 4975 if the DOL rules are not followed. I dont know if an elective contribution made at the end of 05 would be subject to the revised 401k reg that takes effect on 1/1/06 or the reg only applies to elctive deferrals made on or after 1/1/06.

Why cant the employer ask for the reason to determine if the employee had a illness that prevented him from working? I thought that HIPPA only applies to health plans- Determining if the employee had a valid basis to be absent from work is not a health benefit.

To persons who are not parties in interest under IRC 4975. IRA could loan money to unrelated party for home purchase and take back a mortgage with the interest and principal being deposited in the IRA.

The ER is not selecting the policy nor paying the insurer- the employee has the sole relationship and control with the insurance carrier, including the right to terminate the policy. All the er does is pay cash to the employee. In Stange v. Plaza Excavating the court noted that the mere purchase of insurance by the employer was insufficient to establish a plan under ERISA. "When the employer leaves the procuring of the insurance entirely to the employee the plan is truly an individual plan and falls outside ERISA."

Mike: I dont have clients in a state where a QDRO terminating spousal rights can be issued before the parties are divorced. I dont see how the IRS reg would prevent the plan from being liable to pay benefits to the surviving spouse under a separation agreement at the participant's death if state law terminated the divorce proceedings (including the separation of the parties) at the death of the participant. Its easier to get the spouse to waive spousal rights upon separation then to determine whether state law permits spousal rights to benefits to be terminated upon a separation without a final divorce.

If the ee dies before the divorce occurs the plan would be faced with a conflict between beneficiaries since the spouse would be the beneficary under ERISA as the divorce action would be terminated but the plan would have designated another party as the bene. I dont see why the plan would permit a change of death beneficiary for benefits which are not payable in a separation agreement instead of waiting for a divorce decree. I dont understand the logic of allowing for a change of death beneficiary without spousal consent upon legal separation if the authorization for allowing the designation of a non spouse will be invalidated upon the death of the employee. In NY and NJ death before the divorce decree is issued terminates the divorce proceeding and the parties are deemed legally married on the date of death.

I am not sure what the regulatory issues are if the policy is owned by the employee and the employer reimburses the employee for the premium as permitted under RR 61-146. The employer does not select the ins policy or make it part of the er's plan. The ER is not paying the insurer for the policy. This arrangment is not subject to ERISA under the DOL reg for group ins. because the er is not collecting premiums from the employee for the policy through payroll deduction. Its no different than the payment of cash to the employee which is excluded from the employee's taxable income under the IRC.

I have never heard of it but any event the parties are still married and the spouse has all of rights to benefits as a spouse under ERISA. If the ee dies the spouse would be entitled to claim survivor's benefits from the plan under ERISA because the death of the participant ends the pending divorce action with the parties still married. 414p defines a DRO as a judgment, decree or order whereas IRAs can be divided upon a divorce or separation instrument (since there are no spousal rights). Separation instruments do not have to be approved by a ct.

Separation does not result in the elimination of spousal rights to retirement benefits under an ERISA plan-only divorce will result in a loss of marital rights to benefits. If participant dies prior to divorce becoming final the spouse is entitled to all death benefits because divorce action is terminated upon death of one party.

When is the plan being terminated? If the plan will be terminated at the end of the plan year the full 205k limit can be used for allocations made for that year.

If you were divorced before your husband's death and your children were designated as his beneficaires what benefits would you be entitled to? Are his children aware that you have filed a QDRO? Does the union know that you were divorced?

IRC 402(e)(1)(B) provides that a spousal AP can rollover any portion of the retirement benefit received under a QDRO regardless of whether it is a separate account or shared interest.

Mike: The problem with your analysis is that it ignores the rights of the AP under ERISA. APs are beneficaries who are eligible for all the options available to other beneficaries under the plan. (I am assuming that the neither the plan nor the QDRO specificially restricts the right of the AP to a Lump sum outside of the general restriction on the payment of benefits to the high 25 participant.) 414p3 prevents the payment of an option which is not available to other benes under the plan, e.g., J & S is only available to married participant. The refusal to pay a LS to the AP who has a separate interest in the plan without restictions on the LS payment in the QDRO would be discrimination under ERISA 510 if a LS is available to other beneficaries.

