Peter Gulia

Two businesses that are not commonly controlled, affiliated, or otherwise related under Internal Revenue Code section 414(b)-©-(m)-(n)-(o) acted together and applied for group health insurance as though they were one employer. Have they created a multiple employer welfare arrangement?

Has ASPPA published anything about this?

Or invite the plan fiduciaries to evaluate some investment alternatives that pay a little less indirect compensation.

For a typical partnership (including a limited-liability company) or S corporation, pass-through tax treatment might mean that the employer's marginal tax rate is (or approaches) zero. For a C corporation, a marginal tax rate can be substantial, especially for the portion of the business that is done in Boston, New York, Philadelphia, or San Francisco. Does the proposal software also have an aspect for a pass-through business owner's marginal tax rate (which might vary following residences and business locations)?

Does anyone know about any court decision that found an actuary was a plan fiduciary, or at least that a complaint sufficiently alleged that an actuary was a plan fiduciary?

I haven't reached any conclusion. Rather, I've enjoyed the opportunity to learn from you.

But does paragraph (a)(1) make it unnecessary to use (d)(4)?

QDROphile is right about some practical effects of the taxpayer-confidentiality rules. Isn't it simpler and more accurate to have an outside lawyer ask the IRS person? The lawyer describes as much of the facts as it is feasible to describe without revealing the client's identity.

An executive agency's interpretation (mostly from 1979) of the statute is here: http://www.gpo.gov/fdsys/pkg/CFR-2013-title29-vol4/pdf/CFR-2013-title29-vol4-sec1625-10.pdf If the group health plan uses regulated health insurance contracts (rather than an employer's unfunded payments or a VEBA), isn't it good enough that the employer's actual payment is equal for every employee?

About not merging plans across different tax-Code sections, see IRS Letter Ruling 2003-17-022. Leaving aside (or integrating) questions about which plan ought to be the survivor, consider whether it's feasible to amend the to-be-terminated plan to provide that the only form of distribution is a single-sum payment, and that for a distributee who does not properly instruct his or her preference between money and a direct rollover, the default is a direct rollover to the survivor plan.

If you recommend a provision to your client and your client responds with an e-mail that says yes (and implement it as soon as possible), isn't that exchange of writings an amendment of the client's written plan?

As many in the BenefitsLink community often rhetorically ask, what does your client's written plan say?

Does the plan's administrator report its Form 5500 using cash accounting or accrual accounting?

Even if section 204(h) might not require its notice, wouldn't a prudent fiduciary communicate about the changes anyhow?

I concur with others that needlessly involving the plan easily could become a no-good-deed-goes-unpunished situation. Why does not the participant's lawyer negotiate for a payment from the alternate payee to the participant (with the amount negotiated to reflect intervening investment changes and tax consequences)? Or if the divorced parties do not succeed in negotiating their arrangement between them, Fielding Mellish's description of the facts suggests a likelihood that the domestic-relations court still has continuing jurisdiction to order a payment from the alternate payee to the participant.

Would "the numbers" on the Schedule be the same numbers if the valuation date had been December 31, 2012?

ERISA section 404(a)(1)(D) tells a fiduciary to discharge his, her, or its duties "in accordance with the documents and instruments governing the plan insofar as such documents and instruments are consistent with the provisions of [ERISA]." The Supreme Court of the United States has made clear that the "insofar" exception at least permits, and might require, a fiduciary to disobey a plan's document if doing so is necessary to meet an ERISA fiduciary duty, including a duty of loyalty or prudence. Does anyone know of a court decision in which the "insofar" exception applied concerning a situation concerning a health plan?

ERISA section 404(a)(1)(D) tells a fiduciary to discharge his, her, or its duties "in accordance with the documents and instruments governing the plan insofar as such documents and instruments are consistent with the provisions of [ERISA]." The Supreme Court of the United States has made clear that the "insofar" exception at least permits, and might require, a fiduciary to disobey a plan's document if doing so is necessary to meet an ERISA fiduciary duty, including a duty of loyalty or prudence. Does anyone know of a court decision in which the "insofar" exception applied concerning a situation beyond employer securities? Any case concerning a retirement plan? Any case concerning a health plan? Any case concerning some other ERISA-governed employee benefit?

You are right to be concerned about the possibility of an inappropriate discrimination (not necessarily limited to IRC 401 and IRC 403(b)(12)). One assumes that the Rev. Rul. 2002-45 condition about treating similarly those who are "similarly situated" relates to the participant's exposure to the exit charge. For those and other reasons, it would be unwise for the employer to proceed until it can say that it acted in good faith and prudently following the written advice of its expert employee-benefits counsel.

