waid10

Also, it seems to me that if Employer processes deferrals and match on the back wage payments made in 2015 AND corrects for the missed deferral and match in the prior years, that the employees are getting the benefit twice. They would be getting a deferral/match in 2015 on amounts that should have been paid in prior years. And they would also be getting correction contributions to their plan accounts for the missed deferral opportunity and match. Please help. Thanks.

Employer misclassified certain employees for FLSA purposes. So now back wages are being paid for overtime that was never paid during 2012-2015. It is not DOL or court-ordered back pay. Employer found the error on internal audit. Now it is correcting it itself. I have several questions: 1. For the payments that are made now (2015), should deferrals be withheld? And match be processed? The plan defines comp as W-2. 2. Is EPCRS correction triggered for the prior years? After all, the employees were not paid the proper amounts. This means that the employees missed a deferral opportunity and missed a match on the missed deferrals. Or is the payment of the wages (and liquidated damages) in 2015 enough that correction of prior years isn't needed? Thanks.

We are in the midst of a standard termination. We want to offer a lump sum window to terminated vested participants. Can we offer this same lump sum window to active participants? Is that legally permissible? The more people that take lump sums, the more accurate our annuity pricing will be. Thus, we wanted to see about offering the lump sum window to actives. Thanks for any thoughts.

K2retire - I think that that is the actual question...can the money legally be rolled over directly by Schwab? Bird - Prudential is the TPA.

Prudential administers our physician office's 401(k) plan. However, we have some physicians who have “self-directed” accounts which are an off-shoot of the company 401(k) plan and those funds are held at another brokerage firm such as Charles Schwab. We have a physician who is retired and wants to roll over his 401(k) to an IRA, but Prudential is telling us that this physician must first move his money from his self-directed account back into Prudential in order for Prudential to process the roll-over. The physician is questioning whether that is a legal requirement as he prefers not to move his money from Charles Schwab back to Prudential because the physician will not be able to replicate his Bond portfolio with Prudential. The physician would prefer to move his money directly from Charles Schwab to his IRA. Can anyone shed light on this? Is it possible to rollover directly from the self-directed 401(k) account to an IRA? Or must the self-directed account first be moved back to Prudential before the rollover can be processed? Thanks.

Hi. Employer has a Dependent Care FSA. Employee signed up in 2014, thinking that this was for a dependent's medical expenses. Thus, no child care was used and Employee does not have any dependents at an eligible age for dependent care FSA dollars. Is there any way to refund the 2014 dollars to Employee and tax them? Or is Employee out of the luck and the money is forfeited to Employer just like any unused portions would be? Thanks.

Is there a way for an employer to provide health insurance for non-employee members of the Board of Directors? My initial off-the-cuff thoughts are the following obstacles: - it will be a taxable benefit to non-employees - can the employer's plan be amended to include non-employees? if not, could a separate plan be created for the directors? if it is a separate plan, would the plan pass nondiscrimination testing? - would a carrier even insure for this? - if the employer self-insures and its a separate plan, the group would be so small it could be prohibitively expensive I am wondering if anyone else has come across this. Thanks.

But Employer had the responsibility to provide Employee with a notice of HIPAA Special Enrollment Rights upon learning of the pregnancy, correct? I believe that Employer provided Employee with an SPD when she enrolled. But I fear that Employer did not provide the HIPAA SER when the baby was born.

Hi. I have a question regarding responsibility for adding dependent coverage. Here is the scenario. It is fuzzy at best, but this is what I understand happened: Employer hired employee that was pregnant. Employee enrolled in employer's health plan. Employee had baby. Employer continued paying Employee's health insurance premiums (even Employee's portion). Eventually, Employee notified Employer that she is not returning to work. One year later, Employee receives invoices from the hospital related to the care of her baby (as there was no dependent coverage elected). Employee blames Employer for not informing her of the need to add her baby as a dependent. The part I don't understand is when a mother has a baby, at what point do the hospital charges relate to the mother (and get covered by employee-only coverage) versus when do certain hospital charges get attributed to the child (and get covered under dependent coverage). What responsibilities does Employer have to inform Employee of rights related to dependent coverage? Employee never formally notified Employer of Employee's desire to add a dependent; but all parties knew that Employee was on the company health plan, and was about to have a baby.

Hi. We are about to implement a spousal surcharge. The biggest issue that we are looking for guidance is regarding open enrollment periods that don't align. We are unsure how to handle the situation where the employee's spouse's employer's health plan has its open enrollment at a different time of the year than we do. Here is what we would like to do, if possible: if an employee has a working spouse that elects to be covered on our plan during our open enrollment period, we will apply the surcharge. But if that spouse's employer has open enrollment later in the year, and the spouse wants to drop coverage under our plan, we want to allow that drop of coverage so the spouse can then enter their employer's plan during that employer's open enrollment. We realize that this would not be a traditional event that allows a drop in coverage. But can we allow a drop for this reason? Does the law prevent this?

The transaction is scheduled to close in November. This is why I would think that "as soon as practicable" could reasonably mean in 2013 or 2014.

You are correct. My reading of that Reg indicates that distribution must be made to all participants as soon as administratively practicable. So that seems to indicate that participants cannot make an individual election. The distributions must happen to all participants at the same time. But I also think that "as soon as administratively practicable" could happen in 2013 or 2014. The employer can decide when it will make the distributions. Do you agree?

The Plan document does not describe anything about distribution on plan termination. The distribution options under normal (non-plan termination circumstances) are as I describe above.

