E as in ERISA

P.S. I always advise the client to check their SEC attorney on whether an SEC filing is required.

You can also read Kirk's BNA portfolio (#362) to get some general information on the rules. The answer to whether a filing is required depends on the type of plan, whether there are employee contributions, the amount of money in the plan, the number of participants, etc. I believe that if an 11-K is required, it is due 180 days after the end of the plan year. You should also check the S-8 rules, etc.

The instructions for the Form 5330 also make it fairly clear....

IN PLR 9414051 the IRS revoked PLR 9317037, in which it had indicated that the other approach worked.

Page 148 of Pub. 17 is sometimes a good starting point. But nothing there. Try asking the question on the cafeteria plan board. Those people attend conferences where the IRS says what can and can't be paid through a 125 plan -- which is usually determined based on what can be paid under 105 -- which is conditioned on what is deductible under 213 -- which should be the same answer here. (e.g., when people were getting prescriptions for fen-fen, the IRS said it couldn't be paid through a 125 plan).

I agree with your conclusion. I don't have cites. But I believe that the 95 PLR may have been the first allowing that and that there were pre-1995 PLRs that said that you couldn't take the money out of the 401(k) and move it into a deferral.

I don't have a cite. But I agree with your conclusion.

Coverage testing is performed based on all employees of the employer (with certain exceptions). Then discrimination testing is performed on the plan. But Regs Section 1.401(k)-1(g)(11) indicates that the "plan" includes all plans that are aggregated to pass coverage testing. So if each plan passes coverage separately (considering all employees in both companies), then each can be tested separately for discrimination. It may not matter if each has a plan or not. Either way you need to make sure that the plan you're testing covers a ratable number of HCEs and NonHCEs in order for it to pass on its own. And depending on your facts, it could be either better or worse to aggregate them for testing. (But if they aren't using the same vendor, then you are going to have problems getting combined 401(k) testing, etc.)

You perform discrimination testing based on how you passed coverage testing. You probably want each plan to pass coverage on its own, so that you don't have to perform discrimination testing on the plans together.

If all of the covered employees are NHCEs, then you may not have a coverage problem. See Regs. Sec. 1.410(B)-2(B)(6), which provides that a plan that benefits no highly compensated employees satisfies coverage requirements for the year.

ERISA Section 404© is only available with regard to participant directed assets. If all the assets are in a CD, they probably are directed by the trustee. And it doesn't sound like they meet ERISA 404 requirements either (not invested to create adequate returns for retirement benefits, not diversified with respect to either risk and return or with respect to source).

Watch for a ruling to be published soon on the subject of a merger of money purchase plans into other DC plans -- addressing the issue of whether it is a partial termination and what notices are required.

A "VEBA" is defined under the Internal Revenue Code. But any trust used to fund a welfare plan -- whether a tax exempt VEBA or not -- may be subject to ERISA requirements. For example: If a trust is used as a funding mechanism for a welfare plan, then the plan itself becomes subject to the audit requirements of ERISA.

Here is the actual problem: We have just become aware that the software to which we are converting does not distinguish between a change in deferral percentage and a revocation of a deferral. So if a plan allows one change in percentage per year (e.g., from 5 to 7 percent) plus revocation (i.e., zero percent), then it is impossible to code it correctly. If you put in "one" change, then a participant who has changed from 5 to 7 earlier in the year can't revoke the election later. If you fix it by putting in "two" changes (to allow one change and one revocation), then a participant might change their percentage twice and then still be disallowed from revoking later. And so on. We are dealing with hundreds of plans and thousands of employees and changes through the web and IVR, so we can't monitor this manually. I believe that the software must be changed, because we must have some way in the system to reserve the revocation option for participants. I think we all recognize that the 401k regulations require availability of cash on some reasonable basis. But we also recognize that it's not clear what "reasonable" is (one year, one month, etc.). As you've noted there is very little guidance regarding revocation. The best I've found is in the automatic enrollment rulings. I think they support the conclusion that a plan must provide a reasonable opportunity to revoke an election and receive cash.

I understand those ruling don't apply to traditional 401k plans. However, traditional plans must still meet the "cash availability" requirement somehow. So then consider this example: Participant A is employed by Company A which has a traditional plan and on day one affirmatively elects a 3% contribution. Participant B is employed by Company B which has an automatic enrollment provision with a 3% contribution and on day one chooses to do nothing and defaults to 3%. The auto enrollment rulings allow Participant B the opportunity to re-consider his 3% contribution every payroll or every month (some reasonable period). Shouldn't Participant A be entitled to the same opportunity?

On the Retirement Plan message board, I noted: HIPAA defines a health plan by reference to the ERISA Section 3(1) definition of welfare plan. There are a couple of court cases indicating that the disability portion of a retirement plan is a "welfare plan" under ERISA Section 3(1). (See Rombach v. Nestle USA Inc, 2d Cir Ct App, 2000 and McBarron v. S & T Industries Master Hourly Retirement Plan, 6th Cir Ct App, 1985) They rely on the "to the extent that" language in ERISA Sections 3(1). In the preamble to the claims procedures regulations issued on November 21, 2000, the DOL footnoted: " Where a single plan provides more than one type of benefit, it is the Department's intention that the nature of the benefit should determine which procedural standards apply to a specific claim, rather than the manner in which the plan itself is characterized. And, accordingly, I also noted that disability provisions of a pension plan might also subject it to HIPAA....

But it might not be a "qualified" cash or deferred arrangement! The closest I've seen to an IRS requirement that there be regular opportunity to revoke an election is contained in Rev. Ruls. 98-30 and 2000-8 (re automatic 401k contributions). They say that in order to meet the cash availability requirement in 1.401(k)-1(e)(2), an employee must have a reasonable period to make the election (to opt out of the automatic 401k contribution) before the date on which the cash is currently available.

Thanks. My question was one of timing of the revocation -- e.g., can the plan provide that participants can revoke their elections only once per year vs. allow them to revoke their elections every payroll.

I tried posting this under Retirement Plans, but maybe this is the better place to post the question -- Does HIPAA apply to 401(h) medical accounts of a qualified retirement plan?

I see the thread labeled "When to allow change in deferral amount" that concludes either (a) state laws may govern the issue, or (B) there is no law requiring that participants be allowed to stop deferring at any time.

Is a 401(k) plan required to allow participants to revoke their deferral elections at any time?

And what about disability provisions of a retirement plan? HIPAA defines a health plan by reference to the ERISA Section 3(1) definition of welfare plan. There are a couple of court cases indicating that the disability portion of a retirement plan is a "welfare plan" under ERISA Section 3(1). (See Rombach v. Nestle USA Inc, 2d Cir Ct App, 2000 and McBarron v. S & T Industries Master Hourly Retirement Plan, 6th Cir Ct App, 1985) They rely on the "to the extent that" language in ERISA Sections 3(1). In the preamble to the claims procedures regulations issued on November 21, 2000, the DOL footnoted: " Where a single plan provides more than one type of benefit, it is the Department's intention that the nature of the benefit should determine which procedural standards apply to a specific claim, rather than the manner in which the plan itself is characterized. Has anyone researched whether 401(h), disability, etc. portions of a retirement plan are subject to HIPAA?

Does HIPAA apply to 401(h) medical accounts of a qualified retirement plan?