J Simmons

I agree with Eric. As for a cite, try Treas Reg §1.409A-3©.

Yes, it provides death benefits. ERISA section 3(1)(A).

To the extent that ERISA does not preempt state law, then you'll need to deal with each state's differing payroll and insurance laws for the employees' whose employment is in that state.

If it was communicated adequately and no NHCEs directed the investments, I suspect you are dealing with a plan with a low number of NHCEs. If so, then you might want to get signed statements from each acknowledging that they were aware of the opportunity but did not take advantage of it, and then give those statements to the IRS agent.

Count me in GMK's camp of the plan and plan administrator not offering a 'sample QDRO'. Divorce attorneys drafting from samples draw many assumptions many assumptions from what is and is not in the sample that are not necessarily correct about the plan, the benefits, and the payout options offered.

I don't have a citation, Larry, but I'm fairly certain that you are correct.

If the plan imposes a vesting requirement, then maybe these quarterly statements specifying the vesting status as of the end of the most recently completed plan year puts the employees on notice of what the plan administrator's records show that vesting status to be, and perhaps quells complaints that would otherwise later come at the time of distribution. Since the plan permits participant direction, these quarterly statements make it more difficult for an employee who is frowny face due to investment underperformance claim he did not understand the option and rules for directing investments, or that the plan administrator should have done more to notify him of them. Then there is always trying to get some traction in the employee relations sphere by pointing out that the employer can emphasize to the employees that although a burdensome task, the employer regards it as important that it provide these quarterly statements to make sure that employees understand how important diversification is to their retirement security. 'Burdensome, yes. But the right thing to do for employees, no doubt.' Good idea, provided nothing in the guidance on either SARs or the quarterlies prevents them from being included in a single notice. (I haven't looked into the issue, so I do not know. Definitely worth taking a look.)

If it is an ERISA-governed plan, then it should depend on what the plan document says. If not, then state law dictates, and generally speaking, would be more likely to be required in a community property state than in non-community property states.

Is this the sort of thing pilots dream up when they've got the planes on auto pilot? A few years back it was United pilots, now Continental pilots.

Maybe I've misunderstood the 401(a)(17) pro ration for the mid-year cessation of the 3%-of-pay safe harbor nonelective, but I thought that pro ration would prevent this scenario from playing out.

Larry, nicely drawn distinction; I agree with the point you are making.

Bird, to do integration in that context, would you have to put all of the employees that earn under your integration level in one group and allocate to them at least the base rate, and then each of those that earn more than the integration level into a separate group of his or her own and then make the contributions? It seems to me that since each making over the integration level would have a different excess compensation amount and within each grouping the contribution must be allocated in proportion to actual income, this might be necessary to achieve the same outcome as having a stated integration formula. There might be the possibility of bunching a few of those excess earners into one or a few groups so long as what each HCE receives does not exceed the delta permitted under integration, vis-a-vis the base amount that the NHCEs are receiving. Revised to correct a typo

Not just a bunch of b.s. There are new regulations, but they are in proposed form at this point and have not been finalized. However, the preamble to these proposed regulations give reliance to those employers that follow them in the meantime. But for reliance, it is an all or nothing proposition.

You can do it anytime. If the HCE has accrued benefits before then, the HCE stops accruing additional benefits, but cannot have those already accrued taken from the HCE. If the HCE is signing a one-time, irrevocable election for more pay in lieu of ever participating in the 401k PSP, such must be signed and delivered to the plan administrator before the HCE ever becomes eligible for any retirement plan of the ER.

If I was a document re-seller and had that option as you do from Corbel, I would as a matter of marketing and branding do it.

