elmobob14

Employer offers coverage to everyone regardless of hours worked. If you work 20hr/week, you get coverage. If you work 40hrs/week, you get coverage. Because of this, the employer isn't applying a measurement period. But is a measurement period and a stability period applying in the background? So, if an employee works in year one and goes on leave of absence in year two, is the employee entitled to an offer of coverage throughout the entire period of absence because an imputed stability period requires it? Is there a measurement period/stability period operating in the background even though the employer isn't using this for plan eligibility purposes? Employer doesn't want to give benefits on an extended leave of absence.

It's a 403(b) DC plan. The connections that the organization once had with a church were severed long ago, but no one thought about the impact of this separation on the plan. It's clear that it doesn't qualify for church plan status anymore. It has 100+ participants.

So, if I've been sponsoring a church plan and upon review determine that I'm not eligible for church plan status am I able to use EPCRS to fix it retroactively? I assume I would also need past 5500s and plan audits? If anyone has experience with this, and in particular, with how the IRS responded to someone applying to correct under EPCRS, please share. Thanks!

Thanks guys. I talked to someone at the IRS and they said that separate amendments, retroactively amended, are required. Time to track down that old GUST document.

If a plan hasn't been amended for GUST and EGTRRA--using App. C, Part II Sch. 2--must a filer send (1) a GUST amendment and an EGTRRA amendment (i.e., two amendments), each retroactive to the applicable effective date, or (2) may the filer simply send a restatement with everything? Thanks!

Exequity sells a product that performs the Code Section 280G calculations required for parachute payments triggered by a change in control. Does anyone have any experience with this tool? Can anyone recommend other programs (applications--I don't know which term the kids use these days) that can do this? Thanks!

Thanks Flyboyjohn. Do you know of guidance that spells out how verification is going to work or that shows that the Marketplace has the responsibility to contact the employer? I don't doubt you, I'm just trying to get more information to see how it works. Ivena, you note that the employer could challenge the $3k/year fine if it believes that it's incorrectly assessed. This is what I'm interested in. Has there been any guidance that tells the employer how to go about doing this?

Do employer have a right to object or challenge an individual's claims to a subsidy on the exchange? As you know, individuals are eligible for a subsidy if, among other things, they weren't offer coverage by an employer or if the coverage that was offered didn't provide minimum essential coverage or wasn't affordable. Is there guidance or has anyone addressed whether the employer can contest an individual's claims for coverage or what the process would look like?

Thanks Everett. It certainly seems like we're screwed based on the quality assurance bulletin.

The IRS asks for plan documentation when reviewing an application for a favorable determination letter and we don't have it. Section 5.09(3) of the Rev. Proc. 2013-12 says that we are "under investigation" and thus, ineligible for VCP. Are we just screwed or do any of you have any suggestions of how to correct these issues without going into Audit CAP?

This is exactly how I read Treas. Reg. 1.409A-3(j)(4)(v) is supposed to work. As you know, it's listed as an exception to the accelerated payments section of 409A. So, I think you're green lit for take off.

Thanks guys. That's what I thought, but BNA isn't a fly-by-night publication, so I thought I'd double check with everybody here. Weird though.

As you all know, guidance (and enforcement) is forthcoming for fully-insured plans on nondiscrimination. Notice 2011-1 indicates that a fully insured plan that discriminates against non-highly compensated employees will be subject to civil monetary penalties of $100/day multiplied by each non-highly compensated employee that was discriminated against. For self-insured plans, however, violating 105(h) only results in the HCEs losing a tax benefit. Or so I thought. The BNA Benefits Guide states: Self-insured health benefits plans that discriminate in favor of HCEs are subject to a less onerous tax regime. Such plans that violate tax code Section 105(h) must pay a $100 excise tax per day on each beneficiary who receives discriminatory benefits in their favor, rather than the $100 per day penalty that applies to an insured plan for each individual discriminated against. Is this correct? I can't find any supporting authority for it and there's no citation. I thought loss of tax benefits was the only consequence for fully funded plans.

Here's what I've found: PLRs 8411050, 8411051 (substantially similar), and 8336065, hold that waiting periods are benefits under Code Section 105(h). So, if HCEs get in immediately and NHCEs have to wait, say 90 days, then the benefits are discriminatory. Importantly, 8411051 notes "the above ruling is based upon the assumption that the employee contributions required under the Plan will not result in those employees who are not highly compensated individuals within the meaning of section 105(h)(5) of the Code being excluded in greater proportion than highly compensated individuals." This implies that if disparate employee contributions were required under the plan, it could (or would) make the arrangement discriminatory. PLR 8328065 holds that requiring a participant's survivor to pay a monthly contribution to continue in the plan is nondiscriminatory, but "if the contributions required of a survivor result in the survivors of highly compensated individuals being able to continue coverage in a manner that discriminates in their favor, as opposed to the survivors of other participants . . . " then the arrangement could violate Treas. Reg. 1.105-11©(3)(ii). These PLRs, from the early 80s (thank you Chaz), could be more explicit, but seem sufficiently clear to show that the IRS would frown on different premiums for HCEs and NHCEs. If anyone has clearer guidance on this point, I'd appreciate you pointing me if its direction.

Thanks Chaz. I'll try to track down the PLRs. I thought about the 125 angle too. In my scenario, the employer is contemplating paying 100% for HCEs and 80% for NHCEs. Since the HCEs wouldn't be using the cafeteria plan to pay premiums -- since they would pay nothing -- I think this would work under the cafeteria plan rules.