Leaderboard

Yes to every thing Bill said.

No. The 415 regs (and the document) state what is supposed to happen to a 415 excess so that's pretty straightforward. I am curious how after tax money for an owner passed the ACP test. It's pretty rare.

I feel like it is Déjà vu every time there is a medical conference somewhere. "Yes Dr. Acula, I understand that your brother at Google can make this kind of contribution, but it is not going to work for your plan...."

We've written a handful of these over the years and as far as I know, there were no required amendments...until a few weeks ago, I was talking to someone at Fort William and they said, well, something different was required and would be sending some info. Glad this came up b/c I forgot about it. I will share if I learn anything.

I'm with Belgarath.* That old bene des covered him as a participant. I don't think the fact that his account was closed even matters; if he were still an active participant I would not be looking at his participant bene des for guidance. *And Bill Presson; I'm piling on but I had started writing this as they were responding and didn't want to waste the finger effort.

I'll leave it to the lawyers, but I think I respectfully disagree. What do you mean when you say "his designation?" His former beneficiary designation for HIS plan benefits is meaningless, unless the PLAN somehow provides something crazy that specifically states that a former participant's plan beneficiary designation still applies in this situation. I certainly have never seen anything like that, although I guess anything is possible. As ESOP mentions, the plan may have provisions dealing with this situation. Likely it will go to the estate. If by "his designation" you mean that the plan has provisions/forms for a potential beneficiary to designate their own beneficiary(ies) in the event that the participant dies, and the beneficiary also dies before receiving benefits, and as such potential beneficiary he validly executed such a beneficiary designation, then that's a different story, and presumably such a designation would control.

@JSR_Kris Visa status should not affect your COBRA rights. As a general matter, immigration, visa, SSN, or citizenship status is irrelevant for purposes of health plan eligibility. Eligible employees and their eligible spouses, domestic partners, or children under age 26 in the U.S. can enroll when residing in the U.S. regardless of their immigration, visa, SSN, or citizenship status. None of that changes when you're a qualified beneficiary on COBRA continuation coverage. The COBRA maximum coverage period will be 18 months where the qualifying even is loss of coverage caused by termination of employment. Note that the child will become a COBRA qualified beneficiary upon birth if you are enrolled in COBRA at the time. Full details here: https://www.theabdteam.com/blog/enrolling-new-dependents-and-changing-plan-options-under-cobra/ Treas. Reg. §54.4980B-3: Q-1. Who is a qualified beneficiary? A-1. (a)(1) Except as set forth in paragraphs (c) through (f) of this Q&A-1, a qualified beneficiary is— (i) Any individual who, on the day before a qualifying event, is covered under a group health plan by virtue of being on that day either a covered employee, the spouse of a covered employee, or a dependent child of the covered employee; or (ii) Any child who is born to or placed for adoption with a covered employee during a period of COBRA continuation coverage.

The current § 415 rules do not predate § 403(b)(7) accounts. Rather, the confusing text results from some legal drafters’ style or usage, often unfortunate, that assumes a reader’s awareness (sometimes with no signal) of all terms that have been specially defined. For agency rules to implement and interpret IRC § 415, the April 7, 2007 rules replaced the January 7, 1981 rules. https://www.govinfo.gov/content/pkg/FR-2007-04-05/pdf/E7-5750.pdf Congress enacted § 403(b)(7) on September 2, 1974, effective as of January 1, 1974. At least the 2007 revisors might have considered it unnecessary it to state explicitly that § 1.415(j)-1(e)’s reference to “a section 403(b) annuity contract” includes all the individual’s § 403(b) contracts. Internal Revenue Code § 403(b)(5) states: “If for any taxable year of the employee this subsection applies to 2 or more annuity contracts purchased by the employer, such contracts shall be treated as one contract.” And § 403(b)(7)(A) begins: “For purposes of this title, amounts paid by an employer described in paragraph (1)(A) to a custodial account which satisfies the requirements of section 401(f)(2) shall be treated as amounts contributed by him [the employer] for an annuity contract[.]” Likewise, the agency rules include this: “Section 403(b) and § 1.403(b)-3(a) only apply to amounts held in an annuity contract (as defined in § 1.403(b)-2), including a custodial account that is treated as an annuity contract under paragraph (d) of this section, or a retirement income account that is treated as an annuity contract under § 1.403(b)-9.” 26 C.F.R. § 1.403(b)-8(a). Some Treasury department lawyers worked on the § 415 rules (published April 7, 2007) and the § 403(b) rules (published July 26, 2007) around the same time. https://www.govinfo.gov/content/pkg/FR-2007-07-26/pdf/07-3649.pdf About the statement to be attached to the individual’s tax return, I don’t advise anyone; but a lawyer or certified public account might evaluate this: My limitation year for § 403(b) contracts is each year ended with August. A change must comply with 26 C.F.R. § 1.415(j)-1(d).

Generally you would need to use the latest normal retirement age under the plan. See the definition of "testing age" in 1.401(a)(4)-12 for more info. Since the DB plan has the earlier NRA, it's going to get messy. You still need to convert the hypothetical pay credit to a benefit accrual at age 62 using the plan's interest crediting rate and definition of actuarial equivalence, but then you will need to normalize that benefit accrual to age 65 using the testing assumptions before you can aggregate it with the EBAR from the DC plan. It will make your life much easier if you can amend the plans to have the same definition of NRA. The DC plan will be easier to amend.