J Simmons

Since the match throws you into the ERISA arena, wouldn't it be simpler just to have the one ERISA plan that allows deferrals and the match than to have this bifurcated plan approach? Having the second plan doesn't relieve the ER of having to observe ERISA in the matching plan.

Thanks for clearing that up for me, QDROphile. I stewed over that puzzling question quite a bit over the weekend. Google came up with a song I'd never heard of "Dysfunctional Family" by a musical act I'd never hear of, Cinema Bizarre. Larry's suggestion, "ERISA Mash", made me wonder if you were thinking of the theme to the Adams Family TV show from the 60s. Then I simply threw in the towel and gave up. But it is ironic that the song you had in mind on this board was by the Talking Heads.

A health FSA could be limited by type (e.g., just to dental/vision) or to just post-high-deductible. Either way, these limits do not disqualify the EE or spouse from high-deductible status for purposes of making HSA contributions.

Slow down when you have ice cream.

Hey, Larry, there must be a distinction that I don't get. rbk08 in post #3 asked "Can her husband then use $ from a post-deductible FSA to pay for additional medical expenses?" (emphasis added). What am I missing? What's the difference from a post-deductible FSA and an FSA that by its terms is limited to post-deductible expenses?

I've consulted recipient ERs that wanted to exclude leased EEs from their plans, explaining what the leasing org's plan had to provide in order to ignore those leased EEs. I was on two occasions consulted by leasing orgs that wanted the safe harbor plans. But never drafted one.

It does matter if the leasing org has a plan--at least a certain type of plan. The recipient ER need not take into account the leased EE if he is covered by a 10% MPPP of the leasing org. The 10% MPPP must not use a Social Security integration formula and it must sport full and immediate vesting. The 10% MPPP must cover 100% of its employees that are leased out and earn $1,000 or more during plan year or any of the 3 prior plan years. The recipient ER may exclude such leased EEs if they do not make up more than 20% of the recipient ER's NHCE workforce--regular NHCEs that have worked for the recipient ER on a substantially full-time basis for a period of one year, plus the leased employees. See IRC § 414(n)(5)

Check out Treas Reg §1.125-3, A-3(a) for descriptions of three allowable options: Pre-pay, Pay-as-you-go, or Catch-up options for payment. Even if the disability leave is not FMLA leave, this might be a good practice to use if your plan document doesn't specify something else

Notice 2005-5 was issued on January 18, 2005, so plans with years ending 3/31 had more than 70 days to adopt the amendment.

Yes to the first question above, as QDROphile has already answered. Yes to the second question. Should you, as an employer? I think QDROphile drew out well the limited utility. Coupling the post-high-deductible with use-it-or-lose it will make such FSA of very limited utility. You're doing great based on the questions you are asking.

Only the HSA and Limited FSA Expenses otherwise eligible for FSA reimbursement/payment are not so until the deductible has been met.

ERISAQuestioner, It might be too long if its length alone causes an employee not to read it. After all, there is a readability standard. Seriously, as your question relates to a H&W plan, it likely might include health coverage and be very long. You might consider having eligibility, entry, elections, employer payment of coverage costs, claims procedures, ERISA identifying procedures, WHCRA and other notices you might choose to imbed in the SPD up front, with the description about what types of health procedures are covered, with what co-pays and 'co-insurance' responsibilities be attached in an addendum to the main body of the SPD. That way perhaps the main body (relatively short) has a greater chance of being read, and the addendum used by employees as a reference much like using an encyclopedia.

Take a look at what 4 U.S. Senators have to say about SPD length on page 3 of the attached letter, under "Notice to Participants". Also, here's a case that found that the SPD need not detail every method under which an early payment option might be available under a plan. McCarthy v. Dun & Bradstreet Corp., 2d Cir., No. 05-3828-cv, 3/29/07. Not directly answering your question--I think the length would depend on the provisions of the specific plan at issue--but something for you to 'chew on'.

It's also a pretty good idea to update the plan document, as we are always in one remedial amendment period (RAP) or another.

Usually, your smaller, local banks that have IRAs allow a broader range of investment options (e.g., including real estate) than do the larger, national institutions that limit them to funds, stocks, bonds, etc.

Alex, what is 'People are Strange' by the Doors? What? this isn't Jeopardy?-sorry--bad form.

I agree with Sieve Post #2 and Appleby. There are estate distribution cases that hold if you waive, you then don't share at all in the subsequent residual or intestate distribution.

ERISAatty, I think you are correct. Reaching age 59 1/2 is a distribution trigger (or as Bob likes to say, "access event") that permits the assets to leave the context of a 403b contract despite the continued active employment with the employer. Because the active employee is such, he might be eligible for the 401k plan to receive rollovers into the 401k plan--which by virtue of his age can now be made from his 403b plan. If you're missing something I don't see it, but then I'm only a birddog.

