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Health Savings Account Plan Document Question & Answers

2015 July 19
by Sarah Fields

Helen asks…

Can you take a reduced salary from your employer and receive a higher dividend contribution to your 401k?

I am considering going back to work for my family business. Let’s say they are going to be paying me 60k per year. Can I take a reduced base salary of 30k and have them give me an annual dividend of 30k that goes straight to my roth 401k plan? Is this legal and do other people do this? I will still probably contribute the max $16,500 per year from my base salary which will keep me under the contribution limit of $49k per year from the employee and employer. It seems as though this would be legitimate because the dividend of 30k will not exceed my 30k base salary since the rule is the employer can only contribute up to 100% of your salary. Also, is there a special company 401k plan that needs to be set up for the employer to make dividend contributions like this? Will the dividend be tax free for me since the company has already paid taxes on the income? Serious responses only please, thanks a lot!

Sarah Fields answers:

You asked this question 13 hours ago and no one has given you an answer yet! Now I know the reason…It’s impossible to answer!!!

I just spent about an hour reading IRS documents and publications (sort of like watching paint dry) trying to find an answer for you. What I found is that you need to talk to the administrator of the 401(K) plan your family business currently uses.

There are certain restrictions on 401(k) plans having to do with non-discrimination, employee eligibility, etc. That may make what you are asking about impossible under their current plan. Here’s one of the publications that discusses 401(k) plans;
IRS Publication 560

One of the rules that I’ve found comes up often is that the way the company contributes to employees 401 accounts has to be uniform and not show favoritism. In other words, for them to do what you are suggesting, they would have to do the same thing for everyone else.

Having said that, it is possible to do what you asked, but there is no way to know from where I’m sitting. Keep in mind that there are other alternatives your company can use to contribute to the retirement funds of certain employees – so called “top heavy” plans, stock options, profit sharing, etc as well as other ways of compensating you like health savings accounts and so forth.

I’m sorry I am not better versed with these plans as they can get pretty complex. I’m much more familiar with 401(k) rollover procedures than I am with the minutia of the various plans themselves. I could spend 6 hours reading IRS documents and still not be able to help you because I don’t know anything about the plan you have. The best suggestion I could make is, as I said above, for you to talk to the company that administers the plan your family business participates in, be that Fidelity or Vanguard or whomever. They would be the ones that can tell you in detail the type of provisions allowed. Someone at your company has the name of the representative who set it up in the first place and/or the current advisor in charge of it.

I’m sorry I wasn’t any more help, but I hope I’ve at least pointed you in a direction that can answer your questions more accurately than you are likely to find on Yahoo Answers.

James asks…

maternity grant?

hi all i am 28 weeks pregnant and understand i can apply for the maternity grant in a weeks time any ideas how long it takes to come through we are going away for a week and plan on buying all the baby things we need when away so hoping it comes in time
are you 2 bonkers or summit what the hell has a diet got to do with the maternity grant

Sarah Fields answers:

Sure Start Maternity Grant factsheet
If you’re on a low income, the Sure Start Maternity Grant is a one-off payment to help towards costs of a new baby. The grant comes from the Social Fund and you don’t have to repay it.
Who is eligible?
You can get a Sure Start Maternity Grant if you or your partner or civil partner receive any of the following:

Income Support
income-based Jobseeker’s Allowance
Pension Credit
Child Tax Credit at a rate higher than the family element
Working Tax Credit where a disability or severe disability element is included in the award
and if one of the following applies to you:

you or your partner or civil partner are pregnant or have given birth within the last three months
you or your partner or civil partner have adopted a child, or in certain circumstances have been granted a residence order for a child, within the last three months and the child is less than one year old
you and your husband or wife have been granted a parental order for a surrogate birth within the last three months
you’re getting benefit for a dependant under the age of 20 who is pregnant or has given birth within the last three months
Income Support factsheet
Jobseeker’s Allowance factsheet
Pension Credit factsheet
How much do you get?
£500 for each baby. Your savings won’t affect the grant.
How it’s paid
The Sure Start Maternity Grant can be paid directly into your bank, building society, Post Office® or National Savings account that accepts Direct Payments.
Effect on benefits or tax credits
The Sure Start Maternity Grant won’t affect your other benefits or tax credits.

Tax credits – how to understand them
How to find out if you qualify for benefits
How to apply
You, your partner or civil partner can apply for a Sure Start Maternity Grant by completing form SF100 from your local Jobcentre Plus office.

Or you can download a form from the Department for Work and Pensions (DWP) website and return it to your Jobcentre Plus office.

Download a Sure Start Maternity Grant form (SF100) (PDF document, 90K) (opens new window)
Help with PDF files
Adoption law rights – civil partnerships and unmarried couples (opens new window)
When to apply
You can claim the grant at any time from the 29th week of your pregnancy until your child is three months old.

