E as in ERISA

Look at Regulations Section 1.401(a)(4)-4 re benefits, rights and features. In particular look at Regs Sec. 1.401(a)(4)-4(e)(3)(iii)© that indicates that the right to a particular form of investment is a right or feature (and therefore has to be made available on a nondiscriminatory basis).

Look at Regulations Section 1.401(a)(4)-4 re benefits, rights and features. In particular look at Regs Sec. 1.401(a)(4)-4(e)(3)(iii)(G) that indicates that each rate of match is a right or feature (and therefore has to be made available on a nondiscriminatory basis).

The regulations are at: http://www.benefitslink.com/taxregs/rmd2002final.pdf Regulations Section 1.401(a)(9)-9 Q&A 2 has the uniform table.

IRC and ERISA allow employer contributions to a 403(B) plan. However, it is possible that this vendor has its own rules under which it will not service a 403(B) plan with employer contributions. That would not be surprisng. The rules get more complicated and many employers fail to recognize the additional requirements, so the plans have more operational problems.

Rumor is that the extension will go part way into 2003 -- maybe even the fall -- but not the end of the year.

ERISA Section 101 requires a blackout notice. Regulations Section 2520.104-23 exempts "top hat" plans from the reporting and disclosure requirements of ERISA Sections 101 to 111. But a top hat plan might not be exempt from some of the SEC requirements.

Unless your plan allows them to continue to make payments while their accounts remain in your plan, then they will be forced to either pay off the loans or have the loan offset (and reported to them as taxable income).

In his ERISA Outline Book, Sal Tripodi clarifies the differences between the compensation definitions. He indicates that to the extent that group term life insurance provided by the employer is includible in an employee's gross income, then it is includible in the 415 "includible compensation" definition and the W-2 definition. He say that it is excludable from the wages for withholding definition under IRC Section 3401(a)(14). Does that work?

Do you have two determination letters?

But there isn't a PTE that even remotely allows stealing! This PTE appears allow an employer to extend credit to the plan through "payment of benefits in accordance with the terms of the plan."

It is my understanding that you generally have to wear "two hats" in order for a prohibited transaction to occur.

That sounds like a different version than what I've seen. The one I saw only included medical (including flexible spending accounts). It moved the entire cost to employees, who paid for them through a cafeteria plan. Then there was a reimbursement from the employer under 105. It was sold on the premise that it significantly reduced employment taxes. But they were essentially "double dipping" on the tax benefit. Health premiums and expenses are already excluded from FICA taxes to the extent that they are paid by the employer or paid by employees through a cafeteria plan. And for tax purposes, neither of those amounts are paid by the employee. So the employer can't reimburse them using Section 105 and therefore the reimbursements aren't excludable from FICA.

If they don't officially terminate the plan, then they still have to continue to follow the requirements -- including the requirement to allow eligible employees in. So it might become active again. If they terminate without first amending for new law, then they have operational violations. Some say they are more likely to get selected for IRS audit if they terminate without filing for a determination....

For purposes of the 72(p) rules (which also have a 50% limit), are elective deferrals treated as amounts contributed by the employer (like they are for many purposes under 401 ff.)?

A variety of tax exempts use them for a variety of reasons. E.g., a small tax exempt may not want to offer a 403(B) to everyone because of the additional payroll work required, and it may offer a 457(B) to one executive to make sure he can do more than an IRA. Or they may use it as a retention tool to provide additional benefits to a key executive.

It was my understanding that some sponsors use PTE 80-26 as the basis for paying benefits out of corporate accounts and then reimbursing themselves with a payment from the plan (e.g., in a small plan without an outside trustee where the plan is invested in mutual funds and they won't cut checks to participants). Here is a link to PTE 80-26: http://www.dol.gov/pwba/programs/oed/80-26admend.htm The requirements of the PTE, as amended, are as follows: (a) No interest or other fee is charged to the plan, and no discount for payment in cash is relinquished by the plan, in connection with the loan or extension of credit; (B) The proceeds of the loan or extension of credit are used only-- (1) for the payment of ordinary operating expenses of the plan, including the payment of benefits in accordance with the terms of the plan and periodic premiums under an insurance or annuity contract, or (2) for a period of no more than three business days, for a purpose incidental to the ordinary operation of the plan; © The loan or extension of credit is unsecured; and (d) The loan or extension of credit is not directly or indirectly made by an employee benefit plan.

Actually, there is not 80% ownership of A anyway.

I think that I agree with Blinky's answer, but not necessarily the reason. The reason Blinky gave -- the 50% rule of 1563(e)(6)(B) -- only applies to adult children. The actual reason that they are not in a controlled group is that you don't do double attribution among family members. 1563(e)(6)(A) says "An individual shall be considered as owning stock owned, directly or indirectly, by or for his children who have not attained the age of 21 years, and, if the individual has not attained the age of 21 years, the stock owned, directly or indirectly, by or for his parents. But Regulations Section 1.1563-3©(2) provides," Stock constructively owned by an individual by reason of the application of subparagraph (5) or (6) of paragraph (B) of this section shall not be treated as owned by him for purposes of again applying such subparagraphs in order to make another the constructive owner of such stock."

My understanding is that some may do it as a percentage of the contributions that would otherwise be made (e.g., 106% of amounts that the employee wants to contribute). Everyone still ends up with some tax benefit. But it can still reduce participation.

I was agreeing with pax's idea about running it through the plan.

Yes. That would remove any question of whether you have met the 3-day requirement of PTE 80-26.

This is potentially a lending of money from the employer to the plan. See PTE 80-26 and related materials.

There is no deadline. But as long as the money remains in the plan, it creates a qualification issue.

It depends on what the spouse consented to -- the terms of the acknowledgements, consent, etc. See Regulations Sec. 1.401(a)-20 Q&A 31© allowing general consents.

A 501©(3) entity can violate 403(B)(12)(A)(ii) nondiscrimination if the ability to make such elective deferrals is not available to everyone.