My employer pays me only once a year, on New Year's eve. Anecdote aside, it's not entirely unusual for a micro business (the originating post mentioned three participants) to use less frequent pay intervals, especially if the workers are owners and executives.

Revenue Ruling 2002-45 [http://www.irs.gov/pub/irs-drop/rr02-45.pdf] describes a restorative payment (the ruling’s antidote against counting an amount as a contribution) as a payment “made to restore losses to the plan resulting from actions by a fiduciary for which there is a reasonable risk of liability for breach of a fiduciary duty under Title I of the Employee Retirement Income Security of 1974 (ERISA)[.]” The Treasury department’s interpretation requires also that “plan participants who are similarly situated are treated similarly with respect to the [restorative] payment.” Does the plan’s document provide for using forfeitures as a set-off against future contributions?

Aside from adjusting the past, could this employer considering changing its wage-payment periods to quarterly?

A Delaware general corporation may indemnify a person who serves or served, including concerning an “other enterprise”, at the request of the corporation “if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation[.]” Del. Code Ann. title 8 § 145 http://delcode.delaware.gov/title8/c001/sc04/index.shtml A Pennsylvania business corporation may indemnify a person who serves or served, including concerning an “other enterprise”, at the request of the corporation “if he [the indemnitee] acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the corporation[.]” 15 Pa. Consol. Stat. § 1741 http://www.legis.state.pa.us/cfdocs/legis/LI/consCheck.cfm?txtType=HTM&ttl=15&div=0&chpt=17&sctn=41&subsctn=0 Many States similarly allow indemnification if the indemnitee’s “was at least not opposed to the best interests of the corporation[.]” Although ERISA § 410 does not restrain indemnification provided by a person other than the plan, public policy under a State’s law or Federal common law might restrain or preclude an agreement that would set up an incentive for a fiduciary not to perform his or her responsibility. However, there is a range of conduct that, while a breach of a fiduciary’s duty to a plan, nonetheless can be indemnified by a person other than the plan. The point of getting indemnification from one’s employer (or the business organization that asks one to serve as a plan’s fiduciary) is that such a person can indemnify its indemnitee for conduct that an employee-benefit plan cannot exonerate.

Although a plan cannot relieve a fiduciary from liability, ERISA section 410(a) does not preclude a person other than the plan or its trust from indemnifying a plan fiduciary, as long as that other person uses his, her, or its personal resources rather than the plan’s assets. Before accepting an indemnity promise, a fiduciary should consider whether the provision complies with ERISA’s other fiduciary-responsibility provisions and other applicable law. Further, despite any written agreement that purports to provide more protection, a business organization (if organized under the law of a U.S. State) cannot provide indemnification unless its director, manager, member, officer, employee, or agent acted in good faith and reasonably believed that he or she acted in (or at least not opposed to) the best interests of the business organization. Recognizing the differing standards, an employer may indemnify a fiduciary for conduct that was a breach of the fiduciary’s responsibility to the retirement plan but was not a breach of the individual’s duty or obligation to his or her employer. As QDROphile says, the fiduciary would want an indemnification promise to include not only indemnity against third persons' claims and non-liability to the employer, but also all expenses of investigation, defense, settlement, accounting, and reporting, including advances of all expenses. An indemnitee would want advances subject to an obligation to repay only upon a final court decision that the indemnitee did not reasonably believe that he or she acted in the employer's interests. An employer might prefer an obligation to repay that is triggered by an internal decision. In negotiating and drafting indemnification agreements, I sometimes have acted for the employer, and other times for the executive. Some employers are generous without being asked; others want to set some conditions and restrictions.

It happens. A person might deny that a signature is his. Or even without denying a signature, a person might argue about the validity of an act, or about the legal effect of an act. And yes, I have seen situations in which an individual argued the invalidity of his own acts. I have seen situations in which a person signed a consent or agreement that he knew to be invalid because he intended to influence someone who mistakenly believed that the consent had legal effect. I have evaluated thousands of beneficiary disputes. I no longer have to imagine the positions and arguments that people put forward. Even if one is fully confident that the situation of A, B, the children, and the employer today is entirely harmonious, how does one know what circumstances will be in play after the participant's death? All that observed, whether to recognize a qualified election as supported by the spouse's consent is a plan-administration decision that the plan's administrator will make.