Sec. 105 Medical Reimbursement Plan for Sole Owner of C Corp.

[KJohnson]

Individual on COBRA from prior employer starts a new corporation. He is the sole employee of this C Corp. He wants to establish a medical reimbursement account to "pick up" anything that his COBRA coverage does not pay as well as, once his COBRA coverage expires, anything that his new insurance does not cover. He also wants this Plan to be "retroactive" for four months (back to when he incorporated). This will be funded entirely "employer" contributions (no 125 Plan).

1) I assume the Plan cannot be retroactive because Prop. Reg. 1.125-1 Q&A 17 is applicable to all 105 Plans even those not funded through a 125 Plan. Do you agree?

2) If there is only 1 employee do I avoid any 105 discrimination issues?

3) Any problems in "coordinating" with COBRA coverage from a prior employer?

4) Any other problems that you see here?

[Edited by KJohnson on 07-20-2000 at 09:56 AM]

[KJohnson]

Any thoughts?