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Found 11 results

  1. We’re reviewing our medical evaluation process for assessing disability benefit applicants, and we would appreciate feedback from other jurisdictions regarding their practices. Does a third party manage the evaluation process or a panel of doctors? If a panel of doctors oversees the process, how many serve on your panel? What is your method of compensation (flat monthly amount, paid per case)?
  2. It has been my understanding that the new fiduciary rule issued by the DOL applies only to ERISA plans and IRAs (if and when it actually goes into effect). As such, governmental plans and church plans would generally be exempt. However, I recently came across the assertion (here) that money rolled over from an ERISA plan into a governmental plan would continue to be subject to the new fiduciary rules. Has anyone else seen this interpretation of the new rules? I can't find anything else to support the author's position. (By the way, I do understand that advice regarding whether to roll funds between a governmental plan and an ERISA plan or IRA would be advice subject to these rules. The article raises a separate issue by suggesting that the rolled funds would be subject to the new rules while in the hands of the governmental plan.)
  3. I understand that filing Form 5500 begins the running of the statute of limitations for an ERISA Plan IRS audit. A governmental DB plan, however, is not subject to the Form 5500 filing requirement. Any leads on what starts the running of the SOL for a governmental DB plan?
  4. An employee was working for City A and was covered under a union contract hat provided she was an eligible employee for purposes of Plan X (a defined benefit plan). After ten years of service, Employee became a certified teacher and took a job with the Board of Education for (same) City A and is now covered under a statewide retirement system for teachers of State S and no longer an eligible employee for Plan X. Assume that her last day of work with the City was on Friday and she started teaching in the schools of City A on the following Monday. Did this employee terminate service with City A when she became a teacher or has she continued to work for the same employer and just stopped being eligible for Plan X? Must she wait until she retires as a teacher (totally leaving employment with City A or its Bd of Ed or any other subdivision or related employer) in order to commence benefits? The plan does not permit in service commencement of benefits. The plan (which is based on statutes, ordinances and collective bargaining agreements) has very imprecise language so it's really not helpful at all in determining whether or not she terminated employment. If anyone can point me to guidance on how to determine separation from employment or application of controlled group rules as may be applicable to governmental plans in such a case, I would be appreciative. Thanks!
  5. This is related to a question I posted recently under Defined Benefit plans. Client recently discovered a few participants who appeared to have exceeded compensation limit. Each of these participants was participating prior to 1/1/96, and the plan had no compensation limit in effect on 7/1/93. The plan was amended back in 1995 (the TRA 86 restatement) to incorporate the limit effective 1/1/96 for all participants. Did the grandfather rule for eligible participants need to be set forth in the plan document for the plan to be able to use it?
  6. It was discovered that a few participants in a governmental defined benefit plan had compensation over the 401(a)(17) limit. Benefits were within 415 limits. This resulted in an overpayment for a few participants who have retired but also in employer pick up contributions that were higher than they should have been. There seems to be a good amount of guidance (including last year's revenue procedure) and opinion out there on how to correct the overpayment. BUT How can the pickups be corrected? Assume that they involve years prior to 2015. My immediate thought was that the appropriate correction would be to 'forfeit' under the plan - meaning the employee would not have credit for them - which in this case really boils down to whether contributions would be paid out to a beneficiary if the participant died before receiving annuity payments at least equal to his or her contributions. Then the "Employer", in this case the municipality, would need to make the employee whole for the deduction that was taken from pay in error. The payment to the employee would be reported on a revised W-2 for each applicable calendar year, and the employee would need to re-file taxes for those years. Is there a better (easier) answer? Something that doesn't involve re-filing individual income tax returns? Also, could it be possible - consistent with EPCRS principles - to offset the overpayment by the over-contributions? For example, the plan overpaid you $5000, but you overpaid the plan $2000, so you need to pay back $3000 to the plan. Errors are very small relative to the plan size and involve only a few plan years. The intention is to self correct, not to submit under VCP. (It's understood that the plan wouldn't have reliance on the correction method without VCP compliance statement.)
  7. I posted this issue in EPCRS and didn't get a response so I'm trying again here. Governmental employer with a defined benefit plan that includes mandatory employee contributions picked up by the employer. Handful of employees in an excluded class have been erroneously treated as eligible and pick-up contributions have been made for them for many years. How can we correct? (The employer will need to pay social security taxes for these employees, so we don't want to do a retro amendment to include them in the plan. This would also require a VCP since this isn't early inclusion of otherwise eligible employees) Thanks!
  8. Client is a municipal plan who recently discovered that a few employees who should have been excluded has been making employee contributions. One employee has been erroneously included for about 15 years and the others for less time. Mandatory employee contributions have been picked up by the employer since 2003 and were after tax prior to that. Note: This is not an early entry of an otherwise eligible employee - this employee would never become eligible for this plan. Can the plan distribute the contributions to the employee to correct? Can this be done under SCP (assuming insignificant failure) or would a VCP application be required? Would the distribution be taxable in the year distributed as an excess amount or be taxable in the year in which each contribution was made? I am not aware of any formal guidance that addresses this issue specifically. However, I have read the transcript of an IRS phone forum from 2/21/13 on EPCRS changes and the last question asks what should be done with 401(k) deferrals for a participant who was not eligible. Janet Mark stated that the deferrals should not be forfeited and should not be treated as excess amounts, but should be distributed back to the employee and the employee would take that dollar amount into his taxable income. Further, this might required that the participant file an amended tax return to take into account the deferrals. This situation seems to be analogous - so would a participant have to re-file 15 years' worth of tax returns in order for the plan to make this correction? Any thoughts are appreciated!
  9. This is a new one on me. A state instrumentality ("Employer") sponsors Plan A, its own defined benefit plan (i.e., Plan A is not a state-wide, public plan). Participant X, who has a vested benefit under Plan A, has been arrested for embezzling a large amount of money from Employer. Employer would like to amend the plan prospectively to provide that any participant convicted of a felony against Employer forfeits all employer-provided benefits under the plan. Can it do so? The plan is exempt from ERISA as a governmental plan, so the federal vesting and anti-alienation rules don't apply. Not surprisingly, the state's statutes don't deal directly with this question. (And the statutes governing the state's own pension plan don't apply.) Does this boil down to simple state contract law? Cheers.
  10. Public employer calculated the mandatory pick-up contributions for one employee based on the wrong definition of compensation (definition varied based on date of hire, and when he was rehired, his rehire date was in record rather than his original date of hire). So contribution was smaller than it should have been for some period of time (since adjusted prospectively). Is anyone aware of guidance - or informal IRS statements - addressing this kind of situation and whether the employee needs to make up the contribution or whether the employer can simply absorb the cost for its error? The error was in no way the employee's fault.
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