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This.

Or yo have turnover or growth or both. And also hypotehtically an artificial deadline of March 15th for 75% of your plans... Just some other variables!

I believe that 415 and W-2 are NEARLY identical, with the exception of non-qualified deferred comp distributions unless the plan provides otherwise, and treatment of certain stock option situations. Also maybe tips. A long-winded way of saying I agree that what you describe would be 415 comp.

Yea we were caught off guard by it as well...

I have seen government healthcare organizations with 501(c)(3) determination letters. DOL Opinion 2005-07A 1) appears to lean heavily on the "de minimus" position of the DOL, and 2) warns that the opinion does not address any issues under the tax code. I recall from long ago (in the last century, so things may have changed) that the IRS has not adopted the same "de minimus" position with respect to non-governmental employees participating in governmental plans. As Ebplans stated, neither is your situation. Before you read too much between the lines or think the DOL can provide you with comfort, beware that on some evidently parallel provisions in their statutes, the DOL and IRS differ. If you can get the DOL to address the specifics, that may be very helpful, especially if on the negative side. "No" would be an easier way put an end to the question, no matter how the IRS might differ. I hope you are not being asked to validate or deny the status of the plan. All I can conclude is that you have legitimate concerns, whatever your reasons for caring.

I have had many clients over the past 25+ years that were governmental hospitals. Most were county hospitals. They overwhelmingly received 501(c)(3) status so they could maintain 403(b) plans. In addition, many maintained 457(b) plans. As governmental entities, they were not subject to ERISA and the pre-ERISA IRC governs with a few exceptions. Not your facts, but they are governmental with 501(c(3) status. This sounds like your client is a FQHC, a Federally Qualified Health Center. FQHC employees are Federal employees and they get FTCA 'protection.' They get funded through the PSA and get their authority from Medicare rules, I think. See DOL Opinion 2005-07A. Again, not your situation exactly, but the DOL ruled on a statewide group of FQHCs. Reading between the lines, did the DOL consider FQHC to be non-governmental? There are also FQHC look-a-likes out there but I don't know much about them. I suggest you run it by the DOL if someone will talk to you. I bet they have thought about this. There are thousands of FQHCs operating.

I am not sure it matters how plan got frozen. So this person accrued benefits for 5 years, and then plan got frozen. Wouldn't frozen plan satisfy 401(a)(26) automatically?

Whether or not an entity is governmental for purposes of the low 400s of the federal tax code can be very tricky to determine and in my experience the IRS can be pretty demanding about the criteria because governmental plans are not subject to discrimination rules, among others. Your your penultimate paragraph is a bit simplistic, but is the starting point for the analysis. Your initial skepticism is warranted.

Assuming the election was validly executed I don't see where you have a problem...unless it triggers coverage issues which is a large part of the problem with irrevocable elections that Bird eludes to in post above especially in the micro plan market if the election is made by someone who isn't always an HCE.

Instead of requesting a private letter ruling, you might carefully review Treasury Regulation Section 1.401(k)-1(a)(3)(v) to make sure that the one-time irrevocable election does not have to be treated as a 401(k) cash or deferred election.

It's possible that even if there was a taxable distribution to the participant, the estate could be permitted to roll it over on behalf of the decedent. See the following case (kind of old but maybe still valid). https://cite.case.law/pdf/5871695/Gunther v. United States, 573 F. Supp. 126 (1982).pdf

That might be true for state law in MD but for purposes of federal tax law I would take the position this distribution is done. In tax law there is a concept known as "constructive receipt". The wife had control of the check even if for a short period. She had constructive receipt. I am confident the IRS would say the late wife had a taxable distribution. Most of the time once the check is mailed constructive receipt has happened. That is why a check mailed on 12/30 but not received say until 1/3 the following year is on the 1099 for the year mailed. The only question would be is if the husband can roll it over to an inherited IRA or not and I can't cite anything one way or another.

If the plan’s administrator has not yet instructed a distribution to an alternate payee and has not yet instructed a segregation of accounts between the participant and an alternate payee, consider doing now whatever notices and other procedural steps ought to have been done when the administrator first received the domestic-relations order. Further, the administrator might want its lawyer’s advice about whether to allow the participant a reasonable time to present whatever factual information or legal argument the participant wishes to present to assert that the order is not a qualified domestic-relations order. In my experience, few participants assert that a court’s order is not a qualified domestic-relations order.

The check was validly issued to the participant and presumably a 1099-R will be issued. Refer the husband to an ERISA attorney. Let the attorney give him an opinion whether or not he can roll the proceeds to his IRA some how in the 60 day window even if it requires a private letter ruling.

Practice Pointer: In the future send distribution checks by direct wire transfer to the Participant's bank account. Don't mail a check that can be lost, stolen, not cashed, not deposited and not negotiated. If a check has not been cashed or negotiated the intended transaction has not been completed. It's still pending. In Maryland, Harry can sign a deed transferring real property to John, but if the deed is not actually delivered to John, then no transfer of title has been accomplished and if Harry dies John will never get title since the intended transfer was not completed. Practice Pointer: Do nothing. A Plan Administrator should not be in the position of deciding what to do in a situation like this. If he guesses wrong the Plan will be facing a claim for rather large damages as well as legal fees. Better to let court make the decision. Practice Pointer: Contact the Plan's liability insurance carrier and seek their advice - in writing.

