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Found 10 results

  1. I am leaving my company before the end of the month. My coverage will end the day I leave the company, but I am being charge my full premiums for the month. Is this legal?
  2. Good afternoon to all, We have a prospect that has about 1800 employees, mostly in lower paid jobs, in the service industry (think restaurants as an example). Of the 1800, only 600 would be eligible if we use 1 year of service, dual entry, age 21. There are 12 HCE employees. All these employees are spread out over several corporations, but they are all owned by one man, so it's a controlled group. They have been presented a standard 401(k) plan with a safe harbor match to cover everyone and have rejected it. What they say they want is a deferral-only 401(k) plan for the NHCEs and a separate "carve out" plan (their terminology, not mine) that benefits only the HCEs for which the company would be willing to provide a match. We are somewhat aware of the existence of Non Qualified Deferred Compensation plans but our understanding of them is that they have so many drawbacks that they are not very popular anymore. We don't really think that the 12 HCEs will appreciate their contributions being a general asset of the employer, being subject to taxation if they leave and take the funds, etc. We understand that the contributions could be put into a Rabbi trust, but even then, they are still subject to the claims of creditors if the company experiences bankruptcy. All that makes this look like a doubtful solution. Are we missing some cutting edge, new plan design possibilities within the world of qualified plans? How have you addressed such requests, if you can share? As always, your comments and experiences are much appreciated.
  3. Client went through high turnover this year. 2 HCEs 1 NHCE > 1000 hrs 3 NHCEs terminated - 1 > 1000 hrs, 1 900 hrs, 1 < 500 hrs. All left months apart, voluntarily. Two were partially vested. 2 HCEs defer 3 NHCEs defer HCE owners want to max his allocation. Profit-Sharing has last day/1000 hr condition. I think I have to add back 2 terminated NHCEs to pass 410b Wrinkle - Plan has "New Comparability" checked as allocation. Historically, allocation has been Integrated. I think I can allocate as if "integration" was check on the AA. Just want to make sure my "bad news" is solid.
  4. Controlled group: 2 employers with their own 401(k) plans. No Profit Sharing. 401(k) coverage for 2017 fails. Plan 1 is safe harbor match, covers only 1 HCE and a lot of NHCEs. Plan 2 is not safe harbor, has no match, no PS, but covers 5 HCE owners and 1 NHCE, prior-year tested. The plans fail ratio percent test (result is under 10%). The plans cannot be aggregated for coverage testing. Seem that plan 2 needs to open up coverage to some of the plan 1 NHCEs by providing QNECs to until enough NHCEs are above the safe harbor percent and then run ABT. That QNEC is based on the 2017 ADP for the NHCEs in plan 2. The problem is that the NHCE in plan 2 did not defer in 2017, so the NHCE ADP for 2017 for plan 2 is 0% and thus the QNEC is 0%. Therefore, is there a reasonable argument that no action is needed for plan 2 to pass coverage for 2017? Note: the NHCE ADP in 2016 was also zero.
  5. It was discovered that the coverage testing has been done incorrectly for several years (more than 5). Plan fails coverage and there is no fail-safe language so we are proposing an 11(g) amendment and to file the correction under VCP. The TPA's suggestion is to allocate a QNEC contributions to the lowest paid participants sufficient to pass the AVB. While QNEC for ADP testing needs to be limited to no more than 5% or twice the representative rate, there doesn't appear to be any limitations for purposes of the QNEC for ABT. Tres Reg 1.401(a)(4)-11(g)(vii) states that the QNEC should be equal to the NHCE's compensation multiplied by the ADP and/or the ACP so I'm afraid that allocating a QNEC contribution to the lowest paid employees might be considered discriminatory by the IRS. It does not appear to me that they would pass the reasonable classification test. Is it permitted to target the QNEC allocation? Is there any guidance on how to allocate the QNEC?
  6. A client with a 401(k) plan has only 3 participants, consisting of himself as owner, his wife, and one rank and file employee. I am just now finding out that the owner and the rank and file employee are employed by the sponsoring corporation, while the wife is technically employed by her own LLC. For many years all 3 of them received deferrals, Safe Harbor, and profit sharing contributions. However, for 2017, they want to give only the wife the profit sharing contribution. I say this is discriminatory and they can't do that. The CPA says that because the wife's contribution is made by her separate LLC and not by the sponsoring corporation of the plan, it's ok for her to have a profit sharing contribution while the rank and file employee does not. I am thinking that the sponsoring corporation and the LLC are a controlled group belonging to the husband and wife and that they are still running afoul of non-discrimination rules. I am also thinking that a participating employer addendum to the plan's adoption agreement should have been in place for the LLC all these years. 1) Can they give the wife a profit sharing contribution and nothing to the rank and file employee and 2) Can a retroactive participating employer agreement be created dating back to the time that the LLC started making contributions on her behalf? Thank you for any comments!
  7. I have been contributing the family maximum to my HSA for the last 4 years and have seen the account grow significantly. My intention is to avoid dispersements as long as I can to build up enough pretax money in the account to be used in my later years to either bridge the Medicare gap for early retirement or pay for supplemental insurance once I reach Medicare age. Currently, my Wife and last eligible child is on my HDHP plan. Our contribution to the HSA is directly deducted from my paycheck. We file our taxes jointly. My son is not a dependent on my tax return but is eligible for my health insurance until he is 26 yrs old. Questions: 1. If my wife takes another job and is signed into another health plan and off of mine, can I still use the money we contributed as a family to the HSA to cover any of her healthcare expenses going forward? 2. If my eligible child signs into another healthcare plan but it does not cover dental or vision, can I use my HSA account for any of his expenses? 3. If I pass away before my wife and there is still money in my HSA, can she use the money for her medical expenses or the does the HSA have to be dispersed and taxed to the estate? Any info would be helpful.
  8. Hoping someone can enlighten me Plan is Safe Harbor Non-Elective 3%.(SHNE) Age and service waived as of 1/1 for NON-seasonal employees. Seasonal Employees are always excluded. Eligibility is 21 and 1 year of service (1000 hours in 12 month period) with dual entry 1/1 and 7/1 I'm being told that as long as the Plan can pass coverage then the Seasonal employees will NOT receive a SHNE contribution even if they have met the 21/1 year and entry requirements. Something doesn't seem right - isn't this the very definition of discriminatory? The Seasonal people are not covered under a different Plan. How does one go about defining Seasonal? Do you write a very specific definition into your Plan Documents? The client grows different crops and there are 3 seasons. Can you exclude one season (say Summer season) and not Fall and Spring?
  9. Potential prospect is a controlled group, 2 employers each with a plan, plans started a couple years ago. ER 1 plan: safe harbor match, 60 eligibles total, 10 are HCEs, no profit sharing. ER 2 plan: non-safe harbor match. 450 NHCEs, no HCEs, no PS. Matching formula is the same structure as the match formula in plan 1. Can't aggregate a SH plan with a non-SH plan. Coverage for plan 1 is 10% Suggestions for passing coverage?
  10. Coverage testing for a DB plan frozen to new entrants - the plan was frozen to new entrants several years ago. It is continuing accruals for those who were in the plan at the time. Two questions: first, can those who are not age 21 with 1 year of service be excluded (even though the plan was soft frozen several years ago)? If they cannot be excluded, can they be treated as "otherwise excludable" and tested separately? Second, the employer has many workers who work less than 1000 hours. Based on a positive answer to the first question, can they be excluded with less than 1000 hours in the current year? Two most recent years? How many years back would I have to go? Thanks.
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