waid10

We have an employee that is applying for distribution from our DB plan. The application has a question that asks if they have any liens. The employee indicated that she has an IRS lien. Are we (the employer and plan administrator) required to withhold from her DB payment for the IRS tax lien? We have never had anyone answer that they have a lien. Thanks.

I've been given an ESOP that hasn't been touched since it timely restated and filed as a Cycle A filing in 2007. The plan has not been touched since then. It has not been amended, nothing. So it has now missed its Cycle A restatement and filing deadline on 1/31/12. I am currently restating the plan using Sungard Relius. Will a restatement typically incorporate all of the required amendments? Or do they need to be tack-on amendments? Also, I am trying to get a handle on the proper procedure for correcting through EPCRS. Do I file under Appendix F, Schedule 1? Thanks for any guidance for a relative newbie.

It turns out that the employee doesn't want to move this to another 403(b), but rather wants to roll it into an IRA. So the employee's financial advisor wants the hospital to provide a termination letter (even though the employee hasn't and isn't terminating employment) so that the rollover can happen. This just seems strange to me. The Plan doesn't allow in-service rollovers. How could the hospital allow this? What am I missing here?

A hospital client contacted me with a question. Several years ago, the hospital had several 403(b) vendors on an approved list. An employee could select one of the vendors to place their 403(b) money with. The hospital was not involved in any way, other than to process the payroll deduction. Years ago, one employee requested to move their 403(b) account balance from their current vendor to another 403(b) vendor that was not on the hospitals list of approved vendors. The employee was permitted to do this (I was not involved with the client at that time). Now a broker involved with this employee has called the hospital's HR staff and asked them to approve the transfer of the 403(b) account balance to yet a different 403(b) vendor. The multiple 403(b) vendors concept is somewhat foreign to me. My gut reaction is that the hospital doesn't have the authority to grant such a transfer. The 403(b) contract is between the vendor and the employee. The hospital isn't a party. Any thoughts on this? Thank you.

I am preparing the file a VCP application for various 401(a) plan failures. My question is whether other ERISA attorneys advise their clients to make the corrective contributions prior to filing with the IRS? Or do you prepare the VCP application so that the correction is in proposed form, and then wait for the IRS to bless the proposed correction before making the contributions? I have always made the corrections before filing as I prefer to not wait an additional 6-9 months for the IRS to respond and have earnings continuing to accrue. But I have heard other attorneys feel differently. Any thoughts?

Hi. We have an employee that died recently. He does not have a beneficiary designation on file. He is divorced with two children. Our 401(k) plan doc states that absent a designated beneficiary, his account is distributed to a surviving spouse (which there is none), then to children (there are two), then to parents, then to the estate. It appears then that we should distribute to the two children (which are adults). But he also has a 403(b) account. That plan document says that if there is no beneficiary designated that the account is distributed to the surviving spouse, and if there is none, then to the estate. So it seems that the two plan docs are not consistent. Can someone fill me in? What does the law say on this? I have looked in 401(a)(9) but haven't found anything helpful. Thanks.

Hi. We have an employee that died recently. He does not have a beneficiary designation on file. He is divorced with two children. Our 401(k) plan doc states that absent a designated beneficiary, his account is distributed to a surviving spouse (which there is none), then to children (there are two), then to parents, then to the estate. It appears then that we should distribute to the two children (which are adults). But he also has a 403(b) account. That plan document says that if there is no beneficiary designated that the account is distributed to the surviving spouse, and if there is none, then to the estate. So it seems that the two plan docs are not consistent. Can someone fill me in? What does the law say on this? I have looked in 401(a)(9) but haven't found anything helpful. Thanks.

Hi. We are a health system that recently acquired a small hospital. The hospital still maintains its own retirement plans (403(b) and 401(a)) for its employees separate from the retirement plans of the health system (this will eventually change). Since the acquisition, we have a few employees that are working part-time for the health system and part-time for the small hospital, but are working enough hours for each entity to qualify for each entity's retirement plans. How should this be handled? Is each employee simply given a choice of which entity's plans he/she wants to enroll in? Thanks.

Hi. We are a health system that recently acquired a small hospital. The hospital still maintains its own employer sponsored health insurance for its employees separate from the employer-sponsored coverage of the health system (this will eventually change). Since the acquisition, we have a few employees that are working part-time for the health system and part-time for the small hospital, but are working enough hours for each entity to qualify for each entity's health and welfare benefits. How should this be handled? Is each employee simply given a choice of which entity's plans he/she wants to enroll in? Thanks.

1. Was this payout automatic based on a prior election? Was benefit paid in accordance with terms of plan? If answer is yes then employee is taxed because funds were received. 2. If the employer is a NP the only option to avoid tax is to transfer funds to another NP 457b plan. Otherwise it is a taxable distribution b/c rollover to an IRA is not available. If 457b is sponsored by a government then funds can be rolled over to an IRA or employer plan. Yes, payout was based on terms of the plan. There is no dispute that payout was proper and that tax withholding was proper too. The employer is a non-profit.