If you’re adopting a baby or, in certain circumstances, have been granted a residence order, you must claim the grant within three months of the adoption or date of the residence order and the child should be no more than 12 months old when you claim.

If you’ve been granted a parental order for a surrogate birth, you must claim within three months of the date of the parental order.

If you’re waiting for a decision on a qualifying benefit or tax credit do not delay in making your claim as you must still claim within the three month time limit.
How to appeal
If you’re refused a Sure Start Maternity Grant or if you have questions about your payment, you can ask the Jobcentre Plus office that dealt with your claim to look again at their decision.

If you’re still unhappy with the outcome, you can appeal.

How to appeal against a benefits decision
What else you need to knowInformation you’ll need to provide when you apply
You’ll need to tell your Jobcentre Plus office when your baby is due.

If your baby has already been born – tell Jobcentre Plus the date of birth, adoption, residence order or surrogacy.

If you’re claiming for adoption, residence order or surrogacy, they’ll need to see original copies of your adoption papers or residence or parental order.

You’ll also need to show Jobcentre Plus that you’ve been given advice on the health needs and general welfare of your child, and the mother’s health, if you’re claiming before the baby’s born.

There’s a certificate for this on the back of the claim form that you’ll need to get signed by a health professional, for example:

a community or hospital midwife
a health visitor
your doctor
You can get more information at your local Jobcentre Plus office.

Nancy asks…

who demos explain this was obama telling fibs again?

Last week, Douglas Elmendorf, the director of the nonpartisan Congressional Budget Office (CBO) sent shockwaves through Washington when he told Congress that the Democrats’ plans would make health care more costly. Throughout this debate, President Obama has spoken of the need to “bend the cost curve” or drive health care costs down. During a congressional hearing, however, Mr. Elmendorf testified that the Democrats’ plans would have the opposite effect, saying that under their proposals, “The curve is being raised” and costs would “significantly expand.” That’s because the Democrats’ plan adds a new layer of taxes, mandates, and bureaucracy on top of the current system. If that’s not bad enough, the Democrats’ plan cuts Medicare and takes away choices for millions of seniors. What does all of this mean? Higher costs for the medicine and treatments you need.

Sarah Fields answers:

It’s Not An Option

Posted 07/15/2009 06:46 PM ET
Congress: It didn’t take long to run into an “uh-oh” moment when reading the House’s “health care for all Americans” bill. Right there on Page 16 is a provision making individual private medical insurance illegal.

When we first saw the paragraph Tuesday, just after the 1,018-page document was released, we thought we surely must be misreading it. So we sought help from the House Ways and Means Committee.
It turns out we were right: The provision would indeed outlaw individual private coverage. Under the Orwellian header of “Protecting The Choice To Keep Current Coverage,” the “Limitation On New Enrollment” section of the bill clearly states:
“Except as provided in this paragraph, the individual health insurance issuer offering such coverage does not enroll any individual in such coverage if the first effective date of coverage is on or after the first day” of the year the legislation becomes law.

So we can all keep our coverage, just as promised — with, of course, exceptions: Those who currently have private individual coverage won’t be able to change it. Nor will those who leave a company to work for themselves be free to buy individual plans from private carriers.
From the beginning, opponents of the public option plan have warned that if the government gets into the business of offering subsidized health insurance coverage, the private insurance market will wither. Drawn by a public option that will be 30% to 40% cheaper than their current premiums because taxpayers will be funding it, employers will gladly scrap their private plans and go with Washington’s coverage.
The nonpartisan Lewin Group estimated in April that 120 million or more Americans could lose their group coverage at work and end up in such a program. That would leave private carriers with 50 million or fewer customers. This could cause the market to, as Lewin Vice President John Sheils put it, “fizzle out altogether.”
What wasn’t known until now is that the bill itself will kill the market for private individual coverage by not letting any new policies be written after the public option becomes law.

The legislation is also likely to finish off health savings accounts, a goal that Democrats have had for years. They want to crush that alternative because nothing gives individuals more control over their medical care, and the government less, than HSAs.

With HSAs out of the way, a key obstacle to the left’s expansion of the welfare state will be removed.

The public option won’t be an option for many, but rather a mandate for buying government care. A free people should be outraged at this advance of soft tyranny.

Washington does not have the constitutional or moral authority to outlaw private markets in which parties voluntarily participate. It shouldn’t be killing business opportunities, or limiting choices, or legislating major changes in Americans’ lives.

It took just 16 pages of reading to find this naked attempt by the political powers to increase their reach. It’s scary to think how many more breaches of liberty we’ll come across in the final 1,002.

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