E as in ERISA

If there's no 401(a)(30) violation, then you don't have a plan qualification issue. Appendix A .04 can be used where the 402(g) excess is "in contravention of 401(a)(30)." That only occurs where you have related employers.

I disagree. Its my understanding that if they are not related, then its not a plan qualification issue so there is no way to correct after 4/15. But if they are related, then it is a plan qualification issue under 401(a)(30) so you can correct under EPCRS even if its after 4/15. Self correction may be an option for a limited time period.

I tend to agree. But I know I'm not going to convince someone who wants clear guidance on the issue -- when I'm pretty sure that there is none.

As everyone seems to agree. The rules aren't clear. There are too many gaps. The conservative approach is to disallow it based on lack of clarity.

72(p) regs: Q-7: What tracing rules apply in determining whether a loan qualifies as a principal residence plan loan? A-7: The tracing rules established under section 163(h)(3)(B) apply in determining whether a loan is treated as for the acquisition of a principal residence in order to qualify as a principal residence plan loan. 163(h)(3)(b) ACQUISITION INDEBTEDNESS. --(i) IN GENERAL. --The term "acquisition indebtedness" means any indebtedness which -- (I) is incurred in acquiring, constructing, or substantially improving any qualified residence of the taxpayer, and (II) is secured by such residence. Such term also includes any indebtedness secured by such residence resulting from the refinancing of indebtedness meeting the requirements of the preceding sentence (or this sentence); but only to the extent the amount of the indebtedness resulting from such refinancing does not exceed the amount of the refinanced indebtedness. 1.163-10T(p)(5) Residence under construction--(i) In general. A taxpayer may treat a residence under construction as a qualified residence for a period of up to 24 months, but only if the residence becomes a qualified residence, without regard to this paragraph (p)(5)(i), as of the time that the residence is ready for occupancy.

I think that the loan regs say to look at the tracing rules under 163. My recollection is that there may be some guidance there on these types of situations.

MK2308's cite is from the EPCRS ruling -- so I think that it applies to corrective refunds relating to operational errors not ADP, etc. So I think that the question is whether you can consider there to be an operational error at some time.... Was there an operational error at the time of the original distribution -- failure to distribute the entire account balance and/or late crediting of contributions or income that resulted in the de minimis amount? Or if you don't distribute, then does it become an operational error at some point down the road? A year? Two? Then at that point can you apply the EPCRS rule and say that you don't have to distribute because its less than $50? Does this justify forfeiting it for now? (Maybe paying it out if the participant comes back and asks for it).

"Blackout" only includes temporary suspensions. A permanent elimination of a fund -- such as the employer stock fund is not a blackout subject to the 30-day notice rules. (Generally fiduciary principles still apply. But the DOL wouldn't get you for the Sarbanes Oxley penalty). However, you do have to consider the replacement fund -- any delays in getting into a new fund? That might be a temporary suspension that is a blackout. See the preamble to the Sarbanex Oxley regulations for the example.

Based on last year's DOL bulletin and this year's IRS ruling, they may be able to charge the terminated participant's account for his share of the plan expenses. Plan expenses are generally higher than IRA expenses, so the participant may decide to get out of the plan.....

Wouldn't a cafeteria plan make sense where they want different levels of benefits? E.g., if they are 50/50 owners but one wants family health coverage and the other wants single -- with different price tags. If the employer pays all, then they may be messing with the 50/50 split. And technically they shouldn't be adjusting salaries to make up for that difference -- because then they are actually doing salary reductions -- without a plan. By using a cafeteria plan, then they can each purchase what they want....

Mental exercise should be expected in a field with lots of rules and exceptions to those rules and then exceptions to those exceptions. At some point almost every statement can be true. Then its only a matter of context. Whomever oriecat is debating may be insistent because he know that someone told him that the plan doesn't have to provide catch-ups in order for them to apply. The best answer may be "yes, but that rule only applies in the following situation...." Then the other person doesn't have to be wrong...just incomplete.

Actually, I myself am not 100% sure. The statute and regulations simply say that it's not "treated" as a catch-up by the plan -- which is a little bit different than saying that the plan doesn't provide for catch-ups. And the regulation makes reference to the applicable dollar catch-up limit under the plans but that may be a problem with the regulation because the statute doesn't say that. I think that it's at least arguable.