If the APs interest is held in a segregated account then the benefits will be payable under any form available to any othe benes (unless otherwise restricted by the QDRO). If a LS option is available to a bene, the AP could roll the distribution to an IRA.

There are no non discrimination requirements for an insured plan. Employer can provide different benefits or provide different levels of insurance coverage for employees and their dependents even if they are in the same class.

If the Doc owns more than 50% of the med practice the contributions must be combined becuse he is deemed to be in control of both plans. See Pub 571 P3.

See IRS publication 571 P3 col 1, available at irs.gov. He will be limited to 42k for both plans and 1 402(g) limit. He could defer another 14k in a 457b plan though the hospital.

Isnt the issue whether there is risk shifting from the insured to an insurer under the insurance contract - Under PLR 200007025 risk shifting "will occur when the insurer agrees to protect the insured against direct or indirect economic loss arising from a defined contingency involving an accident or health risk... The risk shifting occurs because the insurer assumes another's risk of economic loss in exchange for the payment of a premium by the insured or other payor." "If the premiums represent the actuarial cost of transferring risk then they will be deductible as insurance not withstanding that the premiums may be subject to a later adjustment depending on the taxpayers actual loss experience." TAM 9540001. If the economic risk insured against is transferred to the insurer and distributed among its insureds then the policy is insurance whether it is provided under an insurance policy approved by a state ins dept or under an arrangement having the effect of insurance. The creiteria for insurance does not include the likelyhood of the insurer incurring a loss. The representations regarding the policy provisions appear to provide for payment for certain illnesses in excess of the premium.

While I concur with the above comments about seeking counsel the issue is whether the AP is entitled to any benefits after the participant has retired when the DRO was never submitted to the plan. There are cases (Hopkins v. ATT) that have held that the surviving spouse's rights to the QPSA vest when the ee commenced benefits and the AP has 0 benefit. I dont know why the AP should be rewarded for a delay in submitting the DRO until benefits commence. (APs delay filing the DRO because they dont want to pay an additonal fee to their lawyer for a contingent benefit so they wait until they know there is a benefit available to the surviving spouse before filing the DRO.) The surviving spouse is entitled to rely on the benefit promised at the time the employee retired. I dont see any difference between this case and the case of an AP who submits the DRO after the death of a participant who elected a single life annuity. The basic question is whether the plan should accept the DRO (I am assuming that the DRO was never approved by the Plan) or reject it as untimely. The plan could accept the DRO and approve it as a QDRO if it meets the requirements under 414p and award the AP a benefit of zero because the benefits have been vested in the surviving spouse and no further benefit can be paid. This would require that the AP commence a lawsuit in fed ct which is highly unlikely given the cost. The plan could reject the DRO on the grounds that there are no benefits payable to the participant at this time and treat the DRO as a claim for benefits which will be denied under ERISA 503 forcing the AP to sue under ERISA.

Does B's plan allow B to make contributions for B's employees to A's Plan? I dont see how the trustee for A's plan would knowingly accept contributions from an employer who has not adopted the plan and has not signed the trustee agreement. The company A workers who now work for B are B's employees and should participate in B's plan. The reason for recommending merger instaed of termination is that B will have the same risk in merging A's Plan that it would have in terminating A's plan since it would have to adopt the Plan in order to terminate it. A can terminate the plan at any time if it is willing to pay for the cost of a termination.

One participant plans are not subject to ERISA if the participant is the owner of the business because there are no common law employees. Plans with more than 100k in assets must file a 5500-EZ. However, if the only participant is a non owner common law employee of a business that is owned by a corporation or another person, the 1 participant plan is subject to all ERISA requirements including reporting and disclosure, the fiduciary rules, claims procedures, etc. Plans not subject to ERISA are subject to the parallel provisions of the IRC such as the prohibited transaction rules, non alienation of benefits, QDROs, etc.