J Simmons

It does concern me. It will likely mean that many non-HCEs currently receiving 5% of pay contributions from the company as a gateway minimum will be scaled back to at best a 3% (the safe harbor contribution), and perhaps the safe harbor match (limited to those that non-HCEs that can afford to put part of their pay into the plan). Given the make-up of current, 111th Congress, if stopping cross-testing is going to happen in the next 20 years, it will happen by the end of 2010. The problem with this legislation is that its merits will not even be considered by 90% of those voting in Congress, but votes will be cast for quid pro quo reasons.

ERISA includes a requirement that the employer have a written plan document that describes the benefits provided, so that employees can know what they are and are not entitled to. It is not sufficient for the document to merely say the employer can pay whatever benefit the employer, in its discretion.

Knee pads.

I don't know of a case, but it would seem if the plan document designs into tax qualified status, it would be an ERISA fiduciary breach for failure to follow the document if that is the cause of the loss of tax qualification. It would also seem not to be discharge of duties 'solely in the interest of the participants and beneficiaries' if the ERISA fiduciary did not take steps it has reason to know are necessary to keep the plan qualified for tax-deferral even if not specified in the plan documents. Whether an ER has violated ERISA fiduciary duties by not timely updating the plan documents to keep a tax-qualified plan so qualified might be a greater stretch.

I agree with austin3515.

Chinese fortune cookie says 'Very, very soft assets'.

Hey, Austin, 'Pretty cut-and-dry' or 'every attorney in the country is drafting eligibility that leaves room left for interpretation'? Hmmm. I go for pretty cut-and-dry. Actually, IRC § 410(a)(12-month period shall be made with reference to the date on which the employee's employment commenced. So too DoL Reg § 2530.202-2(a), as Sieve pointed out. Thus, the first eligibility year of service measurement period does not end on the anniversary of the day the person commences employment, but on the day before. You count from the first day the person is credited with hours for services performed. Rev Rul 76-250, 1976-2 CB 124; Budwig v Natelson's Inc. Profit Sharing Retirement Plan, 720 F2d 977 (8th Cir 1983). So k2retire might be getting to the right place, but not because k2retire treats Jan 1 as the employee's employment commencement date for a Jan 2 hire, but because the Jan 2 hire's initial 12-months concludes the next Jan 1. As Austin points out, ya gotta look to see if the plan calls for coincident or next, or just next, entry. Austin did make me look, though, at my self-authored prototype and model for individually designed plan documents. No ambiguity--they both mimic the regulation. It's the day before the first anniversary that the first measurement period ends. I suspect that most of the other plans drafted by attorneys are like that too.

I respect Larry's logic and David's call for consistency. I like k2retire's work-around. I suppose the Boys and Girls at Corbel think, as Tom pointed out, there's no hard and fast rule, as they've programmed Relius so it can be used either way. And I like this thread. Thanks, BG5150.

No. That's why your plan has (I assume) default death beneficiary provisions. I don't think I'd rely on that. How do you prove, if contested after death, that it was truly the deceased EE that made the electronic death beneficiary designation? However, if that is the procedure indicated in the plan documents or a written policy, and measures are taken to make sure it was the EE and not anyone else that made the election, the fact that it is electronic should suffice. See Kennedy v Plan Administrator of DuPont, 1/26/2009 decision by the U.S. Supreme Court.

I think you have a duty to keep all that you receive by way of designations of (or attempts at designating) death beneficiaries in the plan files, and keep them organized and safe. I think you start down a treacherous path towards liability someday if you review what is so turned in, before the employee dies, and give the employee feedback. For example, if you notice two deficiencies in an attempted designation and notify the employee, who corrects them, turns the designation back in and dies before you then notice a third deficiency, what then? Two different beneficiaries might stand to gain on whether you gloss over the third deficiency or you act in accordance with the third deficiency and perhaps reject that designation entirely. Either way, your decision post-death of the employee will anger one or the other 'death beneficiaries'. You might have a finger of blame pointed at you, 'why didn't you notice the third deficiency and give the employee the opportunity to correct it as well, before he died?'

I do not think forced coverage for the EE is an "election", even into next year--unless the employee gratuitously completes and signs an election during your open enrollment to put himself and the child on coverage. If he does not, and the ER simply continues the EE's coverage in order to provide coverage to the child, then when a later QMCSO stops the child's coverage the forced coverage of the EE too may come to an end. If the EE wants coverage for himself for all of next year, then he should make an election now during your open enrollment.

Need more details about the circumstances of the unavailability.

A non-U.S. employer but that derives income generated in the U.S. from employees in the U.S. may have a 401(a) QRP. There are Revenue Procedures that once detailed a different address for determination letter applications if the QRP was sponsored by a foreign employer, and past IRS Form 5500 instructions mention a foreign employer in certain regards. Registering as a foreign corporation in one or more states in the U.S. is a matter of state law (which the foreign company may be in violation), but it has an EIN and has a U.S. payroll for those U.S. branch salesmen. It is an employer for 401(a) purposes.

Why that assumption? Isn't that really your question?

Wow, that reads so much better when not prefaced with "No citation, but...".

I think if the EE's enrollment was forced to be able to act in accord with the first QMCSO, when that one was superseded and the child no longer covered the EE's forced enrollment too could be dropped. After all, we wouldn't be monkeying with an EE election made for the plan year.

I like that one, David. And Larry, that was quick to think of the Terminator's recent vertical acronym. I enjoy the levity, even though with humor on this Board, it often tempts me to make snide political comments. I'll just bite my tongue again.

Yeah, Larry. It's amazing how creditworthy you become if you give a case of wine to your local banker--not to mention the better interest rate you then get.

The IRS has been, Matt, express on the point about not needing to meet the state trust law requirement that a trust must have assets (a corpus) as of the end of the year the plan was adopted for it to have an existence for tax deduction purposes. Do you know has it been express that the trust doctrine of merger may be ignored as well?

IRC § 401(a) begins by describing a trust "created or organized in the United States and forming part of a stock bonus, pension, or profit-sharing plan...". The trust laws of most states include a concept called the doctrine of merger. If the only beneficiary is also the only trustee, then the two titles, beneficial and legal respectively, merge and that person holds title in fee. That is, the person owns the assets outright, free of trust. There is no trust under such circumstances. Given the number of one-person plans that have sprung up, and many if not most listing just that one person as the trustee, it occurs that the doctrine of merger might be problematic. Has anyone looked into this and found any ruling or logically arrived at a reason that the trust law doctrine of merger would not apply to one-person QRPs?

If the IRA custodian hires a real estate management company, then the net rent to the IRA is passive and ought not be UBTI.

I think that if there is no special caveat as I described in post #7 above, then you have the problem pointed out by WDIK in post #6 above. Also, I've never dealt with a minimum service requirement that blended the year of service concept with the elapsed time method. So I'm not sure of the efficacy of that.

Dennis, Is this Time of Participation applicable to both the 401k feature and the profit sharing feature? Or is this the profit sharing feature (and there is no vesting required) and there is a different provision for 401k time of participation?

Good point. The plans that I've seen that include a provision like the pre-amended in OP have a caveat for those employees that satisfy the minimum service before minimum age--entry is 6 months to the day after reaching the minimum age. However, the plan in question might not have that saving clause and thus, good point!

I think that MWeddell is correct. IRC section 410(a)(4) provides that the entry must be the sooner of 6 months after or the first day of the plan year first beginning after the employee meets the requirements set forth in section 410(a)(1), age 21 and 1 year of service--not from the date the employee meets the lesser service requirement (6 months) that the plan might impose.