J Simmons

Good ERISA Antennae! How are the EE and spouse to know that they each have a separate election right from a single continuation notice/election just because it arrives in a jointly addressed envelope? Separate continuation notices/elections, arriving in separately addressed envelopes, communicates that notion much better.

What is going to be the "premium" amount for the MERP coverage as "accident or health insurance" other than the $1,000 itself? For 3 LLC owners for a max of $1,000 each are you going to have an actuarial study to determine the value of the coverage? If not tax-free and you use $1,000 itself as the value of the coverage, MERP or HRA inclusion simply amounts to the LLC paying each of the three owners to the extent that each one's medical expenses exceed $1,500 per year--the payout capped at $1,000/year each. It might be much easier for the LLC to exclude them from the MERP and paying them each $1,000 per year (if they each own 1/3 of the LLC, then it would be a wash whether paying that $1,000 each or the three of them having that much more as their share of the LLC's profits). Comparing the MERP inclusion to just giving them the $1,000 boils down to the LLC having some purpose in limiting how much each of its three owners will receive of that $1,000 to by how much he/she has medical expenses for the year that exceed $1,500. Do the three owners collectively have a purpose in only allowing each of them so much of that $1,000 as his or her medical expenses for the year exceeds $1,500? If not, why include them in the MERP on an after-tax basis? To your question # 1), slamdunk? No. I see it as the same "ambiguity" for the HRA and MERP. Probably need all three--and EBIA too.

Here are some links: http://www.irs.gov/retirement/participant/...=151798,00.html http://www.mhco.com/Library/Articles/2008/...008_112108.html http://www.ftwilliam.com/articles/Technica...e2008_09_18.pdf http://www.relius.net/News/TechnicalUpdates.aspx?ID=417

Compliant? Withe what requirement, Matthew?

This is an interesting thread, and I think Sieve nails it with the best reasoning.

So the date that benefit accruals will stop is not material? Wonder why then the DoL requires the notice be so many days before the date.

Currently, I do not. However, the IRS is promising a pre-approved, prototype plan document approval and determination letter process for 403b plan documentation. It is supposed to be opened in 2009. If so, you might be able to make a determination letter application as part of that program, and the IRS application form might allow for the applicant to also ask for an ASG determination.

If your loan policy allows for PAYMENTS after default but the Note does not, was it a failure of the plan fiduciaries to follow the terms of the plan by making the loan on the basis of a Note that does not comply with the loan policy? Would those plan fiduciaries be furthering the failure by taking a position on the enforcement of the Note that is at odds with the loan policy? Is this a non-HCE borrowing participant? Has a loan pursuant to the policy been made to an HCE with a note that allowed for payments after default? If the answers to these two questions are yes, you may have a problem with a BRF discrimination.

It might be more than just the ER's interpretation of the regs. The cafeteria plan document may circumscribe the situations that a mid-year change will be allowed incident to a change in family status tighter than what the regs permit by way of mid-year changes. So checking the plan document as well as the regs is important. Then there is the issue of who has legal responsibility to interpret and operate the plan. That would be the plan administrator (perhaps that is the employer), and the plan document may give broad discretion to the plan administrator to do so. If so, courts will only upset the plan administrator's decision if it is found to be an abuse of discretion. As for dealing with an unhappy employee, well that's where you need to draw on some HR expertise.

Does the Note specifically state that payoff cannot be before default? or is that the implication because all the Note states is that payoff can be made after default? If the Note specifically prohibits payoff before default, then I agree with QDROphile. If the Note doesn't prohibit nor specifically authorize payoff before default, then I think as the Note holder the plan trust should allow for payoff before default, consistent with the loan policy.

I don't think you have a valid 204h notice. The 9/30/2008 one did not accurately describe the cessation of benefit accruals per the plan documents, that included the amendment. While EEs were notified of an impending freeze, it wasn't the freeze set forth in the amendment.

If it's work related... 29 CFR § 785.47 Where records show insubstantial or insignificant periods of time. In recording working time under the Act, insubstantial or insignificant periods of time beyond the scheduled working hours, which cannot as a practical administrative matter be precisely recorded for payroll purposes, may be disregarded. The courts have held that such trifles are de minimis. (Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946)) This rule applies only where there are uncertain and indefinite periods of time involved of a few seconds or minutes duration, and where the failure to count such time is due to considerations justified by industrial realities. An employer may not arbitrarily fail to count as hours worked any part, however small, of the employee's fixed or regular working time or practically ascertainable period of time he is regularly required to spend on duties assigned to him. See Glenn L. Martin Nebraska Co. v. Culkin, 197 F. 2d 981, 987 (C.A. 8, 1952), cert. denied, 344 U.S. 866 (1952), rehearing denied, 344 U.S. 888 (1952), holding that working time amounting to $1 of additional compensation a week is "not a trivial matter to a workingman," and was not de minimis; Addison v. Huron Stevedoring Corp., 204 F. 2d 88, 95 (C.A. 2, 1953), cert. denied 346 U.S. 877, holding that "To disregard workweeks for which less than a dollar is due will produce capricious and unfair results." Hawkins v. E. I. du Pont de Nemours & Co., 12 W.H. Cases 448, 27 Labor Cases, para. 69,094 (E.D. Va., 1955), holding that 10 minutes a day is not de minimis. Also check out the New York Law Journal's piece on this, dated May 21, 2007 at http://online.wsj.com/public/resources/doc...ts/TechTock.pdf

Sieve, did you get paid for it? More than 10 minutes of Blackberry time while off duty requires pay under the FLSA if you're non-exempt.