Hi. We have a non-governmental 457(b) plan. Our NP is being acquired by a for-profit. Upon the deal, the 457(b) will be terminated. My question is how should we handle the distributions. We have 10 participants. The deal will happen this fall. Does the organization have to choose when to make the distributions? Or can each participant choose whether to receive his/her distribution in 2013 or wait until early 2014? The Plan's distribution options include lump sum as well as installment payments. So could a participant elect to receive part of his distribution in 2013 and the rest in 2014? I haven't been able to locate any guidance on this. Thanks.

So, are you saying that at termination of employment, there is no requirement to provide an account statement? And that the annual statement showing the participant's account balance as of January 1 and the interest credits for the year satisfies any legal requirements?

I respectfully disagree... She can only defer the first year's MRD to 4/1 of the following year IF she doesn't take any distribution during the current year. Since she took a distribution, then per Reg 1.402(c )-2 Q&A-7, it counts towards her MRD requirement to the extent it "has not been satisfied" (also, the cite I provided above says the distributing plan doesn't care that the distribution was rolled over). So, it's appropriate to issue 2 1099's AND strongly advisable to currently send the participant (not the IRA custodian) a letter explaining the ineligible portion and inform her that she needs to take a corrective distribution from the IRA. Thanks Masteff. Does the corrective distribution from the IRA reflecting the MRD need to be taken out by 12/31/13 or does the person have until 4/1/14 to take it?

It's a DB plan.

Hi. What type of participant disclosure or account statement is required at termination of employment? We provide annual individual account statements to our plan participants. We distribute these statements at the beginning of July. My question is this: if a participant terminates employment, say in September, do we need to provide an updated account statement to the participant? Or can we rely on the annual account statement that we provided to the employee a few months prior? Does the answer change if the plan is a DB plan versus a DC plan? Thanks for any guidance on this.

Thanks everyone for your responses. Now, I have a question on a different scenario. Employee retires in 2010. Employee's DOB is 10/22/42, which means that she turns 70 1/2 on 4/22/13. This means that her first distribution year is 2013 and her required beginning date is 4/1/14. She was permitted to roll over her entire account balance to an IRA on 4/1/13. My understanding is that even though the first MRD is not due until 4/1/14, this was an ineligible rollover since the rollover occurred in the first distribution year. Am I correct so far? If so, how do we correct this? We can do the calculation of what the MRD should be for 2013. Would we then communicate with the former employee and the IRA custodian as to the MRD and then issue the appropriate 1099s for 2013 that reflect the MRD and the eligible rollover amounts? Thanks for any help.

The answer may be in the string above, and if so I apologize as I am not quite getting it. We have an active employee who is 72 years old. She wishes to do an in-service rollover of her qualified plan account to an IRA. My understanding is that since she was actively employed (and not an owner), her RBD was delayed until she was no longer participating in the plan. But I believe that the RMD rules for IRAs are different than qualified plans and use the age 70.5 rule even if the person is still working. So my question is this: do we (the employer) roll over the entire amount and leave it to the IRA custodian to then calculate and do the RMD? Or do we as the employer have to handle this differently because once it is rolled over to the IRA, it immediately becomes subject to the RMD rules? Whose responsibility is it (employer or IRA custodian) to calculate and process the RMD? Thanks.

Hi. We are adopting a wrap plan, but I am a bit unsure of the logistics. Here is my thinking on how to handle this: 1. Adopt a resolution for the new wrap plan. In that resolution, I was thinking of including a discussion of how the existing welfare benefits are being incorporated into the wrap. I don't want to adopt a separate termination resolution for those benefits as I worry about confusion in using the term "termination." 2. Select a three digit plan number for the new wrap. Is there some application to obtain this number? Or is it merely selecting a number available that starts with a "5" when looking at the employer's other welfare plans? 3. File final 5500s for the existing welfare benefits. Then going forward, the wrap will file a 5500. Does this all sound reasonable? Am I forgetting anything? Thanks.

I have actually seen the MetLife document that you are referencing. That is what led me to believe that this was possibly okay under the law.

Is there a way to amend the plan to have withholding from a bonus check optional? Or even an administrative procedure? I take the stance, that if participants can stop and start back up at any time (per administrative procedure), that people can ask for deferrals not be taken from bonuses. the way i see it, the participant is "stopping" for one paycheck and "restarting" right away after that. This way, if someone wants some taken from the bonus check they can, while those who don't want it, don't have to. best of both worlds. Well, our plan does allow for a separate bonus-only elective deferral percentage. So participants can elect a different deferral percentage on bonus payments than they elect for regular wage payments. But our payroll system isn't structured in a way to make this work. So we don't allow this option. So we either continue to take deferrals out of bonuses at the same rate as out of wages; or if permissible, amend the plan to not take any deferrals out of bonuses.

Tom Poje - The current document doesn't allow this, but that doesn't necessarily mean that it isn't permissible under the Regs. Diversified (our TPA and document provider) admits that the document is the conservative approach. They will amend the document if our ERISA counsel directs them to do so. BG5150 - the reason is more of catering to our employees' desires. Our employees repeatedly have asked that deferrals not come out of bonuses. They simply want the cash. So we, as an organization, want to at least see if it is permissible by law to make this type of change.

Hi. We have an elective deferral only plan (no employer contributions). We have been investigating the possibility of changing the plan's definition of compensation to exclude certain types of compensation. Specifically, we want to exclude bonuses from compensation so that no elective deferrals come out of bonus payments. My research has been inconclusive on this. Some of the information I have found suggests that this type of exclusion could violate the requirements of effective opportunity under the universal availability rule. This is based on the notion that such an exclusion could impact a participant's ability to make a full deferral up to the 402(g) limit. Other information I have read suggests that the above position is simply conservative and that such an exclusion does not violate the rule. Does anyone have any thoughts on this? Have you researched this? Thanks for any thoughts.