E as in ERISA

You would generally have one 415 limit across businesses in which there was than a 50% interest in common.

I think I would agree. Part of the role of an attorney is to advice the client of the likelihood of their facts succeeding on the merits in a court of the highest jurisdiction. You have to be licensed in the particular jurisdiction in which the matter would be litigated. So those who practice contract law, litigation, etc. must obviously be licensed in the state in which they are practicing. But some law firms don't seem to care if the ERISA lawyers are licensed in the state in which their offices are.

About 1994? One was U.C.A. (unemployment compensation act of 92) and the other OBRA 93 (omnibus budget reconciliation...)

If you're thinking that you heard that there was something special about 401(k) plans for someone in your position, it's the fact that creditors generally can't attach one's 401(k) assets to pay off other debts that one may be running up at this time.

In some cases where you have two companies partially related (but not under common control), you could spin off B's part of the plan and then terminate it and distribute. But it sounds like would have successor plan issues in this case. You could spin and merge.

The safe harbor rules just require that the match goes to NHCEs.

I think that most would interpret it that way. Here is the news flash that indicates that reducing to $1,000 is part of the scheme http://www.irs.gov/pub/irs-tege/epnf_021605.pdf Notice 2005-95 provides the clarification regarding due date for return. I don't think that they are perfectly synchronized so some might debate it. But most would probably consider them close enough.

If you have a service requirement together with annual start dates, you generally have to provide retro entry to the beginning of the year for those who satisfy requirement during first half of year. Doesn't work with a 401(k) plan.

Now for what purpose are you using compensation? 415? ADP? And, if so, how does plan define compensation?

I think this is what they did 120,000.00 Total wages for medicare (includes 401(k) deferrals but not medical) < 18,000.00> 401(k) deferrals + 9,204.33 Medical __________ 111,204.33 Wages for income taxation (includes medical but not 401(k) deferrals) Don't know treatment of medical for S-Corp anymore. Is that right?

See this guide http://www.irs.gov/pub/irs-pdf/p515.pdf Especially Japan on table on page 35. Not sure, but I think that these are the general rules-- If you get a W-8BEN, then you can possibly reduce to 0 if they are a treaty country that exempts them. If they don't give you the W-8BEN then you use US withholding rates even if even treaty country with exemption. If not treaty country, use 30%.

Remind the client that many employees feel better about having the plan audited -- and the concern it might give them if the client did this purely to avoid audit!

Has anyone else ever been involved in an IRS audit? Does everyone understand that IRS audits "taxpayers." For a retirement plan, the parties that have risk of additional taxes if problems are found in any operations of the plan are (1) the employer (loss of deduction on unvested money), (2) the trust (taxation of earnings), and (3) the employees (taxation of vested contributions). The employer may have the least at risk from a pure tax standpoint (because most of the money deposited in the plan is either deductible as contributions to a qualified plan or compensation to employees if not qualified). However, the employer really bears the tax risk with regard to the trust and the employees, because it will be under extreme pressure to make corrections and pay penalties and keep the plan qualified -- so that all the employees don't get mad and walk out the door when all their plan benefits become immediately taxable. Even if the plan has an administrative committee serving as plan administrator, that committee is not a "taxpayer" with potential liability and not at risk. (It's a potential target in a DOL audit or ERISA lawsuit because its a fiduciary). The employer's functions are critical in the plan operations. It generally determines eligibility and withholds 401(k) contributions. And it is the party with the most significant risk if plan operations fail. I think you draw the line somewhere in terms of corrections. But telling the employee "tough luck" is really not the right answer.

My point is that the regulations don't specifically require the second loan repay the first in order to be a "refinancing" or "replacement loan." You can use it when you need to take a second loan that will violate the amount limit if you reamortize correctly. Example. Participant has $100,000 in account. Buying a new car early 2005. Is anticipating a bonus sometime in February 2005. Borrows $25,000 from plan with intention of repaying with bonus. Repayment occurs. In January of 2005 partipant finds house of his (her) dreams. Wants to borrow $35,000. Can't do so because of amount limit. Don't refinancing rules allow it provided that at least part of loan is reamortized through February 2010 (five years from first loan)? Provided plan allows this, of course.

I thought you originally indicated the POP/cafeteria plan didn't have to file, then changed your mind and said it did. A stand alone cafeteria plan that is used to fund premiums to an insured plan only is not an ERISA plan. It is only an IRS arrangement that would have had to file under 6039D. In the past, an arrangement that had over 100 participants would have filed a Form 5500 with basically only the Schedule F completed. After 2002-24, that is no longer necessary. No filing for a cafeteria plan that is solely a POP. There are some cafeteria plans that include flexible spending arrangements, etc. that are considered health plans under ERISA and have to follow the ERISA requirements for filing 5500s. 2002-24 does not exempt them. But that did not sound like the case here. To the extent you're now addressing the unasked question of whether any filing is required -- for the related health plan on which premiums are being funneled -- I agree that 2002-24 doesn't exempt it.

In response to the question of employee's responsibility to look at their paychecks, I've heard high level IRS personnel joke that they don't like to look at their paychecks so they don't hold other employees to doing that every single paycheck. They have yet to answer how many paychecks have to be wrong before the employee bears any responsibility. But they seem to understand that at some point there should be a limit.

saabraa -- I think that you were right the first time. Check Notice 2002-24.

I disagree. The issues of plan administrator, plan assets, late deposits are all ERISA issues that have to do with the dollars themselves. On the Internal Revenue side, the employer has significant responsibility in ensuring that the rules are followed -- including the terms of the plan and employee elections. I think we'd have huge problem if employers are completely free to ignore any deferral elections without any repercussions.

I don't know details of admin. But there must be separate amort of the Roth half. And a deemed distribution is always nonqualified even if qual requirements met.

Isn't an operational error a subcategory of qualification error? From the EPCRS: "The term 'Qualification Failure' means any failure that adversely affects the qualification of a plan. There are four types of Qualification Failures: (a) Plan Document Failures, (b) Operational Failures, © Demographic Failures, and (d) Employer Eligibility Failures." I don't think that the plan is even remotely at risk of being disqualified here. But I also don't think that you tell the employee "Too bad, so sad...but there's nothing we can do."

I think that you're thinking about ERISA and the differences between plan administrator and other plan fiduciaries versus the sponsor and settlor responsibilities. I'm talking about Internal Revenue Code and the party claiming the deduction (employer) wanting it to be a qualified plan and the employer having responsibility for operational errors.... In an IRS audit, it's generally the employer on the line.

Why is this different than, say, Appendix B Section 2.02(1)(a)(ii)(B) of EPCRS in regard to failure to allow eligible employees the ability to defer for part of the year??? If the plan terms say you will allow eligible employees to make elective deferrals and you don't, then you potentially have an operational violation. Catchups have a universal availability rule that also needs to be satisfied.

Isn't this an operational violation for the plan? Plan is potentially disqualified (worst case scenario) if this isn't fixed.

Termination for cause is not an SRF under 83, so I doubt that it is one for 409A. I would question the 18-month notice as an SRF. I doubt it's valid beyond the initial 18 months (otherwise it becomes a rolling risk, which I don't think is generally considered valid in discussions of 409A).

I.e., you file as a DFE for the master trust. Then you put each plan's "interest" in the DFE on line ©(11) of Sch H. Are the plans audited? What about the fact that you need to match the audits? Don't they show each plan's partial interest in the trust?