buckyks

Yes, the Availability Condition answered the question. If a person is "eligible" for Employer A's medical plan, whether they enroll or not, allows them to enroll in Employer A's FSA. That clarified it.

The so-called authority on this in our office states the following... "An employee must be eligible for the Medical plan in order to participate in a HCSA. So somehow PS needs to look at the medical eligibility before offering an HCSA." Any reason she would say this?

Thank you all. I understand the eligibility is based on the Plan Doc. Employer A used to allow 20+ hourly requirement, but was told they had to use 30 hour. I was wondering if there was some law change associated with ACA that made that a requirement. Sounds like it is still up to the Employer to define eligibility, and it is not associated with that Employer's healthcare eligibility. That is, they do not have to match. Correct?

Employer A requires 30 hours eligibility for health insurance, and offers FSA. Employee of A works 20 hour weeks for Emp A, but is covered under Spouse's Employer Health Plan. Can Employer A allow 20 hour Employee to participate in A's FSA?

Can a person sell their Whole Life Policy, and avoid immediate taxable event by 1035, and purchase an immediate annuity?

Thanks for the thought, however, this is a county healthcare facility, and not a part of the State benefits program. They operate independently of the county. Rather, they receive county funding from the tax roles, and operate under a county appointed Board.

I have a governmental employer that cannot meet minimum funding standards for their MP plan in the foreseeable future. The question is, can they freeze their plan until such time as they are financially stable, and then unfreeze the plan with the intent of remaining solvent to the point that they will not have a problem meeting minimum funding, or would they be better off by simply adopting a PS plan, and merging the two. If they freeze the current plan, does anyone know of any authority rregarding unfreezing the plan in the future?

You might refer to a thread I posted on 3-8-2002 titled 414(h)(2). It might give you some additional info.

Customary and appropriate has nothing to do with authority. I would refer your IRS reviewer to IRC Section 401(g) and 401(h). We find that most general IRS representatives in different areas of the country are not familiar enough with the the Code to accept the fact that the use of an annuity contract for replacement plans is permitted, and recognized by the IRS in too many instances.

Absolutely! I have 7 SS Replacement Plans in Kansas alone. All have been tested and approved. All but one include and vest all employees from DOH. The one exception maintains two plans, one for part-time with non-forfeitable contributions, and one for full-time with a 4 year graded vesting schedule that meets minimum funding requirements. All 7 use variable annuity contracts. However, instead of using 457(B) for employee contributions, they use 401(a) and 414(h)(2), and make participation a condition of employment.

Thank you for your response. This is a county hospital, and participation in their pension plan is mandatory. The individuals in question were notified that they could make up the contributions over a period of time, but apparently have grave reservations about that solution. We shall look at state law for further guidance. Any additional response is appreciated.

You are correct, if they are grandfathered and elected not to participate in the Medicare program

Plan document states "In lieu of a contribution made by the employee, the employer shall contribute to the planfor each plan year in accordance with Code Section 414(h)(2), an amount equal to X % of a Participant's compensation". Like any PERS plan, that % or $ is deducted from compensation before taxation, but after FICA withholdings on a per pay basis, and shown on the employee's pay stub. Therefore, one could interpret that to mean contributions from an employee's pay, but treated as an employer contribution. If participation is required when eligible, and eligible employees were not enrolled into the plan until a year after meeting eligibility requirements, obviously their accounts should be made whole as if they had been enrolled in a timely manner. To simply start from the date of discovery would deny each participant a years worth of contributions and gain/loss that they were entitled to as a benefit . Since, in reality, the 414(h)(2) employee contribution reduces the employees compensation, who is obligated to make up the 414(h)(2) back contribution. If the employer makes it up, they have, in essence given the employee a pay raise for the previous time frame, and then a pay reduction from the date of discovery. Am I wrong in my analysis?

If, through administrative error, an employee is not enrolled in the employer's 401(a)/414(h)(2) pension plan when eligibility has been met, who is responsible for making up the 414(h)(2) contribution? Can the employer force the employee to make-up the past 414(h)(2) contribution if the employee cannot afford to?