We had an executive sever employment. His 457(b) paperwork with distribution options was sent to his home. Executive was away for a long period of time. Executive's spouse was home but never opened the mail with his 457(b) paperwork. We paid out the 457(b) account in lump sum. Now Executive has returned and wants to know if there are any options for returning the money to the Plan or rolling it over. Any ideas?

In this case, there is not a DB plan. But there are the following plans that they would be eligible for: 403(b), 401(k), and 457(b). The 457(b) is employee deferral only. The 403(b) is also employee deferral only, with a match on the 403(b) deferrals going into the 401(k). In addition, an employer non-elective contribution goes into the 401(k). These employees want to participate in the employee-deferral plans (403(b) and 457(b)), but just opt out of any employer money. Could they waive participation in the 401(k)?

May an otherwise eligible full-time employee elect out or opt out of retirement benefits in exchange for receiving a higher salary?

Since there are two employers taking some of the employees, would they just negotiate which would assume the COBRA responsibility? Or could they share it?

But how would COBRA work? The JV will cease to exist. So there won't be any plan remaining.

Yes, I believe they will be able to do that.

I have the same question as leevena. Also, is there support in the regs that this is the proper way to handle unused FSA money when the plan is terminated?

I work in HR at an organization that is a for-profit joint venture between two hospitals. My employer is going to be dissolved. Many of our employees will receive employment at the two hospitals, but some will not have jobs. My question is this: we have an FSA. How is this handled? My employer is not being acquired. It is going to be terminated/dissolved. I am not sure that the two hospitals are considered successor employers. How do we handle employee FSA accounts where money has been set aside but unused for claims? Thanks.

Does anyone know where I can purchase a 457(f) plan document. Sungard Corbel is no longer offering a 457(f) document as part of its 457 plan services. And FTWilliam only offers 409A and 457(b) documents (no 457(f) document). Thanks.

The employer is definitely over 20 employees. I am just not sure how to handle the premium payments made this year and also the premium payments made in prior years. Does it need to be re-categorized as income to the employees? If so, does the employer need to issue revised W-2s and must the employees file revised tax returns?

We currently offer 2 health plans; one is a high deductible health plan and one is not. We offer an HSA and make an employer contribution to it for employees that is equal to half of the annual deductible. The monthly premiums for the health plans are $50 for the HDHP and $150 for the regular plan. From what I understand, if an employee enrolls in Medicare, he is not eligible for the HSA. But this same employee could elect the HDHP. Is it okay that we are making the contribution to the HSA, but the Medicare person can't get that contribution (because the Medicare makes them ineligible for the HSA) even though they are in the HDHP? Our HSA administrator is recommending that we offer that same HSA contribution amount to employees that elect the HDHP but aren't eligible for the HSA.

I believe it can only be done if the option of selecting the Medicare product is presented but the employer doesn't pay for it (which would remove the financial incentive to forego the employer sponsored coverage).

Hi. I was speaking with an employer the other day. They had the practice of offering, to their Medicare-age employees, to move them off of the employer-sponsored health plan and to a Medicare product. In exchange for doing this, the employer was paying the premium for the Medicare product. I informed the employer that this was impermissible and violated the Medicare Secondary Payer rules. Medicare-eligible employees cannot be provided a financial incentive to forego employer-sponsored health coverage (42 CFR 411.103(a)). What I am not certain about now is whether the employer needs to re-categorize the premium payments made. In other words, should that premium payment be included in taxable income for the employee?

Hi. We have an employee that participated in our 457(b) Plan. She terminated employment in June of 2009. Upon her termination, she completed the form to defer distribution commencement until a later date. She selected the maximum deferral, choosing to receive her account at age 70 1/2. She now comes to us and wishes to receive distribution of her account now. She is age 62. Am I correct in my reading of Treas. Reg. 1.457-7©(2)(iii) that the law permits a change to a distribution election ONLY if the change pushes the distribution date further into the future and that a change accelerating the distribution date is not permitted? Thanks for any help.

Hi. We offer an EAP whereby employees and their dependents can receive mental health and substance abuse services. The first several visits per year are free, and then there is a copay thereafter. Employees and dependents can also access mental health and substance abuse services through participating providers under our health plan, although there are copays for all visits. Our EAP office has a patient who is an eligible dependent of an employee who is very disruptive, repeatedly misses appointments, etc. It is possible that her demeanor and the way she treats the EAP staff is due to her illness. However, none of the EAP staff want to see or treat her any longer. If we dismiss her from the EAP, what issues do we encounter? Is it lawful to deny someone access to the EAP? Thanks.