E as in ERISA

I think that this is just one of those computer programming issues. Once you say "Yes" then the computer program will generate an error report until you put a number in the box. Zero is not considered a number. The guy at the DOL can't close it out until you give him a number. He's not trained to tell you what number you should give him. He's only trained to know that he needs a number....

My understanding is the same as yours. I think that the only way a participant can have a "catch up" without the plan providing for it is where the participant is in two separate plans and exceeds the 402(g) limit.

Ask for a copy of the plan document.

Can deemed IRAs be used by a plan to comply with the mandatory rollover rules -- in case they can't find another provider?

If the requirements are met, 410(b)(6)© potentially allows coverage to be treated as satisfied for the period ending 12/31/2003 -- and accordingly, the new sub would not have to be added to the plan until after that time in order to pass.

If I recall correctly (though I'm not sure I am), the IRS' suggestion was that the employer would make up the contributions for a limited period of time only.

What about a board resolution authorizing the adoption of the plan?

I've heard the IRS say that the participant has a responsibility to notice at some point -- but they also joked that they don't like to look at their own paychecks -- so they don't expect others to look at every one of theirs. I can't remember what time frame they suggested. I think that it was reasonable -- I don't think that it was longer than a quarter.

See Q. 19 at http://www.abanet.org/jceb/2004/qa04irs.pdf

That sounds like unauthorized practice of law to me.....

The DOL answers a related question on its web site. http://www.dol.gov/ebsa/faqs/faq_911_2.html I am a participant in a 401(k) plan. While I am on active duty, may I give my spouse or another individual the authority to change my investment allocations through a power of attorney or other legal document? Can that individual also apply for a participant loan or hardship withdrawal on my behalf? The terms of the plan would generally govern this situation. However, if some employees are permitted to designate individuals to act on their behalf in other contexts when they are away from work, the employer should permit the service member to designate someone to act on his or her behalf also.

Remember that the loan still has to meet the "agreement" requirement of the regulations. Make sure that you will have a paper trail of the participant agreeing to pay the full amount of the refinanced loan, according to its terms (might have a new interest rate, etc.). And make sure that your truth in lending disclosures will be correct. These can be more of an issue on refinancing, especially with "paperless." You're only writing a check for the additional amount, but you need to make sure your paperwork reflects the total amount.

I thought that you needed to allocate BEFORE the spin-off (to avoid doing a filing).

Does your plan define 414(s) compensation? Many plans have one (or more) definition(s) of compensation for allocations, another for 415 limits, another for testing (414(s) compensation).

Probably not.

Actually, I have asked an agent in my region a question similar to velll's and been told that might satisfy an agent on examination. It should be well documented why the problem was not timelydentified and why the distribution method was chosen. (The better your facts, the more likelihood of success upon examination. This includes not only the facts specific to this situation, but then entire plan operations. E.g., if other facts suggest that the plan is operated in favor of HCEs, then this might not succeed).

My understanding is the opposite. I understood that the compensation and deferrals are both considered as occurring on 9/30/03 for purposes of 402(g). See Notice 87-13, Q&A 6: "How does section 402(g) apply to partners of a fiscal year partnership for the first taxable year of the partnership ending after December 31, 1986? … such elective deferrals would be treated as having occured, for purposes of section 402(g), on the last day of the partnership year..." So the October 2002 contributions would be reported on the K-1 for 9/30/03 and treated as occurring in 2003.

The DOL electronic disclosure regulations are at http://www.benefitslink.com/erisaregs/fina...cdisclosure.pdf They allow active employees who have regular access to computers as part of their jobs to be provided the information electronically. All other employees must satisfy the notice and consent requirements of the regulations before they can be provided information through electronic delivery. (And then paper must be available upon request). Unless either all of your employees have regular access to computers for work purposes (or you are including data about access to computers in the info you provide to the administrator), then you probably need to satisfy the notice and consent requirements. There is not a specific requirement to provide an annual statement. ERISA 105(a) requires that a statement be provided upon request (maximum once a year). The electronic disclosure regulations do not appear to apply to this requirement -- no notice and consent. ERISA 105© requires that a terminated participant be provided with the info, if any, reported on the Form 5500 Schedule A. That information is subject to the electronic disclosure regulations -- notice and consent required. If a plan is intended to satisfy ERISA 404©, those regulations require that participants be provided information about values of shares, expenses paid from their account, etc. (some must only be provided upon request). Some of this info is likely satisfied through statements. That information is subject to the electronic disclosure regulations -- notice and consent required. Enron bills that are still pending in Congress contain annual/quarterly statement requirements. It is likely that if those pass the DOL would make them subject to the electronic disclosure regulations.

Note that the IRS' 403(b) examination guidelines indicate that the employer would include any related employer under 414(b), ©, (m), (o). http://www.irs.gov/pub/irs-tege/403b.pdf The point is that regardless of what the legislative history, statute and regulations say, you could get an agent and supervisor who adamantly insist on aggregation -- and potentially tell you that 414© provides the statutory authority to do whatever they want -- because it is vague enough to support any conclusion....

? Only 414(b) references 1563.

Here's another link: http://benefitslink.com/perl/qa.cgi?db=qa_..._employer&id=19 It's a more recent article (1999) from the Who's the Employer column/book discussing the IRS' past position and disputing it to some extent. The logic in these articles might be used to win on appeal. But lots of taxpayers don't want to take an issue that far. The statute simply says that the organizations have to be under "common control." And it's possible for the IRS to assert that one organization is under "common control" with the other where the one's board appoints the other's board. They analyze control all the time for other purposes -- e.g., in terms of reporting compensation, transactions, and other information on the Form 990 -- and applying tax rules on the Form 990-T. And if they have established for those other purposes, then they may very well apply the same logic to the plans. This is one of those situations where the client needs to decide whether they wants to be okay in an IRS exam or whether they are willing to take it to court and win the appeal. (And only an attorney can advise them on their probability of success in a court case -- that is practice of law...)

It appears unlikely that there would have been any additional allocations in prior years if the plan had been operated correctly? It appears that the forfeitures for any one year would have been in the range of $10,000 or less (dividing $60,000 by "several"). So if the prior years' contributions would have been similar to this year ($50,000) or even much less, then there probably would not have been any excess to allocate? So no issue there? But can you clarify what has been happening with fees? They have been deducted out of forfeitures? Or deducted directly out of accounts? So some people have lower account balances than they would have had the expenses been properly paid out of forfeitures? My only warning is that fee problems are becoming the big issue of the day, so make sure the warning is adequate...

See http://www.kglawpgh.com/subsearch/publicat...sfj_dec1988.htm It's old, but it provides some of the history of the IRS' position -- as well as arguments about why it may be questionable. So they may have room to take either position.

So I'm assuming that there is no stock? So why are they considered "wholly owned"? Do you mean "wholly controlled"? And what are the specific facts?

What types of organizations are these and what type of ownership? I'm assuming the hospital is a 501©(3) tax exempt organization and so are the "subsidiaires" -- in order to actually be eligible employers? A "wholly owned subsidiary" would more likely be a "wholly controlled subsidiary" in the tax exempt context. There wouldn't generally be stock ownership. There would be control -- e.g., the ability to appoint the board of the subsidiary, etc. The rules for common control/controlled group are not as clear in this context. There is some indication from the IRS regarding how they think that the rules would apply -- mostly based on the voting power concept -- and applying that to the ability to control through appointment of the board, etc. But I don't think that the law is clear.