I agree that Rev Rul 61-146 won't be enough. That Rev Rul was issued under IRC 106, which excludes the value of health coverage provided by ER at its expense, in the absence of giving EE the choice to take cash or other taxable benefit in lieu of the health coverage. For such a choice by EE, you need IRC 125. Rev Rul 61-146 outlines three mechanisms that the IRS approved by which ER could effect payment of premiums for coverage, and yet be tax free. Those three mechanisms are: (1) ER reimburses each EE directly once or twice a year for ER's share of the insurance premiums upon proof of prior payment of the premiums by EE if the payments are shown to be in reimbursement of premiums actually paid by EE to the insurer; (2) ER issues to each EE a check payable to the particular EE's insurance company, EE being obligated to turn over the check to the insurance company; or (3) ER issues a check as in method (2) except the check is made payable jointly to the insurance company and EE. Rev Rul 61-146 is yet instructive on the mechanisms that an ER may use to effect payment under a cafeteria plan (where EE has a choice and elected coverage that is provided via an individual health policy) for the insurance premiums. Note, other federal and state laws pose other challenges to reimbursing premiums paid by the EE for individual policies.

Thank you, Masteff, I do. It's another manic Monday.

Apparently, health risk assessments can only be voluntary--not mandatory for coverage--so no stick. Also, beware if you dangle a carrot. While EEOC previously allowed a safe harbor if the carrot was no more than 20% of the value of the coverage. The EEOC has withdrawn that 20% safe harbor. So now even a baby carrot might get you crosswise with the EEOC. Maybe what is going on is simply this: Employers are bad. Therefore they should just shut up, take their medicine and pay for health coverage to employees no matter how the employees' habits--lifestyle or consumer ones--drive that cost up for the employers. BTW, metaphors are best served shaken, not stirred.

I think this is a matter of interpretation. I do not know of any regulation or ruling on point. The plan limits loan amounts. One interpretation is that the cumulative elective deferrals, without adjustment for investment experience, is merely a measurement of that limit. As there are sufficient benefits, elective deferral and profit sharing, that a loan to that limit may be made without violating any IRS rules, then the loan should be allowed up to that amount. This would be so despite the facts that all of the loan cannot be allocated to just the elective deferrals and some of the loan will have to be allocated to the profit sharing benefits. That interpretation impinges less on the notion that it is the cumulative elective deferrals without adjustment for investment gains or losses. Another seemingly viable interpretation would be that the plan does not permit loans by reason of profit sharing benefits, and thus it is logical that a loan cannot be made to the extent that any part of it would have to be allocated to profit sharing benefits. I think both would be viable interpretations, and whichever is adopted should then be applied in future situations.

It's been long enough ago, I do not remember what procedural avenues were open to us and were considered. Off the top, I don't know if the Reorganization Plan of 1978 gave this issue to just one agency or other, or if as you suggest, vesting on partial termination is for the IRS an issue of tax qualification of the plan and separately for DoL to protect the benefits interests of the employees.

I don't know of any internal appeal at IRS, but you can file for declaratory relief in federal court under IRC section 7476.

Don't know of a cite. But you gain basis from the fact that the distribution results in taxable income to the IRA owner in the amount of the fair market value of the shares, and by reason of paying the tax on that amount, you have tax basis in that amount.

I think Sieve is right on target. A few years ago I represented a surgeon who had two full-time employees and a profit sharing plan. The next business in the building suite where the surgeon's office asked how it was working out with the 'two part-time employees' handling his office. Out of concern, the surgeon hired a PI to surveil the comings and goings of his two employees. The result was clear time clock fraud. He fired both of them. One was 20% vested, the other 40%. That's all he had the profit sharing plan pay out to them. They then contacted the regional office of PWBA (EBSA's prior name). PWBA was adamant about the firings being a partial termination, that it would not relent and that if payout of the otherwise forfeited benefits was not made, PWBA would litigate the issue for the two former employees. PWBA did not question the allegation of time card fraud, but insisted it was a partial termination nevertheless.

I agree with Peter. A paper investment direction is, if anything, more burdened by a time lag in getting the trade effected than a telephone call availability is. Just because some might yet prefer paper, I do not think you have to accommodate that just because paper has a longer historical run than the telephone calls in making investment directives.

The plan has a legitimate need for the information. The plan might be required to have HIPAA privacy and security policies in place, and notices given, but if the employee doesn't want to give up the info, no hardship payout. As for the blackout, how would you know that the medical services provided were not for a facelift or other cosmetic surgery or procedure, and not be a proper basis for a hardship?