Peter Gulia

Thanks.

leevena, yes IRC 414 is about common ownership and other ways that several separate persons might be treated as a single employer. Flyboyjohn, thank you for the information-reporting answer. About the ERISA section 510 complaint against Dave & Buster's, I spoke about it in May at a bar association meeting, and for a Pennsylvania Bar Institute CLE on June 8. For BenefitsLink readers (including My 2 cents), I attach the complaint. The hypothetical employer described is based on a charity that restricts its employees' work hours because not doing so would be financially disadvantageous to those workers who are not covered under another employer's plan or a spouse's employer's plan. For them, receiving an offer of coverage would disqualify the person from Affordable Care Act subsidies. For most of these workers, the available subsidy is much more than the excise tax the charity would incur, and for many the lost subsidy is more than what the charity would pay to make health coverage sufficiently affordable not to incur the excise tax. Moreover, administering the conditions of the charity's funders, including government agencies, makes it not feasible for the charity to bear an employee-benefits expense that is not a tidy allocation to a particular grant's conditions. And even if there were a way to do the accounting, anything the charity paid for health coverage would reduce the money available to pay cash wages. Many of these workers prefer cash wages over employer-provided health coverage, especially if other health coverage, if needed, can be obtained with a government subsidy. And the charity can't pay out more than the grants-makers and donors give. Dave and Busters.pdf

Is it still so that a plan, while making a direct-rollover distribution payable to the receiving eligible retirement plan, may mail the check to the participant's address?

An employer, since the beginning of its operations, has restrained every employee's work hours to no more than 20 in any week (and no more than 980 in any year). This employer (which has no subsidiary, affiliate, or other business that is treated as the same employer under IRC 414) believes it has no exposure (despite more than 50 full-time-equivalent employees) to the IRC 4980H play-or-pay excise tax. Is that correct? Is such an employer's only compliance requirement information-reporting about its non-offer of health coverage?

But why does the business owner prefer IRA over qualified plan?

Kevin C., thank you for the helpful information.

WDIK, thank you for the helpful information.

My experience about what practitioners advise and what plan sponsors provide is similar to the two described above. But I'm curious: does a preapproved document's adoption-agreement form even allow a choice?

Even if an order meets all other conditions, a QDRO cannot require a plan to pay an alternate payee (or the alternate payee's agent) before the participant is entitled to a distribution or reaches age 50 and would be entitled to a distribution if he or she severed from employment, unless the plan provides a QDRO distribution before that time. How much flexibility does a prototype or volume-submitter document allow in turning on or off such a before-50 provision? Does a preapproved document allow a user to choose to provide a before-50 QDRO distribution for some kinds of QDROs while not providing it for others?

Consider that Internal Revenue Code section 3405(e)(10)(B) commands a "payor" to "transmit to the payee notice of the right to make an election" concerning withholding. Concerning a distributee who is not the payee, consider whether a payer need not afford an opportunity to make a withholding election.

Thank you both for the good help. For reasons somewhat aligned with Lou S.'s observation, I had already decided not to accept the employer as my client. But an investment adviser who, following my no-thank-you, will take on a plan-documents task is a friend, and I'm willing to help him think through the issues. Kevin C., your thought about how delaying distributions affects a participant count is useful.

Imagine an employer wants a safe-harbor plan's relief from the ADP test, but seeks to design the plan so that some employees will choose not to make elective contributions. To do so, the plan precludes participant loans, precludes hardship distributions, and does not provide any distribution until a participant's death or latest commencement date permitted under ERISA 206(a). (The employer's owner would not be troubled by these restrictions because she does not anticipate a need to use her plan account until her age 70.) Assuming the plan, the employer, and the administrator meet other safe-harbor conditions, including all notice requirements, does anything about the restrictive plan provisions cause the plan to lose safe-harbor relief?

