J Simmons

QDROphile is right that if the plan document permits, hardships may be taken from matching contributions--at least those that are not QMACs. HarleyBabe, Treas Reg § 1.401(k)-1(d)(3)(ii)(A) provides That is a provision expounding upon the limitation set forth in Treas Reg § 1.401(k)-1(d)(1) relative to elective deferrals, not matching contributions. So on your facts, as long as the matching you mention is not QMACs, then $8,000 could be taken--$3,000 from the matching and $5,000 from the elective deferrals.

I think that ADP testing applies to those years, and you may need to make QNECs to correct. See Rev Proc 2008-50, section 4.05 and Appendix B, section 2.07. As for the 3% contribution that was made, its true nature is likely that of a discretionary profit sharing contribution. You need to re-examine it for each year, along with any other discretionary profit sharing contributions to make sure it is not discriminatory and has overall allocation in accordance with the terms of the plan for allocating such contributions. Also, if the discretionary profit sharing contributions are subject to vesting and any of what were believed to be "3% safe harbor" contributions were distributed, the ER might need to make additional contributions equal to the amounts that would have been forfeitures if those distributees will not voluntarily return the amounts that were, it turns out, not vested.

I agree with what your understanding is, bcspace, not the terminated employee's--but make sure that the plan document did not intentionally or inadvertently do what the terminated employee claims.

Do you mean what if the 2009 notice wasn't sent out? In my opinion, the notice or lack thereof, wouldn't make a difference IF the plan is amended before the beginning of the plan year. The contribution is required if the document says it is required. If you don't amend before the beginning of the plan year, then you have to follow the mid-year amendment rules. But, as I said before, I think there is more than one reasonable interpretation of the rules in this case. If you want to follow the mid-year amendment rules even though the amendment is adopted before the beginning of the year, that is a reasonable interpretation, too. John, Would it affect your answer if the 2009 notice had not been sent? Hi, Kevin, Yes, it would change my answer. Just to make sure I'm tracking then the question, with no notice being sent, your #1 would read (bolding is where the changes are): In this situation, 2009 would not be safe harbored from testing. The two requirements are not met: plan so provides and notice timely provided. There would be no inadvertent notice by which the ER said to the EEs that the ER would make a contribution. So the EEs wanting to force the ER's hand would not be able to 'hang their hats on' any such promise. My answer would be the same as in post #7 for your #2, as it has all along posited no notice being provided.

Hi, Larry, The closest to a concrete fact that the IRS has given, to my knowledge, on what is meant by Treas Reg §1.105-11©(3)(ii) regards setting the EE contributions so high that as a practical matter only the upper paid can effectively pay and continue coverage. See Letter Ruling 8328065, April 13, 1983 Letter Ruling 8411050, December 13, 1983: only mention of operational discrimination is in same paragraph re required EE contributions. Letter Ruling 8345065, August 10, 1983 But compare Letter Ruling 8328077, April 13, 1983 where there is no mention of EE contributions, but warns there could be operational discrimination, and Letter Ruling 8134129, May 29, 1981 (EE contributions and operational discrimination possibility both mentioned, but not 'in the same breath' nor the discrimination expressly tied to EE contributions).

O owns 100% of Corp C, a C corporation, and O receives Form W-2 pay from Corp C. O also owns 100% of Corp S, an S corporation, and does not receive a Form W-2 from Corp S, although others (non-owners) do receive Form W-2 pay from Corp S. Corp C and Corp S are obviously a control group. Corp C and Corp S sponsor an HRA for their EEs. Is O eligible for the HRA because he is an EE of Corp C? Would the answer differ if O also received Form W-2 pay from Corp S? Or is O ineligible as though a 'partner' because he owns more than 2% of Corp S which is a part of the control group, whether or not he also has Form W-2 pay from Corp S?

If an ER's only health plan is a POP (premium only plan; no flex accounts) to pay for health insurance premiums, does HIPAA privacy/security apply if EEs submit the applications (with health history info) directly to the insurance agent and the ER is not provided with individual claims information from the health insurer, even as part of annual renewal? Would the ER need HIPAA policies, notices, business associate agreements, etc. even in the absence of it having any health info on its EEs?

Hi, Peter, I do not know of such an IRA custodian. I post only to pose questions to be considered. Would it be an impermissible alienation of the power to pick, choose and change the death beneficiary for the IRA owner to contract away that right? Is the ability to change the death beneficiary a necessary incident of ownership of the IRA under 408? Since any change of beneficiary, in the context of such a contract, would contractually require both to sign, would that make the IRA owned by two rather than one? Does the state in question have a legal mechanism for dividing the marital/community property despite the marriage continuing? Could there perhaps be a severance of the benefits now, pursuant to a QDRO and then each take half into an Roth IRA separate from the other?