By "the plan received all the amendments from the document sponsor" is that the ongoing amendments or the mid-RAP (remedial amendment period) updating amendments? If you are referring to the ongoing, interim amendments, then the plan documents needs to be updated before the plan is terminated. That is usually easier and less time intensive by adopting a new EGTRRA restatement than having someone try to piece together a specially drafted amendment to cover all the various updates needed. If the plan's documents are not updated one way or the other, you may find that the plan loses its qualification back to 1/1/2002.

No SoL on not filing; filing is what triggers the SoL to begin running on a year. FYI, until a few years ago, it was specifically the filing of a Schedule P with the Form 5500 that was required to trigger the running of the SoL. The TPA should put together Forms 5500 for all years (or part thereof) that the plan trust had assets, and then file them as a batch along with a user fee for the DFVC program. For the plan documents failing to be updated, there are remedies for such found in Rev Proc 2008-50. Much less draconian penalties that if caught by the IRS on audit, or even as part of a request for a d-letter.

And apart from Rev Proc 2007-71, § 8, the new 403b regs merely require a plan document in order to keep contributions out of the EEs' taxable incomes, and those regs did not apply until 1/1/09. Treas Reg §§ 1.403(b)-3(a) and (b), and § 1.403(b)-11(a)

No citation, but the choice will not mean that in testing each plan, you do not count those that chose the other plan. So you will create minimum coverage testing challenges right off the bat. It will probably be more a problem for the DB plan, if the EEs make wise choices. Where I've heard of this there is a 401k plan available to all for elective deferrals, but EEs only get an ER contribution to the 401k plan if they waive out of the DB plan. if the contributions by the ER to the 401k plan are set in amount that over one's career they will total about what the ER would have contributed to the DB plan, it is yet more advantages for those in the last half of their career to choose the DB plan over the 401k. Since those are higher earners, the DB plan will either immediately or over time run into a minimum coverage problem. As a matter of ER-EE relations, I've actually heard this approach discussed as a first step towards terminating the DB plan. The ER looks good giving the EEs the choice, but then later explain to EEs that the ER must terminate the DB plan to avoid its disqualification in light of the minimum coverage failure that resulted from having given that choice to EEs. Termination is thus 'sold' to the EEs as necessary to keep the EEs from facing adverse tax consequences.

The ER does not have to make an application for a d-letter. A plan's qualification vel non is a fact independent of having such a letter. Penatly? Not in the traditional sense. However, SCP (self correction) for significant Operational Failures under EPCRS will not be available if the plan does not have a favorable d-letter. Rev Proc 2008-50, § 4.03. If the plan is audited, usually an auditor will not dig into the document history back beyond the date of the most recent d-letter. Also, if down the road the ER wants to apply for a d-letter, such as incident to terminating the plan, it might be more difficult to assemble all the documents (misplaced, lost, etc.). If you have a d-letter when making a later application, the Service will only require documents back to the date of the most recent d-letter.

That's my understanding, too.

I'm not so sure that all paid on-call hours must be counted, at least not those during which no duties are performed. There are two regulatory provisions that count hours for which the EE is "paid, or entitled to payment". DoL Regs § 2530.200b-2(a)(1) and (2). DoL Regs § 2530.200b-2(a)(1) only requires counting of hours during which duties are performed. DoL Regs § 2530.200b-2(a)(2) only requires counting of hours for which 'paid, or entitled to payment' for "a period of time during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence". I suppose being available while on-call, perhaps staying within a certain proximity, could be construed to be 'performing a duty', but I think it would be equally reasonable (if not more so) that such is interpreted that the hours while on-call, but not called, do not count.

Don't make a SIMPLE contribution on the 1/2/2009 payroll. Rather, count such toward the 401k plan.

Which, then, of the safe-harbor hardship categories are you thinking this situation might fit into?

Correct as to the eligible 457(b) plan. As for a 403(b) and by 'employer makes an elective contribution' you are describing an employer making contributions by reason of an employee's salary reduction agreement, also correct. On the other hand, if you are referring to contributions made at employer expense, and as to which the employee did not have the option to take as extra pay, then FICA tax does not apply to the contributions. The tax rules that apply to 403(b) and 457 plans (the additional ERISA rules would not apply because the employer is a public school) do not contemplate tagging specific contributions for specific purpose payouts, such as sick or vacation payout. When an employee's employment ends, all benefits are distributable from either the 403(b) or 457 plan, unless drafted to restrict payout beyond what the tax laws require.

How imminent is the foreclosure? Has the mortgage company started that process? Has it threatened that it will commence foreclosure proceedings by a specified date if mortgage payments in arrears are not caught up before that date?

If the plan year in question has ended, I think you'd need a Treas Reg 1.401(a)(4)-11(g) amendment to accomplish this, by splitting Group 1 in two, one for the 25% thereof that are HCEs and another for the 75% thereof that are NHCEs. But Tom Poje will shed more light on this.