J Simmons

If I recall correctly, the election to Roth or not one's k deferrals has to be irrevocable. So I don't think I'd give the EE the choice now of having the deferrals pre-tax or Roth.

I agree with k2retire. There's no problem in the plan. Just in payroll.

Hey, Larry, would that rollover involve any transfer of funds or more of a metaphysical transformation of a plan account from pre-tax to Roth designation since it has to all occur inside one and the same plan (if I understood you correctly)?

Common law of trusts (which ERISA fiduciary standards were in 1974 primarily a codification of, and thus there is a great deal of overlap).

Not if that same firm is truly competent in all three functions, and the trustees are aware of all charges and 'revenue sharing'.

Larry, I loved your creativeness in serially numbering your points! Oh, BTW, I agree with your answers.

Hi, Chaz, There are DoL advisory opinions along the lines you have pointed out one. But there is more to the analysis than the limited reach of those advisory opinions. Please e-mail me (see address in my signature below), and I will then reply e-mail with the more detailed analysis.

BG5150, I too use FF 3.6--since yesterday anyway--and am not having the problems you note. I don't know why there would be a difference unless it might be in your Options under the Tools pull-down menu.

Hey, Bird, as I read IRC § 402©(2)(A) where the term "trustee-to-trustee transfer" is used, it is a transfer to a 'qualified trust' or IRC § 403b annuity contract, and IRC § 402©(8)(A) defines a 'qualified trust' as a trust described in IRC § 401(a) and exempt under IRC § 501(a), not an IRA. Your first post in the thread indicated you thought that the term "trustee-to-trustee transfer" was reserved just for IRA-to-IRA transfers. It seems the Code's use of the term is from one QRP directly to another QRP. Did I misunderstand your first post? or how the Code reads?

Yes, that is correct. Anyone that is entitled to an ER contribution--including the SHNEC--is entitled to the Gateway. Yes, I believe he does. I think if your rate groups for HCEs do not all pass with 70% or better ratio percentages, and you have to do the average benefit percentage test, then yes you'd include this 1 HCE. Since 401k deferrals are included in the ABP test, I think you'd have to include this HCE's deferrals in that test. In the rate group testing itself, I do not think you have to include this HCE unless he is also not a Key EE and receives a TH Min. Then you'd have to test this HCE's rate group.

A trustee-to-trustee transfer is the means by which the spinoff to a new plan is effectuated. A trustee-to-trustee transfer may also be the means by which the assets/liabilities for benefits of a certain group of employees is transferred to an existing plan. In that instance, the receiving plan is not a spin-off plan per se, but more appropriately just a transferee plan.

That's the tree I was barking up. I think there is an exception to the rule against collectibles for U.S. minted gold coins, but not silver ones.

It does and does not hold water. As to ER contributions, Administaff's explanation does hold water. As to allowing EEs, as part of the cafeteria plan, to elect to have part of their pay held out pre-tax/pre-FICA and contributed by Administaff to the EE's HSA, this rationale does not hold water as such does not have that comparability requirement.

The POP provides the medical benefits "through the purchase of insurance".

"The terms' employee welfare benefit plan' and 'welfare plan' mean any plan, fund, or program which ... was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, (A) medical, surgical, or hospital care or benefits... ." ERISA § 3(1) (emphasis added). Not if the health insurance is specified to be a benefit of and a part of the POP rather than the health insurance itself dubbed a "plan"--then just one Form 5500 will do, provided that you've not already in documents ascribed different 501 et seq number to each group health policy and filed separate Forms 5500 for it.

Is there a numismatic (coinage) value beyond the mere value of the silver as a precious metal?

Wouldn't the pregnancy kind of undermine that?

Still disagree. For tax savings, the "POP mechanism" involves either the ER paying the premiums (no chance of exemption from ERISA--DoL Reg § 2510.3-1(j)(1)) or IRC § 125 (i.e., "cafeteria plan"). Thus for possible exemption from ERISA (and the SPD requirement), the POP is either a cafeteria plan or part of one. In either event, to comply with IRC § 125 requires the employer's involvement in an ongoing administrative scheme beyond what DoL Reg § 2510.3-1(j)(3) permits, ergo, an ERSIA plan for which an SPD is required.