When do you see multiple employers in a controlled group all "sponsoring" the plan? I think that the answer is never. One is the sponsor and the rest participate. Accordingly, when the second part of that definition of master trust apply? Never. To give it meaning, I read it as requiring either that you have multiple companies within a controlled group participating in one plan.

I wouldn't rely on that distinction. When do you ever have a plan "sponsored" by several companies? I would qualify it under 81-100 even if it is a master trust. Master trust is primarily just filing status. It still has to satisfy the exclusive benefit rule.

In an ERISA 404© you would generally have the equivalent of the second statement (e.g., you would say that the fiduciares are not responsible). But what if an employee looks at his choices and finds he isn't happy? And he decides not to sign the letter? Etc., etc. What happens? I'm guessing neither the employer or employee will end up happy.... The current theory is to make sure that the employees have access to the tools so that they can do well and be happy.... (e.g., investment education or advice...)

It's not a "master trust" in the 5500 sense if the companies are not part of the same controlled group. (Maybe it is in the "master plan" context, but I doubt that is what they have here). The trust needs to satisfy the "group trust" rules under Rev. Rul. 81-100 to avoid violating the "exclusive benefit" rules. "Exclusive benefit" is the big risk. If as mbozek notes, plan A participants can legally get to plan B's assets, then the exclusive benefit rules are potentially violated.

He has to give you a reason.

Actuarysmith -- see Regulations Section 1.402(g)-2(b): “[A] catch-up eligible participant who makes elective deferrals under applicable employer plans of two or more employers that in total exceed the applicable dollar amount under section 402(g)(1) by an amount that does not exceed the applicable dollar catch-up limit under either plan may exclude the elective deferrals from gross income, even if neither applicable employer plan treats those elective deferrals as catch-up contributions.”

KJohnson and that other person are correct. And if multiple welfare benefit plans are in the one VEBA, there may now be multiple Form 5500s -- one for each separate plan....

If my recollection is correct, the reason that you can't "terminate" a 403(b) is that you can only make distributions at 59-1/2, severance, death or disability. So even if you said you were terminating, you couldn't distribute the money out unless all employees meet one of those. Does the employer have any involvement other than withholding the deferrals and sending them on? Does it make contributions, limit investment options? The employer can try and eliminate its involvement. It can open up investment options so that employees can transfer them wherever they want. It can stop making any employer contributions into the arrangement. I think that there are links on here -- if you look for discussions about how you can attempt to make it into a non-ERISA plan....

They can't have it be nontaxable unless they fit it into an exclusion -- such as medical....

Some of the 457(b) rules apply only to governmentals.

Let me re-phrase that zero is not an entry (as opposed to not a number). Some computer programs automatically put in a zero until you enter a number (probably not as much anymore...). So a zero is not treated as an affirmative answer in some cases.

From footnote 3 to the 2000 proposed loan regulations: \3\ The Department of Labor (DOL) has advised the IRS that... the administration of a participant loan program involves the management of plan assets. Therefore, fiduciary conduct undertaken in the administration of such a loan program must conform to the rules that govern transactions involving plan assets. In particular, a loan program must be administered in a prudent manner, solely in the interest of the participants and beneficiaries, and for the exclusive purpose of providing benefits to participants and beneficiaries. ...In the view of DOL, it is questionable whether a participant loan program of a plan covered by Title I of ERISA that does not provide for timely repayment of loans (through payroll withholding or otherwise), REGULAR AND EFFECTIVE COLLECTION EFFORTS FOLLOWING A DEFAULT, and adequate security for the plan in the event of default would be in compliance with the rules applicable under Title I of ERISA to transactions involving plan assets. In the view of DOL, it is also questionable whether such a program would qualify for the relief provided under section 408(b)(1) of ERISA. See Preamble to 29 CFR 2550.408b-1.... A fiduciary must take steps to ensure, inter alia, that such a loan is bona fide and not a mere transfer of plan assets, that the loan is adequately secured, and that the plan's assets will be preserved in the event of default. See Preamble to 29 CFR 2550.408b-1, (54 FR at 30521).

ERISA requires a plan administrator to collect a loan -- regardless of whether the loan has been deemed under IRC 72(p) or not.