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Minimum Funding Requirements-Are TSAs subject to them?


Guest Lonnie Tomlin

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Guest Lonnie Tomlin

IRC Section 412 clearly states it applies to 401(a) and 403(a) plans, appearing to exclude TSAs from coverage. The TSA Answer Book says they are subject to the rules.Per a discussion with Rosamund Ferber, Senior Tax Law Specialist, IRS, they may be subject under Title I of ERISA. I have review Title I, and honestly can't find a clear cut answer one way or the other. Can someone steer me in the right direction?

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412 does not apply.

ERISA Title I may apply. See 29 CFR 2510.3-2(f). Also very helpful is the new DOL interpretive bulletin on whether Title I applies to payroll deduction IRAs. There also is DOL guidance on whether participation in the IRS amnesty program for 403(B) plans subjects the plan to Title I (generally no) and whether allowing hardship withdrawals subjects the plan to Title I (yes). Limiting employee contributions to the 415 limit or the exclusion allowance could subject the plan to Title I. The basic guidelines are that the plan is subject to Title I if employer-funded contributions are made or if there is excessive employer involvement with the plan. A governmental 403(B) would not be subject to Title I. This is a tricky area. You may want to hire a good employee benefits attorney.

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