If the B EEs did not become A EEs until 8/1/08 and Plan A is by its terms only for A EEs (which I assume), then it would not seem logical that A could match what those who were B EEs before 8/1/08 deferred to Plan B without violating Plan A's terms--despite no match to Plan B deferrals for 2008. Some plans define sponsoring/participating ER to include any other members of a control or affiliated service group of which the specified ER is a member. If so, then B EEs might have been eligible for Plan A since the 1/1/07 purchase of 80% of B stock by A. It would be a good idea for A to have an ERISA attorney review the documents of both plans A and B, and dig into what notices were given to B EEs when.

Yes, I've read them. And while I respect your inductive reasoning--if the IRS says in a publication (not regulation, proposed regulation, Rev Rul, Rev Proc, GCM, etc) about IRAs that no MRD is required for the calendar year of 70 1/2 if the IRA owner dies after reaching that age but before his RBD on April 1 of the next calendar year, then that's an interpretation that also you also apply to the DC context--I would not base any legal opinion letter issued under my signature on that basis. I'd certainly argue it to the IRS if a client came to me not having taken the MRD for the calendar year the DC plan employee reached age 70 1/2 but then died before his RBD. I'd certainly argue it in a request for PLR or in tax court. But for the death beneficiary seeking my opinion as to whether the RMD for the calendar year of 70 1/2 should be taken by April 1 of the next year despite the employee's death, I would make sure to advise that there is nothing directly on point from the IRS--as well as your inductive reasoning argument. I would also point out that the IRS could claim on the basis of -5 that the MRD for the year of age 70 1/2 is required, and they'd be seeking a 50% penalty tax. I'd want my client to understand both interpretations, the arguments favoring and disfavoring each, and what the consequence of foregoing the MRD might be (to weigh against the loss of further tax-deferral on what the MRD payout amount would be), so that my client could make an informed decision as to what course of action to take. Is that a trick question? Before I answer, I'd like to know what parts of no are there? I think I just did in this post. Will you be answering mine, i.e. Are you opining the IRS wouldn't [assess the 50% penalty] in the DC context? If so and you'd be willing to give death beneficiaries and estates an unequivocal written legal opinion to that effect, I'll know where to send those not satisfied with my drawing out the pros and cons of the two viable interpretations.

You haven't answered my question: Given the statements in IRS publications and the MRD regulations 1.401(a)(9)-2 and 3 and reg 1.408-8, would the IRS impose the 50% excise tax if an MRD is not taken where a participant who attains age 70 1/2 dies before April 1 of the following year? Are you opining the IRS wouldn't in the DC context?

If the S Corp is audited, how will she justify no W-2 prior to this year, and now all of a sudden W-2 wages? Did she not perform personal services for the S Corp prior to this year?

As a result of this thread, I know a couple of sources I can send those who are death beneficiaries of a (former) employee that reached age 70 1/2 but then died before April 1 of the next calendar year for an unequivocal legal opinion on the topic.

Although stated declaratively, that Sieve's opinion. Mine is different. The situation of the OP meets the explicit requirements of both -3 and -5, nothing in the regulations provides that if -3 applies then -5 cannot. My position is that both apply to the OP situation. Ignore -5 at your own peril--or get a legal opinion (so you might have malpractice recourse if need be).

ERISAnut, So which 403b contracts are included in an ER's 403b plan? (Rhetorical inflection.) It would seem a real stretch to say that 403b contracts that are not included in an ER's 403b plan are nevertheless assets of that 403b plan that must be distributed in a reasonable time in order for there to be a 403b plan termination (an "access event" as Bob terms it for those active EEs under age 59 1/2). Bob concedes that not all post-2004 403b contracts will be successfully included in an ER's 403b plan (and that's okay for the non-included 403b contracts, so long as the ER made a reasonable, good-faith effort to include them). So do the assets of the non-included 403b contracts prevent a 403b plan termination if all of the assets of the included 403b contracts would otherwise be timely distributed? Would it belie the claim that the ER made a reasonable, good-faith effort if in trying to include the post-2004 403b contracts the ER asked the vendor and EE to subordinate those 403b contracts to a plan document that were to give the ER the unilateral power to terminate and direct payout? (I realize Bob says that the model plan language of Rev Proc 2007-71 that the ER can terminate, but only subject to the individual contracts--but what if I don't include that clause? The regs do not require that clause. Rev Proc 2007-71 does not require that clause?) What is the IRS' motive in introducing a dramatically new regulatory scheme but then hamstring the ERs that operated under the old one from being able to terminate? Is it to punish them for having operated a 403b plan under the previous scheme? Actually, ERISAnut, all the foregoing questions are rhetorical. Chalk if up to practical frustration with regs and guidance that are not even internally consistent. I'm use to better (albeit not perfect) from Treasury regulations.