(3)Definition of year of service (A)General rule For purposes of this subsection, the term “year of service” means a 12-month period during which the employee has not less than 1,000 hours of service. For purposes of this paragraph, computation of any 12-month period shall be made with reference to the date on which the employee’s employment commenced, except that, under regulations prescribed by the Secretary of Labor, such computation may be made by reference to the first day of a plan year in the case of an employee who does not complete 1,000 hours of service during the 12-month period beginning on the date his employment commenced.

Oh ok. That sounds fine to me from an ERISA standpoint. I don't think that creates GHP issues. But you probably want to think through the qualified employee discount fringe benefits rules in §132(c) for potential tax issues.

Yes I would issue 2 1099s and yes the participant should request a distribution from the IRA - but it is important to request it as a refund of an excess contribution, otherwise they will be taxed twice. No VCP. I doubt the check is uncashed and in any event wouldn't want to mess with blowing up an investment company's system with a bad check.

If they executed the election then that means they cannot be in the plan, ever. If they signed it they can't say they should be covered so I think you are ok in that regard. Most of us in the biz don't like irrevocable elections for various reasons, but if it already exists, so be it.

I realized my answer may not have been very helpful, so I will try to add more as I have seen this many times. I think you have a couple options: 1. If you keep the Fidelity system exactly as is, then Workday needs to be coded in such a way to add deferral and catch up to get your total deferral rate then the system calculates the match each pay period. Then once an employee reaches 402g, the system needs to know to only use regular deferral to calculate the match. This route may be the best as it is just an admin coding change. 2. Keep the elections and payroll as is and amend the document to add a true up. 3. implement one election at Fidelity that continues until you reach the limits. Workday then just calculates the match based on one total election. The problem with this is how you handle all the existing catch up elections. These are just ideas to further investigate as each has its own set of challenges.

Doesn't really matter how it sounds. What matters is how it impacts the group. Are you generally restricting the compensation of HCEs, or NHCEs. You would need to annually demonstrate that the definition is non-discriminatory.

So you're saying the employer will reimburse a portion of the cost-sharing paid by the employee to ensure each visit does not exceed $75 OOP? That would be a GHP reimbursement of medical expenses in my opinion. I know it feels different because the provider is also the employer, but I don't see how that changes the basic concept that reimbursement of a medical expense creates an ERISA GHP. Here's an overview: https://www.newfront.com/blog/addressing-employee-health-plan-exception-requests-part-vi Specific Expense Payment Exceptions: Requests for Employer to Reimburse Outside the Plan Although many employers expend a great deal of time, effort, and money to maintain group health plan offerings for employees, there will always be at least perceived gaps in coverage where employees believe the plan does not provide sufficient benefits. This will often create situations where an employee requests that the employer pay for or reimburse a specific medical expense that was not covered by the group health plan. Common examples of situations where an employee will request reimbursement of a medical expense outside of the formal ERISA group health plan include: Services not sufficiently covered by the group health plan (e.g., infertility expenses, abortion travel expenses, gender dysphoria expenses, mental health expenses, autism-related expenses); Cost-sharing under the group health plan (i.e., deductibles, copays, coinsurance); Items and services not covered by the group health plan; Out-of-network provider costs under the group health plan; High-cost pharmaceuticals; Individual policy premium costs for part-time or out-of-state employees; Medical wellness expenses outside a wellness program integrated with the group health plan. Reimbursement of the Medical Expenses Creates a Group Health Plan Reimbursement of Internal Revenue Code §213(d) health expenses creates a group health plan, which would trigger the full array of group health plan laws (ERISA, COBRA, HIPAA, ACA, HSA eligibility, §105(h), etc.). Therefore, employers should avoid providing reimbursement for any §213(d) medical expenses outside of the group health plan unless it is part a HRA or wellness program that is integrated with the health plan. IRS Publication 502 provides a useful summary of expenses that qualify as §213(d) medical expenses.

As a recordkeeper, we do the same thing - dual elections from the start. At the end of the year, if the participant hasn't met the criteria to be catch-up eligible (402(g), plan limit, etc.) we move the money to the regular deferral bucket until they do meet the limit. This will be a huge problem though, when catch-ups for those making too much (in Congress' eyes) are Roth.....

This discussion is not exactly the same, but may still be helpful. The payroll system should be adding both "regular" deferral and "catch up" deferral to calculate the match until the deferrals actually become catch up. D. Lewis provided the reasoning. This is exactly the reason I don't like separate elections for "regular" and "catch up". If you have one election then the payroll system just continues to withhold until deferrals reach 402(g) for non catch up eligible or 402(g) plus catch up for catch up eligible.

I don't have an answer for how to handle this in your payroll system, but from a plan perspective it's not a catch-up until a limit is exceeded. Electing it on a form doesn't make it a catch-up. It's a catch-up once the annual limit is exceeded (or another plan limit). We find many payroll systems and record keeper forms do not handle this well.