I think that mjb's suggestion that GoneTooSoon file a claim for the death benefits is a good one, and that GoneTooSoon should do so as quickly as possible. This could be a first come, first serve situation. The regulations certainly provide for the efficacy from the plan's perspective of a QDRO that the ex-wife might obtain now, even though the employee has died. DoL Regs § 2530.206©(2), Example (1). On the other hand, since GoneTooSoon was married for a year to employee before he died, she might find that Carmona v. Carmona, No. 06-15581 (9th Cir. 9/17/2008) could be the basis for GoneTooSoon to prevail. It's good GoneTooSoon has already engaged an attorney to assist her in this situation.

I came into a situation after it was discovered that when the ER moved his Keogh profit sharing plan from a bank where it was trusteed to another financial institution, the receiving financial institution erroneously set up the transferred funds into "SEP IRA" accounts. The financial institution can't get its head around the fact that it made the error--so it's position is that the prior bank handled what is truly a SEP IRA erroneously as profit sharing plan. Nonetheless, we've filed a VCP application which has now been pending with no response from the Service for 6 months+, for failure of the Plan assets to be held at all times before distribution in a trust, as required by 401(a)(1)--as well as for the failure of interim amendments to the plan's documents since the assets left the bank. The correction proposed as part of the VCP application is to establish a properly titled account and transfer the "SEP IRA" assets to the properly titled account. The situation I am dealing with is exempt from Title I of ERISA, so we have not also sought resolution also through the DoL as a trustee violation.

Yes, but perhaps not the unspecified factual situation that you may be dealing with. Prop Treas Reg § 1.125-1(l)(1) provides (bolding added)-- Prop Treas Reg § 1.125-1(l)(2), Example (vi) provides-- Treas Reg § 1.125-4©(3)(iv) provides (bolding added)--

Scrooge providing positive reinforcement? Bah, Humbug! (sorry to those I offended by being too snarky)

Thanks VEBAPLAN for repeatedly posting your two authored pieces. It wasn't until about the third time I read each of them that I realized that I was re-reading the same piece. But I kept re-reading each, as many times as you posted it. Being so slow witted and all, I appreciate all the multiple postings. It wouldn't have occurred to me that I could re-read a single posting of them, in one forum under one thread!

I agree with jpod, and note that it is a facts and circumstances test as to whether any of the arrangement is an ERISA pension plan, i.e. it ERISA § 3(2)(A) So it might be advisable to get a legal opinion that an arrangement is not an ERISA pension plan before proceeding on the assumption that it is not.

I will be very interested to see what others might have to say on this topic. I do not think that under the scenario you posit that you would have different times and forms of benefit. Different times and forms of benefits usually has meaning in the context of when and how the employer and employee must make elections as to which time payout will be made or begin, and how (e.g., all in one lump sum or installments over a certain period of time). The situation you describe is a single form of payment--monthly from the date of severance (without cause) until 5 years pass from the date of hire. The only potential manipulation or discretion as to time of payment (and consequentially, amount of payment) comes into play as to when the employer might terminate the employee without cause. That's a different question under 409A than the different times and forms of benefits concept.

I've never heard of anything that would disqualify a foreign employer from having a cafeteria plan for its U.S. payroll. Indeed, that would disqualify a significant portion of the U.S. workforce from having cafeteria plan benefits, if foreign employer's were so excluded.

Tom, you are always so generous with info you have. Why no post of this recipe?

What are the paydays of the ER in 1/09? Is it an ERISA 403b plan? You might simply be able to wait until 2/1/2009 and remit the payments to the new vendor. That would be by the 15th day of the month following the month of the paydays in question. For a late 12/09 payday, get those deferrals sent off to the old vendor no later than 12/31/09.

Yes, I think so. The grandfathering only applies to the NQDC plan if it is not amended. I think that the failure to make the 2007-scheduled payment would be an amendment taking the plan out of grandfathered status.

ER wants to make 5% of pay contribution to ERISA 403b plan for all eligible EEs. ER also provides group health coverage to EEs per stricter eligibility requirements and do not have other group health coverage (such as through spouse). ER would like to provide another 10% of pay contribution to ERISA 403b plan for those NHCEs that are eligible for the ER's group health coverage but for the fact they are covered under other group health coverage. No EE would have a choice of extra pay (or any other taxable benefit) in lieu of the 5% or 10% contributions. Problems?

I agree with MeToo that an FSA may be funded by EE and/or ER contributions. ER contributions may be made to a cafeteria plan as 'employer flex credits' (Prop Treas Reg 1.125-1®(3)), which may be applied to the payment of an FSA (Prop Treas Reg 1.125-5(b)(1)). I agree with Matthew Tae that only employer contributions may fund an HRA.

Yes and Yes.

20% or 50% reversion tax under IRC 4980, and the plan yet being liable to the participants for benefits based on the reversion amount.

Sort of both, John. The IRS-approved EGTRRA prototype I use has the following provision: Other aspects of ERISA are observed. In addition to being a written plan, the plan documents name a fiduciary and apply the ERISA claims procedures even for governmental plans.

Was the financial institution the document provider? If so, what does it have to say for itself about the fact it has no record of any plan documents?