Indeed, those informal comments from the IRS suggest that the PA have clear and convincing evidence that the election made was not the intent of the EE at the time it was made. Keep in mind, the tax free savings of the value of the benefits of all other EEs using the plan (and the ER's 1/2 of FICA on those amounts) is what is at risk if you allow the EE to undo an election that the IRS/courts determine should have remained irrevocable.

I think your point may be more theoretic than technical, because it is not practical given the exemption from ERISA. DoL Reg § 2510.3-1(j)(3) limits the involvement of the employer, for the exception to apply, to --without endorsing the program [of group or group-type insurance], to permit the insurer to publicize the program to employees or members, and --to collect premiums through payroll deductions or dues checkoffs and to remit them to the insurer. So, who is handling the cafeteria plan elections (making sure they are timely), mid-year status changes (but no other mid-year changes to make sure that they are generally irrevocable), other health plan notices (like COBRA, HIPAA), and other administrative chores inherent in the POP for an 80 employee group? For example, how is the employer going to maintain the plan for the benefit of its employees (who decides if a worker is an employee or an independent contractor for plan purposes) and that the POP "is operated in compliance with the requirements of section 125 and the regulations" (Prop Treas Reg § 1.125-1(a)(1))? As a practical matter, this requires more employer involvement to achieve the tax break than is permitted to achieve the exemption from ERISA.

The earnings on the Roth benefits are taxable because the 5 year rule has not been met and the money is not being rolled over. I would lump the Roth earnings in with the P/S, and then determine the 20% withholding.

Generally speaking, yes. If you use a prototype plan, you might find integration difficult to accomplish given that the number of different groups you can put NHCEs into is limited. So there might be some further consideration in the planning phase if you are using a prototype plan.

The plan years may yet end on 9/30 despite the sponsoring ER changing its fiscal years to end on 12/31. A change of the ER's fiscal year does not automatically change the plan years--unless the plan document so specifies (some do). First thing is to make sure that the plan document does or does not key plan years off of the sponsoring ER's fiscal years. Not sure 100%, but if you had a 401k safe harbor notice for the plan year that was to go from 10/1/2009-9/30/2010, it probably would apply to the short plan year of 10/1/2009-12/31/2010 (if plan years are keyed to the sponsoring ER's fiscal years). If the plan years are so keyed, and you now have calendar plan years, with the first having started 1/1/2010, you do not have a timely 401k safe harbor notice for it. That would seem to be an uncomfortable consequence of there not having been coordination with you by the sponsoring ER's attorney when its fiscal year was changed. Thus, I would think you are an ADP testing year for PY2010. (If there is no keying of plan years in the plan document to the sponsoring ER's fiscal years, then you're yet on the PYE9/30.) As for deferrals, the 402g limitation ($16,500 and $5,500 over-50 catchup) apply on calendar year basis anyway--even in fiscal plan year plans. So that's not different. The limitations affected by the ADP test apply on a plan year basis, and that depends on whether it was a 401k safe harbored year (no ADP limitation, just the 402g one) or if subject to testing, what the non-HCEs average was.

Yes, you need an SPD for a POP for your small company. If you know how to do the testing, you can do it. You need a plan document. It's right there in IRC section 125(d)(1), and ERISA applies and ERISA section 401(a)(1) requires a written document too. The source of your advice that you do not need it is not knowledgeable in this area. You have complex testing issues given that you have a premium only plan and flex accounts. Best that you find a professional that knows about these matters to advise you on this--probably not the source that said you do not need documents.

What does the agreement between the TPA and the ER provide in this regard? Is the TPA also specified in the plan documents as the 'plan administrator'? (If so, does the TPA have any reason to doubt the ER will do an adequate job of keeping the election forms on file?) Or is the ER the plan administrator that has contracted for services with the TPA?