Is it feasible to include in the financial statements' disclosure not only the values counted under the assumptions the plan's administrator or its actuary used but also under the assumptions the independent qualified public accountant suggests should be used? Would doing so enable the IQPA to render its report without the qualification?

mming, if anyone in your TPA shop is a “practitioner”, consider the implications of the Treasury department’s rules for practice before the Internal Revenue Service, including this one: 31 C.F.R. § 10.34(d) Relying on information furnished by clients. A practitioner advising a client to take a position on a tax return, document, affidavit{,} or other paper submitted to the Internal Revenue Service, or preparing or signing a tax return as a preparer, generally may rely in good faith without verification upon information furnished by the client. The practitioner may not, however, ignore the implications of information furnished to, or actually known by, the practitioner, and must make reasonable inquiries if the information as furnished appears to be incorrect, inconsistent with an important fact or another factual assumption, or incomplete. While engagement terms or a client’s “hold harmless” might excuse or relieve a TPA’s liability to its client, neither of those writings can excuse a practitioner from its conduct duties under the tax-practice rules.

Thank you for your good help. So is this kind of ambiguity problem about an employer that doesn't control what its executives write?

The Supreme Court of the United States, in its recent decision in M&G Polymers, provided some guidance about how to construe and interpret writings that are ambiguous about promises of health coverage for retirees. Here's my question: Looking only to non-governmental employers, and only outside a collective-bargaining context, how often does this issue happen? Are there still employers left that have not cut off obligations and expectations? If so, what circumstances lead to not revising the documents?

I haven't analyzed the questions and have no view in either (or any) direction. Rather, I ask about whether a law firm has delivered a written opinion because in my experience the presence or absence of such an opinion sometimes might convey a little indirect information about how comfortable or uncomfortable a view is. I confess that I'm searching for a shortcut on a question I don't have time to think about.

Is any BenefitsLink reader aware of any U.S. law firm that has risked its owners' reputation and liability by delivering a written opinion that supports the zbenefits view?

David Rigby, thank you for pointing us to the rule. (It's especially helpful to me because all of my experience with a cash-balance plan was before the 2006 Act.) While to me it's unwise for an employer to try to do what MGOAdmin describes, could a plan's formula for a participant's account balance specify that it is (at all times, not only after retirement age but also before) the result of applying the contribution credits, the interest credits, and a subtraction of $100 (not referring to some described "fee" or "expense", but rather a specified amount)?

But could a plan's document provide that the benefit is the otherwise determined notional account balance minus a specified amount?

If the expense saved by changing a plan year or an insurance-contract year makes dealing with the question worthwhile, consider asking the Internal Revenue Service for a letter ruling, perhaps seeking an expedited ruling.

To add to the ambiguities and confusions: The 1969 (amended 1979 and later) interpretive bulletin partially quoted above, although reprinted in the Code of Federal Regulations, is not necessarily a regulation or a rule. And reasonable minds can differ about how much authority Congress delegated. For these and other reasons, it is unclear how much deference a court would give to the interpretive bulletin. Until the questions described above are litigated, we tell a client about the range of possible interpretations and arguments.

Thank you for the vote of confidence. But I didn't express any view; rather, I asked a question to help uncover more of the hypothetical facts. One might wonder why an employer is willing to pay if restoration should be had from a service provider that received amounts the service provider was not entitled to. And understanding those reasons (which might be proper and loyal to the plan) might help in an analysis of whether an employer's payment is a "restorative payment" described in the tax-law interpretation.

Has the responsible plan fiduciary exhausted its efforts to get from the overpaid service provider the excess the service provider was not entitled to?

What if an employer says its nonelective contribution toward all health and welfare benefits is 10% of salary? (Assume that no benefit is "self-funded"; rather, each is provided by a regulated insurance company.) Would the fact that the contribution is set in relation to another measure of each employee's value to the employer support an argument that the contribution does not discriminate against increasing age? Would this hypothetical plan be meaningfully different, in an employee's perspective, from what would result if the employer provided a 10% salary increase and made all health and welfare benefits employee-pay-all?